Social media, mortgages - 2

Happy Halloween!

A few columns back I wrote about how lenders (and brokers) research potential clients online. Results of these online searches can affect mortgage applications.

I had some interesting feedback about that comment. Like it or not, this is the new way of doing business.

Searching the property you are thinking about buying is also important. For the last few months, I’ve been working with a young couple in Nanaimo who are purchasing their first home.

They have a very specific wish list and are being very methodical about their search. They want to make an informed decision that they are comfortable with for years to come.

After viewing multiple potential properties over the course of several months, they found the perfect home. It met every single item on their wish list, was well within their price range, and in a great neighbourhood. They went home to discuss how much they would offer and what they wanted as a closing date. They were thrilled.

Over a coffee they googled the address of the house.

They were disappointed by what they found. There were multiple posts and media interviews by the owner and neighbours about significant problems with how the subdivision had been built.

These interviews talked about issues that happened a few times a year (winter and spring generally) that made the neighbourhood almost unbearable to live in.

Crisis averted.

Think about what would have happened had they bought this beautiful home, only to find out several months later they couldn’t stand to live there.

The same logic applies to the mortgage process.

Whether you are a first-time or repeat home buyer, it is a great idea to do some research about mortgages. Much has changed over the last few years.

There are fantastic tools available on line to help. Canada Mortgage and Housing has several calculators that will help you determine if you are ready to buy a home.

I also suggest talking to your mortgage broker or bank before you consider moving forward with a purchase. In the not so distant past, it was almost a given that you would qualify for the same size mortgage you are currently carrying.

With the implementation of the stress test and resulting decrease in buying power, it's important to confirm the amount you are qualified to borrow.

Early this spring I helped clients who already had an accepted offer on their home. They were moving to the Lower Mainland and needed a slightly larger mortgage. In their case, they were able to find a home with a rental suite which helped bring their debt servicing in line.

As important, if you are part-way through the mortgage process and have made an offer, talk to your broker or bank before making any big changes to your situation.

Clients I worked with over the summer were thrilled to be approved for the purchase of their first home. Their application was approved and they removed their financing subject. They had written with a slightly longer closing date, so were basically in a holding pattern for two months.

The wife called to ask what would happen if she changed employers. She had been recruited by a competing firm and been offered a substantial increase in salary. The new position, however, had a mandatory three-month probation period.

It would certainly make sense to take a position that paid more money.

Their mortgage had been approved based on the application we sent in, and part of the strength was the fact that she had been with the same employer for 10 years.

I approached the lender to see if this would affect their approval. Based on the amount of their down payment and their impeccable credit score, we were able to get an exception and she took the new position.

However, lenders do not like surprises. And they sometimes do post-audit checks to confirm everything is still the same shortly before the mortgage closes.

I’ve seen this go the other way. Last year, I had a client who posted all over his social media how excited he was to start his new (commissioned sales) job in a completely different industry.

The lender saw this, re-evaluated the file, and cancelled the commitment as this was deemed to be a material change in the client’s financial picture. The client had already removed all his subject, so he was in a bad spot.

The lesson out of this is that the internet is an important tool during the home-buying process.

There is extensive information available at your fingertips to help with both education and calculations.

The process of buying a home can be both exciting and intimidating. Doing your research will help make you more comfortable with the decisions you are making, and hopefully ensure that you make the right decision.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.