QUALIFIED TO MAKE SURE YOU QUALIFY – OUR HOUSE MAGAZINE
If you need open-heart surgery, you want to be sure the doctor in the operating room knows what they’re doing. You want to know they’ve got the professional education, skills and experience to carry out the life-saving procedure.
You would expect nothing less from the person handling the biggest financial decision of your life – your mortgage broker.
Though a mortgage broker doesn’t need quite the same qualifications as a heart surgeon, there are still rigorous standards each mortgage professional must meet to do their job.
While regulations can vary in each province, mortgage professionals need to be registered with a government body and be licensed to carry out broker activities.
First, each broker must complete a provincially approved course for mortgage brokering. These courses are offered through various colleges and institutions and can take days or months to complete. In Ontario, for instance, after completing the course, aspiring brokers need to be hired by a Financial Services Commission of Ontario licensed brokerage, in which the brokerage applies to the commission for that particular broker’s licence.
In B.C. for example, mortgage brokers need to pass a course to be registered with the Financial Institutions Commission, or FICOM, and then update their licence every two years.
Agencies like FICOM have the power to investigate public complaints, hand out fines, and suspend or revoke licences of brokers.
“The Registrar of Mortgage Brokers protects the public and enhances mortgage broker industry integrity by enforcing mortgage broker suitability requirements and reducing and preventing market misconduct under the Mortgage Brokers Act and Regulations,” notes the FICOM website.
While Greg Domville, DLC’s vice president of training and business development, noted the course for mortgage brokers is a good foundation, he suggested it’s the background and criminal checks that are most important.
“They make sure you’re a real good person,” he told Our House Magazine. If you’re going to be dealing with someone’s finances, those checks and balances are in place.”
Domville added that consumers can take comfort that their mortgage broker has gone through a rigorous screening process before they have any contact with them. Adding the standards in place are good at weeding out people in the industry.
He pointed out, at DLC, a mentoring program is in place where franchise owners can monitor and train new brokers to ensure they’re doing all the right things along the way. As Domville noted, there’s a good chance even if you’re dealing with a new broker, they’ll have a lot of experience.
There are a number of online resources available to the public through the varying licensing agencies. Don’t be afraid to ask your mortgage broker about their background, they’ll be more than proud to share with you their qualifications.

Jeremy Deutsch

Your credit score today is SOOOOO important when applying for your mortgage. Mortgages today are more of a planning process that a transaction. As a mortgage broker, I have been predicting this change for a while. Time after time, I find my clients getting insufficient advice from their bank or credit union. The tiniest and most insignificant little detail can cost you your mortgage approval. Contact me today!

Enjoy the blog from our colleague Len Lane…

LOOKING FOR A MORTGAGE… YOU BETTER KNOW YOUR CREDIT SCORE

Over the last month, as the big banks and many of our monolines mortgage lenders wind down their fiscal year, we are starting to see some very obvious changes in what your credit score can get you.

I heard a few months ago that 720 beacons were going to become the new 650. The 650 beacon credit score for many years was the mid-range norm for most mortgage lenders. Today on many of the sites we use, we are seeing that the primary borrower must have a credit score of 720 and the secondary beacon can’t be below 650. It’s a big change from what we have seen in the past.

There are more changes coming as the banks will need to set aside more balance sheet if your mortgage is conventional. The one report I read said that if your credit score is lower, then the banks will now need to set aside 1.5% or possibly more if the score is low enough. That of course will then mean that an investor will need to be compensated more for having that in their portfolio, aka higher rates for you on a conventional mortgage.

If you are in the market for a house and you don’t know where to start, at least contact Dominion Lending Centres mortgage broker who can guide you through the process and let you know where you start. If you use a DLC broker, they can set you up with a CleverCredit account and you can work together to make sure your credit is strong enough to apply for a mortgage when the time comes.

Len Lane

Today’s Post in the blog is actually an article posted recently by Mortgagebrokernews.ca by Ephraim Vecina. The full article is available on their website. I have posted the link towards the bottom of the post.

