A couple of weeks ago, I went out for dinner with another mortgage broker.
We pledged not to talk about work. That lasted all of about 15 minutes. We ended up comparing war stories.
An acquaintance of mine said to me one day it must be great to be a mortgage broker in this market. I have to say I feel completely the opposite. My broker friend said she feels the same way.
I far prefer a more balanced market, where clients have time to carefully consider multiple homes without feeling that they have to rush in and make crazy offers with tight timelines and few (or no) subjects, just to get a home. I far prefer a market where people can afford comfortable homes without feeling like they are in way over their heads, just to get a home.
I also far prefer a market where people can list their homes for sale knowing when it is sold, they can find another home to buy instead of panic-buying just to get a home – suitable or otherwise.
When I decided to focus on brokering full-time, I connected with an experienced broker in Penticton. She shared a handout with me she gave to most of her clients. It was titled something like “The Ten Commandments of Mortgages.” At the time, I remember feeling the list sounded somehow condescending.
How does this tie into our current real estate market? Frantic impulse buying can lead to decisions that clients regret down the road. And yet, the longer I do this, the more I think the list is something we should be going over with all of our clients.
A couple of months ago I was working with a family in Alberta. We had all of their documents put together so when they found a property we would ready with an approval as soon as possible. They called to let me know they had written an offer and sent me their updated employment and down payment documents. Their offer was chosen, so we all did a happy dance.
I got an approval in place for them and we were waiting for the final sign-off from the lender. I mentioned the last piece we were waiting on was the verbal employment verification.
They didn’t realize the lender would be calling to confirm their employment. As it turned out the husband had been let go the day before they wrote their offer.
He was the primary bread winner and his income was key to their mortgage approval. They assumed because we had the employment letters and paystubs they were in the clear.
So back to the list.
The items on the list were things like:
• Thou shalt inform your mortgage broker of any significant changes in your situation
• Thou shalt not quit your job or change jobs without connecting with your broker to make sure that it won’t affect your application
• Thou shalt not finance a new vehicle before your mortgage closes
• Thou shalt not finance new furniture before your mortgage closes
• Thou shalt not miss any payments before your mortgage closes
• Thou shalt not spend your down payment prior to closing
This gives you a general idea.
Lenders do their due diligence to confirm the information provided by clients is true. They will usually search the internet to see what pops up. And they will sometimes double-check credit reports shortly before closing.
Brokers also do their due diligence. Sometimes my spidey-sense tells me something is not quite right, and in those situations I do a little more digging to make sure my clients are on the up-and-up.
After months of saving and working towards buying a home, it can be heartbreaking to have things go sideways. However, what is even worse is moving forward with a firm purchase agreement and having the lender cancel your approval just before closing because they re-checked your information and found a material change to your situation.
Always, always be upfront with your mortgage person.
Sometimes we can help mitigate any changes in your circumstances and hopefully we can save you heartache by avoiding a situation that could result in major legal difficulties for you.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.