29 Sep

PAPERWORK YOU MUST KEEP

General

Posted by: Brad Lockey

As a mortgage professional there are things I wish more people were aware of. Which is why we are going to take a look at the paperwork we all need to hold onto to avoid frustration or even a decline when applying for a mortgage. Each of the following is taken from real life observations of everyday folks just like you and I.

1. Separation Agreement – When you apply for a mortgage one of the first questions we ask is marital status. If your answer is separated or divorced then the banks are going to want to see the official document. They are seeking to ensure that you do not have any alimony or child support payments which will make it difficult to pay the mortgage. The legal system only keeps these documents for 7 years after which you will not be able to get a copy. Your marital status is reported on your tax return which can trigger the request for this documentation long after it seems relevant.

2. Proof of Debts paid– Keep all records of debts you have paid! Here are three real-world examples.
a) Client A has paid off her mortgage, receives verification from the bank and promptly destroys the paperwork at a mortgage burning party just like on the commercial. Due to a clerical error, the debt as paid is not reported to land titles so the mortgage remains vested against the property adding additional steps when she goes to get a new loan.
b) Client B pays out his truck loan in full and receives a letter stating this. Due to a clerical error, the interest accrued shows a small outstanding balance. The client believes all is well while the small debt quickly hits a written off status on the credit bureau and he is declined for a mortgage three years later.
c) Client C settles with a collection agency on a debt gone bad – The debt is not reported as paid to the credit agencies and the ‘ongoing’ bad debt causes a large drop in her score and she pays higher rates than she should. The collection agency has since gone out of business and there is no record of the payment to be found.

3. Bankruptcy/Orderly Payment of Debts – As with the separation agreement, the trustee will only keep a copy for 7 years. When you apply for a mortgage, the bank will want to ensure they were not affected by the bankruptcy and also to determine if there was a foreclosure. Even though this information is supposed to fall off the credit report that is not always the case.

4. Child Maintenance – whether paying or receiving child support, you will want to keep all correspondence in regards to this to ensure you are receiving the appropriate credit for monies paid or have been given all the money you were supposed to have received.

Emotionally you have a valid reason to want each of these documents so far away from you but, realistically, you are likely to need them at some point. There are a number of online services such as Dropbox or Google Drive where you could scan these to yourself and save them digitally. Alternatively, you could spend a small amount of money on an accordion style file folder and go old school with actual paper copies of all of the above applicable to your situation.

If you have any questions, please contact your local Dominion Lending Centres mortgage specialist.

22 Sep

AVOIDING “STICKER SHOCK” WHEN IT COMES TO MORTGAGE RENEWAL

General

Posted by: Brad Lockey

Imagine that, a few years from now, the time has come to renew your mortgage.

Several years back, you got a $350,000 at the then great rate of 2.24%. Your mortgage payments are $1522 per month.

Because we are now in what the financial brainboxes call “ an escalating rate environment “ – normal people just say rates are going up – when you open your renewal notice you might encounter the same feeling you get when you look at the price of a car you like.

When you actually do look at the renewal notice, you see that the remaining balance on your mortgage is now $294,662, the new ( very competitive rate ) is 3.25% and that the new payment is $1668, actually $150 dollars a month MORE than you were paying previously. You think “WHAT THE….???”

This type of sticker shock is a new sensation to an entire generation of Canadians. Brokers are fond of talking about the fact that rates had not moved in 7 years but we rarely talk about the fact that rates have been trending down for more than twenty years and chances are, if you’ve had a mortgage for any time during that period, the payment at renewal has always been lower than when you started out.

‘Well, what’s to be done’, you ask? ‘How do I avoid “sticker shock”?

The key to avoiding that sinking feeling is to increase your payment slightly every year. You can find out how much to increase it during your Annual Mortgage Review. By increasing your monthly payment by even 2% a month, you can potentially avoid that sinking feeling – and pay off your mortgage even faster!

But wait; “Annual Mortgage Review? Qu’est-ce que c’est”, you ask.

An annual mortgage review, done with either your mortgage provider’s representative or your own mortgage representative ( i.e. your friendly Mortgage Professional) is just a quick checkup to discuss what the current balance is, how things are going and do a quick review of your early payment privileges, increased payment privileges and potential prepayment privileges.

It’s best to have these annually because, well, the average human needs to be shown the same information seven times to learn it – save time and start today. If you have any questions, please contact your local Dominion Lending Centres mortgage specialist.

