Let me tell you a little story about moving. It’s stressful!
It is funny because when you think about buying a home you don’t really comprehend the gravity of the situation, and I would hazzard a guess most of you out there don’t either.
You are literally agreeing to pay hundreds of thousands of dollars back to the company holding your mortgage and as Canadians we do it without ever batting an eye. I was the same. Go out. make the offer, get the mortgage, move into the house. Easy peasy lemon squeezy.
What I failed to comprehend was how ridiculous we were being in thinking this wasn’t a big deal and we paid for it dearly! We lost thousands in this process due to bad advice and our bank turtling at the last second. Leaving us staring down the current homeowner with a big bill in hand and threats of court action.
All seemed lost, no new home, our apartment already rented out to someone else, we needed to move and nowhere to go! That is, until we met our Mortgage Broker…
Back Story: Mortgage Magnates reached out and asked me to share this story after seeing my comment on a Globe and Mail feature and I was very happy to oblige.
Here is what happened to my wife Kelly, my three boys and yes my two cats, Roger and Fuzznut.
Kelly and I were ready! We had finally saved up our down payment and were so excited to finally get out of our $2,800 per month apartment and become homeowners! Rent when you have that many kids is insane and we were the luck ones at that number where we live!
We booked an appointment at the bank with the front desk the last time we were in the branch to put some cash in the machine and it was time to talk mortgage with someone!
We sat down with a rep named Clint who stated emphatically we were approved! I thought it was a little strange that we had only been there for 10 minutes or so and he asked us virtually nothing, but what the hell, we heard the word “approved”, so let’s do this!
He printed something out and we excitedly bounced out of the office, ready to call our realtor. It’s funny because as we walked through the bank doors back to our car, my wife stopped, turned to me and said, “did that seem weird to you?”
“You mean that a kid named Clint 3/4 of our age asked us nothing and gave us carte blanche to go out and spend hundreds of thousands of dollars of the banks money, based solely on the blue of your gorgeous eyes, hun?”…..”Nope, seems completely normal”.
Did you catch a little sarcasm in there? Ok it may not have been an exact quote, but it was definitely a snap shot of my naive behaviour at the time.
Of course it seemed normal, he used the word approved!
We saw our realtor and started seeing houses right away, big ones, little ones, houses that weren’t even houses….why are there so many warehouses turned to houses in the GTA/Hamilton area?…Weird, but I digress.
We made offers! Oh how we made offers, and most were not accepted but we still felt like the Rockefellers on a typical Sunday! Buy, buy, buy! You get a car, and they get a car and she gets a car!
Then one day….offer accepted! No conditions! We went hard at all of these places because our realtor said that would set us apart. After all, we were approved, so a condition for financing was just in the way of our glorious path to home buying victory!
Our Realtor sent everything our lawyer needed and every thing Clint needed and we were on our way. Clint got back to us, got our pay stubs and job letters. He got our proof of down payment. We were on our way. But we did say to him…”I though we were approved already”. “Just a formality now” he happily piped back. Ok then we are on our way!
We went a little over our pre-approval amount but no one seemed to care and Kelly had a $20,000 empty line of credit at our bank we would simply use to top up the down payment to get to the pre-approved amount.
Are you sensing a sharp right coming? If so, you know more about how this works than we did.
Fast forward to 3 days before everything closes. We get a call from Clint.
“Hey guys, just finishing things up here, no big deal but we look to be a little short based on your maximum approved amount. About $15,654 to be exact.”
“Don’t worry Clint we have it and will transfer it today” we joyously said.
“Ok, when you do, I just need a bank statement to show it is in there and we are good to go”.
We emailed that statement in shortly after the transfer and popped a bottle of wine on a lunch date. There we were at our favourite restaurant, about to be home owners. When the phone rang…it was Clint:
“Hey guys, got your statement, thanks for that. Listen, we just need one more thing. I just need to know where these funds came from. It’s a large transaction so my back office likes to just dot all of the i’s and cross all of the t’s, you know how it is”.
“Oh, we got it from our line of credit”.
