She orders the pre-purchase inspection and likes the results. Her Realtor asks about a financing
condition, she doesn't think she needs one but to be on the safe side,
the Realtor calls the loan's officer who reiterates that there will be
a mortgage for Melanie when she is ready. The Realtor waives the
financing condition. Melanie starts to pack.
Two weeks later, the loan's officer's assistant calls up and drops
the bomb. The loan application requires a guarantor with proven income
of at least $35,000 per year. Once she picked herself off the floor,
in a panic, she called the Realtor to let him know what happened.
The Realtor picks up the phone to give the loan's officer a blast, only
to be told to mind his own business. He calls the Manager of the
Bank who goes over the file and agrees with the decision that a guarantor
is required, even though his loan's officer allowed the waiving of the
financing condition. Melanie is having nightmares. The Realtor
has me call her.
I took down all the information and knew straight away that a "normal"
lender would not do what Melanie wanted. All normal lenders go by
debt service ratios, which of course means that the applicant must have
a job; although theoretically speaking, anybody can be laid off a blink
of an eye. The fact that Melanie had oodles of money in the Bank
showed no compromise from her Banker.
I went directly to an "equity" lender and got the deal approved instantaneously.
The pricing was a little more expensive that what Melanie had been told
by her Banker, of course she had heard numerous things from him.
She would live with the 7.45% rate and a fee of $1000.
The equity lender lives up to its name. This type of institution
only cares about the quality of the property and the amount of the loan
versus the value of the property. The higher the loan to value, the
higher the rate. The property location should also be favourable
toward disposal, if something goes wrong. At the first sign of trouble,
the lender applies to terminate the agreement and sell the property.
Do not waive your financing condition until you are absolutely certain
that the lender has given you a written commitment to fund your mortgage
without any other conditions. No matter what the person behind the
counter says, get it in writing. Melanie gets her property but has
aged immeasurably due to stress. Tranquillity may now set in.