Mortgages From Banks Are More Costy Than Alternatives

The lowest mortgage rates offered by the country’s leading banks are uniformly higher-priced than those available from alternative lenders, according to a new analysis by online comparison portal LowestRates.ca.

Combined with the fact that Canada’s “Big Six” banks account for a vast majority of the national mortgage market, the situation is contributing to a significant portion of consumers’ fiscal grief – and they might not even realize it.

“Brokers and smaller lenders often drop their rates first to be more competitive, and banks are slower to implement changes because they know they own the market,” LowestRates.ca CEO and co-founder Justin Thouin said.

“This will only change when Canadians realize they’re being overcharged and begin to shift away from the banks, and that will only happen as we increase awareness about the alternative market. The best deals are found online, not in your family’s legacy bank branch.”

Read more: Alternative financing increasingly popular in Ottawa

For instance, in January, RBC cut its 5-year fixed-rate mortgage to 3.74%, but LowestRates.ca found that the best currently available 5-year fixed-rate term in the non-bank lending market boasts of a 3.23% rate.

“The big banks never offer the lowest posted rates on the market, but Canadians aren’t spending enough time researching rates before signing their mortgages, and that’s potentially costing them thousands of dollars a year,” Thouin warned.

https://www.mortgagebrokernews.ca/news/alternative-lending/mortgages-from-banks-are-more-costly-than-alternatives-254417.aspx

Refinanincing your home can be a powerful financial planning tool. It can give your and your family the ability to pay off much, or all of your consumer debt and allow you to take control of your finances and start saving for retirement or your kid’s education. In recent years, the Government of Canada has made it a little tougher for you to refinance. However, we are often able to qualify our clients. An mortgage professional can offer you many alternatives to your mortgage. Becoming more popular in recent years are Hybrid mortgage such as All-in-One mortgages or more simply mortgage with a line of credit portion. This can help you cut your mortgage amortization by half. To discuss any refinancing strategies, please call me.

Enjoy today’s blog!

WHAT QUESTIONS TO ASK WHEN CONSIDERING A REFINANCE

Many of my clients and friends regularly ask me when or if they should consider a refinance. Here are 4 quick questions that I ask of them. The answer they give me, will very quickly tell me if we should be taking a deeper look at the mortgage refinance options available to them.

What do you believe the current value of your home is and what is the outstanding balance on your mortgage?
Have you ever heard your mortgage broker or banker talk about “loan to value”(LTV)? They are looking to determine what your outstanding balance of your mortgage is as a percentage of your property value. The reason we look at your LTV is because there are limits in Canada with respect to how large your mortgage can be based on the current value of your home. This gives your mortgage broker insight into how much equity or money you have access in the event that you were to refinance your mortgage.

What is the maturity date of your mortgage and your current rate/term length?
Understanding who your current lender is, what your maturity date is, and what your rate/term details are, will help your mortgage broker determine what type of penalty you might have for breaking your current mortgage contract. Knowing your rate will also give them the details they require to calculate the interest savings that you would receive from a refinance. When looking to refinance, your mortgage broker should be factoring these potential costs and overall interest savings into their overall benefits analysis when trying to determine if refinancing is the right option for you.

How is your household monthly cash flow impacting your short and long term financial goals?
Budget, budget, budget… this is one of those tools that we all know we should do, but it often gets very little of our attention each month. By understanding how much net income you have coming in each month and where that cash is going (cash flow) we can look at how a restructured mortgage could help. If you are finding that all of your money is disappearing each month and you’re having trouble getting by, a new mortgage can help restructure your monthly debt payments giving you some added breathing room. It is important to note that sometimes it is not about debt payments and it can be about high household expenses. Taking the time to assess your spending and cutting it back if necessary, might be enough to get you back on track. Check out our blog post on basic budgeting tips and tricks.

Looking at your outstanding debt, what are the current interest rates that you are paying and are you only making the minimum payments each month?
A quick snap shot of your current debt load, respective interest rates and monthly payments can give us some insight into how a refinance can save you interest. By understanding what your financial picture looks like and the amount of interest that you are currently paying to service that current debt, we can very quickly estimate how much interest you could save with a refinance. If you take a number of those high interest rate credit cards and roll them into a new, low interest rate mortgage, the savings can very quickly become quite substantial.

