Documents required for a home buyers pre-approval
A mortgage lender will ask a prospective home buyer for a number of documents. In this interview, mortgage specialist Mike Schroeder of Mortgage Architects, explains and lists the documents which will be required.
For a full transcript, click the arrow
[00:00:00] Bo Kauffmann – REALTOR: In any hot real estate market buyers know they need to get pre-approved before even looking at homes. So how do we streamline that process? That’s coming up next on Winnipeg’s real estate podcast.
[00:00:28] Bo Kauffmann – REALTOR: Hello, everybody Bo Kauffmann here, Remax performance Realty. And today we’re talking about pre-approval. Now that’s been around for awhile buyers. These days know that they need to get pre-approved by the way, pre-approval is different than pre-qualification. When a buyer goes up to a bank teller and says, Hey, I make 60 grand a year.
How much of a mortgage can I afford? Can you plug those numbers in? And the teller gives them. That’s pre qualification. That’s not what we’re looking for. We need something a lot deeper than that. We need something where they do a bit of a dive into your financial abilities to financial history, your credit rating.
And that’s called a pre-approval. Now, depending on who you’re dealing with or pre-approval. Take just a few hours or it could take days. A lot of times it depends on the financial institution you’re dealing with, but it can also be helped. Like the process can be sped up by you, the buyer being ready for the questions they’re going to answer, because no matter where you go, they’re going to need a number of documents from you.
And today we’re going to talk to my good buddy Mike Schroeder of mortgage architects. And he’s going to give us a list of documents that you, the buyer have to have. So you, you may as well spend the time to dig them out, have them ready and really impressed the hell out of them when they ask for those documents and you say, Hey, I’ve got everything ready in a file here for you.
I’ll email it to you. A lot of times that pre-approval process can be cut down to a mere hours. So here we are, help me in welcoming Mike Schroeder to the show. All right, Mike, welcome back to the show.
[00:01:53] Mike Schroeder – Mortgage Architects: Good morning, Bob, how are you doing today?
[00:01:55] Bo Kauffmann – REALTOR: Excellent. Excellent. How are you? Are you
[00:01:57] Mike Schroeder – Mortgage Architects: busy? Oh man. This has been great.
All everyone’s buying and selling homes you say? So it’s been
[00:02:02] Bo Kauffmann – REALTOR: crazy. Okay. All right. So we’re talking about what a buyer can do to kind of shorten that whole pre-approval process and they can, as quick as possible some of the documents that they need, that your you and other lenders are likely going to ask them for.
So let’s start with that. What, what do buyers need to provide to get pre.
[00:02:21] Mike Schroeder – Mortgage Architects: Sure. So we can break the documents down to three different categories. We have to show how much money you make. So your income, we have to cover your down payment and we have to go over your credit. So let’s start at the beginning of that first question of course would be, would be, are you employed or are you self employed?
If you’re employed at the company that really, we need the last pace. Have you received your last two years of G4S? If you’ve been the employer that long, that will give us a good establishment on Granger. Don’t forget if you’re receiving the Canadian child benefits that many lenders will also accept that as a valid thing.
Now, if you’re self-employed, we need to get your last two years and they’ve been tax returns. One of the easiest way of getting those tax returns is to contact your accountant because they have them all filed away for you. So you really should have both either of those items ready to go when you’re ready to get them.
[00:03:14] Bo Kauffmann – REALTOR: Okay, quick question for you. I’ve heard people say that they need a letter from their employer. When does that come into effect?
[00:03:20] Mike Schroeder – Mortgage Architects: Sure. So yes, we will need a letter from their employer, but I understand that sometimes employers are delayed in getting you there. If we have your teeth boards and your pay stub, that is enough to get the process started on your pre-approval.
We can always ask for more documents later on, but at least we’ve got this process started.
[00:03:37] Bo Kauffmann – REALTOR: It still, wouldn’t be a bad idea for a buyer to just reach out to his employer and say, Hey, could you give me a quick letter? What is, what needs to be in there? You’ve been working here for X number of years.
[00:03:44] Mike Schroeder – Mortgage Architects: Yeah.
So when you’re starting there, how you’re paid, uh, whether you’re on commission, whether you see bonuses, uh, whether or not you’re on probation and, uh, someone of a lender can contact. If they want to, just to verify the information.
