Mortgage Marathon

Tracy Head • August 26, 2024

Getting across the finish line is sometimes more challenging than getting your initial mortgage approval.


Lenders have different processes for evaluating mortgage applications. With some lenders we need to submit all of your supporting documents upfront; others send out the initial approval with a list of what they want to review.


Process-wise I collect all (or most) of my clients’ documents before I ever submit for an approval. This means we can be flexible when choosing which lender we are going to work with. In some cases when I know it will be a few days before the client is able to provide everything I will work with a lender that sends out their approval then asks for the documents.


There are pros and cons to both lender processes.


For the lenders that need everything upfront, in an ideal situation their approval arrives with very few additional document requests. This feels smoothest for our clients.


Lenders that issue an approval without reviewing all documents are great to work with when we are in a time crunch. If I am pretty confident of the information my clients have provided verbally but am just waiting on certain documents (ie: a T4 or bank statements) I will often use these lenders to make sure we stay on track to meet deadlines like our subject removal for financing.


Sometimes, even after working with clients for months, surprises pop up.


This week felt like a game of Whack-A-Mole dealing with just such surprises on several of my files.

First surprise: my client has a credit score in the high 800s (900 is the highest available) and has been with the same employer for over fifteen years. She is putting down 50 per cent of the cost of her home from savings. A beautiful application all the way around.


Our approval came back requiring confirmation that her cell phone bill has been paid in full. Apparently her Transunion credit report shows she is in arrears with her cell bill.


The back story was that her employer had sent her out to work one of the active fires and she was putting in long exhausting days so it was an oversight.

 

In view of the application I felt this was an absurd ask but the lender would not budge on it. My client was very unhappy being asked to provide this as the mortgage application was with her bank.


Another challenge was after working with clients for almost a year on their preapproval (and having reviewed their credit history ten months ago) they finally had an accepted offer. We pulled their credit history to update their application. There was now an outstanding collection that had not been there before. It was for an old student loan that they assumed had finally gone away.


Even trying to verify basic information can seem daunting. As a prime example, CRA has changed the format of the T4s that clients can pull from their My Account portal. The T4s no longer include the clients’ names. To pull from My Account clients need to do a screen shot that includes their name on the portal. This can be a royal pain for clients to access the information in a format that lenders require.


All this to be said that lately many clients have been frustrated by some of the document requests we are making. From my perspective, if we are asking to borrow hundreds of thousands of dollars I appreciate that lenders are doing their due diligence. Identity fraud and mortgage fraud are out there and in the long run cost us all money.


If you are finding yourself a bit frustrated with the process you are not alone.

There are days where I put on my helmet and flak jacket before reaching out to clients for yet another document. This week there were five days. 


Then there are the days when a particularly challenging mortgage finalizes and my clients now have keys to their dream home. Today is just such a day, and days like this remind me that persistence is worth it in the long run.

