Top 10 Mortgage Mistakes.
Now, when applying for a mortgage,
having a strong application and reducing mistakes can really mean the difference
of getting approved or denied for your dream home. As a mortgage broker,
since 2009, I've seen a lot of people shoot themselves in the foot.
And the worst part is it's all preventable.
You just need to be aware of these things. So that is my goal today.
And if you happen to know someone who's looking to buy,
please share this video with them so that they can put themselves in the best
position possible to get approved for a mortgage.
Now there's no particular order of importance, except for mistake 1 - 3,
which I will mention near the end of the video.
So make sure you stick around for that.
Mortgage mistake Number 10 - Switching jobs while you're approved.
Now, when you switch jobs for most people,
you'll be on a probationary period of three months and the lenders will not
forward mortgage funds to you. Now,
if you're a contract worker and or you're self employed,
then you need to provide a two year tax history. Now,
if you do switch jobs after getting approved and before you take possession,
the lender will likely cancel your approval.
And if you already waived conditions,
then you risk losing your deposit mortgage mistake. Number nine,
taking on more debt after getting approved.
Now make sure you don't finance or lease a car or buy furniture or big ticket
items until after you take possession. Why?
Because your debt service ratios,
meaning if you increase your debt and you no longer qualify because of that
debt, your lender will cancel your approval.
Now, some people will be okay if you're not maxing on your budget,
but you have to make sure that you consult your mortgage broker first before
doing any of that mortgage mistake. Number eight, getting a loan from a friend.
Now, unfortunately this is not an acceptable form of a down payment.
How will gifts from immediate family members are? Now,
if there's a larger amount,
know that the lender may ask for the source of funds,
meaning they might ask the gifter for a statement showing the
money that's going to be gifted coming out of their account. And of course you,
as the Bo for you to provide a statement, showing the money,
going into your account,
a gift letter will be needed to be filled out both from the gifter
and the borrower.
And just know that sometimes the lender may call the gifter
just to do a verbal confirmation, to confirm the gift letter mortgage,
miss stake, number seven, underestimating the costs of home ownership.
Buying a home is exciting,
but you shouldn't have to sacrifice too much of your lifestyle.
You still wanna be able to go and travel,
go out with friends and buy the things you need.
So make sure you understand the cost of home ownership, mortgage mistake,
number six, missing credit card or loan payments.
Now late or missed payments,
actually stay on your credit report for seven years.
So there's no excuses to miss your financial obligations.
You have your credit report shows how financially responsible you are.
And if you're last, if you're asking to borrow money,
you better make sure your credit score is in tip top shape.
Also never ignore your credit history or your score or not
check your credit score. If you want to know what is on a credit score,
what upper credit score or anything related to that? Check out my video here,
mortgage mistake. Number five,
being out of the country around your possession time. Now,
obviously it's best. If you are able to attend your lawyer appointment,
which happens up to two weeks before possession,
if you need to be out of the country, then you need to check with your,
to see if where you're going.
You're allowed to sign the lawyer documents in front of a notary.
If that's the case,
you will need to courier the original signed documents to your
lawyer. So make sure you plan for that worst case.
See if the lender is okay with a power of attorney,
just although that not all lenders will allow that.
So make sure you ask them mortgage mistake. Number four,
not having your documents ready now.
Good mortgage brokers will ask for documentation upfront to verify all the
information on the application so that it's correct condition dates can be
very short, especially in a low inventory market like ours.
And the conditional period is the most stressful part.
You have to get documents and there's a due date for it.
So make sure you're proactive versus reactive.
And you're gonna be in a good position. Now for the top three,
most detrimental mistakes. You can make mortgage mistake.
Number three, looking for a home before getting a preapproval.
Now this is the most common mistake. Why?
Because if you don't know how much you can qualify for how do you know what your
budget's going to be?
And the worst part is you're gonna end up setting your expectations much higher.
And when you go and apply for your mortgage, if you don't qualify,
then you're gonna have to settle for a much less purchase price.
Now, if you do that, you might not get the location you want.
You're not gonna get the finishings you want or the features you want.
And it's just gonna end up ruining experience. So make sure you get a,
pre-approval do that first step, right?
So that you're positioning yourself for success.
When you get approved mortgage mistake, number two,
assuming all mortgage products, lenders,
and terms are the same, or you're blinded by rate.
Now just like in life, you get what you pay for.
And mortgages are no different.
Now a study from TD came out and said that 70% of homeowners
moved from their earlier than expected.
Now there is something called the pay penalty and your mortgage is really
a contract. And if you break that contract, well,
there's a penalty rate is important,
but you shouldn't be your driving decision to choose a lender for fixed rate
mortgages.
Your pay penalty is the greater three months interest or the interest rate
differential for variable rates. It's three months interest,
a lender that provides a much lower rate than the rest of the market
could have a pay penalty of 3%.
Now I wanna compare what a 3% pay penalty is versus a variable rate,
three months interest. Okay. As an example,
let's just say we had a $300,000 mortgage,
three months interest on that is $1,160,
but 3% of 300 is $9,000.
About eight times more.
Another restriction could be refinancing where the rules are.
You have to refinance with the same lender. As an example,
I had a friend who went with a, a lender with a much lower rate,
despite my advice who wanted to refinance our home a few years later,
but they could only do that with the current lender and was at the mercy of
their high rates, mortgage mistake, number one,
not getting a pre-approval. Now, if you don't get a pre-approval,
how do you know how much you can qualify for? And what do you can't even,
you won't even know your budget pre-approvals are free and they don't take up
much time. They act as an insurance policy because they protect you.
If rates go up and if rates go down, I mean,
in today's more probably won't happen. You'll get the benefit of the lower rate.
Now it's important to know that a preapproval does not guarantee mortgage funds,
but make sure that you submit to your mortgage broker, all your documents.
So for example, your pay stub your job letter, your tax returns,
your mortgage statements, anything that they've asked for,
make sure you give it to them upfront, along with your application.
So they can verify all that information and make sure that you have a higher
chance of getting approved when the time comes.
So that sums up the most common mortgage mistakes.
My team and I have witnessed over the decade of being in the industry.
Now, if you're looking for mortgage services,
my team can service a big part of Canada.
So whether you're in BC or Ontario,
buying properties in those provinces, my team can still help you.
My name is Felix Chan,
realtor and mortgage broker with a live inner city real estate team,
helping you keep real estate simple. And we'll see you in the next video.