Buying A Home In Hamilton | Six Reasons Financial Conditions Are Needed

By Robert Floris, Lead Mortgage Broker in Hamilton

Mortgage Architects
30 years of mortgage experience
April 27, 2020

Are you thinking about buying a home in Hamilton? Congratulations!

Are you thinking of putting an offer in a home without conditions of financing? Don’t even think about it!

You may find success with the offer, but without conditions you may be entering a world filled with stress, headaches and buyers remorse.

Whatever the case, I’m going to give you an informative list that will protect the purchaser when buying a home in Hamilton and help you understand what is real in the real estate world.

1. Pre-Approvals are Worthless When Buying A Home In Hamilton

It sounds cruel doesn’t it? However, a pre-approval is only a snapshot or snippet of your personal profile. What could go wrong? Well, many banks do pre-approvals without doing a credit check. It’s insane, but true. As well, has the income really being examined? What if his property taxes are super high or your condo fees are up in the stratosphere? If they are high, you may not qualify.

A pre-approval is great, but have the financial institutions actually have seen the home? Many mortgage lenders will not lend in certain areas or specific buildings. All the above examples have been true examples which I have experienced.

2. Final Approval May Not Be The Bank’s Decision

When purchasing a home in Hamilton with less than 20% down payment, it is the insurer (CMHC, Genworth or Canada Guaranty) who officially approves your mortgage. Where do the mortgage clients get their preapproval? They get them from the bank. But who approves the financing? The insurer approves the financing. You wonder why there is a problem? Why would this happen? With less down payment, there is more risk. More mortgage risk means stricter financial conditions. Having a condition of financing allows you to walk away and get your deposit returned if not approved. Sounds smart to me.

3. Income Discrepancy

The clients belief of their income could differ greatly from the lenders view. The majority of non-approved mortgages has occurred in this category. Earnings in Canada for individuals has changed greatly from the full-time employment seen before. Today what is most common in terms of income? Part time hours, contract work, lack of guaranteed hours, and the big one: self-employed income. What are lenders and mortgage insurers seeking? A two-year consistent history of income.

The smart and easy way to protect you and your family is by simply putting in a financing clause on the agreement of purchase & sale when buying a home in Hamilton.

4. Appraisals And Home Inspections

Last week, a professional couple of hours purchased a home and had not only a financing clause, but also an inspection clause. They discovered mold in the home. Do you think they were grateful for installing this condition? Having the experience in the mortgage industry, we have come across many different situations. Inspections have revealed unreported fires, non-standard electrical wiring, cracked foundations, toxic black mold, faulty water pipes, water damage and badly damaged roofs. Do you really want buyers’ remorse?

Buyers experience many emotions, especially during the multi-offer situations. Where everyone overbid for their homes. Many appraisers hired from the insurance and mortgage lenders have come in lower than the purchase price. A good mortgage broker in Hamilton who insists on their clients having a financial condition cannot only protect his clients but but potential he be able to re-negotiate a lower price. Having a safer and less expensive home has never disappointed any clients.

5. Buying A Home In Hamilton Without Selling Your Current Home

UGH! Our theme for 2020! You purchase a home and you do not put in a condition of selling yours (thinking your home will sell easily). Well, stuff happens! The amount of stress in owning two homes is inconceivable. A client of ours unfortunately did this several years ago and he has never been the same. This really nice gentleman has continuous anxiety that he no longer works and continues to struggle with depression.

In today’s slower real estate market, worry about yourself first, the home second.

6. Passion, Emotion and Intensity Involved in Buying A Home In Hamilton

During the last 10 years of frantic real estate purchases, home prices were rising fast and multiple offers were the norm. It was a difficult time to be a mortgage broker in Hamilton, since clients emotions were losing their common sense. Although we strongly advised our clients to install financing conditions, many realtors were advising that their offer on their purchase would not be accepted unless the offer was condition free. Were the realtors correct? Partially, a great number of purchases DID NOT close due to the realtors and clients exuberance. Sadly, the clients lost their deposits and their home buying dreams were dashed.

Final Thoughts

That wraps up on why conditions MUST be used. If you have not figured it out, it is about the home buyer and only the home buyers’ happiness. The realtor, mortgage broker in Hamilton and real estate lawyer are here to guide you. If they are not giving valuable advice to protect you, I advise you to find someone who will educate you and serve you well when buying at home.

Robert Floris has been in the mortgage industry for 30 years, including working as a sales manager for a major chartered bank. Over his career, he has personally lent over $1B and proudly continues to advise and tutor his valuable clients.

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