“Line of credit?” his sheepish, seemingly very concerned voice now exclaimed.
“Yes. Kelly has one with you guys she never used so we used that” we said.
“Oh….uhh…ok I just need to do some work with some numbers and call you back”.
Oh he called alright. He called to tell us our bank could not “fund” this mortgage. His reason “unfortunately your debt ratios are now out of line to a point the bank is no longer comfortable proceeding”.
“Pardon et moi?”
“Well, we missed that Kelly had that line of credit as it was only registering on the one credit bureau and unfortunately when we saw it we have to factor in a percentage of the full available credit and that put us out. I am really sorry”. Clint said
“Missed it?!?! It’s bloody your line of credit!” I exclaimed. “Now what can we do? Why did it take so long to discover this? How was it missed, is it not in her profile? Why are we not finished with this process with only 3 days to go? Clint we are going to get sued!” we said, terrified.
“Unfortunately, these decisions are not made by me. It is out of my control. My head office approves all mortgages and they are not comfortable proceeding at this time”.
No suggestions, no ways around it, nothing. We lost the house, Clint disappeared and our Realtor “fired us” as clients, even though she was the one who told us to go in without conditions.
Luckily, the homeowner was not in a rush to leave so we weren’t sued and they sold to someone else. But we did lose our $15,000 deposit we made and were now left without that $15,000 in our down payment savings.
A few months went by…
One day we were walking down the street, doing some shopping when my wife accidentally kicked this sign out on the sidewalk. It it made a loud metallic smash sound, so you know, why not?
Everyone was looking at us. This is how things were going….
Or was this the loud crash meant to make us see a sign from whatever you all believe in?
We looked down to pick it up and set it straight and the sign read, ‘Broker on duty’, with an arrow we can only assume was originally pointing into the office before Kelly decided to try and punt it. (Cue the arm punch when she reads that…she loves me).
We looked at each other and said “let’s at least see”.
We went in, me (of course) with my proverbial guns blazing, “we don’t want to hear about high interest rates, we are not bad customers, if you are going to give us a high rate, forget it”.
The broker whom has now sadly retired, was nothing short of incredible!
Mary sat us down, gave me a coffee, likely to shut me up….hey we had been through a lot…and spent nearly two and a half hours with us. She heard our story, worked with our dwindling savings numbers, spending time on the phone with her lenders’ development managers and seeing what she could do for us.
No word of a lie, it was like a war room and we took up so much of her time and she didn’t care. Her determination and focus was so refreshing and the advice and understanding like nothing I ever got from Clint. Sorry buddy.
Yes our ratios were a concern, even for Mary, but we worked through so many different scenarios on how to get the lowest rate, stay with a “prime” lender and never have this issue again.
Plus, she begged us to go in with a condition of financing this time and even told us that pre-approvals aren’t properly underwritten and essentially not worth the paper they are printed on.
In the end we found a house and here is what Mary did for us:
It was actually number three that got me thinking, and this would be my message to all of you….
When I go to my bank with my life savings, I don’t talk to Clint, I talk to someone who is going to give me proper advice on how to handle that kind of money. After all, it is hundreds of thousands of dollars and I want the right advice to make sure I invest wisely and that it grows so that I can retire comfortably.
In sitting there thinking about my investments it dawns on me that your home is no different.
You need advice! Think about it, you are putting money into your mortgage which is growing real equity in your home, the equity in your home is yours to keep. Not only that, the value usually continues to increase year over year, sometimes between 3 and 15 percent! This sounds a heck of a lot like a big investment doesn’t it?
Then why would you see Clint or anyone else like him, when it comes to this size of investment? You shouldn’t!
I implore you all not to make the same mistake we did. It could cost you thousands and you deserve better than that.
Get great advice, get and keep a mortgage broker.
Mortgage Magnates is an online lifelong learning platform for mortgage brokers. It is the industry’s only online streaming platform for sales, marketing, business development, business management and best practices training. The content is made up entirely of brokers delivering real advice on what makes them so successful, thus helping the industry share knowledge, making everyone better at what they do. It is about brokers. helping. brokers.