If At First You Don't Succeed....Call A Broker!
 February 11 2013     Posted by Mary Poburan

If At First You Don’t Succeed….Call A Broker!

                Ideally this should say, “If you want to Succeed at first…call a Broker” as my topic today deals with lending guidelines and how they differ from lender to lender. Most people are aware that you can get a mortgage from either a bank, or from a smaller finance company or even a private lender as they all cater to different types of borrowers, but did you know that lending guidelines can even differ greatly from bank to bank. Although legislation has outlined the guidelines that banks must adhere to,  many banks also have an obligation to maintain even more rigid lending practices for their own mortgage portfolio. One very clear example of this is in regards to total debt servicing. Although the maximum threshold is currently at 45%, some lenders including some major Financial Institutions, have insisted on applicants not exceeding a debt ratio of 40%. This could mean that one bank could say “no” when another is perfectly happy to extend mortgage financing.

The other factor to consider is that different lenders factor in different variables into the debt load. Some include a minimum 3% payment on all approved credit limits while others use only 3% payments on balances, while others are happy to exclude debts that do not carry balances or that are paid monthly.

Another consideration is that lenders differ on their minimum credit score requirement. Some banks require a credit score of 680 while again others are happy to go as low as 600. This can be the difference between success and failure.

There are numerous other finer points to a mortgage application but they are too numerous to outline. The bottom line is that it is MY JOB to worry about these isues. As a client you need to present me with the facts and allow my experience and knowledge to guide me where to go for approval. As a broker I need to ensure that I find a lender that is able and willing to be flexible according to individual circumstance. If you are only dealing with one specific Bank or lender, you are at the mercy of their particular guidelines so if declined, you will be starting over with another bank. By dealing with a broker, we can shift from lender to lender seamlessly without pulling multiple credit bureaus and possibly bruising your credit. In this ever changing lending environment do not trust your Mortgage approval to chance! Remember...Not all Mortgage approvals are Equal!