[00:03:58] Bo Kauffmann – REALTOR: I’m talking in full. Okay, excellent. So that covers the income portion.
[00:04:03] Mike Schroeder – Mortgage Architects: And so next would be down payment. So this one’s a little bit trickier because the documents we need will really depend on whether you’re down to humans coming from. So there’s more, so here’s some questions for you that. Is the money coming from money you’ve saved yourself. So that could be from an employer matched RSP or employer match tax-free savings account, maybe money you’ve been saving the bank philosophy months.
The other question will be is if they’re coming as a gift, so maybe you have a parent or a sibling or a grandparent who’s gifting you money for a down payment. Well, that will change the documentation that as well. The other two factors will be that if any of the money’s coming into modus, And lastly they, the money is being bored.
So for down payment, more so just know where the money is coming from first. And then we can give you some more details on what people are working from there.
[00:04:54] Bo Kauffmann – REALTOR: So people can actually borrow money for that 5% down payment, correct.
[00:04:58] Mike Schroeder – Mortgage Architects: That most of them don’t realize that, but you can actually bore it usually on like a, a line of credit or a short-term loan.
And then that money can be used legally for a down payment, a.
[00:05:10] Bo Kauffmann – REALTOR: But of course the payments that you make on that new loan will also affect how much you can afford on a house. Like it goes against your credit score.
[00:05:17] Mike Schroeder – Mortgage Architects: Correct. And that’s one reason why a lot of people often don’t do it. Um, but it is an option for you.
And we’re really comes in handy is if you’re short, say some of the down payment, so maybe you need $20,000 for down payment and you have 15, $16,000 saved up. You can make it the difference or that, and that can really help you in buying the house you want.
[00:05:37] Bo Kauffmann – REALTOR: Okay. Cool.
[00:05:41] Mike Schroeder – Mortgage Architects: We’ll be right back after this short
[00:05:43] Bo Kauffmann – REALTOR: announcement.
[00:05:47] Mike Schroeder – Mortgage Architects: This episode of Winnipeg’s real estate podcast is brought to you by total moving, providing, moving services, packing supplies, assembly, and organizing for residential and commercial clients guaranteeing no hidden fees while providing the most efficient moving process. Call 4, 3, 1 4 4 1 move. Or get an estimate email@example.com that’s total moving Metta.
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[00:06:14] Bo Kauffmann – REALTOR: And we’re back. And Mike is going to tell us about the last set of documents we need.
[00:06:20] Mike Schroeder – Mortgage Architects: And then the last one will be the credit report. So all we need to do is a pull. A credit report is the information you provide anyways, accurate standard Bersin number. But here’s the key. We find that about quarter of all Clara reports have errors, and we want to pull your credit as early as we can.
I’m not making this up last month. We had a client who they had combined his credit report with Jim or with a similar name from Vancouver. They now said that he was responsible for it $900 a month car payment, which you can imagine affect how much has been pre-approved for it. Right? So fortunately we have a contact at the credit agency where we can go and repair and we can actually help correct those items for you with no cost.
And so just wanted to keep might as additional services we offer is making sure that your credit report is actually.
[00:07:05] Bo Kauffmann – REALTOR: No in that case, how long did it take to repair that?
[00:07:08] Mike Schroeder – Mortgage Architects: I took a couple of
[00:07:09] Bo Kauffmann – REALTOR: weeks. Okay. I’ve heard stories that it can take, sometimes it can take months. Is that, is that true? Like for different kinds of
[00:07:17] Mike Schroeder – Mortgage Architects: issues, it can sometimes take longer.
What is nice though, is that as mortgage brokers, we actually have access to a backend, uh, contact method through Equifax. And so we can use escalate the matter yet. Correct. And more quickly than clients could have they just called.
[00:07:33] Bo Kauffmann – REALTOR: Okay. So, um, it being pre-approved one of the benefits is that you lock in that mortgage rate, which of course now there’s a good threat of it going up.
Right. So how long can you lock it
[00:07:43] Mike Schroeder – Mortgage Architects: in for, uh, between 90 and 120 days, depending on the lender. So call between three and four months.
