Mark – Can you explain some of the benefits with dealing directly with the bank, as opposed to a mortgage broker?
Katherine – Banks offer the same competitive rates that a mortgage broker can, but we also offer full service relationships, so you can do all your banking, have your loans, your bank accounts, and a personal lender that you can walk in and deal with on a regular basis.
Mark – Here we are in April, 2016, and clearly we are in a buyer’s market. Can you tell me how this has affected approvals from what you’ve noticed?
Katherine – It’s definitely made qualifying a lot more difficult. A buyer’s market is a great thing, but with that comes risk with the market, which means borrowing money gets a lot harder.
Mark – so is the bank exercising extra precautions, are they asking extra questions, do they need additional information, have you found the criteria maybe has changed from now and say a year ago?
Katherine – Definitely. The criteria has changed in many areas. Income is one major area. Wellness, over-time, anything like that can be jeopardized due to the economic situation is really scrutinized, they really want to keep an eye on it.
Mark – so they might say, sure you worked overtime, but we’re not going to count that, or something like that?
Katherine – Yes. They are doing that. They won’t discount it altogether, but they’re definitely being more conservative with what is realistic now. The length of time an appraisal is good for, they’ve reduced because the market is changing quite quickly, and we’ve seen drastic changes in values even in just from the fall to now. So we have seen this impact a few deals, so they are very conservative as far as values, and they want to make sure the values is what were paying.
Mark – so they’re watching the appraisals, making sure they’re not going down too far, wanting them done more often. I’m asked this all time, we’re at the bottom of the market, well, what if we’re not? What if the market was to go down just a little more, maybe that’s a consideration I have, I want to go buy a house but I want to wait until it’s at the very bottom, I’ve pre-qualified, or pre-approved, would you recommend that it might be good for me to wait?
Katherine. No, if the market continues to drop, chances are that our criteria could also continue to change further, so if you know that as per today’s standards and today’s prices you qualify, it’s probably just best to look for something that works for you right now.
Mark – and you know, if we’re kind of in the down, we have our cycles, since the 80’s we’ve had so many recessions say, it goes up and down and up and down always seeming to go higher in our next spikes, so not a bad time to dive in, lots of inventory, you and I talked about that earlier as well.
Mark – What kind of criteria are you looking at before you pre-qualify a mortgage?
Katherine – Employment history, a big one, we need to know where you work, how long you’ve worked, what industry you’re in,
Credit, do you have credit, is it established, are you new to Canada and need credit, all these things come into play.
Down Payment, down payment won’t actually impact your pre-qualifying, but we do need to know where it’s coming from, we need to know do you have it, do you need to save it, is it gifted, where is it coming from, where is it being sourced from? All those things are important things to know.
Mark – so you’re going to ask to see my statements I assume then?
Katherine – if it’s cash, we’re going to ask to see the statements.
Mark – So how far back are you going to want to look?
Katherine – 90 days. So a lot of people misunderstand the 90 days, and think they need to have the cash on deposit for the full 90 days, the cash doesn’t have to be on deposit for the full 90 days if you can verify the source of where it came from. So you sold a car, you got 25 grand, you put it in your account two weeks ago, you can give me a bill of sale, I know where the cash came from, we’re okay. [If] you can’t provide me an explanation, it needs on deposit for 90 days.
Mark – so we’re talking more if you have 5% down, are we talking with a mortgage insurer, or is this right across the board, even 20% down?
Katherine – right across the board, even 20% down. All funds have to be verified.
Mark – we talked about the 20% down, you said you’re very specific, you don’t pre-approve necessarily, you prequalify. Can you go into that, why is that?
Katherine – it is just something I prefer to tell a client because 20% down means you only have to deal with ATB, I know ATB’s guidelines, I know if you approve with what we want, so I’m comfortable saying yes you’re pre-approved. CMHC and Genworth will handle everything between 5% and 15%, they ultimately get to decide, so when I see a client, I prefer to tell them you’re pre-qualified per the ATB guidelines, you meet all the requirements and criteria that I’ve asked for, but ultimately the insurer gets to decide.
Mark – if you are pre-approved or pre-qualified, does that guarantee my financing?
Katherine – no, it doesn’t guarantee it. They’re going to look at the house you’re purchasing when you do make an offer, that will be part of the criteria that they also look at, they’re going to look at what it is you’re purchasing.
Mark – and that’s what we talked about earlier with the appraisal.
Katherine – right, and just the type of house, is it mobile, is it a manufactured home, is it a house, is it an acreage, all these things can affect it. Also, don’t take on any new debt, a lot of people will say “okay, I’m pre-qualified”, they don’t think too far ahead and they trade their truck in, and their payment changes $150, or they rack up a credit card, or they buy a bunch of stuff, waiting to buy their new house, those are not good changes to make while you’re pre-qualified. In that stage, you want to wait until house is final, it’s done, it’s with the lawyer. If you really need to make a change, don’t jeopardize you’re house purchase.
Mark – are there ways that people can be more certain, that once they’ve been pre-qualified, they will be able to get the financing, for the home they’ve [offered on]?
Katherine – like I said, don’t make any financial changes. Leave everything the way it is as we first discussed, and if we can prove down payment and we got everything we need, you should be just fine.
Mark – ATB Financial is an Alberta bank, so there’s lots of big federal banks, so do you feel there are advantages with working with ATB Financial that I might not get at one of the big federal banks?
Katherine – Definitely, ATB is a lot of relationship based banking, so long term relationships exceptions, stuff like that. Business clients, we have great relationships with our business clients, so there are a lot of things we can do for them, specific properties, we do a lot of raw land financing, large quarter sections, we have very good programs for that, manufactured mobile homes, we are one of the only banks that will still touch them, so all these things are specific to ATB, and they’re good programs.