Investors aren't immune to mortgage application mistakes and they make these doozies quite often, sabatoging deals that would otherwise fund. Learn from their mistakes, reports Jemima Codrington.
Video transcript below:
Jemima Codrington: Applying for loans is a step most investors will undertake to gain financing. But some little mistakes can have a costly impact. We take a look at some blunders to avoid on this week’s Investor Insight on Crew TV.
When filling out of an application there are certain mistakes and oversights making increased chances of it being declined. So what exactly should investors be mindful of?
Paul Kondakos, President, Realty Hub
Paul Kondakos: The mistakes that investors make when they are filling out their loan application actually begin even before they look at their application and that’s not knowing the parameters of the financial institution that they are submitting their application to.
And what I mean by that is that every different financial institution has different guidelines and rules that they operate by, within their own institution in terms of debt ratio that they are looking at and in terms of appetite for financing a particular product. So what investors need to do is before they even get to the application stage, they have to know what parameters and requirements each institution have for that particular investment for their particular property.
Now some of the best ways to get guidance on that is to consult with a mortgage broker, because they are very well versed with the different institutions and their requirements and how to fill out a loan application to make sure that it fits within the box.
Typically you are going to find a lot of the institutions have a box that they need you to fit into neatly. And if you don’t fit into that box even by half a percent or .3 of a percent for a ratio, your application will be declined. So what you need is somebody to guide you into that process so that all your ratios are in line and make sense so that your application can be approved by that particular financial institution.
Phil Edwards, Mortgage Broker, MorCan Direct
Phil Edwards: I think that clients can increase the chances of being declined by misrepresenting information or not disclosing information to lenders. These days with the tightening up of the diligence with lenders, a lot of times we find that clients can mess up on their applications in a number of ways.
Number one. Not disclosing the information correctly as regards to their leases like the length of time that tenants might be residing in the property, not really disclosing you know who covers what with the lease and also another big one you will find is that sometimes clients may not disclose the properties that they actually own, whether it’s owned by themselves personally or they have their personal guarantee in the field of operation.
Matthew Tynan, Real Estate Investor
Matthew Tynan: Okay, so recently as a small investor we are closing on this property and we found that the mortgage broker wasn’t ready to close and it ended up costing us a lot of money and wasted time and a lot of stress. So my tip for that is to always follow up, make the phone call, make sure everybody is ready to go and when time comes to close the property, closes immediately.