22 Sep

MORE MORTGAGE CHANGES ARE COMING—ARE YOU PREPARED?

General

Posted by: Brad Lockey

I know – more changes?! How can that be! With this ever-changing landscape, mortgages continue to get more complicated. This next round of changes is predicted to take affect this coming October 2017 (date not yet available). These new rules contain three possible changes, the most prominent being the implementation of a stress test for all uninsured mortgages (those with a down payment of more than 20%). Under current banking rules, only insured mortgages, variable rates and fixed mortgages less than five years must be qualified at a higher rate. That rate, of course, is the Bank of Canada’s posted rate (currently 4.84%, higher than typical contract rates). Going forward, it will be replaced by a 200-basis-point buffer above the borrower’s contract rate. (source)

The other proposed changes include:
• Requiring that loan-to-value measurements remain dynamic and adjust for local conditions when used to qualify borrowers; and
• Prohibiting bundled mortgages that are meant to circumvent regulatory requirements. The practice of bundling a second mortgage with a regulated lender’s first mortgage is often used to get around the 80%+ loan-to-value limit on uninsured mortgages.
These two proposed changes are minor, and would only affect less than 1% of all mortgages in Canada. The main one, the stress testing, will have a far greater impact.

Why is this happening?

You may recall that the stress test requirements were announced by OSFI in October of 2016. This rule followed a long string of new rules that occurred in 2016. At the time, they primarily affected First Time Home Buyers and those who had less than 20% down to put towards a home. Now, those who are coming up to their renewal date or wishing to refinance may find that this will have an impact on them. They may not qualify to borrow as much as they once would have due to the stress testing implication. For example:

A dual-income family with a combined annual income of $85,000.00. The current value of their home is $610,000.00.

Take off the existing mortgage amount owing and you are left with $145,000.00 that is available in the equity of the home provided you qualify to borrow it.

Current Lending Requirements

Qualifying at a rate of 2.94% with a 25-year amortization and with a combined annual income of 85K you would be able to borrow $490,000.00. Reduce your existing mortgage amount of 343K and this means that you could qualify to access the full 145K available in the equity in your home.

Proposed Lending Requirements

Qualify at a rate of 4.94% with a 25-year amortization and with a combined annual income of 85K you would be able to borrow $400,000.00. Reduce your existing mortgage amount of 343K and this means that of the 145K available in the equity in your home you would only qualify to access 57K of it. This is a reduced borrowing amount of 88K.

They have a mortgage balance of $343,000.00. Lenders will refinance to a maximum of 80% LTV (loan to value). The maximum amount available here is $488,000.00

As you can see, the amount this couple would qualify for is significantly impacted by these new changes. Their borrowing power was reduced by $88,000-a large sum of money!

With the dates of these changes coming into effect not yet known, we are advising that clients who are considering a renewal this fall do so sooner rather than later. Qualifying under the current requirements can potentially increase the amount you qualify for—and who wouldn’t want that?

For more information on how these changes affect you specifically, or to refinance your mortgage, get in touch with your local Dominion Lending Centres Mortgage Professional-they are well-versed in these changes and are ready to help you navigate through the complexities!

19 Sep

What is the “Best” Mortgage Rate?

General

Posted by: Brad Lockey

Six in 10 mortgage consumers choose brokers, in large part because they think brokers will get them the best rate.

All too many of those people associate the “best” rate with the “lowest” rate. Mortgage professionals know that’s not generally true, but convincing clients of this isn’t always easy.

While rock-bottom “no-frills” mortgage rates may look great in an advertisement—and can indeed save you a significant amount of interest if you don’t renegotiate early—it’s the loss of flexibility after closing that really stings people.

For thoughts on how mortgage shoppers can better choose the real best rate, we reached out to two seasoned mortgage pros who know rates as well as anyone. Both run mortgage rate comparison websites—James Laird, co-founder of Ratehub.ca and Rob McLister, founder of RateSpy.com—but are the first to admit that the lowest rate is usually not the best rate.

What makes a great rate?

“The ‘best’ mortgage rate means the lowest rate available for a mortgage that contains all of the features and terms the client is looking for,” says Laird.

He notes that some of the key features rate shoppers should consider include the penalty to break your mortgage; pre-payment privileges (i.e., the lump sum payments and percentage increase to your monthly payments that are permitted each year); whether it comes with a Home Equity Line of Credit (HELOC); and the rate hold period.

Laird adds that quality of service from the lender should also be on consumers’ radar when rate shopping.

