Documents needed for Home Buyer Pre-Approval
[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.
[00:00:13] Mike Schroeder - Mortgage Architects: You're listening to the bone knows real estate podcast tips and advice for home buyers, sellers, and owners with award winning Remax agent Beau Kaufman.
[00:00:28] Bo Kauffmann - REALTOR: Hello, everybody bought Kaufman 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.
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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. No
[00:09:30] Mike Schroeder - Mortgage Architects: 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.
[00:09:47] Are you looking to buy a house or a condo in Winnipeg work with the agent who takes the time to explain the process to you, guiding you through every step for service beyond the sale book, your home buying consultation with Bo Kaufman of Remax performance today Bo knows
[00:10:01] Bo Kauffmann - REALTOR: real estate.
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[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