[00:07:50] Bo Kauffmann – REALTOR: Okay. Awesome. Um, yeah, it’s only gone up a quarter point, but the chance of it going up another quarter point in the next three to four months is pretty real, right. Well,
[00:08:00] Mike Schroeder – Mortgage Architects: don’t forget the, even though the variable rate just went up by a little bit, our fixed rates have been going up by a lot.
Um, so just to give you an example, I had a client that I got approved for a mortgage purchase two weeks ago, and they got approved at 2.99%. They’re taking possession of their house tomorrow. If they had got their, their approval tomorrow, their rate would have been 3.3%. It’s gone up by 0.3 on the fixed side in two weeks.
And so you want to get that information. You can get that rate locked in. Some, give you may office in care.
[00:08:31] Bo Kauffmann – REALTOR: Okay. And how do people get ahold of you make
[00:08:33] Mike Schroeder – Mortgage Architects: sure? So one of the best ways is to my website, like sure. Dot CA uh, you also book an appoint with me. You know, my knowledge is firstname.lastname@example.org.
You can also find us on Facebook and Instagram and in businesses by this partner is my wife. And we know these are mortgage couple on social.
[00:08:49] Bo Kauffmann – REALTOR: You’re a mortgage couple. Awesome. Okay, Mike, thank you very much. Some valuable information once again, and let’s do this again in two weeks. What are we going to talk about that?
Have you, have you thought about what we’re going to do next?
[00:09:01] Mike Schroeder – Mortgage Architects: Um, so the, the, the topic I was thinking would to bring up potentially would be other types of mortgages that people don’t think about, uh, such as a home equity lines of credit interest, only payments, cash back mortgages. Uh there’s uh, most people don’t realize just how many options are out there.
And so kind of give you some of the different mortgage products you can think about. It goes beyond the fixed versus variable compensation.
[00:09:22] Bo Kauffmann – REALTOR: Sure. Yeah, that sounds, that sounds interesting. I, I think I can learn a lot there too. Again, it’s been educational. Thank you very much for your time, Mike.
[00:09:30] Mike Schroeder – Mortgage Architects: No problem.
One last thing. There’s no such thing as a stupid question for anyone out there, listening to this, always feel free to, they can reach out to us with any more questions. It’s all been asked before and we’re here to help guide you through it. So please no such thing as a dumb question, always ask. Thanks, Mike.
[00:09:43] Bo Kauffmann – REALTOR: We’ll talk to you soon. Take care. Bye-bye. Are
[00:10:26] You’ve been listening to Bo Kauffmann of Remax performance Realty. Are you thinking of buying or selling a house or a condo in Winnipeg called Bo at 2 0 4 3 3 3 2 2 0 2. Remember, Bo Knows Real Estate
Interview with RBC Mobile Mortgage Specialist Jan Michael Reyes about the process and benefits of the mortgage pre-approval process, before buying a house or condo in Winnipeg.
For a transcript of this episode, click the down arrow
Announcer: [00:00:27] Buying or selling a home. Require specialists from multiple related fields. Everything you need to know direct from the source as the Real Estate Roundtable presents as an expert. Mortgage Pre-Approval.
Ryan: [00:00:38] And today we welcome Jan Reyess of RBC mortgages. Welcome to the show Jan.
Jan Reyes: [00:00:42] Thanks for having me. You guys are really exciting.
Bo Kauffmann: [00:00:45] Tell me what can people expect when securing a mortgage during the home buying process, a mortgage pre-approval
Jan Reyes: [00:00:49] Well I’d like to preface this by saying every situation is going to be a little bit different. I like to keep things tidy and organized. I like to have kind of an order of operations when we do things is probably going to tell you guys the whole process is going to be really emotional.
Jan Reyes: [00:01:04] I assume you’ve told clients that what my job is is I like to make sure that things are just about as easy peasy as possible. Right. So to give you an example of what what my interaction looks like everything is going to start off with a phone call and that right then and there we’re going to talk about what to expect throughout the next few weeks months however long it takes. The biggest thing that that I would like to get out of the way is documentation. If you want this process to happen as easy as possible I’m going to ask you to bring a whole bunch of documents right up front at the beginning. The worst thing that could happen is me chasing clients around for documentation making things longer and making things more stressful especially right when maybe there’s an offer on the table and you need to follow that timeline really quickly. We don’t work during bank hours we don’t work 9:00 to 5:00 sometimes sometimes is going to need an answer at 7:00 p.m. that night. I want to be ready for when both says hey listen we need an answer tonight. We’re writing an offer right now. I need to know.
