I've recently noticed a trend (especially in Guelph, Ontario, but it may be applicable to your own real estate market) where home buyers are either remove the conditions of financing or need to turn around their financing in only a couple of days. Although we are in a balanced market in the area, nice homes that are priced correctly sometimes have multiple offers and realtors are advising buyers to remove the financing condition to make their offer "stronger".
Even if the borrower has been pre-approved for the mortgage, getting mortgage financing can still be an issue for buyers as the qualifications for mortgage lending have become more stringent. Borrowers who where once able to qualify (event six months ago) may find themselves in a position where they cannot now get a mortgage.
Here are some recommendations if you want to remove the financing condition from an offer:
1. Speak to a mortgage profession who is confident in explaining the risks. If they cannot clearly explain the risks find someone who can, because they do not understand mortgage-lending as thoroughly as they should. Do you really want to work with a banker/broker who doesn't know what they are doing?
2. If you are selling and buying a home, know exactly how much equity you have available when you sell. I find most people assume that they have more equity than they really do because they haven't accounted for all the costs and debts that need to be paid out. Your mortgage professional should review in detail the numbers with you.
3. If you are putting less than 20% as a down payment, you will likely need to obtain default insurance on the mortgage (sometimes referred to as "CMHC"). What I've found is that in cases where the mortgage financing becomes an issue, the borrower cannot get approved through the requirements of the default insurance provider. The requirements are clearly laid out so be sure your mortgage professional knows them. You can also get them at CMHC's web site.
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