In 2015, I was asked to do a pre-approval by a couple hoping to buy a home. I went through the application with them and pre-approved them for $320,000. They were astounded, they told me that their bank told them that they were qualified to a maximum of $260,000. The clients wanted to know how I could get them more money. I looked at their credit reports and quickly found the answer.
I pointed out to them that they both had $10,000 unsecured lines of credit. They said that the bank had offered this to them several years ago but they had not used them. The zero balances confirmed their story. What they didn’t know was according to the bank’s rules, they had to consider these lines of credit as being fully utilized. The bank considered them as each carrying $300 in monthly payments that did not exist. My lenders took a zero balance as being a zero balance and I was able to get them more money and more house.
Last year I had a young man who wanted to buy a new home. He was very surprised when I told him he couldn’t afford it according to the new stress test rules. The reason being, he had a $950 a month truck payment. The only solutions available were to sell the truck. Or try and negotiate a new payment plan by stretching out the payments for another year.
The moral of the story is that it’s important to know that other debts outside of the mortgage can affect how much house you can qualify for, and that buying a vehicle or new toys like a trailer or boat before going to see yourlocal mortgage broker, can be a costly mistake. Ryan Majeau can help you through the whole home buying process but you need to have him involved early in the process. My job is to make people’s dreams come true and I do it a lot better than the banks.
If you want an unbiased, industry trained professional , helping you ensure you get the best mortgage – give Ryan Majeau a call today!
*Contributed by David of Dominion Lending Centres