Jan Reyes: [00:02:12] Yeah yeah. So as much as we can. Let’s get all the boring documentation out of the way. We’ll get you pre-approved. We’ll talk about that a little bit later on. And then as many of the variables we can take out right at the beginning. Let’s do that and let’s make it easy peasy right till the end. So yeah of course people can fax and e-mail in those documents. But if you need to go somewhere to pick something up yeah you can do that. You’re not stuck behind the desk.[00:02:39] There has to be at least one one on one meeting. I definitely need to know that you really exist clients. But yeah once we have that established we can let’s use technology as much as we can e-mail fax whatever it may be and let’s get this done for you as easy as possible.
Ryan: [00:02:55] Now this is a question for both of you. Why is it so important to have preapproval in hand before you start looking for it home.[00:03:02] The way I look at that is I want to make Bo’s life as easy as possible.
Bo Kauffmann: [00:03:05] Thank you. Thank you.
Jan Reyes: [00:03:07] I did say it a couple of times that this whole process starting with Bo. It’s very very emotional. So when we take out a lot of the variables when we can say hey listen your financing looks pretty fantastic you’re pretty approved. That gives Beau and yourself the confidence to start looking at houses. The worst thing that could happen to us is you guys fall in love with two or three houses you can offer and then unfortunately I have to say no at the end you can’t afford it.
Bo Kauffmann: [00:03:35] You know we didn’t probably do things so a lot of times to a bank will let’s say pre-approved somebody for three hundred thousand. That doesn’t mean you have to spend 300000. You’ll come to me and say you know what my max is 275 and that’s fine. I respect that we set up the search to go up to 275. But you know what’s going to happen invariably is we’re going to look at a bunch of houses and they might not be up to your standards. And we we stumble across one that’s 290 and it’s nice to know that we can at least make an offer on that. It’s nice to know going in that that is if you choose to go that high that you’re going to be approved for it. We don’t fall in love with houses and then discover that you’re out by 25 grand. So it’s very very important to set our standards set our expectations and know how far we can go. Is it also good to have that extra headroom in case a bidding war happens. And you know what. I totally respect buyers that come and say Oh I’m never going to get involved in a bidding war. I don’t want that.
Bo Kauffmann: [00:04:32] That’s easy to say until you walk into that house that has absolutely everything you want and wouldn’t you know it. It also has absolutely everything that three other people want. So I don’t want to get in a bidding war means that you only accept a house that nobody else wants. And that’s just not reality.
Jan Reyes: [00:04:51] My experience when I bought my first home. My wife and I we weren’t going to settle for any old home. This is the house that we were going to live in for the next 10 fifteen years we were going to raise both of our beautiful daughters in this house until whenever they wanted to leave and we fell in love with every home that we put an offer in. And that doesn’t mean that we were going to get that home. And I guess we didn’t understand that concept so I hadn’t met Bo yet but when my realtor told us that we didn’t get the first and the second and third house man the conversation the home wasn’t wasn’t the finest. Right.
Bo Kauffmann: [00:05:23] Yeah. So are you still in your original home.
Jan Reyes: [00:05:26] I am. I am yeah.
Bo Kauffmann: [00:05:27] That’s no good. How long you been there. OK it’s time to talk.
Jan Reyes: [00:05:35] I’d like to talk about one more thing about preapproval. They are fantastic. But there’s a notion there that people think that because I’m preapproved. I am good to go there. Nothing wrong happened but the financier really the simplest way I can put a preapproval is we’re going to take a look at your finances and we’re going to take a look at numbers. We’re going to take a look at credit. We’re going to take a look at your relationship with the World Bank whatever that may be. And we’re going to say yes financially you look pretty good and you should be able to afford such and such amount on the home. But there are other factors so both can talk to you about financing conditions and all of that good stuff it’s still a good thing to have. I want to give you a specific example I gave a preapproval to a client. Financially they are perfect. They were really good. They went and put an offer on a home. We had to send out an appraiser on the home and the home itself didn’t meet our standards. So that effectively could decline your application. No matter how great your finances are so don’t get me wrong. Rules are fantastic it takes 80 percent of the worry out but it’s not the end all be all in your home buying process especially in a case where somebody is putting down less than 20 percent there is still CMHC.
