N1412P47004HASK A REALTOR MARCH ISSUE 2017 | Evernote Web

Our Bank gave us a mortgage pre-approval to purchase an investment property with 25 per cent down in November and then refused to finance the home we bought with a finance condition unless we increased the down payment by another 15 per cent, what else can we do?

In this competitive market homes are selling in a blink of an eye and many Buyer’s are making their offers without conditions like financing.  The question above that a colleague received is a great example of just how important the financing condition can become if lenders tighten their lending controls and policies after pre-approval has been granted.

If the Lender the Buyer’s use refuses the financing as per the pre-approval, then the sale would fall through and a mutual release would be signed by all parties and then the deposit would be released by the Selling Brokerage.  In some cases the bank may be willing to grant the mortgage on the condition of appraisal.  In these highly competitive markets the appraisal may come back showing the home has less value than the purchase price.  What Buyers need to keep in mind is that the bank may not be the only source for approval and supply of financing.  Second opinions are crucial before you buy any home as each bank has a different matrix of products, rates and client solutions.  Some big bank lenders work in conjunction with B lenders, some honour longer mortgage amortization periods.  Some Mortgage Brokers also have a host of lending solutions including private lenders they can act with immediately to help the sale survive this conditional status and close.

CMHC Canadian Mortgage and Housing Corporation the largest insurer of mortgages in Canada once again raised rates effective March 1st, 2017.  Other lenders also increased expectations and guidelines before lending and these parameters are not to be taken personally.  Investors and first time home buyers are two groups that have felt the changes more so than the repeat buyers. Home values have risen so sharply in such a short period of time that the risk ratio for lenders and insurers needed to be readdressed now while the market is strong instead of later when the market corrects itself.

Another important tip is to cease all unnecessary spending once pre-approved because again that new car, exotic vacation or shopping spree could also result in rejected financing.  The more you prepare with your Accredited Buyer’s Specialist ABR® in advance of the action you take to purchase real estate  the better.  Be proactive and anticipatory of all angles and obstacles when it comes to financing, home values, competition and your choices in lenders and you will feel more empowered instead of disappointed.

– written by Connie Power

Connie Power is a Real Estate Sales Representative SRS® ABR® SRES®, Mentors and Develops New Real Estate Sales Representatives for RE/MAX Hallmark York Group Realty Ltd.,  Brokerage serving York region and beyond.

Empowering you in Real Estate, Call Connie today to be proactive about your next move. (905) 726-0856.

**INVITATION TO A HOME BUYER STRATEGY SESSION on May 30th, 2017 at RE/MAX Hallmark York Group Realty Ltd., Brokerage Location: 15004 Yonge Street; Aurora from 7-9pm hosted by Connie Power and Darren Plumb to answer your Buyer and Seller questions in this competitive 2017 market.  Call to reserve your spot now.  (905) 727.1941


**Not intended to solicit those currently under a real estate contract