In my many years as a mortgage agent with the bank, and subsequently as a mortgage agent licensed with the Province of Ontario, I have seen hundreds of applications approved and some not given any consideration as a result of non-qualifying criteria. In this section, we will cover some of the most common concerns and items to keep your eyes open for when considering mortgage refinancing.
A credit check seems to be one of the most dreaded processes many clients encounter when considering refinancing their mortgage, with either a bank or a mortgage broker. There are significant differences in both cases that need to be taken into consideration when looking for a new mortgage loan.
Credit check via the bank: In many cases, the bank will do a great job in presenting to you all mortgage options available in their roster when considering a new mortgage, however, much of your ability to qualify for their mortgages, requires that you have a good credit score. I have seen cases where clients have put down in excess of 20% down, yet, given their poor credit scores, the bank flat-out refused to provide any mortgage loan funding in these cases of poor credit. When it comes to refinancing and/or extracting equity out of the value of your home, similar criteria may be applied in the event your credit is not up to standard, as required under their underwriting requirements.
So, you go through the credit check and are not approved at the bank, now what?
Well, its not the end of the world (yet many clients I have met in my previous career believed it was), but you do have an inquiry on your credit bureau, showing that you have sought out a credit product at the respective financial institution. Many clients, I have worked with, believe in applying to each bank individually, hoping one of them will “bite” and approve their mortgage refinance application. In most cases, the decline usually stands, and now you have a reject from more than one bank, along with multiple inquires on your credit bureau – not good.
What will a mortgage agent do differently?
In most cases, when you approach a mortgage agent for assistance with your mortgage loan needs, he or she will usually be representing you – and not the lender. What this means, is that the mortgage agent is looking out for your best interests in finding you the best mortgage loan or mortgage refinance product for your circumstance.
But wont the mortgage agent pull my credit report as well?
Yes, the mortgage agent will, with one big difference, he or she will only need to pull your credit report once, as they shop multiple lenders, including banks, for the best product for your mortgage borrowing needs. This will not affect your credit score in a derogatory fashion, in a similar manner if you were to apply individually to multiple lending institutions.
What can a mortgage agent do for me that a bank can’t?
A mortgage agent can save you the hassle of searching and applying to multiple institutions, in your attempt to qualify for a mortgage with the best rate. I would suggest to take your bank’s posted mortgage rate to your mortgage agent and confirm as to whether they can beat the rate as posted at your financial institution. In most cases, they can! Given the wide network of financial institutions, inclusive of credit unions and smaller finance companies that are lending in Ontario, Mississauga mortgage brokers have a wide selection of lenders to chose from.
Another topic that comes up often in mortgage refinancing, is the issue of having to get an appraisal done on the property that you are looking to re-mortgage. I have had many clients ask if they can by-pass this step, based on the fact that the property down the street sold for a certain price and apparently was a smaller lot and had little upgrades in comparison to the client’s home. In almost every refinance I’ve seen, an independent appraisal is required by the lender in-order for underwriting of the mortgage deal to take place. In many cases, banks will absorb the cost of an appraisal, if they feel there is little risk, given the value of the property. Many properties in Toronto, are given a “pass” with respect to a full inspection and allowed the bare minimum of a “drive-by” appraisal when considering underwriting from the bank’s perspective. The trouble here, is that you usually end up paying it back to your respective financial institution in the form of interest charges in the end, in comparison to what a mortgage agent could likely do for you by providing a lower mortgage rate.
Do mortgage agents offer free appraisal services?
Most don’t, however, up until March of 2017, and subject to approval conditions, we offer to cover our client’s appraisal service by reimbursing the sum of $350 upon closing, for mortgages that are funded and closed by Victor Kaushal at Expert Mortgage.
So, what’s next?
If you are considering mortgage refinancing, whether it be for a second or even a third mortgage on your property, contact Victor, by phone or email as listed below for the best mortgage refinance experience in Ontario.