In closing, a refinance is a financial tool that can make a significant difference in your current financial picture. If you have reviewed the questions above and would like to take a closer look at your situation, there is never a better time than the present to make a change that will have a positive impact on your future.

Take the time to have a conversation with a Dominion Lending Centres mortgage broker who can give you some insight into how a new mortgage could help you with a brighter financial future.

Nathan Lawrence

First timers are my favourite. I have a soft spot in my heart for helping brand new, bright eyed clients get into their first home! I love it! There is so much to teach them. Mortgages are not just about rate and payments. There is so much information to review. Household budget, future plans, closing costs, property tax adjustments, property tax collection, Insurance….. the list is extensive. This is a great Blog by our colleague Geoff Lee.

Enjoy!

FIRST TIME HOME BUYERS

Your First Home. What a THRILLING thing that is to think about!! One of the best parts about our job is helping individuals purchase their first home. We know that the process can seem daunting at first, but we have an in-depth understanding and knowledge of what steps are required to make the process go smoothly. Follow these and you will be turning the key into your new home before you know it.

1. Find a Fantastic Mortgage Broker
Finding a mortgage broker who can help with your pre-approval process can allow you to determine the price point of home you can really afford. Finding a mortgage broker right off the bat can also give you an advantage over working with your bank:

Mortgage Brokers work for you, not the bank or lender
They have access to multiple lenders and are not limited to one single product
They are an expert in the field. They focus on mortgages and mortgages alone!
2. Get Comfortable With The Numbers
There are two numbers that all first-time homebuyers should keep in mind: 39 and 44. These two numbers can help you budget and determine what you can truly afford when looking to purchase a home. Why 39 and 44? Here’s why:

A maximum of 39% of your total income can go towards your housing costs. This will cover your mortgage payment, property tax payment, heating costs, and strata fees.
A maximum of 44% of your total income can go towards your housing costs and total debt payments. This will include ALL housing costs and all debt repayments (credit cards, car loans, student loans, etc.)
Now, here are a few other key numbers that can help you in your house hunting:

3. Know What Your Down Payment Needs to Be
You know the numbers, now let’s look at what you need to know about the down payment itself. First, if you have less than 20% down payment your mortgage will be insured and have insurance premiums added to your mortgage. If you are considering putting the minimum down, that would be 5% if the property is worth $500,000 or less. A down payment of 10% is required for any amount over $500,000. Here’s a quick example of what this looks like:

Purchase Price of $600,000

5% of $500,000 $25,000

10% of $100,000 $10,000

Total Down Payment: $35,000

4. Take Advantage of The RRSP Home Buyers Plan
The Canadian government’s Home Buyers’ Plan (HBP) allows for first time home buyers to borrow up to $25,000 from you RRSP for a d own payment, tax-free! You are able to combine this with your partner if you are both first time home buyers you can both access the $25,000 from your RRSP for a combined total of $50,000. Certain qualifications do apply for you to use this plan, we have laid them out here for you to review.

5. Don’t Forget About the Closing Costs!
This is one so many people overlook! Closing costs are something that can add up quickly when you are purchasing a home. Here is an approximate breakdown of the funds you will need:

Legal Costs: $1000
Title Insurance: $200
Appraisal: $350
Property Transfer Tax: Pending on purchase price
An additional few facts on property tax for you to consider:

This is an approximation of what your closing costs may be, but it is always good to budget for them beforehand.

6. Have your Documents Ready to Roll
Mortgages = paperwork! There are a number of documents that you will need to have to give to your mortgage broker. This will vary depending on your employment situation and where your down payment is coming from, but here is a general list you can follow:

Most Recent paystub
Letter of Employment
NOA’s (2 years)
T4’s (2 years)
Down payment verification—up to 3 months of bank statements
Contract of Purchase and Sale (Your realtor will provide this)
Property Disclosure Statement (Realtor will provide)
if you are self-employed you may also have to show:
o T1 Generals
o Articles of Incorporation
o Financial Statements
7. Start Working on Your Credit Score
Yes, your credit score does directly impact your ability to get a mortgage. Lender’s want to see that you can responsibly manage credit and debt repayment before loaning you a large sum of money to purchase a home. Your credit score will be a determining factor in the terms and rate associated with your mortgage.

