ANOTHER BANK ‘HORROR’ STORY TURNED GOOD
We recently had new clients come in who had sold their home firm and purchased another based on a bank pre-approval.
Initially they were assured “No Problem” by the bank and all seemed fine until they realized the bank was taking too long to get them an approval for their purchase financing. They had to get an extension on their financing (offer) condition only to be told later that they had been declined.
What had happened was that the couple (having sold their home) decided that since two of their credit cards were going to be paid off from the proceeds that they didn’t need to make the last few payments.
Wrong! These two delinquencies cost them dearly. Their credit scores plummeted below the acceptable minimum effectively turning them into bad credit risks from an institutional lender standpoint. Now they forfeited the chance to get a prime institutional mortgage.
They only remaining option was for them to take a private mortgage at 8 per cent or more than double the going rate. They wanted the new house that badly so they proceeded with the knowledge that within a year we could get them into a low rate mortgage.
Fortunately they had good jobs and income and could afford it, but what a hard lesson for sure.
The bottom line is this. Bank pre-approvals typically are not worth the paper they are printed on if no credit check is done. Things like this can go wrong, really wrong and present a very nasty and unwelcomed surprise.
When we give you a pre-approval you can count on it since we are very thorough which includes a credit review, proof of employment and income. In fact we are pre-approvals are guaranteed and only subject to purchasing a property, the quality and marketability of which is satisfactory to the lender. Your rate is also guaranteed in advance and you are protected.
If you are thinking of selling your home or you are in a buying mode please call us first for peace of mind protection on your next purchase.