Day: April 9, 2009

Real Estate Financing

John Walsh on Pre-Approvals and Pre-Qualifications

Why it is important to get pre-qualified or pre-approved.
-first differences in the two terms
Pre-qualified -implies credit has been checked*, income verified, potentially some credit issues found that can be overcome, generally debt service ratios make sense, overall deal looks reasonable.
Pre-approved -credit checked* (no issues), income verified, debt service ratios work, potential property identified, either purchase or selling agent wants/needs/demands a piece of paper stating that financing will not be an issue.

*Please note that most banks do not pull credit in order to pre-approve you. This is a very dangerous practice, IMHO, as if there are problems with credit, they simply cancel the pre-approval, leaving the buyer in a panic mode.

-saving everyone time and effort.
What you think you can afford versus what reality dictates might be off by $10K or $100K. If you have that kind of cash just sitting around, then no problem. Most don’t. Make sure you are looking in a range you can afford. Save your agent time and effort negotiating a deal that you can’t afford and save your mortgage guy a few gray hairs trying to put a square peg in a round hole.

-identify any potential problems with your credit and fix them
Part of the pre-qualification from a broker is checking credit. Most folks don’t know the rules and figure their credit is fine. Mostly they are correct. Occaisionally, there are either mistakes on the bureau, which can be fixed with a phone call, or some long lost utility bill was not paid and has gone to collection for $50 and has subequently trashed your credit. This could take 2 months to fix. Fix it before you put in that offer and find out you can’t extend financing condition for 30 days while you run around and document the repair.
Simply put bad credit equals higher rates. That $50 collection could cost you and extra 2% points on your mortgage. Ouch!

-know the rules of the game
Simple things like self-employed people need two years history. Cash on hand has to be there for 3 months or you have to show the paper trail where it came from. And the BIG one, your taxes have to be PAID and up to date. This can be a show stopper.

-I offer free credit advice, banks don’t. It’s not in their best interest.
This is one of those services that you can’t put a price on. I’ve been down the path of bad credit and know first hand how to fix it. If I see that there is a problem, I will work with the client in order to fix the problem, rather than hand out a mortgage that will go power of sale in 2 years.

In short, be an informed consumer. Dont’ roll the dice and hope your banker will just give you money because you’re a nice guy/gal.

Warmest regards

John R. Walsh, B.Eng
Mortgage Agent with Mortgage Alliance
Licence Number: M08000603
Founder of O.R.E.I.O. www.oreio.org

613-237-7044 x148
888-474-0137 (toll free fax)

jwalsh@mortgagealliance.com
http://ForAllYourMortgageNeeds.com
blog: ForAllYourMortgageNeeds.com/wordpress
Twitter: www.twitter.com/jr2walsh

Uncategorized

What’s Scarier? Jumping into the deep end, or being in it?

Alot of people would say that jumping into it would be – and it’s actually very true. People are afraid of the unknown, and are very hesitant to push their comfort limits whatsoever.

People that frequent the deep end will tell you that there is MUCH more room for you move around, you aren’t surrounded by the novices, you can fully extend yourself and even try some cool summersaults underwater. If you are really brave you can even get down to the bottom and pick up some blue, yellow and green rings!

Real Estate is no different, and here’s why – when the recession news hit, people got SCARED. Its ok, its natural. They saw the deep end and said, ” No way Hosé! Im not getting in there! I can’t see the bottom!” Some of these people already had their trunks and floaties on, and some were even about to get on the diving board.

A few brave souls jumped into the deep end because not only did they have a good idea of how to swim, but they knew there were professionals helping them every step of the way; just like instructors and lifeguards do in the water – REALTORS do in Real Estate. You know what these people found in the deep end? You guessed it – some really cool spots to explore and the confidence to know that they can make it where others were too scared to try. This market has seen buyers come in with cheap money and pick up some really good bargains.

Now that the deep end has been around a little while, people are starting to look at it again and think, “Ok – I’ll just put my legs in, its not so scary!” People are coming around! Here in Ottawa, we are blessed to have lower than National Average Unemployment rates, more stable incomes, and the SAME cheap money available to us! One of the reasons I personaly believe is causing this is the great number of public servants in our core – security and competitive pay, but thats another blog.

The point is that people are starting to become a little more comfortable and realize that the sky is not falling. People are coming outside, opening their eyes and starting to get out there and make smart and strategic moves again. Real Estate is all around, as are the opportunities – so get that swimsuit back on, squeak into those floaties and come let the experts show you how you can make it in the deep end!

The water really isn’t that cold, and there are some really cool rings down here.