Just what impacts your credit score? Good question! Here are a few things:

Late payments will lower your score
Collections, judgements, consumer proposals, bankruptcy this will lower your score
Exceeded limits on credit cards
Ideally, you will be able to show a minimum of 2 active and current trade lines
The longer your trade line is, the better increase in your score!
Lenders also like to see a minimum of $2,000 limit on your credit cards.
Understanding and using this knowledge can help make your first home buying experience a great one! Once you have gone through the pre-approval process with a mortgage broker the fun part begins! Upon you receiving your preapproval, you can begin the house hunting. From there, you can put an offer on your dream home (yay!) Once your offer is accepted, we go through the mortgage process with you and then it’s moving day for you!

This is an exciting time for first time homebuyers—we enjoy getting to help our clients go from start to finish and helping them get the keys to their first ever home. If you have questions or are looking to find out just how much you will qualify for you can check out our mortgage calculator OR you can reach out to a Dominion Lending Centres mortgage professional directly!

Geoff Lee

Pre-approval vs. pre-qualification is a huge distinction. Today’s blog comes from our colleague Ryan Oake.

enjoy.

PRE-APPROVALS & PRE-QUALIFICATIONS
Throughout the mortgage and home buying process, there are many steps and many checkpoints a buyer will need to complete before they can move on to the next one. A buyer will not be able to close on a purchase if they do not have a lawyer. Financing conditions need to be lifted after confirmation from a mortgage broker that a file is broker complete. A buyer should never write an offer on a home until they have a realtor working for them. Most importantly, a buyer should never be looking at property they are considering buying until they have been pre-qualified and pre-approved.

Now, one thing we need to make clear- pre-qualified and pre-approved are two different things. Pre-qualified is when someone completes a mortgage application with a mortgage broker or a bank representative and is told how much they can afford. Pre-approved is when someone has written confirmation from a lender stating they are willing to lend based on what is stated in an application and the applicant’s current credit history.

The difference?

Pre-qualifications are based solely on the knowledge and experience (sometimes even opinion) of a broker or bank rep. A pre-approval on the other hand is backed by the lender actually willing to give you the money. When someone says they are pre-qualified, that means they have taken an application with a mortgage broker or bank and in broker or bank rep’s opinion, they can afford “x” amount on a home. A pre-approval is a written letter from a lender stating based on applicants current credit history, declared income on application and current assets, we will lend “x” amount pending confirmation everything stated in the application is verifiable and the property meets all lender requirements.

As you can probably tell, one can be more reliable than the other, especially if you are working with a mortgage broker or bank rep that is inexperienced in the industry. Pre-approvals also usually come with a rate hold. What a rate hold does is guarantee you the interest rates that lender is offering today for a certain amount of time (usually 120 days), and if you put an offer on a place within that time period, they will give you that previous rate even if they went up. If rates go down, they will allow you to access the lower interest rate as well.

You must always get yourself pre-qualified before you begin looking at homes so you know what you can afford. Once you have and you are actively looking, it is very important you try and get a pre-approval before you write an offer. It will give you that extra confirmation your application is acceptable, and protect you against interest rate increases while you look.

If you require a pre-qualification, pre-approval, or want to speak with someone about your current situation, please give a Dominion Lending Centres mortgage professional a call.

Ryan Oake

9½ STEPS TO REPAIR AND IMPROVE YOUR CREDIT
Though credit scores aren’t always an indicator of financial health, they are used in a variety of ways that could have a major impact on your life. Interest rates (including mortgage rates) are almost always determined by your credit score. Some employers & landlords may require a credit check to see if you have past credit issues.
Remember this is your credit report, not your “I’m Fiscally Responsible” report. Lenders want to know how you have historically handled credit in order to determine if you are a good credit risk. Higher risk = higher rates!

