For many of you arranging financing can be a tedious and stressful time. However, when considering buying a home, it might be the most crucial activity you can do. Many clients go to their local banker. The ones they have had previous car loans, student loans, or other financial dealings with. Bankers are typically very polite and provide the obvious options. They ask questions about your income and potential downpayment etc. Based on this information, you will often receive an indication from the finacial adviser as to how large a morgage you might receive. You the consumer often take this as gospel! Unfortunately, that is not how it works.
Many of you will be encouraged to use a "mortgage broker" That is always a good idea as mortgage brokers do not get paid unless they provide you with a mortgage, very similar to Real Estate agents, no pay cheque without a sale! You will often go through the same procedure with a mortgage broker as a bank, but possibly a little more in depth. They will ask for an array of documents which will include; past tax returns and proof of down payment, and sources of all monies that will be used in completing the transaction etc. Then they will say to you..."now get me a live deal to work with."
A "live deal" means a Contract of Purchase and Sale which you have negotiated which is subject to you getting satisfactory financing. This is when the work actually starts! Unfortunately, if you are normal, when you put in an offer, you probably have not got, or delivered all the documents that the financial adviser has asked you to provide. This is where the rub is. Most financing clauses are for about 7-10 days, but it usually takes you that length of time at least just to find all the documentation. It then has to be assembled by the mortgage broker and sent off to head office back east to be approved. With all the new banking rules and criteria now, these approvers will often want clairifationon documents, or even request further documents.
Many times you will run out of time to provide all documentation so you will require an extension which is always problematic. Further, many times you actually will not have documented proof of all the information that you have given the financial adviser. This means you may not get approved for the amount the finacial adviser had originally indicated you could get. This is happening more and more often.
Since many consumers "shop" mortgage companies to find out what the perceived best deals are, many financial advisers will not spend too much time pushing you on documentation until you actually have a "live deal". This is somewhat understandable as it takes a tremendous amount of time to pursue clients to get documentation, and then a further extensive period to put together everything to give you a confident approval.
My strong advice to you is find a professional mortgage broker who is recommedned to you because of their competency, not because they are a friend of a friend, or that they are a nice person. Then do everything they ask as quickly as possible. If you provide confirmation of everything they ask, they should be able to give you a 90-95% confirmation on your financing "subject to a confirmation appraisal". With this level of confidence, you are in a much better position to buy a property especially if you find yourself in competition.
As usual, my 38 years of experience could be invaluable to your success. Please call me anytime!...Brent