Renewal Options

Tracy Head • Jan 26, 2024

It feels like I’m harping on the subject of mortgage renewals, and that may well be the case.


Many of my conversations with clients right now are deep dives into renewal options.


One of my calls this week really struck me. I was talking to Jim (name changed of course), a new client whose mortgage is currently with one of the big banks.


After we worked through the initial questions I start with, he shared that the renewal department of his current bank had started calling him in December. His mother had just had a stroke and he was at the hospital with her.


He tried to tell the renewal officer that it was a bad time. The person calling kept pushing him to commit to locking into a 5 year fixed term for his renewal and told him this ”great rate” would not be available if he didn’t commit that day.


He hung up. The renewal officer called repeatedly, sometimes up to three times per day.


Once I had a better idea of Jim’s situation and plans for the future we chatted about options for him.


As it turns out, he is on the home stretch towards having his mortgage paid out. More important is his plan to retire in three years, sell this home, and move to a smaller home that he already owns in the Oliver area.


He had no idea that he could even choose a three-year term. He has always gone with a five-year term thinking that was his only option.


We played with some figures to see how he could pay his mortgage off within his three-year plan. In his case, he will be staying with his current lender because that makes the most sense given his timeframe to retire and sell his home.


The eye-opening takeaway for me was the high-pressure sales tactic used by the renewal officer. Not all banks nor renewal officers operate the same way, but they often don’t take the time to get to know the clients they are working with never mind offer them options and solutions with the clients’ needs in mind.


If you have a mortgage renewal coming up over the next few months I encourage you to reach out to a mortgage professional to look into your options. Your renewal is the best time to make changes to your mortgage so it is important to invest some time to make sure you make the decision that is best for you, not your bank.

Tracy Head

Mortgage Broker

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Procrastination

By Tracy Head • 19 Apr, 2024
This morning I was up with the birds (literally) and really wanted to sleep a bit longer. I decided to listen to a podcast rather than get up. The podcast, ironically, was about procrastination.  Her general message was that procrastinating often makes us feel bad. There are things we want to accomplish or feel we should do but we choose the immediate gratification / dopamine hit of time in front of the TV or mindless scrolling (or more time in bed) rather than the satisfaction that comes with achieving our larger goals and dreams. She talked about procrastinating with both our actions and making decisions. The irony that I was listening to the podcast rather than getting up and tackling my day was not lost on me. There were a few comments the podcaster made that struck home. Making a decision, any decision, is better than no decision. Human nature (for many of us) is that when facing a tough decision we freeze. We over-analyze the “what-ifs” and potential outcomes. We worry about what others may think of our choices. We may not even know what our options are. While procrastinating opportunities are lost or we dig ourselves in a bit deeper. The last year in particular has been challenging with higher interest rates and a steadily increasing cost of living. Many families are struggling to cover their bills and put food on the table. I’ve written columns before about how if you have equity in your home it might be wise to consider a consolidation of your consumer debt to free up cash flow. Making lifestyle changes can be easier said than done. I believe that staying the course and getting your mortgage paid off as soon as possible is always the best plan, but there comes a time when you also need to look at how your finances are affecting your physical and mental health. When we get behind with our bills or are teetering on the edge of not being able to cover everything this month we are also concerned about what people might think. We are worried about a call from our creditors asking for a payment. We project a certain lifestyle and feel the pressure to maintain this even though we can’t actually afford it right now. We lose sleep at night thinking about the “what-ifs”. If you are in this situation and have equity in your home, I encourage you to take action to explore your options sooner rather than later. I have worked with clients who have never missed a payment ever but their credit scores were in the 500 range (not good) because they are over-extended and maxed out on multiple loans, credit cards and / or credit lines. Had they reached out sooner we would have had more options to help them with a fresh start. This doesn’t mean we can’t find options, but there are certainly more available when credit scores are higher. As a rule I don’t get into the discussion of why you would work with a mortgage broker versus a bank but this is one of those times. I do place many of my clients with chartered banks when that is the right fit. When you approach your bank your situation might not be a fit for their lending guidelines. They may tell you they are not able to help you and that you will have to sell your home or look at a consumer proposal or bankruptcy. Selling your home may be the right answer, but before you jump to that place take a look at other options. Pick up the phone. Don’t procrastinate. If you are working with a mortgage broker they are able to explore multiple lenders and programs to help you try to find a solution to put you on the right track sooner rather than later.

Mortgage Puzzles

By Tracy Head • 08 Apr, 2024
I’ve written about mortgage documentation in several columns over the years. This week I had an interesting call with several of my colleagues about trends we are seeing in the mortgage world around paperwork right now.  There are people who think that mortgage brokers are able to cut corners and have an easier time getting a mortgage approved. Ironically, I believe we are held to a higher standard which sometimes translates to frustration for clients as we are doing our due diligence with document collection. When starting with new clients part of my conversation includes an overview of the documents we will need as well as an explanation of why. This conversation also includes a bit of an apology because I know how challenging this process can sometimes be. “My bank has never asked for that” is something I hear often. What clients don’t consider is that their bank has a full historical view of their day to day banking as opposed to new lenders who are just being introduced to these clients. If you were asked to lend someone half a million dollars would you do it on a handshake? Would you assume they will repay you in a timely manner (as agreed) because they seem like good people? Likely no to both questions. That’s one part of the puzzle. The other piece to the puzzle is the increasing trend of fraud in the mortgage world. From my perspective, my reputation and livelihood are too important to entertain clients that I suspect are not quite as they appear. I explain I am very particular about gathering documents upfront to make sure we are not going to run into any unexpected or unpleasant surprises. From time to time we come across documents that are glaringly obvious attempts at fraud. With today’s technology fictitious documents are becoming easier to create and harder to detect. As brokers we represent both our clients and the lenders we are placing their mortgage with. I discovered fraudulent documents on one of my files recently and cancelled the application and notified the lender. My (ex) client was very very angry. He didn’t see what the big deal was. He went to a local branch and his mortgage was approved. Where is the harm? If part of the fraud includes income documents, will this client actually be able to make his mortgage payments down the road? Because he did have a substantial down payment relative to his income, does he have a sideline that isn’t declared or legal? I absolutely agree that collecting the required documents for your mortgage can seem frustrating, and you may question why your mortgage person is asking for the weird and wonderful collection of paperwork they are asking for. Or you may question why they are asking for more and more paperwork. Please understand that these requests are coming from the lender and we are doing our best as the middleman to help ease the process for you. Lenders want to be confident that they are making solid decisions with their approvals and are doing their best to prevent mortgage fraud.
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