Bo Kauffmann: [00:06:47] Yes and they will definitely take the house into account. And I guess in this case what you’re talking about is we had to do an appraisal somebody actually put on more than 20 percent of my right. I guess the overpaid for the house or whatever happened I don’t know what what the scenario was.
Jan Reyes: [00:07:01] So I saw a good specialist or a good mortgage professional will outline on your preapproval that you’re good for the finances but there will be that part on the letter that says maybe you should still consider putting a financing condition on leave that to you and Bo because something could happen at the end. And we just want to make sure we’re ok.
Bo Kauffmann: [00:07:18] When it comes down to payment and amortization what should people really focus on.
Jan Reyes: [00:07:23] So this is going to come up a couple times through art review. When we when we sit down and we talk about your situation and what type and what kind of mortgage is going to be the best fit for you. Avi I’m obviously going to guide you through all of that. That good stuff but how you’re going to want to look at it is what your goals are. So everybody can say yes I want a mortgage for 100 years so my payment is as low as possible right now.
Jan Reyes: [00:07:49] Disclaimer We don’t have 100 year mortgages just because you heard this as you heard it from. Yeah I am calling about the 100 year mortgage certainly. Totally.[00:08:01] And what happens is let’s say 20 years down the line or more realistically we set you up for a 20 or 25 year mortgage where the payments are nice and easy. But you know you don’t want to stay there forever do you. Maybe this is your first home and maybe you have a couple kids down the line and you’ve outgrown the home or is the plan really to stay there for the next 10 15 20 years. For my clients who do expect to stay in their home for an extended period of time we should set a goal to get that mortgage paid off as quick as possible. One of the things I really believe in is the bank or myself I represent the bank. We make quite a bit of money off of the interest that you make on the mortgage. But I want you to pay that thing up as quick as possible. I want you to be as financially free as possible as soon as possible. So we’re going to sit down and talk about those goals as well. [00:08:54] So I want to say here that people get really hung up on an interest rate. Yes. You can save yourself half a percent here and they’re going to somebody else a couple of things you don’t want to figure out is number one affordability. Is this going to make sense for me. Am I paying extra fees when I’m looking at a lower rate thing. Yeah. Are all the fees up front or are they hiding anything. [00:09:19] I mean when you’re paying for premium product like mortgages as a premium mortgage product but the premium institution like we are are you paying for the correct type of product for you are you are you paying for what you should be getting. So my little bit all over the place but please just don’t take a look at the interest rate and go with that.
Bo Kauffmann: [00:09:39] We’ll talk about that a little bit at the end of the show and in our roundtable because consumers do have options they can go to one of the big banks. They can go to a mortgage broker they can go to a credit union and each one of those options in my mind has an advantage. But sometimes those advantages come at a cost and I’m looking forward to talking to you about that at the end of the day really. Absolutely.
Jan Reyes: [00:09:59] Now and what are some of the biggest benefits to seeing a mortgage specialist as a whole a mortgage specialist is going to be there from the beginning of the process right until the end and beyond. And I and I don’t work bank hours. You’ll see some banks. Now they close on Mondays unfortunately. I will work that Monday that the bank is closed to give you an example. I’ve got a couple Boeing clients are in that industry. They get off at 1 1:00 a.m. in the morning and I have been known to pick up my phone and meet them at Tim Hortons or a coffee place and do a mortgage application right then and there. So I owe you all the time. Hey my phone is going to be on all that time. Will I answer everytime I say yes what I say but my voice mails reveal to you but I will I mean I mean I will be happy to work with you whenever wherever you’d like as long as in the city.[00:10:50] Excellent. Jan Reyes is with RBC mortgages. Jan how can people reach you if they want more information such as the list of documents they need to prepare and that hundred year mortgage. [00:11:06] My main contact is obviously my phone. Give me a call anytime. Like I said I work all hours. That number is 2 0 4 5 1 0 5 7 0 9. Conversely you can email me my email address is my first name Jan.Reyes@rbc.com. [00:11:34] Jan it’s been a real pleasure. Thanks for joining us today. [00:11:37] Thank you. Thank you guys for allowing me to be here.
For a step by step instruction, check out ‘Buying a Home – 6 Important Steps’