Verifying and Understanding Mortgages.

What will be your requirements for maintaining a mortgage?

The toughest part of this exercise is knowing and comprehending that for the next 25 years, you will be paying money to the banks, trust companies, mortgage providers or whoever gives you money to buy a property. That is not quite the right word here, the operative word is "LEND" you the money to buy a property. If you analyze the consequences, you will understand the best way to approach mortgages for you specific needs. Trying to develop a strategy before you sign on the dotted line gives you the comfort of knowing that there will be no surprises down the road.

Shop around

I have been dealing with mortgage officers for years. There are some that are wonderful, knowledgeable and compassionate.
These are the people that I tend to use over and over again, because they can very quickly determine the quality of the application and give approval in a very short space of time.
The biggest difficulty when applying for a mortgage is getting the right information to these people in a timely fashion.
They need as much information as you can give them!
Dribbling information in a bit at a time does not make for good relationships with your mortgage officer.
In a minute, I will give you a list of what you should have available to present to these people.

Play the game

If you are together with your paperwork, then the person you are dealing with is positive-
"Great! These people are a good risk. They know what they want and they know what they need to do. This is a good risk for us.!"
Scatter things around and the person thinks, "Hm! this person is "flaky", doesn't have a clue. Should I take a chance here?? This may not be a good risk for us??".

What you need for the mortgage officer

  • Income statements
  • T4's
  • Letters of Employment
  • Bank statements showing money available for purchasing such as:
  • Cash Funds
  • Investment Certificates
  • Bonds
  • RRSP's

Money from relatives.

There is a special way of dealing with this one.

Money from relatives can be considered income or it can be considered a repayable loan. Depending on the mortgage officer and or CMHC, they can say to you - This is a gift from your relatives and therefore it is taxable! OR This is money from your parents that you will have to pay back, so we will deduct a portion of your GDS to accommodate you paying back the money to your parents. So right away, this will reduce your GDS.
If you get a letter from your relatives stating that -- "this is a demand loan without interest and repayable only on the sale of the property," -- then they cannot add it to your GDS and therefore, will have to consider it as legitimate down payment.

Outstanding Debt

Credit Card Numbers and balances, (all credit cards), outstanding loans or payment plans.

Keep in Mind

Not everyone has all of the above. Most people have about half. The one thing to remember is that when you are getting ready to go to the bank or mortgage provider, have as much as you can. This can expedite matters. Understand that most mortgage officers have the right to approve a conventional mortgage up to about $200,000.00 without having to go to the head office for approval. If things are good, it just means a walk to the manager's office to have him/her approve the commitment to give you the mortgage money when needed. REMEMBER to get a written commitment. Verbal commitments are useless!!

Be careful

What you do not want to do is give the person any information that can be misleading. If you say to them that you have $15,000 in the savings account and then they check and find that you only have $5.000, watch out that will bring everything to a standstill and the officer at the institution will check everything!! Probably right down to the fine print on your underwear label! In most cases, you have just given the wrong figure, But, the institutional person will become defensive and dig a little deeper to check on you.

Good Luck!