The Rule of Two:
• You should always have 2 “tradelines” going. This can be a combination of 2 credit cards OR a credit card and a line of credit/ loan etc.
• Credit lines should have a minimum $2,000 limit
• Minimum of 2 years old

So, if your credit score sucks, it could be costing you.
The good news is, you don’t have to live with bad credit forever. There are plenty of things you can do to improve your credit score. Use the 9½ tips below, to improve your credit score

#1) Know Your Credit Score and Credit History
Request a free copy of your credit report from both of Canada’s credit agencies (TransUnion and Equifax). You are legally entitled to one free credit report yearly from each credit agency. Check out my BLOG How to Get a FREE Copy of Your Credit Bureau

#2) Review both TransUnion & Equifax Reports for Any Errors or Discrepancies.
If you find any errors in your credit report, you should dispute them with Equifax or TransUnion and request to have them correct any errors.

#3) Pay On Time, EVERY time!
This might seem obvious, but you need to make your payments on time, every time! This is crucial to repairing and maintaining your credit rating. The largest percentage of your credit score is based on your payment history!! Even being a couple of days late will have a negative impact on your score. Staying current with your payments has a huge positive impact. If you can’t pay the balance off in full, pay the minimum amount on time!

#4) Don’t Go Over Your Card’s Credit Limit
Going over your credit limit, even once will have a huge negative impact on your credit score. You need to be aware of your credit limit and your current debt levels to avoid this.

#5) Pay Off Any Overdue Accounts ASAP
Paying off a collection account will not remove it from your credit report, so do your best to avoid going to collections. If you have any overdue accounts that have gone to collections, negotiate to pay them off ASAP.

#6) Reduce Your Debt
Easier said than done, but if you want to increase your credit rating, you need to reduce your debt. The closer you are to your credit limit, the lower your score. In a perfect world you only want to use about 30% of your available credit. If you have a lot of credit card debt you might consider a loan (with lower interest rates than the credit cards) to consolidate your debts.

#7) Limit Your Inquiries for New Credit
You lose points from excessive hard inquiries on your credit bureau. Any attempts to take on multiple loans/credit cards will look bad in your report.

#8) Avoid Closing Credit Cards
Account age is a factor that reflects positively on your credit score. Too many new accounts lowers your average account age and negatively impacts your credit score. For the same reason, you may want to keep an old account open, even if you are not actively using it.

#9) Time is your Friend
When rebuilding your credit, time will be your best friend. The impact of past credit problems lessens with time, so that a late payment from a year ago will have much less weight than a late payment today. Get current and stay current.

#9.5) Protect Your Credit from Identity Theft
As more of our personal information gets circulated via the internet, there’s more room for “bad people” to steal your personal details so that they can make fraudulent purchases in your name. This can be extremely damaging to your credit history. You can protect your credit history from this by paying for a service that can alert you to fraud.

If you have any questions, contact a Dominion Lending Centres mortgage broker near you.

Kelly Hudson
KELLY HUDSON

So your mortgage is renewing this year. What do you do? When you initially shopped for the mortgage you did your best to make sure you received a great rate and great mortgage terms. So why not now? Getting a 2nd opinion about your renewal is very important, especially with all of you new mortgage rules. Our blog today comes from our colleague Chris Cabel.

Enjoy the blog!

HOW TO RENEW YOUR MORTGAGE IN 5 SIMPLE STEPS!

If you have a mortgage, you’ll be completing a mortgage renewal when your current term has finished.
While most Canadians spend a lot of time and expend tons of effort shopping for an initial mortgage, the same is generally not the case when looking at mortgage renewals.

So what is a mortgage renewal?

Mortgages terms are locked in rates that are *over a set term* which can vary from 1-10 years.

About 3 months before the end of your term, your current lender will suddenly become your best friend showering you with attention and trying to entice you with early renewal offers…And the first offer is never their best. It really shows how they value the relationship.
“Please, please sign here on the dotted line to renew… it’s sooo easy!!”