“Does the lender have a reputation for offering good service? Even if a mortgage has a feature that a customer wants, they will often need to work with someone from the lender to execute said feature,” he said, such as porting a mortgage from one property to another or doing a “blend and extend.”

For McLister, the “best” mortgage rate is one with “the highest probability of maximizing your net worth. That means choosing the optimal combination of interest rate savings, term length, rate type, origination fees, post-closing fees, advice and flexibility,” he said.

As for the key features rate shoppers should take into consideration, McLister adds, “Depending on one’s circumstances, a borrower might need to overweight factors like payment flexibility, refinance options, porting rules, prepayment allowances, readvanceability, prepayment charges and so on.”

How a lower rate could end up costing you more

We all know that the cheapest rate doesn’t necessarily translate to the lowest borrowing cost. Lenders are able offer reduced rates because they typically strip out flexibility.

“A less-frills mortgage that makes you pay a higher rate or bigger penalty could easily cost you 3–4 times the interest rate savings,” said McLister. “For example, if you move and your closing date is 60 days away, but your lender only allows 30-day ports, you could be stuck paying thousands in prepayment fees and/or lose your pre-existing low rate. Or if you need to refinance but your lender doesn’t let you refinance elsewhere before maturity, you could easily pay 1/2 point more than best market rates.”

Laird notes that the difference between “no frills” rates and full featured rates is usually around 10–20 bps. He provided this example to illustrate how you would be further ahead by choosing a full-featured rate in the event you break your mortgage:

Assumptions:

  • Mortgage size: $400,000
  • Amortization: 25 Years
  • Term: 5-year variable
  • Difference between no frills and full feature rate: 20 bps (3.20 % vs. 3.00%)
  • Client breaks the mortgage after 2 years
  • Penalty to break low-frills mortgage: 2.75% of mortgage balance
  • Penalty to break full feature mortgage: 3 months’ interest

“While the “no frills” rate will have saved you $1,555 of interest, the penalty to break would be $7,362 higher,” Laird explains. “So the net cost of the no-frills mortgage would be $5,807.”

How can shoppers decide what’s best for them?

No one can predict their future housing and financial needs with 100% certainty. But mortgage shoppers should still take the time to contemplate their long-terms goals and expectations. That’s the only way to make an educated guess as to what their mortgage needs will be.

“Some of the more common questions,” McLister says, are, “‘What are the odds I’ll move before my mortgage matures?’, ‘Where will I move and how much might I spend on the new home?’, ‘Will I need to tap my equity at some point?’, ‘Will I still qualify if I need to renegotiate my mortgage?’ and ‘Am I better off with a longer amortization?’”

Additional questions suggested by Laird are:

Career related:

  • Do you expect your earnings to change significantly during the term of the mortgage?
  • Will you receive significant bonuses during the term of the mortgage?
  • Will you need to move cities during the term of the mortgage?
  • Do you view the current property as a “starter house” that you will upgrade when you have the financial means?

Personal:

  • What is your relationship status?  Is there a chance you will enter (or exit) a relationship during the term?
  • Will your family grow during the term?
  • Will any family members move out (or back in) during the term?
  • Do you plan on doing any renovations during the term?
  • Will you require any significant amounts of cash for other parts of your life during the term?

Questions like those above can quickly weed out mortgages with restrictive charge terms. If necessary, brokers can take a client’s scenario, make some basic assumptions and show how a low-frill mortgage’s penalty, refinance or porting restrictions can cost them more than a tenth of a per cent rate discount.

Rate Comparison Sites as a Tool

With the advent of mortgage rate comparison sites, rate shoppers now have more information than ever at their fingertips. But McLister cautions that rate sites such as his are only a starting point when researching a mortgage.

“Rate sites reduce information asymmetry between consumers and lenders/brokers, but they’re not a miracle tool—not yet anyway. They don’t, for example, list all the qualification criteria or nuances of each product. That’s where an honest, experienced broker comes in,” McLister said. “If you want a quality personalized assessment of your options, you generally have to pay for it. You can’t expect a mortgage expert to perform in-depth analysis of your optimal financing options and give you rate site rates.”

He adds that every borrower needs to truthfully assess his or her own mortgage knowledge and then decide what level of advice and service they’re willing to pay for.

“A salaried online-savvy 49-year-old renewing for the fourth time and 25-year-old self-employed first-time buyer might both be suited to a 5-year fixed, for example, but their qualifications and need for flexibility and guidance, and hence their ‘best rate’ might be very different,” he said.

