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Why deals fall apart when it comes to financing!

There are many reasons why a home purchase offer may fall apart due to financing. Many of these can be avoided by working on your financing and getting a preapproved mortgage before you even begin your journey to buying a home. You will know what your limit is and be looking at properties in your prequalified price range and that you can make an offer on that dream home with confidence. Here are two examples of what happened to clients of mine.

First time home buyers who had stopped into their bank to ask about mortgages as they were starting their home buying journey. The person at the bank asked them some basic questions and they were told they could look at homes up to $420,000. We looked at many homes and finally found one in their price range that fit all their wants and needs. We put an offer in and it was accepted subject to the usual conditions first and foremost the financing. Very close to the condition removal date, they still did not have their financing approved. I had another mortgage broker work with my buyers and she came back to me saying that she would only be able to get approval for about $320,000 based on the information they gave her. They did not get this home. What had happened here, is that they had not been preapproved as they thought . To be preapproved one must make an appointment with a mortgage consultant and go through a process which requires providing certain documentation such as pay stubs, record of employment , the last couple of years of your income tax and disclosing all other debt you may have such as credit card debt and other loans. (Be sure you have filed your income tax the last two years).

The other scenario was with clients who had landed immigrant status. They had been here for 5 years, employed at good jobs and were ready to buy. They even had a 20% down payment. They found a home, made an offer and then worked on getting their financing.  What they had not divulged was that their down payment money was still in their country of origin and they could only take it out in small increments. It was not a problem to get the money here in time for the actual completion date which was several months away, the problem was that the money was not in their bank account for 90 days which is federal law here in Canada when it comes to getting mortgage approval. So they must wait, hopefully their home will still be there when they are ready but it may not be.
In both of these cases, the buyers thought they would not have any issues with their financing and both were disappointed.  Make that appointment with a mortgage consultant now, before you start the process of looking for a home, even if it is not your first home as the lending rules are much tighter now.