Posted in In the last few years, this is slowly becoming a huge problem. Just last week in fact, I received a panic call from a potential client one day before the financing condition on his house was set to expire. He had gone to his bank (one of the big 5) and received a 'pre-approval' from a branch rep but was now having trouble getting approval on a real deal.
After speaking with him for less than 5 minutes and reviewing his credit report, it was not hard to see what had happened. Based on the limited credit depth and a few recent blips, there was no way CMHC or any other mortgage insurer was going to approve the deal with only 5% down. Sadly he had to walk away from the deal. I was able to show him what needed to be done to get to the point of being able to get approved, but this would be a process that would take months and not days.
A preapproval is only an indication that you would qualify to be able to debt service a certain amount of mortgage. It also can lock in a rate for a certain number of days. It does not mean your income, credit or down payment has been properly vetted, or that a high ratio insurer will approve a real deal. This is where I can offer something beyond what you will receive at a bank, as you should know exactly what you will be approved for before you even look at one house with a real estate agent. Part of this comes from over 20 years experience, part comes from being very familiar with exactly what CMHC will and won't approve at any given time, and part is being realistic with your clients. Far too often people are afraid to say no at banks.......
If you are looking for pragmatic mortgage advice (not to mention great rates), please give me a call at (613)394-5810 or send me a message.
