Why Using a Mortgage Broker Can Save You These 7 Loan Application Mistakes

1. There are too many credit enquiry notations on your credit file.

Mortgage Lenders do not like doing work for nothing, and I guess it is only natural that borrowers want to ensure they get the best deal. The problem hits the fan when you rack up too many hits on your credit file, and alarm bells start ringing at all lenders, as they all have access to the same credit files. The result can be you get your application declined from all lenders!

Loan Application Tip: Don’t sign [or give verbal approval] to any lender to access your credit file, till you have decided which lender you will be applying with. Get your Mortgage Broker to apply for the best loan you are eligible for after he or she has properly qualified your needs.

2. Your home loan submission is poorly written.

Any innocent or deliberate errors or omissions in answering questions about your credit history and your partners, can be viewed as suspicious or even fraudulent by the lender or mortgage Insurer. Most people don’t know that what you don’t say [omissions], can at law be taken as a misrepresentation of the facts.

Loan Application Tip: Have your Mortgage Broker get your credit report for all parties to the loan before you submit your loan application. Ensure that your Mortgage Broker writes a synopsis to cover your mortgage application, explaining why the loan should proceed and ironing out any wrinkles there may be.

This extra work on the part of your Mortgage Broker can get your loan application over the line, especially where your broker is a trusted party in the home loan process with a lenders back office team.

3. Your proposed home is appraised as less than the purchase price agreed.

When a property value is appraised by the lender’s valuers as less than the purchase price, you have a problem.

Because banks only lend on Loan to Value Ratios. For instance let us say that your $400,000 home is valued at $360,000. 10% deposit is 40,000 and costs are say $8,000. Yes, you have the $48,000 required. But the bank will only lend on 90% of $360,000 [the appraised value, or $330,000. With your $40,000 deposit that makes a total of $370,000 and you are $30,000 short.

Loan Application Tip: A Mortgage Broker will give you the options you need to try to resolve this, including re-negotiating the price down with the sellers agent, getting the lenders to have the valuers re-appraise, or asking the lender to appoint a new valuer [at your cost].

Another solution may be to get a new lender who has a valuer that may be more appreciative of the value of your proposed home. Finally, you may have to find another home that values better.

4. Your Lender says you have insufficient savings, deposit or income.

Down payments and income requirements and payment capacity can vary between lenders.Also, the deposit is not all the money you need to complete a home settlement. You will have conveyance lawyer costs, property tax and other costs that might include mortgage insurance, property and mortgage stamp duty.

Loan Application Tip: Ensure that you have the funds for your costs, in addition to your down payment. Your mortgage Broker can help you with all of this.

AND/OR, find a mortgage lender who has less home loan deposit requirements, or who pays your mortgage insurance for you, OR find a lender that requires no mortgage insurance as they carry that themselves.

5. You have changed jobs, or employment status recently.

Many residential mortgage lenders, [or their mortgage insurers] view changing jobs in high unemployment times as a sign of instability that may lead to you defaulting on the loan.

The other problem is that if you are on probation for 3 to 6 months, your income cannot be assessed as proof of income till the probation period has lapsed.

Loan Application Tip: Your Mortgage Broker may find a lender who calculates your repayment ability in a more favourable way, or a lender that will take a letter from your employer that your job is secure beyond probation, and then get that letter from your employer.

If that is not possible your Mortgage Broker will find a sub-prime or low doc lender to approve your loan for you.

6. You have no savings history or irregular savings patterns.

Banks like to see stable incomes and regular savings for at least 6 months prior to the loan application. This shows you can plan for buying a home. They want to see predictable inputs and outputs, as this has proven to be valuable in having less repayment pain down the line.

That can be good for the borrower and the lender.

Many banks do not like ‘unsaved deposits’ or irregular savings from windfalls and the like. If you are self employed or have seasonal ups and downs, that can be a problem.

Loan Application Tip: Your Mortgage Broker will source your loan from lenders that allow unsaved deposits, gift deposits and parent help with collateral, and parent joint ownership options, including shared equity mortgage options.

Or your broker may use lenders that specialise in small business owners and the self employed if that is your situation.

6 a. You or your partner have a bad credit rating or history.

Bad credit is often result of breaks in income streams, because of the reasons listed in point 6 above. After all the bills don’t stop just because your income does. It might be a good idea to run a credit check to find out your credit rating and credit score before you apply for a home loan, not be told by the lender that your loan application has been declined due to a poor credit score. Many Mortgage Brokers are set up to give this service, or you can apply for a credit report from the major credit reporting agencies

Loan Application Tip: If you or your partner have a poor credit history your Mortgage Broker will have already performed a credit check, and may use a nonconforming lender, that lends to borrowers with past credit issues, usually at a higher interest rate, at least for the first one to three years. Some non conforming loans are good deals!

