The complexities of the mortgage industry are best highlighted by stories. Far too often we get carried away in the excitement of the moment, and the immanent prospect of owning our own home. In times like these, we may put too much trust in our decisions without thinking, planning and focusing on the best course of action, to ensure the process of acquiring a mortgage is relatively simple and stress-free.
“Basil and Miranda Almost Don’t Get a Mortgage
Miranda and Basil lived in Miranda’s condominium for three years and were now prepared to buy a house together. Miranda estimated that she had $40,000 equity and Basil had CICs valued at over $40,000, so they would be investing equally in their new home.
Millie, the mortgage specialist at the bank, pre-qualified the couple and said that with their combined resources and salaries they would easily be able to qualify for a house. Miranda had had some rocky years financially and had defaulted on her student loan. She had also been chronically late with her car payments. Her credit cards were still maxed out.
The couple spent a few weeks looking at open houses, until one day they met Pat, a real estate agent, at an open house. Pat explained that they would be in a better position to buy a house after Miranda sold her condominium. That evening, Pat listed the condominium and arranged an open house for the following weekend.
The market was brisk and there was a lot of interest in the condo, so Miranda and Basil felt comfortable making an offer on a house. Once their offer was accepted, they had 10 business days to get a building inspection and to confirm their financing.
The next meeting with Millie went just as smoothly as the last.
This time, she had their credit reports in front of her and when Miranda expressed concerns about her past credit history, Millie assured her that since she had made all her mortgage payments on time, the student loan and late payments would be minimized. She said that all she needed to do was to “run it by” CMHC and get its approval and to expect a call back the next afternoon…
Miranda and Basil were astonished by this news, especially since Millie had been so positive about their application. Miranda told one of her colleagues at the clinic where she worked about the position they were in. They had to move out of her condominium within 45 days because all the subjects had been removed and the contract of purchase and sale was now firm. Miranda’s colleague was married to a mortgage broker…
That evening, Jerome, the colleague’s husband, met Miranda and Basil. He looked at this situation and said that he thought he could probably process their loan through another lender that used Genworth…
The next day, Jerome told them that the only way they could get the house was if just Basil went on title, even though $40,000 of the down payment was coming from the sale of Miranda’s condominium. Miranda and Basil didn’t like this decision, but agreed that they would arrange for the lawyer that handled the closing of the sale to prepare Wills for both of them that would ensure that Miranda’s interest in the house would be protected in the event of Basil’s death.
There was more to come! Jerome called again to say that the lender had stipulated not only that Miranda could not be on title to the house, but the money from the sale of her condominium could not be used as part of the down payment. They would be looking at three months’ worth of Basil’s bank statements to ensure that all the money that went into the purchase was from his own resources.
Miranda was devastated.
She called Pat and said she wanted to get out of the condominium contract. Pat said that it was too late for that. So, there was little choice but to comply with the lender’s conditions. Basil cashed out more GIC’s and sold his truck to his brother in order to raise the money to pay the full down payment.
Even though Miranda paid Basil back $40,000 after the sale of the condominium had completed, a lot of the excitement of the new home purchase was lost because of the stressful process.”
REALTORS® and mortgage professionals provide their very best expertise in supporting you to realize your dreams. However, remember it’s your responsibility to deliberate on every action and decision you make given your particular circumstance, to avoid complicated and unnecessary stress that may put a dampener on your excitement.
Published with permission from authors Peter Dale and Helen Jones of Mortgage Smarts, which can be purchased from.