Full-disclosure application

One thing I love about my work is that I learn something new every day.

• Some days, this is technical information about a specific mortgage product.
• Some days, this is new technology to help streamline my process, and some days this is a better way to communicate with my clients.
• Some days, this is a reminder about the importance of asking the right questions.

During the last few weeks, I have been working with clients trying to find a solution as they wrote at a higher price point than they qualified for. They did this before reaching out to a mortgage professional.

I found a cash-back mortgage that they are able to use to pay down their credit line. With the credit line paid off, their ratios are where they need to be and we have an approval.

Full disclosure: I am not a big fan of cash-back mortgages. The fine print on most of them states that if the client pays the mortgage in full as much as a day early, they will have to repay the entire cash-back amount to the lender, regardless of how much they have paid down on the mortgage.

When we initially completed the application, I reviewed the list of debts that came up when I pulled their credit bureau. The clients confirmed that everything seemed in order.

We pull Equifax credit reports. Some lenders also pull Transunion credit reports.

There are sometimes discrepancies between the two.

In this particular case, the clients forgot about a credit card that they were making payments on. When I asked about it, they said they had closed the card and figured because it was closed it wasn’t an issue.

Fortunately with the credit line paid off, the file still works with the outstanding balance on the card they’ve closed. Had the numbers not lined up, the clients would have had to figure out a way to get the card paid off, and they were already tight for funds.

Earlier this spring, I was working on a refinance for a couple who own their own business. We needed to use an alternative lender because they had written their income down to minimize taxes they needed to pay.

I remember asking the clients if everything was up to date with CRA. They confirmed this to be the case. They stated that they owed some income tax, which was part of what we were paying off.

They did not disclose that they also owed $20,000 in GST.

This, too, could have been a deal breaker.

I send a list to clients upfront asking for any and all documents I anticipate that the lender will require.

My learning from both of these files was to be crystal clear with my questions. I fine tune my conversations with clients every time I learn something like this.

If you are buying a home or working on a refinance or renewal, make sure you share all key information with your mortgage person. Something that you feel may not be all that important could potentially create issues with your mortgage financing.

Before making any changes mid-stream, double-check that these changes won’t affect your mortgage approval.

Changing jobs, buying something on credit, or spending part of your down payment are all things that could leave you scrambling at the last minute for a mortgage approval.

Being upfront initially will help your mortgage person navigate any issues that may arise, before they do.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.