7. The home of your dreams is undesirable in the eyes of the Mortgage Lender.

We have talked about a poor appraisal coming back, and the home being under valuation. But lenders may also have policies on the type of property they require to be pledged as mortgage security. Problems can occur with unacceptable postcodes, residential property deemed rural, rural property over 5 acres, 10 acres or 25 acres.

Loan Application Tip: Residential mortgage loans cannot be used for working farms for instance. The smaller acreages would not be viable as a working farm, and therefore may be considered as “residential rural”.

Also ‘dual key apartments’, and “ultra low area” housing units may also be unacceptable to your lender. The central policy theme in rejecting these types of security is that the property resale may take longer than the specified time to resale [usually 3 months], should the lender need to exercise a mortgagee in possession sale.

In these cases your Mortgage Broker will assist you to find niche lenders that are comfortable with these types of security, or you may need to find a property that is more in demand that the type you have selected.

Summary

Mortgage Brokerage is normally a fee free service to the borrower. So using a Mortgage Broker to help you get your home loan approved quicker and easier makes sense. Mortgage Brokers can also save you from making these eight common loan application mistakes when applying for a mortgage loan. Whilst having your loan application declined may be overcome, and you can get a great home loan without using a Mortgage Broker, why deal with the stress and bother when a Mortgage Professional can take care of everything for you and do things right in the first instance?

Important Qualities Developed During Mortgage Broker Training

For most people, transferring to a new home may both be the hardest yet the most exciting thing to do. Leaving all your past behind and starting a new life could be good reasons for change. Meeting new people in the neighborhood while keeping the previous ones will add zest to anybody’s social life. However finding and closing a mortgage loan can prove to be a challenge on its own. This is probably why people who have undergone mortgage broker training is very in demand due to their line of work, and their ability to make dreams happen.

Mortgage brokers serve as an important link for the borrowers and the lenders.It is rather not easy to find a bank or lending institution that will give out mortgage loans in an instant. There are simply too many things needed to do like forms to be filled up, backgrounds to be checked, credit ratings studied, and ability to pay must be assured. In all these troubles just to be granted a mortgage loan, one person could make everything easier; a person with a great mortgage broker training background.

In order to excel in such field, mortgage brokers need to develop certain aspects in their personality that will be very useful in their field of work; qualities that are either inert to themselves or are achieved and developed only through constant training as well as exposure to the ins and outs of the industry. Read along as I lay each one and point out their importance to the profession.

Special Interest in Real Estate Market

Since mortgage brokers pretty much work along this line of field, they must have an inert interest and flare for the real estate industry. It is easy to distinguish if a person is working with his mind or with his heart. Real estate is a very big business opportunity and only those who are deeply interested in making it big, will be granted the bigger piece of the cake. Brokers need to be updated with all that is happening in and around the real estate market in order to keep in step with the changing times.

Ability to Communicate Well

In a type of job where a simple miscommunication can cause immense impact on its result, it is a must that a mortgage broker should and will be able to communicate very well both to his client and the lenders. Most of the time, clients seeking for a mortgage loan are not totally equipped with the necessary information for it. At times, they may not even know a little about the laws governing the deal. The burden now lies to the ability of the mortgage broker to dissect this seemingly “alien” information to the borrower and turn it into something easy to understand to make sure that he/she will not be left in the dark.

Mortgage brokers also need to establish rapport in order to gather as much contacts as possible. In this line of work, contacts with people on the lending sector are the bread and butter of any broker. Without these contacts, there will be no loan assurance that can be passed on to the borrower. Without these contacts, being a mortgage broker could be a lot harder than what it originally is.

This is where the broker’s inter-personal skills will be tested. He must make himself available for these lending companies, and he must make sure he gets on the good side of the people behind the loan approval section. The ability of the mortgage broker to keep good relationships with the lending institution, will most likely result to more updated company facts that he can use in order to turn it into an approved loan for his client.

The communication pathway between the broker and the client, as well as the broker and the lending institution must be open and clear at all times. This is to ensure proper information dissemination on the client’s side, and accurate terms on the lender’s side. These qualities will be given importance during mortgage broker training sessions and will be put to the test on the actual field.

