When Getting A Mortgage, Don’t Trust Lenders Unless They Do THIS

 

 

Banks sometimes lie…

 

I had been warned by my managing broker when I first got into the industry.  I took note and was careful to advise all my clients of this.  What is it you say?

See, everyone knows that it would be a good idea to get a mortgage pre-approval and pre-qualification prior to searching for a home with their Realtor.  

A mortgage pre-qualification is just a preliminary assessment of a borrower’s financial position.  This can often be done on the phone and the bank or lender just needs to know the borrower’s overall condition.  A mortgage pre-approval is more in-depth and requires financial statements to be provided to the bank or lender and would require the borrower to fill out a credit application so the bank or lender can assess the borrower credit situation.

But, how many people know that the mortgage pre-approval or pre-qualification doesn’t guarantee the bank will lend to you?

 

What do you mean, Gary?  

 

That’s right.  First of all, when the bank or lender says they’ll lend X amount of money for your purchase, you MUST make sure that this pre-approval or pre-qualification be given to you in WRITING.  A verbal commitment is as good as hearsay.  

 

Oh, you’re just being overly cautious…

 

Am I?  There have been ACTUAL cases with my colleagues where banks or lenders had verbally promised to lend to buyers and when time came to complete on the transaction, the banks or lenders denied that they said that.  So, in those cases, my colleagues frantically searched for another lender for their buyers and fortunately was able to complete on the transaction.  

 

So MAKE SURE YOU GET A WRITTEN CONFIRMATION FROM THE BANK when getting a pre-approval and pre-qualification.  

 

Next, even after you get a written confirmation, make sure you read the written confirmation.  I was working with my buyer looking for an apartment in Burnaby.  We made an offer, it got accepted, we did the home inspection, removed subjects ONLY AFTER we got WRITTEN CONFIRMATION from the lender and we just waited for the completion date.  A week before completion date, the lender tells my buyer that they’re not going to lend to him.  

I questioned that.  I asked my buyer what it said on the written confirmation.  He said that the written confirmation had a bunch of contingencies, including contingent upon receiving this document and that document, etc…  Why didn’t you tell me earlier?  Thankfully, we had all the documents to the lender EXCEPT one.  

We couldn’t get that one document because it was not available.  The lender knew that PRIOR to my client removing subject clauses and making the deal firm.  So, you’d think that the lender was ok with not receiving that document.  Apparently not…

Anyway, long story short, we got the property management company to write a letter to the lender explicitly saying that that one document was not available.  Only then did the lender give funds to my buyer.   

 

So MAKE SURE YOU READ THE WRITTEN CONFIRMATION FROM THE BANK and see what it is contingent upon.  

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