Tips for Mortgage Brokers
A lot of careful preparation goes into putting together a mortgage file, so if an unexpected decline is received, it can be especially frustrating. There is a way to avoid this frustration – it involves a little more groundwork before you hit ‘submit’, but it can mean a smoother process and fewer surprises.
The trick is to ask the questions that get you the information you really need. Some of the questions may seem basic, but these are the most common reasons for receiving a decline, and the questions that could have been asked ahead of time:
Condition of the Property.
One of the most common reasons for a decline on a file, is the overall condition of the property. Some of the best questions you can ask a borrower, are: What year was the house built?; Are there any unfinished projects that you may need to complete?; Does the roof, furnace, windows, or electrical need to be replaced?
Remember, the little things can matter just as much as the big ones when it comes to the overall condition of a home.
Location of the Property.
Most lenders have preferred lending areas. Usually this information is available on the lender’s website, but if you’re unsure, this is a great question for your lender’s Business Development Manager (BDM). Contact the lender’s BDM for your region, and find out if a property’s location falls within their lending zone.
Overall Strength of the File.
Ask yourself what the overall strength of the file is. Every lender is willing to consider exceptions when issuing approvals. If you have a file for which you think you might need an exception, call your BDM before you submit, and make a submission note summarizing the discussion before you send the file in for approval. Addressing exceptions before you submit rather than after is a best practice approach that will serve you well.
So, it’s all about asking the right questions – of yourself, your borrowers, and your BDMs. The key is to ask the questions before you hit submit in order to make the process as smooth as possible for everyone involved!
About Magenta Capital Corporation
Established in 1994, Magenta Capital Corporation (MCC) is one of Canada’s oldest and largest Mortgage Investment Corporation (MIC) managers. MCC sources, underwrites and manages a portfolio of primarily residential first mortgages, secured by properties located in Eastern and Southwestern Ontario, two of the strongest, most recession resistant real estate markets in the country. MCC has a 24-year track record of generating superior returns for the shareholders of Magenta Group MICs. MCC exercises oversight responsibility for the Magenta Group MICs in its capacity as General Partner of three limited partnerships, each of which is wholly owned by one of the MICs.
For more information, call us at 888-267-1744 or visit Magentainvestment.ca.