Knowledge on Mortgage Industry Laws

People say that no soldier must go into battle unprepared. So are mortgage brokers. They need to arm themselves with the necessary knowledge about laws related to the mortgage industry itself. In most cities, there are federal and state laws governing the real estate as well as the mortgage brokerage. It is also not enough to be acquainted or familiarize these laws; a brilliant broker with a good mortgage broker training background must be able to explain these laws clearly to the borrowers. He must also be able to discuss with the client everything that is written on the loan agreement form and make sure they understand each statement before letting them sign it. Information about borrower default and other issues must be clearly understood by the client before closing the deal.

Keen Eye for Details

Mortgage brokers must develop a keen eye for details when interviewing his client. He must listen to what they are specifically looking for and what they are capable of paying. It is also a must for the broker to check the credit status and background of the borrower in order to make sure he got all the information needed before he can match it up with the best possible lending institution. This is rather important because the broker must also make sure he is giving these institutions legit clients that are not hiding anything or else risk losing contacts and good relationship with the company and having a tarnished reputation on the field.

These qualities are not developed overnight. A broker must be willing to nurture it from the moment his mortgage broker training took place until the time he is up and running on the actual world. Practice makes perfect as they say, and that is the only way you can excel in this field of work.

Understanding Commercial Property Investments

Do you ever feel that you should be looking more at investments in commercial property in the saturated residential property market? If this is in your mind, you are joining the new wave of investors who wants to diversify their investment portfolio with the unstable economy.

How big exactly is the commercial property market? Generally speaking, commercial property investment is not as straightforward as residential market. In Malaysia, it is almost sure that any piece of residential property will be lapped up the moment it is launched, and everyone at some point of their life will be looking for a house of their own. Some may buy a piece of residential property and rent it out instead. For commercial properties, there are a lot of other considerations.

1. Location

Location is a very important factor when it comes to investment in commercial properties. It may be true that a lot of people are looking into creating their own business, and it will not be too hard to find someone to rent your property start their business, but if the location is not right, the chances for renting out is slim.

When you wish to invest in a commercial property, look around to see whether there are other residential properties which will support the business. You may want to take a good look at the whole development project, and check residential population surrounding the commercial lot that you are aiming for.

Also, do check if the area is a flooding area, or are there any other disadvantages. Parking space is a very important factor of consideration for any business to thrive in this modern world, and you ought to make sure that there are parking spaces near the property you wish to invest in.

2. Features

Sometimes, the success of commercial properties also comes with the features included in the project itself. For example, some properties may be managed by the developer, with facilities such as wi-fi zone, making the commercial blocks into event venues or even being selective about the types of business and brand name to qualify as tenants. Some commercial properties with such strict criteria about tenants include BM Utama in the mainland Bukit Mertajam, and Straits Quay in Penang island.

Both are project examples of two contrasting backdrop. Straits Quay is a high-end sea facing project by E&O, with very high traffic coming from its branded tenants and expensive condominiums and landed property support. Meanwhile, BM Utama is a 7-unit exclusive commercial lot owned by BM Utama’s property developer, DNP Land, and is meant to become part of the lifestyle support for the almost sold-out BM Utama. The 7 units are called The Gallery, which is available for leasing only, to ensure the quality of retailers.

3. Price

Although people are talking about market price, as an investor, you should take into consideration the price and the size of the property. It is important to note that your property lease are usually based on long term contracts, and for some cases may span for 10 years instead of the normal renewable 1 or 2 years for residential properties. Also, you need to remember that returns from residential property comes from the capital value increase, but for commercial properties, it comes from income. Although commercial properties generally will cost more than residential properties, you will still need to sieve through to see if the investment can really bring you back a good return. Is the rental price of that property able to cover the loan that you took for the purchase?

If you are buying the property for the sake of making it into a hub for your own business, then it is up to you to ensure that the business that you are going to do will bring in enough sales and income to cover for the loan repayment of the property.

Commercial property leases provides an average contracted income stream of about 7 years.

4. Ownership

When you buy any property, you need to be very clear about the type of ownership that you have. Is it a freehold or a leasehold property?

Although leasehold properties are usually released with a certain amount of payment when the expiration term arrives, there may also be conditions where the land is taken back for new development. When the lease-land period is almost reached, property prices will drop significantly.

You also will want to check on the previous ownership of the property. Most properties may have more than one owner sharing the ownership of the property, so you should get a background check about this with a trusted lawyer, also to find out if there are any underlying problems to why the property is up for sale. Make sure the property sale gets consent from all legal owners.