Mortgage brokers have relationships with lenders and advocate for you. We submit ‘clean’ documentation to lenders and help you prepare well before that. All of this reduces the ‘dark period’.
The question we get the most is “What’s happening with my mortgage?”. The borrowing process can seem like a black box where information goes in to the lender but not back out. There are a few reasons for this and a few things you can do to make sure the process goes as quickly and smoothly as it can.
It can be particularly stressful when you need to finance a property that you’ve agreed to purchase and are waiting on the lender to ‘ok’ the mortgage. As if buying a property wasn’t stressful enough!
A typical mortgage transaction has hundreds of pages of documentation. A lender reviews every page and every line. They have to. Here’s why:
Lenders have to catch exaggerations and outright fraud
A percentage of borrowers are not truthful about their financial situation.
A survey conducted by one of the largest credit agencies in the world discovered that more than 20% of younger mortgage applicants were not truthful about their financial situation. Lenders know that 2 of every 10 applicants they review aren’t legitimate so they are extra diligent. This slows them down. As your broker, we know that you’re being truthful – the Lender doesn’t.
Lenders have to check off boxes and answer to the government
In an effort to avoid the speculation and lax lending rules (liar loans) that inflated the real estate and financial bubble in the United States in 2008, Canadian regulators tightened the rules and regulations around mortgage financing. Know Your Client (KYC), Anti-money laundering (AML), identity fraud, fraud for shelter and the list goes on with rules for how Lenders manage their business.
Today’s transactions are considerable. Lenders need to comply with a long list of rules, scrutinize what’s in front of them and make sure that the money is available when we need it. This takes time.
How to reduce the ‘black box’ period
Working with a mortgage broker is a good start. We have relationships with lenders and act as intermediaries when problems pop up. We also submit ‘clean’ documentation to lenders on your behalf. This means lenders get exactly the information they need (and not more). This means fewer requests. Also, try to be as ready to buy as you can be. Have a clean credit history and a stable employment situation. Line up your ducks. We can help with that too.
A lender will still have supplemental questions and request further documentation to meet conditions. This is normal. The borrowing process is complex and full of hurdles. But with good advice, good credit, clean paperwork and a little more patience than you expected to need — we will get you into your next home.