Bad advice and choices can impact real estate transactions. Here are three things you need to know about mortgages that you might think are innocent enough but can actually lead to major problems for you:
1. Closing Date Changes
If you make a change to your contracted closing date which happens to be beyond the rate hold offered to you by your lender, you may be subject to a higher interest rate. Or worse, you may no longer qualify at all for a mortgage at higher rates.
ERIE’S EDGE PRO TIP: If for whatever reason a change to the closing date in your contract is required, reach out to your lender before agreeing to the change to see if the change will effect your mortgage
2.Last Minute Price Adjustments
Sometimes a buyer and seller agree to a reduced price just prior to closing day. Generally this happens because the buyer finds something wrong during their final inspection. For example, we once found a large puddle of water in the corner of the basement.
The buyers received a $10,000 price reduction from the sellers. The last minute price change raised red flags for the lender who asked why there was a price change.
When the lender learned of the water in the basement, they withdrew financing.
3. Expensive Inclusions Included in Purchase Price
A lender’s collateral for a mortgage is the actual real estate.
Sometimes expensive inclusions, referred to as chattels, are included in the purchase price. We’ve had buyers and sellers include boats as part of a sale.
The problem with this is that a lender may question the value of the chattel(s) and deduct the value of the chattel(s) from the amount they are prepared to loan.
In addition to these three tips, MortgageOutlet.ca offers these “Ten Commandments When Buying a Home of Applying for a Mortgage”.
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