Potential mortgage got-cha’s and things to consider

Gordon J. Wallace
Gordon J. Wallace
Published on June 6, 2018

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We’re having weekly meetings at the office for those of us who are new to RE/MAX Real Estate Centre Inc., Brokerage and so the meeting today was hosted by one of the in-house mortgage professionals that RREC has. There was a lot of discussion and a few items that I found particularly interesting (these are just from my notes, you should always contact a professional mortgage broker or agent for advice specific to your situation). These are in no particular order btw but I did try to group them so just skim through and see if any might be applicable to you:

  • it’s important for buyers (especially first time buyers) to understand there is no point in trying to “hide” any debt obligations, it’s all going to get found out so just be up front from the beginning and your mortgage broker/agent can work with you to get you were you need to be (if necessary)
    • credit checks are just the tip of the ice berg, bank statements may be required for verification so any recurring charges might be called into question
  • the main three areas lenders are going to look at are your income, debt and down payment – obvious to most, but as with the comment above ALL recurring payments could be lumped into that debt category…
    • the most ‘got cha’ type thing that came out of this particular discussion was actually about child support / alimony.. again I strongly caution you to seek expert advice from a qualified mortgage broker/agent but just be aware that these sorts of payments should be disclosed.. payments you make would likely count against your debt (which really should just be called “obligations” IMO) but .. while the income will count if you’re receiving it, they cautioned a lot of lenders will want to see uninterrupted payments for 1 year before really relying on it
  • you’ll need to prove where the down payment money came from and if you’re fortunate enough like I was to have family be able to assist you with providing a gift for your down payment then the lender will have a letter for you to fill out verifying as such
    • what I didn’t know as that gifts, as well as and co-signers have to be provided by immediate family (definition can vary)… HOWEVER if the money has been in your account for more than 90 days they’ll typically consider that savings so keep that in mind if you’re a beneficiary from a distant relative’s will or some angel supporter (sorry no advice for the co-signer route)
  • first time home buyers or those with little history in the lenders eyes need to be cautioned that banks can refuse to fulfill mortgages (even if you’ve been pre-approved) if the property isn’t one that seems easily marketable (hobby farms were discussed as an example, sorry first time home buyers but that llama farm might have to wait)
    • usually it’s the insurance provider (CMHC, etc) that would have the problem so it’s potentially less of an issue if you’re putting 20% or more down BUT seriously if you’re after something that isn’t going to be considered a “standard” residential dwelling you might want to let your lender know sooner rather than later
  • last but not least another thing I didn’t know prior to today was that while the minimum down payment amount for residential properties is 5% that only applies to your primary residence and at most one other residence (trailer, mobile home, cottage, etc) anything over that and the lenders will typically consider them rental properties and require the full 20%.. now I imagine the personal relationships you have with your mortgage person play a factor (I assume if you’re on your third house you probably have a mortgage person) BUT I can’t stress enough how important it is to talk with one as early as you can in the process

Oh, and the lenders typically have wording in their agreements that they can re-check your credit file up to 2 days prior to closing so don’t go buying things between having an offer accepted and the financing approved up until closing day.. For all buyers the synopsis is:

  1. Get pre-approved
  2. Disclose EVERYTHING to your mortgage provider
  3. Call me 🙂 226-218-0433
  4. Buy a house
  5. Finalize the financing details & fulfill your finance condition
  6. DON’T BUY ANYTHING MAJOR (motorcycles, cars, Caribbean islands, etc)
    1. Also don’t quit your job..
    2. IF you plan to or actually do buy something that adds to your debt load or affects your down payment amount OR your work situation changes (good or bad) let your lender know ASAP
  7. Close the deal and move into your new house

I’m going to close this out by reminding you to always seek the advice of qualified professionals, in this case a mortgage broker or agent (including those at your bank especially if you have history there). If you want advice on picking a mortgage professional or just want to chat about mortgages or anything else real estate related remember I’m here to help. The one piece of advice I’ll give you here is to go and get your credit report before you go see a lender.. they’re technically free for Canadians to get (once per year or something like that) Equifax and TransUnion have details on how to obtain free copies as well as paid options. Gordon J. Wallace, Sales Representative RE/MAX Real Estate Centre., Inc Brokerage [email protected] (226) 218-0433

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