Make the right moves: Do’s & Don’ts to Financing

Make the right moves – use these following tips to aid in your financing decisions.

Don't shop for your mortgagesRate shopping for a mortgage on a consistent basis is not recommended because it can lead to a significant decrease in your credit score and could result in your deal being declined. A far better alternative is to build a good relationship with a mortgage broker. A mortgage broker will perform only one credit check while sourcing multiple mortgage options for you with various lenders.
Do Focus on the Best Product Not the Best RateDue to the individual borrower and property qualifications, some deals are harder to finance than others and can result in different lending options and rates. A borrower is best to focus on sourcing the right lending solution for their situation rather than looking at the best rate.
Don’t Place a Non-Conditional Offer Without a PlanNon-conditional offers can be a competitive tactic in order get your offer accepted. When placing a non-conditional offer however, make sure that you have done your due diligence ahead of time and ensure that you have contingent strategies in place should you have challenges obtaining financing. If your non-conditional offer is accepted, you are legally liable to close on the property. Private financing is always a great alternative to obtaining financing quickly and conveniently compared to conventional lenders.
Do Use Private Funding to Get Ahead in Your Real Estate EndeavoursMany borrowers are scared off by higher interest rates associated with private financing. Utilizing private money can make a huge difference in bringing your real estate acquisition goals to life. With benefits such as quick closings, open mortgages, limited qualification restrictions and creative financing strategies, private financing can
provide borrowers the opportunity to purchase a property they otherwise may not have had the ability to purchase.
Don’t Assume a Pre-Approval Guarantees FinancingMost lenders do not review preapprovals and if there is an issue related to income, job status, or down payment, it may not be known until an actual property is being purchased. It’s important to note that a mortgage pre-approval is simply a starting point for a borrower and does not guarantee financing.
Do Read All the ConditionsGetting a mortgage approval does not guarantee your mortgage will close until each condition is met to the satisfaction of the lender. Since rules and regulations have recently tightened, bank lenders are now asking for more documentation to close a mortgage. It’s important to read the conditions of your mortgage commitment carefully.
Don’t Waive the Financing Clause Until Absolutely SureOnly waive your financing clause if you have written approval from a lender. Otherwise, if there are any issues, the borrower may be stuck having to close on a property with no option for financing.
Do Check your Credit ReportIt is important to periodically check your credit report to determine if the information displayed is accurate and to see if there is any room for improvement. Understanding the factors that affect your credit score allows you to make positive changes to your current situation, in order to make sure you are in the best position possible when it’s time to qualify for a new loan. This may mean paying off a larger balance of your outstanding debt that’s bringing your score down, or taking immediate action to fix any inaccuracies that may hinder your qualification potential. Being aware of your credit situation is extremely important to maintaining a healthy score and improving your financing options.
Don’t Order Your Own Property AppraisalBanks and lenders have a specific list of appraisers they use and not all lenders use the same ones. If a borrower orders their own property appraisal, they may incur this cost twice if the appraisal company does not satisfy the lender requirements.
June 19, 2019