You have 3 options

1. Sign and send back with no alterations or changes (don’t do it, really I mean it… don’t do it!!)
2. Check the market to make sure you are getting the best rate and renegotiate with your current lender
3. Talk to a mortgage expert and together we can discuss the best options available for your situation

Lenders know that 80% of people will sign their renewal forms because it’s fast, easy and convenient. Banks & lenders push this “take it as it is” tactic to borrowers to ensure they make the highest profits to keep their shareholders happy. As an educated consumer, you need to take the time to ensure you are being offered the best possible rate & terms you can get.
Remember all those hours of research you did regarding lenders and mortgage rates when you were buying your first home… don’t forget!
It is true that signing the renewal document is easy, however it is in your best interest to take a more proactive approach. Money in the lenders pocket comes directly out of your pocket.

5 steps to save you money on your mortgage renewal

1. Receive the renewal offer from your current mortgage lender and examine immediately. This gives you enough time to make an informed decision
2. Do your online research about the best current rates for you
3. Call your current lender and negotiate!
4. If your lender will not offer you a better rate then it is time to move your mortgage. You will have to complete a mortgage application and gather applicable documentation just like you did for your original mortgage, but we will help with most of the work!
5. Take a look at your budget and see if you can increase the amount of your mortgage payments. This will eventually save you money by paying off your mortgage faster

Your mortgage is one of your biggest expenses. For this reason, it is so important to find the best interest rates and mortgage terms you possibly can.
As you can tell there is lots to discuss about mortgage renewals. We can help. Contact a Dominion Lending Centres mortgage professional today!

Chris Cabel

This is one of my personal favourite BLOG posts from 2018. When you are in house hunting mode, the though that you may need to break your mortgage is inconceivable. Why would I ever need to break my mortgage, the house we found is perfect!!! Well, life happens. Our colleague Kelly Hudson outlines some very important points to consider. The best advice is to contact a dedicated mortgage professional.

Enjoy the blog!

9 REASONS WHY PEOPLE BREAK THEIR MORTGAGES

Did you know that 60 per cent of people break their mortgage before their mortgage term matures?

Most homeowners are blissfully unaware that when you break your mortgage with your lender, you will incur penalties and those penalties can be painfully expensive.

Many homeowners are so focused on the rate that they are ignorant about the terms of their mortgage.

Is it sensible to save $15/month on a lower interest rate only to find out that, two years down the road you need to break your mortgage and that “safe” 5-year fixed rate could cost you over $20,000 in penalties?

There are a variety of different mortgage choices available. Knowing my 9 reasons for a possible break in your mortgage might help you avoid them (and those troublesome penalties)!

9 reasons why people break their mortgages:

1. Sale and purchase of a home
• If you are considering moving within the next 5 years you need to consider a portable mortgage.
• Not all of mortgages are portable. Some lenders avoid portable mortgages by giving a slightly lower interest rate.
• Please note: when you port a mortgage, you will need to requalify to ensure you can afford the “ported” mortgage based on your current income and any the current mortgage rules.

2. To take equity out
• In the last 3 years many home owners (especially in Vancouver & Toronto) have seen a huge increase in their home values. Some home owners will want to take out the available equity from their homes for investment purposes, such as buying a rental property.

3. To pay off debt
• Life happens, and you may have accumulated some debt. By rolling your debts into your mortgage, you can pay off the debts over a long period of time at a much lower interest rate than credit cards. Now that you are no longer paying the high interest rates on credit cards, it gives you the opportunity to get your finances in order.

4. Cohabitation & marriage & children
• You and your partner decide it’s time to live together… you both have a home and can’t afford to keep both homes, or you both have a no rental clause. The reality is that you have one home too many and may need to sell one of the homes.
• You’re bursting at the seams in your 1-bedroom condo with baby #2 on the way.

5. Relationship/marriage break up
• 43% of Canadian marriages are now expected to end in divorce. When a couple separates, typically the equity in the home will be split between both parties.
• If one partner wants to buy out the other partner, they will need to refinance the home

6. Health challenges & life circumstances
• Major life events such as illness, unemployment, death of a partner (or someone on title), etc. may require the home to be refinanced or even sold.

