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Dealing with last-minute mortgage glitches

Read mortgage fine print

Read your mortgage paperwork.

I am sharing this situation as a reminder of the importance of reading the fine print. I have been working on a refinance at renewal for a couple in northern B.C. They tried to sell their home but their acreage is unique and they did not have any offers. Their home sat on the market for more than a year and their mortgage was coming up for renewal.

In the meantime, life happened. They were at their limits on multiple credit cards and credit lines and were stretched pretty thin. Work slowed for a bit so his income was down and they had a new baby and she was on maternity leave.

They did have a significant amount of equity in their home, so the plan was made to consolidate their debt to improve cash flow for the short-term. We got an approval with a great rate. So far, so good.

The approval stipulated most of their credit cards and lines of credit would be closed. I submitted the application specifying which ones were to be left open and which were to be closed. When the mortgage commitment came from the lender, I double-checked the list and all was in order.

The lender pulled the clients’ credit reports about two weeks before closing and came back with a few changes because they were now over limit on two more cards. The clients went to the lawyer and learned the new lender wanted an additional credit card closed. That particular card was one they used for rewards points, so they were not willing to close that specific card.

They discovered this change when they were signing with the lawyer two days prior to their scheduled closing date. I became aware of this the morning their mortgage should have finalized. Their lawyer told them it wasn’t an issue and she would sort it out, but the lender was unwilling to compromise.

The clients called me and were very frustrated. After several calls back and forth with the lender and the client, we were able to reconfigure their file a bit so that card stayed open and another credit line was closed.

So where does reading your mortgage paperwork come in?

Most people think once they sign their original documents from their mortgage person their financing is set in stone. In fact, there is always fine print that includes something to say any material change to the clients’ financial situation may cause the financing to be altered or cancelled.

A wise broker I know shared a list of 10 mortgage “commandments” with me in my early days. It laid out 10 things you should never do between the time your mortgage is approved and the time it finalizes. It includes things like not change jobs, buy a new vehicle, co-sign for any loans, spend your down payment, go over limit on your credit cards, etc.

At the time, I remember thinking to myself the list was so condescending I would never share it with clients.

After many years and interesting scenarios as a broker, I go over this list with almost every client. If you think no one would do those things, I can assure you I’ve seen it happen.

In this situation, we were able to sort things out and their mortgage funded the next day.

If you run into something similar at the last minute, loop your mortgage person in. They will likely have no idea things are happening behind the scenes and they are in the best position to help you navigate through it. Our goal is to help you have a smooth experience, so we are here all the way through the process.

Part of my practice is to connect with my clients’ legal representatives so they have my contact information in case anything like this pops up at the last minute.

Clients often don’t know they can reach out for help, and the lawyers may not think to ask.

Should something like this happen to you at closing time, take a deep breath and reach out to your mortgage person.

It may be very simple to solve when the right people are helping.

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



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About the Author

Tracy Head helps busy families get a head start on home ownership.

With today’s increasingly complicated mortgage rules, Tracy spends time getting to know her clients and helps them to better understand the mortgage process. She supports her clients before, during, and after their mortgage is in place.

Tracy works closely with her clients, offering advice and options. With access to more than 40 different lenders. She is able to assist with residential, commercial, and reverse mortgages in order to match the needs of her clients with the right mortgage package.

Tracy works hard to find the right fit for her clients and provide support for years down the road.

Call Tracy at 250-826-5857 or reach out by email [email protected]

Visit her website at www.headstartmortgages.com

Download her app: Headstart Mortgage Architects

 

 



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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