 

15 Sep

HOW TO INVEST IN CANADIAN REAL ESTATE-FROM ABROAD

General

Posted by: Brad Lockey

\ust because you are a Canadian citizen living abroad doesn’t mean that you are exempt from the rules for foreigners buying real estate in Canada.
Foreign ownership applies if:
• You don’t reside in Canada for more than 6 months a year (even if you are Canadian)
• You don’t report your working income to CRA
So how does one go about gaining purchasing property in Canada when you are a foreign buyer?

1. Understand Your Employment Status

For your employment status, there are two categories you may fall into: Business for Self or not Business for Self (employed by someone else).

If you are Business for Self, you must meet the following requirements:
• Be in business for a minimum of 2 years
• Verify 2 years of business for self through something equivalent or similar to yearly financials.
• Verify current year’s financial history (personal & company if applicable)

On the other hand, if you are employed by someone else, you only need to show a letter of employment and your latest pay stub.

2. Understanding Down Payment Requirements

Down payments for foreign investment in property have a few requirements as well. The down-payment typically will need to be 35% down. The exemption to this and when 25% down would be accepted, would be if you are a Canadian citizen living abroad or if you are a US citizen.

Another requirement, the money for a down payment and closing costs must be on Canadian soil 30 days prior to the completion date (with exception of 15 days depending on the lender and circumstances). Lenders may also require a deposit of 12 months’ principle and interest payments in a Canadian account.

The other and final requirement for a foreign real estate investment is to have a Canadian bank account registered in your name.

3. Understanding Your Financial Profile

Your unique financial profile may need to feature a number of different things. This may include:
• International credit bureau to view your credit history
• A bank reference letter
• All current debts you have outstanding

Once we have compiled that information and any other that is required, it is on to the next set of requirements: Property requirements!

Property and Loan Requirements

For foreign real estate, there are a few conditions the property and the loan will have to meet. First is the type of property. The property can be owner-occupied, a second home, or an investment property. Next, in terms of the loan, there are two things that need to be considered. These are the rates and the length of the loan. The rates will be the best, discounted rates your mortgage broker can get at the time of purchase. As for the length of the loan, the term of the contract can be up to 10 years long, with an amortization of the loan of 25 years and up to 30 years on exception.

Final Take-Away

Purchasing foreign real estate does not need to be difficult. The best advice is to stay transparent, open and follow the requirements. As an extra piece of advice, here is a checklist to follow to make it go even easier:

• Proof of “out of Canada” permanent resident address
• Contact and use a Canadian solicitor/lawyer who is familiar with foreign investors
• Contact and use a Realtor familiar with foreign investment purchase.
• Be prepared to have to make a physical appearance in Canada to complete the purchase transaction
• Ensure you have the ability to transfer monies from your Canadian bank account to the TRUST account set up by your Canadian Solicitor/Lawyer’s firm.
• Be prepared for the purchasing process to take 30 days or longer

One last consideration. As of August 2, 2016, the Ministry of Finance of British Columbia has applied an additional 15% property transfer tax to certain BC residential property purchases to anyone who is a foreigner (or foreign entity such as a corporation).
a. This is applied only to the Greater Vancouver Regional District – please contact GLM Mortgage Group for an exhaustive list of the areas affected.
b. This affects anyone who are foreign nationals including foreign corporations or taxable trustees.
* Please note that the corporation can be incorporated in Canada. However, if the corporation is controlled in whole or in part by a foreign national or other foreign corporation the tax applies.
c. The additional tax applies in addition to the general property transfer tax.
d. The additional tax does not apply to non-resident property (commercial properties).
e. The additional tax will be paid with at the statement of adjustments when signing at the lawyer’s office.
f. There are heavy fines associated with avoidance of this tax (ie purchasing a property through a Canadian relative who holds the property in trust) and can even result to up to two years in prison.)

The only way that this foreign buyers tax is exempt for a nonresident when purchasing in the Greater Vancouver Regional District are borrowers that have a current work permit/visa and will maintain the property as their primary residence and reporting and paying taxes in Canada

In closing, if you follow the basic steps laid out in this article and work with a skilled broker you can get into your Canadian property faster, easier, and with minimal stress! If you have any questions, please contact your local Dominion Lending Centres mortgage specialist.

14 Sep

SAVING FOR A DOWN PAYMENT

General

Posted by: Brad Lockey

What prevents many potential homeowners from buying a home is the lack of a down payment.
Many first-time home buyers are receiving down payment gifts from family.

