Avoid the home-buying mouse trap

Brandon Scott is a Sherwood Park & Edmonton based mortgage consultant and the author of a weekly column entitled Real Estate Solutions in the Sherwood Park News. This article was originally published on October 19 , 2012 Before there was PlayStation 3 and Xbox 360, there was a different type of game being played in the home. That’s right, the board game. Who remembers playing board games growing-up? One of my personal favourites as a child was called Mouse Trap. The game begins with players navigating various obstacles in order to safely reach the much-desired cheese without falling victim to the trap. It came with many pieces that added to its “cool factor” like rotating gears, which would then tip a bucket with a marble that would then roll down a chute, and into a washtub-like item and set off many other thingamajigs, ultimately trapping the mouse. Be the last un-captured mouse in the game and you win. Without a doubt, there are people out there who felt their last home purchase resembled this game. With sound advice and careful planning, your next purchase can be an altogether different experience. Once an offer to purchase is made on a home, the seller will normally agree to provide the potential buyer with a specified number of days to arrange his or her financing. This is commonly known as the condition of financing and sets into motion a series of events that will move forward quickly and either bring you closer to your cheese (home) or ensnare you with red tape. Here are a few tips to help you avoid the mouse trap: • Mouse Trap Tip 1: Before you make an offer on a home, make sure you have your paperwork in order. Your mortgage professional will tell you what’s needed in advance so as to minimize any delays. Trying to obtain a previous year’s tax document from the Canada Revenue Agency (CRA), for instance, can take time to locate, especially if you require the CRA to mail you a new one. If you make an offer on a home and do not have the right documents that the bank or lender requires, you could miss out on getting the home of your dreams if the seller is not able or willing to grant you an extension. • Mouse Trap Tip 2: When agreeing to a condition of financing deadline date with the seller, take into account holidays and weekends. While possible, it is not easy to obtain a full unconditional approval (start to finish) in less than 48 hours. Do not assume that an offer written Wednesday evening can be lender-approved Monday. This means your application is keyed-in and submitted Thursday and may not even get looked at by an underwriter until Friday or Monday of the following week. Even if it does get reviewed and approved on Friday (technically 24 hours later), the lender still has to review all the documentation (pay stubs, down payment details, etc.). This process can take up to another 24 to 48 hours. Once the lender reviews your paperwork, they may have more questions or request additional documentation thereby causing more delay in reaching your goal of obtaining a final approval. • Mouse Trap Tip 3: As much as any mortgage company wants to roll out the red carpet and earn your business by obtaining a fast approval for you, it is helpful to understand that there is a queue for applications submitted and a lender can be working their way through hundreds or thousands of applications being submitted from all over the country. Even though your application was submitted to the bank or lender for approval, know that it does take time for the underwriter to get to your application as they first have to finish the pile of other applications submitted before yours. You can almost see the cheese, but remember there are still obstacles to overcome. By keeping these simple things in mind, you can avoid the mouse trap. Download the current e-edition of the Sherwood Park News