There are easier approaches to getting prepared for a mortgage submission and there is a harder, more stressful route. Why not learn from the mistakes of other borrowers,experience a less stressful process and increase your mortgage options.
I am going to delve into the action items you can do to relieve your mortgage application headache. I am continuing this list from part 1 & 2 & 3.
Items below aren’t necessarily a deal breaker, as there are mortgage solutions for all types of applications, but collectively these items will increase your mortgage options. Also noted are some items unique to real estate investor applicants.
23. To increase your mortgage options, stay below an equity take out of less than $200K on a refinance. In other words, don’t sit and rack up massive equity in your property and count on an easy process for cash out refinance. In this new regulatory landscape, lenders are shying away more from simply giving borrowers such a large chunk of funds without any explanation. Lenders prefer directing funds to paying out active debts or to active investment.
24. If buying in a corporation, have your corporation structure and documents in order before submitting an offer. Also make sure the directors named in the corporation are the matching mortgage applicants (guarantors). More basic than that, understand why you are buying in a corporation in the first place (get proper legal and accounting advice).
25. Understand that commercial lending is not the same or necessarily easier than residential. There are pros and cons for each scenario, but commercial is on a different level. Commercial underwriting takes longer and a lot of effort, and comes with a lot more fees.
26. Consider mortgage terms and features, outside of just focussing on rate.
Having flexibility is important, especially to an investor. You don’t want to find out the hard way later that your mortgage didn’t fit your needs. See related blog here
27. Have access to a scanner. It’s inevitable, but we have to join today’s technological age. Sharing documents electronically enables you to get quicker and better answers about your financing needs. Organizing your files electronically is not only helpful to the mortgage broker, but to you. Once scanned, files can be at your fingertips for future use.