4 Weird Things Lenders Ask For

Blog Posts David Cooke 25 Jul

A number of times I have had people who wonder why they need to provide so much documentation when it comes to arranging a mortgage. Besides an employment letter, you are usually asked to provide a pay stub and your most recent Notice of Assessment (NOA) to prove income. “Why do they need all 3, doesn’t the employment letter satisfy this condition?” I am often asked. No, is the short answer.

A pay stub shows your current income and shows how much you have made year to date. This will also show overtime or any special allowances you receive such as a northern living allowance. This confirms or sometimes does not agree with your employment letter. The employment letter shows what you are going to make this year and your NOA shows what you made in the past. It also shows that you do not owe taxes to the government. This is important to lenders because they don’t want the government to put a lien on your property ahead of their mortgage claim on title.

Your realtor will provide an offer to purchase and sale agreement, so why do they ask for a MLS listing sheet? While the purchase agreement shows the financial agreement and what is included with the house, the MLS describes the size of the house and lot as well as the amount paid for municipal taxes and the size of each room. This allows the lender to establish whether you have a fair market price for your new home.

Finally, a lender will ask for a 90-day bank statement to show your down payment money. The reason they ask for this is due to Canadian money laundering laws which need to show the source for all funds and that you have been saving the funds over the past 3 months. If you get an inheritance, you will need to show documentation that this is the source of your sudden wealth.
Be sure to contact your local Dominion Lending Centres mortgage professional before making an offer on a home. He/She can tell you exactly what documents you will need in advance and make the home buying process go much easier.

 

Millionaires and real state

Blog Posts David Cooke 5 Jul

Andrew Carnagie was one of the richest men in America over 100 years ago. Today his wealth would be worth $4.6 billion dollars. He was a shrewd businessman. While he made most of his money in oil and iron, he understood the value and importance of real estate in building wealth.

Leveraging your money is the key. Leveraging is using someone else’s capital to make a larger purchase. Let’s say you have money to buy a house. You have 2 options:
1- You can use your $100,000 cash and buy a home for this amount free and clear.
2- You can use your $100,000 as a 20% down payment and borrow the rest and buy a $500,000 home.

A year later, if house values have gone up by 5%, a very reasonable amount for many Canadian cities and towns, what would you have?
If you took Option 1, you would have made $5,000 or a 5% return on your money. If you took Option 2 you would now have made $25,000 on your house purchase.
If you are like most Canadians, you don’t have $100,000. You can get into a home with only 5% down. Purchase a $300,000 home with a 5% down payment or $15,000. After a year, with property values going up by 5%, your house is now worth $315,000. You have made a 100% return on your money! Now you can see why people invest in real estate as soon as they can.

Are there any downsides to buying a home as an investment? Yes, if the main industry in your town is announcing layoffs, houses on the market could drop in price and wipe out your profit. But let’s face it, by buying a home you are making yourself your landlord. When you pay your mortgage balance down you are paying yourself. It’s like forced savings. You have to pay the mortgage, so you are forced to save for the future. If you were paying rent, you pay a similar amount of money what do you get in the end besides your damage deposit back? Nothing. We are not all going to become millionaires but we can become wealthier. It’s within the grasp of most Canadians to become homeowners.

If you are considering purchasing a home, be sure to speak to your favourite Dominion Lending Centres mortgage professional first to discuss what’s best for you.

We can fix your credit problems

Blog Posts David Cooke 3 Jul

Many people do not realize that Dominion Lending Centres mortgage professionals can help you with your credit and get you to a point where you will qualify for a mortgage. We have been doing this for years.

New to Canada or Just Graduated – both of these groups of people have the same problem. They have little or no established credit so lenders are hesitant to lend them hundreds of thousands of dollars to buy a home without a track record. Your DLC mortgage professional can get you a Dominion credit card. You should get a $1,500 limit as that’s the magic number with lenders. A car loan or a personal loan would be a good idea as well. Why? Lenders want to see that you can pay off a debt such as a loan and that you can budget for a revolving line of credit such as a credit card where the balance goes up and down monthly.

Previously Bankrupt or in Consumer Proposal – you had credit and something went wrong. Now you need to re-establish credit. We can help you obtain a secured credit card or help you with suggestions on how to re-build your credit. This can’t be done overnight, but if you are patient and work with us, the end result will be improved credit. Did you know that we have lenders who will pay out your consumer proposal as part of a mortgage refinance? It’s not well advertised but we can do it.

Bruised Credit – these are people who have had credit and then something goes wrong, but we can help. Usually it’s a result of a divorce, a long illness or a job loss. You can go see a credit counsellor for help in improving your credit which will cost you about $6-800 for a year of help, or come see us. We have a program set up by one of the credit reporting agencies that tells you exactly what to pay off first and how much to pay to get the maximum improvement in your credit score. This program costs $17 a month. Your Dominion Lending Centres mortgage professional can get you set up with this .
Instead of being denied a mortgage and told to come back when your credit is better, go directly to your DLC mortgage professional and get help. We’re in the business of helping people.