Unfortunately, many are not in this position and need to plan to save their own down payment.
When you can visualize the benefits of owning your own home and it becomes your number one desire, most of us can save that down payment.
Every time you feel like spending money that is not a need and takes away from you down payment, consider what you could be giving up, your home.

I recently did a mortgage for a couple buying their first home. During the process, they told me that 25 years ago they moved into a brand new rental home and they just finished paying off the landlord’s mortgage. The house had gone up about $800,000 in value over the 25 years. If the couple would have had their down payment and bought the home they would have a home worth over $1,000,000 paid for.

Here are some tips 
Avoid borrowing money for a depreciating asset like a car or furniture. Did you know that most people who buy furniture interest-free for a year do not pay it off and end up paying about 29% interest on that loan?

Open a Tax Free Savings Account (TFSA) and start contributing monthly. Try and maximize what you can put in the TFSA. Turn it into a game and see how fast you can make it grow. Remember the end game is your own home.
The Business Insider reports that 62% of your expenditure is spent on three areas: Housing, transportation, and food. Focus on cutting down expenses in these areas and put the extra money in your TFSA. It may be tight living in a smaller place for a few years or even staying at home for a few years to save up that down payment, but if you could look down the road 25 years and have a choice of buying your first home or owning a million-dollar home with no mortgage, what would you choose? You need to keep that vision of owning you own home if front of you to make the sacrifices worth it. The longer you rent the more you are paying off someone else’s home.

I read a statistic that 43% of our annual food costs are eating out. Then there are prepared meals that involve no cooking that when included add up to 60% of your food budget. I recently had a friend that stopped eating out and is now putting about an extra $350 a month in his investment account.
Create a budget, control your spending, and buy groceries on sale. Use the Flipp app and find the lowest price on main items and price match. You can save $100’s of dollars doing this.
All these savings can go into your TFSA. Ask friends for their money saving ideas. Stay focused and before you know it you will have your down payment.

If you have any questions, please contact your local Dominion Lending Centres mortgage specialist.

13 Sep

GATHER YOUR MORTGAGE’S DOWN PAYMENT

General

Posted by: Brad Lockey

For many people, saving enough for a down payment on a house is not an easy task. (You can’t rely on finding One-Eyed Willy’s treasure like they did in the Goonies movie, either!)

Once you have an idea as to how much you can afford on your home, relative to your salary and monthly costs, it’s time to get that down payment! For a starter home, a 5% down payment is often enough.

Your down payment can come from several sources, including your Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP) or a gift from immediate family, such as parents or grandparents.

TFSA

The TFSA lets you save your extra cash for just about anything — including a new house— without paying any tax on the growth within the account or on withdrawals. Since the TFSA was introduced in 2009, it’s estimated that only around half of Canadians have opened one, so be sure to start yours today. Should you use your TFSA for your down payment, you pay no taxes on the withdrawal.

There are many clever ways to make the TFSA and RRSP work together to improve your wealth. Generally, RRSPs are a good choice for longer-term goals such as retirement, while TFSAs work better for more immediate objectives, such as a house down payment.

RRSP

With the federal government’s Home Buyers’ Plan (HBP), you can use up to $25,000 of your RRSP savings ($50,000 for a couple) to help finance your down payment on a home. To qualify, the RRSP funds you’re using must be on deposit for at least 90 days. For first-time home buyers, taxes are not paid on withdrawals of your RRSP and the repayment period starts the second year after the year you withdrew funds.

Gifted Down Payment

A Gifted Down Payment is very common for first-time buyers. Often this is done because their son or daughter doesn’t quite have enough funds saved up for the full 5% down payment. Or, because they want to make sure their child has enough money to make up 20% for a down payment to avoid Canada Mortgage and Housing Corporation (CMHC) premiums.

If you put down 20% or more on your down payment, it can all be a gift. If you put down less than 20%, part of the money can be a gift, but part must come from your own funds. This minimum contribution varies by loan type. You can only use gift money on primary residences and second homes.

All that is required for documentation is a signed Gift Letter from the parents, which states that the money does not have to be repaid, and a snapshot of the son or daughter’s bank account showing that the gifted funds have actually been transferred.

A gifted down payment is viewed as an acceptable form of down payment by almost all lenders. Talk to a Dominion Lending Centres mortgage specialist to make sure that your lender accepts “gifts” as an acceptable down payment.

11 Sep

“The Double” Bank of Canada rate increase explained …

General

Posted by: Brad Lockey

So, what about this recent Bank of Canada interest rate increase?

