A buyer can qualify for a mortgage and still be declined on the house; here are the two property problems lenders push back on.
In my blog, I’m Pre-Approved … What’s the Rush?, I talked about the misconception of a pre-approval. Today, I’d like to advise you on two areas to consider that could affect pre-approval and final mortgage approval: Condition of the Property and the Condo Building.
Condition of the property
The “DIY” shows have made fixer-uppers look very popular. However, lenders see it differently. A “handyperson’s dream” or a “re-model your way” can be very difficult to fund. Lenders don’t like poor conditions and if a home inspection finds defective areas, then the chances are very slim for a mortgage.
The condo building, not just the unit
It’s true that you are buying the condo and not the building. And even though all efforts have been made by the current condo owner to maintain and update the condo unit, if the building is in an undesirable state with higher than average fees or assessments, lenders are leery. Just like the condition of a property, the condition of the condo building needs to be in good standing. In all honesty, this should be a red flag for you as well.
I can never stress enough good communication with a well-experienced real estate agent and mortgage broker. We are here to make sure you purchase safely, securely and confidently.
How to tell if a property will qualify for a mortgage before you offer
Ask three questions before you fall in love with a listing. Is the property insurable, meaning year-round access, a permanent heat source, potable water and a condition an appraiser will not flag? Is the use conventional, since tiny homes, mixed commercial space, former grow operations and homes on leased land each narrow the lender list? And is the price within what the lender will lend against, because a purchase above appraised value means the difference comes from you. A pre-approval says you qualify for a mortgage; the property has to qualify too. Send us the listing before you write the offer and we will tell you which lenders will look at it and what conditions to keep in. Insured mortgages follow CMHC property rules, and uninsured lenders each have their own. The short version: you qualify for a mortgage on paper, the property qualifies on inspection and appraisal, and both have to be true on closing day.
Talk to us about qualify for a mortgage
Every file is different, and a ten-minute conversation usually answers more than an hour of reading. Book a call with Lisa or Kelly, or phone 289-723-2126, and we will walk through your numbers.