Tracy Head

Mortgage Broker

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Mitigating Mortgage Moments

By Tracy Head • February 7, 2025
This week I had a panicked call from a realtor I work with on a regular basis. One of her sellers had a sale that looked like it was going to collapse. He was counting on the sale of that home for the down payment of his next home. She called mid-day Wednesday. The sale was supposed to complete on Friday. She asked if I could talk to the purchaser and potentially arrange financing for her. Before you read the next part, this is not intended to single out any particular bank or mortgage person. It could just as easily be a mortgage broker or a branch employee. The back story is that the purchaser had been working with a mortgage specialist from one of the chartered banks since mid-December. The specialist gave the client the go-ahead to remove her financing subject January 17th. The specialist then said they needed to extend the closing date by a week. Then by another week. Then she told the client she would have to come up with twenty per cent for her down payment. The client scrambled and came up with the additional money needed for her financing to be approved. I might not have believed this story except I did see the email chain. So what actually happened? My guess is that the mortgage specialist did not have an approval in place with the insurer or her bank when she gave the client the ok to remove her financing. The client had not seen nor signed any mortgage paperwork before removing her financing subject; she was trusting that her mortgage person had things well in hand being as she was told she was approved and things were fine. The buyer in this case is a first-time home buyer and did not know any different. I have pulled off the odd miracle in my days but I had serious doubts about being able to help this client in one day, especially being as she was buying in a smaller remote community so we had fewer options. We were working on her application and 6:00 pm Wednesday evening had word that the bank she was originally working with had come through and would be sending mortgage instructions to the lawyer the following morning (we are now at the day prior to closing). When you are purchasing a home and applying for mortgage financing, I feel it is so important to work with a team of professionals that have your back. As someone who has never bought a home before or maybe hasn’t done so in many years its important to do your homework and understand the process. If you think things are going sideways with your financing please make sure you ask questions to better understand what’s happening. If you have a feeling that something is really wrong, don’t wait until you have no other options. When you choose a mortgage professional to work with (and realtor for that matter) do a bit of homework. Ask your friends who they have used and what their experience was like.  Buying a home is stressful enough on a good day, but what this poor client has been through could have been avoided had she had a better idea of what the home-buying process was supposed to look like.

Private Lenders

By Tracy Head • January 24, 2025
The easy fix isn’t always the right fix. I’ve been wondering how long it would take to see the fallout as clients who have been paying really low interest rates come up for renewal. We have all experienced a steep increase in the cost of living. Even though rates now are sitting where most clients qualified with the stress test when they originally got their mortgages, for many people life has happened in the meantime. What do I mean by that? Often clients are having to push right to the top of what they qualify for just to get into the housing market. As we are going through the mortgage approval process we talk about keeping big consumer purchases (financing a car or furniture as an example) to a minimum as additional loan payments reduce borrowing power. Once clients are into a home life does indeed happen. The older car dies and a new car is necessary. Little ones come along and that can affect family income and add a daycare bill to the bottom line. Property taxes increase. Grocery prices skyrocket. You know the list. Balances start creeping up on credit cards or lines of credit. There are lots of different mortgage products to help with consolidation of debt. Lately the challenge has been that even if clients have significant equity in their homes with the increased interest rates they may not qualify with traditional lenders. Alternative lenders and private lenders come into play as options in this case. I’ll leave the alternative lenders to another day because I have a cautionary tale about private lenders. Not all private lenders are created equal. I have several that I work with when my clients need a solution in the private world. There is a time and a place where a private mortgage is the ideal fit. As long as you have an exit strategy (a plan as to how it will be paid out in a relatively short time frame ie: one year) this can be a great option for clients. Then there is the private lender that hurts my heart. Heavy catchy marketing bombards us from multiple venues. Their jingle is running through my head as I write this. For them the bottom line is that if you have adequate equity in your home you are approved. Cool. That fixes the immediate problem. However, more times than I like to think about, this lender creates far bigger problems for people. Despite the fact that you have equity in your home you still have to make the payments on these private mortgages. Interest rates are usually around the 14% mark so payments are high and you are not making any headway with paying down the mortgage. If there is no significant increase in your income you struggle and find yourself in a financial bind again. They set up another mortgage with an even higher rate. When you sign on for a private mortgage your are responsible for covering your legal fees, the lender’s legal fees, and there is also a lender fee that is included. Even a small private mortgage can end up costing almost $10,000 to put in place. If you couldn’t cover expenses with your first mortgage (at reasonable rates) guess what happens when you start adding in more and bigger payments on top of your normal expenses? For most people the only out at this point is selling their home. That is a very hard conversation for me to have with clients, especially when they’ve been in their home for many years. If you are finding that there is more month than money, sitting down and reviewing your expenses is the first step to take. Are there any areas that you are able to cut back? Do you have any options for increasing your income?  If the answer is no, talking to a mortgage professional sooner rather than later may help identify some options before you end up in a never-ending cycle of sleepless nights and missed payments.
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