Short Version

  • I am not locking in myself;
  • I am personally staying variable;
  • For a variety of reasons that I will elaborate on;
  • This does NOT mean that you should for your own reasons;

Long Version

If your discount from Prime (currently 3.20%) is 0.50% or larger – then the variable rate product still holds a valued position.
If your discount from Prime (currently 3.20%) is 0.25% or small – then you may consider converting to a fixed rate, BUT…

Keep in mind the penalty to prepay (i.e. refinance or sale of property) a variable early is ~0.50% of the mortgage balance, whereas if in a (4yr/5yr or longer) fixed rate mortgage the penalty can be closer to 4.5% of the mortgage balance ***depending upon which specific lender you are with and how long of a term you lock in for.

There are many considerations before locking in your variable rate, and we spoke about them when we made the decision to take the variable rate together:
– many questions to ask;
– most of which the lenders are unlikely to ask you;
– your lender is re-active, not pro-active;
– you need to be pro-active;
– and sometimes being pro-active results in no action being taken at all;

It is usually to the lenders benefit that you lock into a fixed rate, rarely is it to your own benefit – unless of course we see 3 more consecutive rate increases (which I am no ruling out). There are a multitude of changes happening within the mortgage industry, and I think that the Liberal government is learning along the way too. At the moment many decisions are being made from a biased frame of mind; i.e. because we have had two recent rate increases this must mean still more rate hikes are on the way.
Not necessarily.

The government may well have overstepped with this recent rate hike and there may be a pullback within the next 6 to 12 months? That is the beauty of the variable rate being dependent on the Prime rate set by the Bank of Canada – it can always move.
Back in 2010 rates increased 0.25% three times, and that sat stagnant for nearly five full years before two, 0.25% decreases back downward.
In other words the last time Prime was pushed as high as it stands today, it sat there for five full years. And was then cut.
Something to think about?

When you and I decided that a variable rate mortgage could work to you advantage we knew that your household income could sustain a little volatility. Well, volatility is here – but is it here to stay is anyone’s guess.

The next Bank of Canada meeting is October 25, 2017.
I will be watching and waiting.
Primarily waiting.

5 Sep

THINKING ABOUT PUTTING IN A FIRM OFFER? MAKE SURE YOU READ THIS FIRST

General

Posted by: Brad Lockey

The market is constantly changing these days, so if you asked me about affordability just a few weeks ago, I would have had a different answer, as the seller’s market has quickly shifted to a buyer’s market – for now, anyway.

This spring, many first-time homebuyers were quickly being priced out of the market due to multiple bidding scenarios that saw houses sell well over their asking prices. This was not an ideal situation for any buyer – let alone first-time buyers on a particularly tight budget.

And while affordability was going by the wayside just a few weeks ago, so too were having a condition of financing and a home inspection included in the purchase offer.

Weighing the no condition of financing risks 

Going in firm (with no conditions) on an offer to purchase is incredibly risky for numerous reasons.

In a state of panic during multiple bidding scenarios, many homebuyers opt to take the no conditions route in the hopes that it lands them the home of their dreams. What it often does instead, however, is land them in hot water. Once a firm offer has been accepted by the seller, the purchaser is bound to that contract, which means they can end up in a lot of legal trouble if they can’t secure financing on that property by the agreed upon closing date.

On the flip side, if a purchaser places a condition of financing within the purchase offer, they have time after the offer is accepted to arrange the mortgage. If they’re unable to arrange financing by a specific date noted in the contract, they can simply walk away from the deal with no repercussion.

It’s important to note that lenders loan money based on appraised values, not on the selling price.

What happens if I forego a home inspection? 

When things go wrong with a house, they can prove extremely expensive – especially when pertaining to the home’s structural integrity. After all, a home inspection looks at much more than the mere cosmetics of a property that can be seen through an amateur’s eye.

Home inspectors are professionals who look at homes everyday and know the ins and outs of pretty much anything that could go wrong with things such as the roof, foundation, electrical, plumbing and so much more.

And, on the financing side, foregoing an inspection can also prove risky. What you may not know is that lenders don’t only lend based on the borrower’s financial situation, but also based on the conditions of the property that you want to purchase. It’s part of a lender’s due diligence to ensure the property is livable and worth the amount of money that you’re willing to spend.

The safest move is to consult with a Dominion Lending Centres mortgage professional before making any offers to ensure your bases are covered and you’re not bound to a contract you simply can’t fulfill.