Monday, January 25, 2016

Below is a scenario I just went through with a client of mine.  Please keep in mind every person has a different mortgage situation and it is important that your mortgage experience is tailored to you and your needs.  See below on how I took my client through the whole process so she could make a confident buying decision.

I had a client contact me who has been to THREE other banks and was declined!  She was so confused with the whole mortgage process and felt like her head was going to explode.  She did not understand why she was declined and was shocked to know her credit was also being effected with all the credit inquires.

 I told her that I would take her through the entire process, Step by Step so she understood what was going on without being overwhelmed and anxious.  I explained that I will work out some options to get her approved, or show her why she was declined so we can work on a plan to get her approved in the coming months.

Step One:  The first point of contact:
a. I found out she was declined at 3 banks
b. I found out she had a salary job and was a single mom who also received ongoing verifiable child support payments.
c. I found out she had her own down payment saved
d. I found out she wanted to purchase a New home that was ready for possession in 35 days.
e. I found out she will be staying in this home long term - 5 years or greater
f. I found out that pre-payment options were not important to her, rate was.

I emailed her a client consent form to fill in and sign and date and return to me by email or fax.

Step Two:
I received the clients Signed consent form and contacted her to take a mortgage application.  This takes approx 5 to 10 minutes and it helps me gather all your information.  Before pulling her credit bureau, I was able to determine he debt to income ratios were not within the 44% required amount.  I asked her if anyone had reviewed her current monthly debt with her - Her answer was "No". 

Based on a few calculation, I figured out she could re write her loan for a payment that was half of what she was paying by getting a fixed loan for 16 months - so I lowered the rte and only had to extend the term by 4 months and I increased her overall purchasing power for a new home, see example below:

Home price - $425 000.00
Down payment - $21 250.00
Mortgage Insurance -$14 535.00 - CMHC, Genworth or Canada Guaranty
Income Required  - $73 350.00 if you have no debts - so no payments

This client has a car loan for $945.00 and a visa for $3200 and a cell phone bill. 

Based on her income she was at 46% TDS or Total debt to income and this is why the banks declined her.  She was not give any further options, she was just told she was declined.

I explained to the client how her income and debt work and told her I could get her a loan for her vehicle for $473.00 and then her ratios fell back to 42.3% and she qualified to purchase the home.

Step Three:

I pulled the client bureau to ensure her credit was paid on time as stated when I took the credit application.

Step Four:

I gave the client a list of paperwork I required to verify the pre-approval.
1. Letter of employment dated within 30 days
2. Most recent pay stub dated within 30 days
3. 90 day banking history to verify her 5% down payment
4. Two pieces of ID - one a picture ID as she was not able to meet me in person
5. verification of her Child Support payments - in case we needed to show more income to help her qualify.

Step Five:

I received all the paperwork and verified that the pre-approval would work.

Step Six:

She signed the offer to purchase on the new home and had copies sent to me.

Step Seven:

I submitted for approval and within 1 day, I received a mortgage commitment outlining the mortgage and option in detail - focusing on a five year term with the lowest rate possible as per her mortgage needs outlined in step one.

Step Eight:

The client and I reviewed the mortgage commitment and ensured she understood before signing.

Step Nine:

We removed conditions with the lender and a very frustrated upset client was beaming and excited!

She now understood what goes into the mortgage process, she understood the mortgage she was getting and was excited to become a home owner for the first time!!!

Moral of this story:  As a broker I only deal in mortgages and I only represent you:)  This is the perfect cocktail to ensure that I am yourmortgagegirl!  Ensure that you and your needs are heard and being represented all the time.  " Mortgage Options, Not Restrictions"

Amy Wilson,
Verico Brokers For Life

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