Whether you’re looking to buy your first home or refinancing your rental property, the mortgage landscape is far different than it used to be due to all of the mortgage changes.
Based on many years of mortgage underwriting experience while working with the banks for 20 years and as a Mortgage Broker for the last 15, I am now seeing more than ever many mortgage applicants who have been declined by one lender only to be approved by a different one.
Mortgage brokers negotiate with many different lenders on behalf of borrowers, so they know the different rules and guidelines of each lender. This includes offerings available through banks, credit unions, mortgage companies and trust companies, as well as alternate and private lenders. As a result, there is more choice for you as well as better access to a product and rate that will meet your specific mortgage requirements.
Here are just a few differences I have recently seen that distinguishes one lender from another:
o I have an application that I am working on right now and the borrowers are a bit over their maximum debt servicing limit. They don’t have any additional cash to put down but they are paid the Child Tax Credit each month for their 2 kids that are under 15 years old.
§ Solution - I just got them approved with a lender who will include that type of income in meeting debt servicing requirements
o A client pays spousal and child support each month totalling $1100. When I included this payment under total debts along with his car payment, the debt servicing was too high.
§ Solution - I took him through a lender who will allow that $1100 per month to be deducted from his income which meant his gross debt servicing is now under 44% which meets the lenders guidelines.
o The borrowers buying a home to owner occupy have decided to keep their current residence and turn it into a rental property. They went to their bank who told them, even including rental income, they can’t meet the debt servicing guidelines.
§ Solution - I got them approved with a lender that recognizes 80% of that rental income instead of just 50%
o Self-employed clients often do not take out significant personal income from their businesses if they don’t need it just to pay higher income taxes. This means a good number of business owners don’t qualify at the purchase price they would like to buy at.
§ Solution - I can work with a lender who will allow “addbacks” to the borrower’s income. Eligible addbacks can be business use of home, amortization/depreciation and capital cost allowance.
o I had a common-law couple apply for a mortgage and his credit was not good so he couldn’t be on the mortgage. Her income was high enough to buy the home in her name only, however, he is the one who had been saving the down payment funds in an investment that was under his name only. Their bank told them the “gift” funds could only come from a close family member and they did not consider the common-law spouse as a close family member.
§ Solution - Took them through a lender who allows “spousal” gifts
o A client came to me who wanted to refinance his current mortgage at renewal to pay off some credit card debts. His credit report showed one credit card that was $10 over limit so his credit score had gone down to 665 and his mortgage holder declined him because their minimum credit score requirement for refinances is 680.
§ Solution - I took him through a lender who will refinance for people with credit scores as low as 620 and the rate was actually lower than what his current lender had available
o I just completed a deal that involved a home, garage and 160 acres of land. Clients had gone to their bank first and their bank said they could only value 15 acres. Client had 5% down payment. Clients were declined by their bank as they did not have enough down payment when using only 15 acres of land.
§ Solution- I used a lender that valued the home, garage and all 160 acres. Client only needed 5% down payment.
If
one of these situations sounds like what you are experiencing then contact Kevin Mroczek today and put his 30 plus years of experience to work for you. Call my office - 780-675-5821, My cellphone - 780-213-2799 or email - kevin@mortgagegrp.com.