Kelly and Jan (like most people) rely and trust their bank. They've owned a home before, had a mortgage with their bank (TD) and all went well. They only had a $60,000 mortgage left on their main house, and with a growing family, where ready to move into a bigger home. They wanted to keep their main house as a rental because it was close to the university and offered great rental potential. So they went back to their bank to get pre-approved for a mortgage before looking to buy their next house. Their bank said yes to the financing and away they went!
After spending hours with their realtor, they finally found a great home, put an offer on the home, and went back to their bank to finalize the mortgage. Here's where the story gets bad...
The bank came back and rejected their mortgage approval. Kelly and Jan where stunned...how could this be possible? What I've learned through my clients' experiences, are that banks don't pre-approve people for mortgages they only pre-qualify. The missing piece in Kelly and Jan's original pre-approval was a credit check that their bank didn't do. Kelly's credit history was weak because of a job loss she experienced a year ago. Although she was now back to work, a few missed bill payments from the previous year appeared on her credit history.
Here's where the story gets better...
Their realtor referred them to The Mortgage Centre, and with the skill of a trained, mortgage agent where still able to get a decent mortgage and they where still able to buy their dream house. The great part of this story is that the mortgage payments where in-line with their monthly budget.
The lesson from this story is to ensure that whomever helps you with your mortgage financing, ensure they do a thorough job for you so that there are no surprises once you find a home.
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