As an independent mortgage broker, I can tell you we think a lot about underwriting standards and about matching the client with a lender and loan that suits their needs. Real estate agents focus more on helping the client compare properties, making a clean offer, negotiating the best price and so on.
Because clients generally spend more time with their realtors, finance related questions do come up. Sometimes when a client asks their agent a question that’s more suited to a broker (or vice versa), it can lead to confusion. I have put together some mortgage financing tips for real estate agents to help steer their clients in the right direction and smooth out the process.
Even move-up buyers should get a mortgage pre-approval
Almost all of the first-time buyers I work with get pre-approved so they know how much they can afford to spend on their new home. But not all realtors encourage move-up buyers to seek pre-approval, and I think they should.
The situation may have changed from the time their clients originally took out a mortgage. Even if they’ve built up a lot of equity, it may not help the buyer if their income or credit is not aligned with the price of the property they hope to buy. In some cases, a client may have qualified for their first mortgage under the ‘new to Canada’ program or under the ‘net worth program’ (where your income doesn’t qualify you but you demonstrate significant enough assets to qualify).
Perhaps the program is no longer available or they do not qualify. Oftentimes, people who have qualified for a mortgage at one time are surprised by new and current restrictions and underwriting standards. For this reason, real estate agents should encourage their clients to speak with a mortgage broker even if the client thinks they already know the ropes.
This can help avoid surprises or disappointment further down the line and save time for agents and their clients.
Advertised rates aren’t always available.
Some realtors encourage their clients to shop around for rates at the last minute or promise mortgage interest rates to clients that they have seen online. This can often lead to frustration because not everyone will qualify for those advertised, ultra-low promo rates and there may be additional stipulations such as a quick closing or mortgage insurance.
That’s why I personally don’t promise rates until I have a completed application and all supporting documents. No two files are the same, so it’s best not to promise something over which we have no control.
Organized paperwork helps with financing.
With a usual seven-day subject period, the more documents we have upfront the better. I love it when an agent has strata council minutes, depreciation reports, warranties, etc. ready even before a lender requests it. Having paperwork organized and ready reduces back and forth confusion between lenders, brokers, clients and agents and ensures an on time closing.
Not all lenders will ask for minutes, but if a building has been flagged before (maybe for rain screening or new roof), the documents should be gathered in advance. Ask the listing agent for the certificate of completion, warranty and other documents as appropriate.
If an issue has come up in the minutes and you have specific information, please explain it to your broker so they can relay the information to the lender. Collaborating to get an appraisal done on time (if required) can also help smooth the closing process.
Some properties are tougher to finance than others.
Micro-units are trendy but not all lenders will finance them. Other types of properties, such as high-end rentals, self-managed buildings and homes in rural areas can also be tougher to finance, so clients and agents should be aware and maybe allow a longer subject removal period. Another issue that can potentially complicate financing is if the building is undergoing remediation.
In-progress remediation that is paid for might not be a problem with some lenders, but the majority of lenders won’t lend until a major remediation is completed. In all tougher to finance cases, clients should make their offer contingent on securing financing and keep in mind that they may not be able to shop around and compare.
Real estate agents, what do you wish mortgage brokers knew about your jobs? I’d love to hear the other side of this story, so please comment and let us know.
Atrina Kouroshnia is an independently licensed mortgage broker in the province of British Columbia. She specializes in helping first-time home buyers invest in their future through the purchase of their first home. For more information visit MortgagesByAtrina.com or email [email protected].