Help Me Help You

General Pam Pikkert 29 Nov

Help Me Help You with Your Mortgage

 

Dear clients and all good folks. What we as mortgage specialists would like you to know is that we want to get you into that home. We know that once you have placed an offer, you have already mentally hung the pictures and organized the garage.

But here’s the thing. We have to satisfy all conditions from the lender before we can remove the financing condition let alone actually get the mortgage funded. You are our ally in this battle of time and regulations and there are actually things you can do to help us.

 

1. Make sure you let your employer know to expect a call or 2. The lender has to verify the information on the letter of employment so it’s really imperative they get a callback ASAP.

2. Don’t change your financial picture in any way. This can kill your financing approval. Please do not buy a new vehicle or change jobs or increase your credit card balances.

3. If we are asking for something it is because the lender requires it. It is absolutely true that it seems like a ridiculous amount of paperwork, we really do need it just like we asked for. Mortgage fraud by the few bad eggs has wrecked it for the good people. This isn’t any different than security at airports and it’s the actions of a few that have ruined it.

4. It really was easier last time. The government has made major changes year over year and it is probably true that it was easier the last time you purchased but alas that is no longer the case.

5. The onus is on YOU to understand the mortgage. You are the one signing on the dotted line and agreeing to the terms the lender is laying out. Ask questions.

Research. Do what you need to do but remember that you are responsible for the terms so make sure they are reasonable and acceptable.

6. Choose your[PP1]  professional wisely. Referrals are a good start but ask why they are referring you. Do they receive a kick back? Receive foreclosure listings from the lender? Kickbacks take many forms so ask. Why do they recommend A over B?

If the answer is that great service and a thorough explanation of the mortgage then you will likely be happy too.


 [PP1]

How to Get Your Kids out of the House

General Pam Pikkert 29 Nov

How to get Your Kids into Their Own Home and Out of Yours

            When the kids are little and oh so sweet it is hard to imagine ever wanting them to leave the nest but as any parent of a young adult can tell you, this changes.  The comes a point in every parents life where it is time to gently nudge that child out and today we will discuss what they need to know as far as the world of financing is concerned.

  1. Saving money has nothing to do with how much you earn.  If it did then professional athletes would not declare bankruptcy and a fast food worker would have no hope of buying a home.  Saving money is a habit like any other and as such can be learned and cultivated.  If you make the savings an automatic monthly withdrawal then you will never be faced with an excruciating choice between those new shoes or to save.   You will know that the savings have been taken care of so the money that’s left after the bills are paid is yours to do with what you will. Working with a qualified financial planner is a great idea.  These folks will help you set a plan for your short and long term goals
  1. You have to have at least 2 things reporting on your credit bureau.  Your credit bureau is your financial report card.  A prospective lender will use the information to determine if the applicant is a strong candidate for a mortgage.  The keys to a strong credit score are this:
  • Do not exceed 75% of the available credit limit on your credit card but be sure to use it.  Credit cards are not evil.  They are a tool like any other and one you will need to book a trip or shop online.
  • Make all of your payments on time.
  • Cell phones report on your credit bureau so make sure it gets paid.
  • Even if you end up moving around, the onus is on you to pay those bills.  Make sure the utility companies can find you for that last bill after a move.  Consider e-statements as those will follow you.
  • Don’t let too many companies pull your credit.  It can be an indication of financial troubles whereby you are seeking out additional credit to help you pay for the bills you already have.
  1. Consider your expenses carefully.  That amazing F150 truly is fantastic but is it worth having to rent instead of buy?  A large vehicle payment can put your affordability over what is allowable by mortgage lenders. 
  2. Once you have saved the down payment and established your credit then you are ready to look for that perfect home.  But before you get caught up in granite and hardwood and all those other pretty things I would suggest you ask yourself, do I really need all this?  A starter home can be turned into a rental property in a few years very easily.  Think long term and plan wisely.
  3. What about a roommate?  Think of your friends who were not fortunate enough to have read this article.  While they are in the process of establishing their own credit why not have them move in with you as a mortgage helper or savings account booster.    

And there you have it my friends.   A way you can get the kids out of the house and into their own and actually well set up for life down the road.

How To Successfully Kill Your Mortgage Approval

General Pam Pikkert 21 Nov

 

                Here is where you are currently sitting.  You have successfully found your dream home.  Negotiated like a true champion and kept your calm through the back and forth with the seller.  Provided the endless supply of paperwork required by your lender to meet the financing condition. Set up all the things required for the big day like scheduling the myriad of people to come and move your furniture and get your internet and make sure your home is warm and toasty.  And then you get a call from your mortgage specialist to the effect of “Houston, we have a problem.”  This week we are going to look at the most common ways people unwittingly kill their mortgage approval and leave themselves in a lurch.

                First thing to note is this, your financing approval is based on the information the lender was provided at the time of the application.  Any, and I do mean any, changes to your financial picture are grounds for the cancellation of the approval.  It’s actually in the commitment you have signed.

  1. Employment – Not all employment is considered equal by the lender and the insurers like CMHC. Self Employed, commissioned, part time, overtime, and bonus are all examples of income types where we must have a 2 year average to satisfy everyone involved that you will have enough income to support the mortgage. 

For example, Bob accepts a position with a new company after his financing condition is met. He has negotiated well and knows that the income will exceed what he made previously.  The problem is that now Bob will be paid a base plus a bonus component where he was previously salaried.  Until there is a 2 year history, the bonus income cannot be used and the mortgage approval is cancelled.

The other consideration is that most new employment comes with a probationary period which can be up to 1 year.  Lenders will not use probationary employment which will likely lead to a cancellation as well.

A really important thing to note here is that lenders are calling at the time of approval and again just before funding to verify the employment information provided. 

 

  1. Debt – Again, the approval is based on the debt load you had on the day of the mortgage application.   Any changes can cause a cancellation.  The following are the most common:
  • New vehicle – Often comes with a large monthly obligation
  • Do Not pay for 12 months – We know you are eager to fill your new home with furniture and that you don’t have to pay for 12 months but this is a new debt and the lenders have to include a payment for it.
  • Increase to credit card balances – can change your affordability ratios too much

 

 

  1. 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, there are lenders who will allow you to use a line of credit for the down payment.  Not all of them do and even if yours is one of them then the lender is still obligated to inform the mortgage insurer and their investors of the change to the source.   This leaves you at risk at the last minute of your mortgage being declined.    

 

  1. Credit – Even if you do not increase your debt load, you also need to make sure you keep your credit as strong as it was when you were approved.  Make all payments on time. This includes cell phones.  And be careful about allowing anyone to pull your credit.  Too many inquires can be an indication of money troubles as you search for new credit facilities.  You could see a substantial drop to your credit score which can??  You know the answer, kill your mortgage approval.

 

There you have it.  You are now fully aware that your mortgage approval is a delicate thing which requires proper care and keeping during that period between approval and funding.  Make sure you take good care of yours.  Have a great week everyone.