7. Remove a person from Title
• 20% of parents help their children purchase a home. Once the kids are financially secure and can qualify on their own, many parents want to be removed from Title.
o Some lenders allow parents to be removed from Title with an administration fee & legal fees.
o Other lenders say that changing the people on Title equates to breaking your mortgage – yup… there will be penalties.

8. To save money, with a lower interest rate
• Mortgage interest rates may be lower now than when you originally got your mortgage.
• Work with your mortgage broker to crunch the numbers to see if it’s worthwhile to break your mortgage for the lower interest rate.

9. Pay the mortgage off before the maturity date
• YIPEE – you’ve won the lottery, got an inheritance, scored the world’s best job or some other windfall of cash!! Some people will have the funds to pay off their mortgage early.
• With a good mortgage, you should be able to pay off your mortgage in 5 years, there by avoiding penalties.

Some of these 9 reasons are avoidable, others are not…

Mortgages are complicated… Therefore, you need a mortgage expert!

Give a Dominion Lending Centres mortgage specialist a call and let’s discuss the best mortgage for you, not your bank!

Kelly Hudson

Today’s blog was authored by our colleague David Cooke from Calgary AB. This BLOG is one of the most important informational pieces. Just because your mortgage broker and lender have approved you, doesn’t mean that your mortgage is 100% guaranteed to fund on possession. I hope you enjoy todays blog and please contact me directly with any questions.

5 WAYS YOU CAN KILL YOUR MORTGAGE APPROVAL
So, you found your dream home, negotiated a fair price which was accepted. You supplied all the needed documentation to your mortgage broker and you are waiting for the day that you go to the lawyer’s to sign the final paperwork and pick up the keys.

All of a sudden your broker or the lawyer calls to say that there’s a problem. How could this be? Everything has been signed and conditions have been removed. What many home buyers do not realize is that your financing approval is based on the information the lender was provided at the time of the application. If there have been any changes to your financial situation, the lender is within their rights to cancel your mortgage approval. There are 5 things that can make home financing go sideways.

1 Employment – You were working for ABC company as a clerk for 5 years making $50,000 a year and just before home possession you change jobs. The lender will now ask for proof that probation for this new job is waived and new job letters and pay stubs at the very least. If you change industries they will want to see more proof that you are capable of keeping this job.
If your new job involves overtime or bonuses of any kind that vary over time, they will ask for a 2 year average which you will not be able to provide.
Another item that could ruin your chances of getting the mortgage is if you decide to change from an employee to a self-employed contractor just before possession day. Even though you are in the same industry, your employment status has changed . This is a big deal killer.

2. Debt – A week or two before your possession date, the lender will obtain a copy of your credit report and look for any changes to your debt load. Your approval was based on how much you owed on that particular date. Buying a new car or items for the new home need to be postponed until after possession of your new home.
Don’t be fooled by “Do not pay for 12 months” sales campaigns. You now owe this money regardless of when the payments start. Don’t buy a new car and don’t buy furniture for the new home. This will increase your debt ratio and can nullify your financing.

3. Down payment source – And yet again I reiterate that the approval is based on the initial information you have provided. You will be asked at the lawyer’s office to verify the source of the down payment and if it is different than what the lender has approved, then you may be in trouble. For example, you said that you were going to save the funds and then at the last minute Mom and Dad offer you the funds as a gift. There’s no problem accepting the gift if the lender knows about it in advance and has included this in their risk assessment, but it can end a deal.

4. Credit – Don’t forget to make your regular credit card payments. If your credit score falls due to late payments, this can kill your financing. If you have a high ratio mortgage in place which required CMHC insurance, a lower credit score could mean a withdrawal of their insurance once again , killing the deal.

5-Identity Documents – This can be a deal killer at the lawyer’s office. The lawyer is required to verify your identity documents and see that they match the mortgage documents. Many Canadians use their middle names if they have the same name as their parent. Lots of new Canadians adopt a more Canadian sounding name for their day-to-day lives but their passports and other documents show another name.

Be sure to use your legal name when you apply for a mortgage to avoid this catastrophe . Finally, keep in touch with your Dominion Lending Centres mortgage professional right up to possession day. Make this a happy experience rather than a heartbreaking one.

David Cooke