The mortgage application process is a critical stage for brokers and agents. It is also the best time for mortgage due diligence.
Often, when a deal falls through at the closure stage it has to do with something that could have been spotted during the application process.
When validating deals at the application stage, there are three important points to check. We have put together this checklist for brokers and agents to verify a deal before too much time and money is sunk in.
Three-Point Checklist for Validating Mortgage Deals During the Application Stage
- Validate the property value
Customers often mis-estimate their property value, which – if taken at the client’s word – could lead to a deal that does not end up happening. Even if the deal goes through anyway, there could be a potential missed upsell opportunity when there is more equity than you know about.
The solution: use an automated valuation model (AVM) at the application stage to verify the property value.
- Validate homeownership
Often other people are on title, such as parents and spouses. But many customers might not know that they need their spouse to sign. And in the case of co-signors, such as parents, other family members, or friends — many homeowners do not realize that they are even on the title.
The solution: use a Property Details Report to validate the legal homeowners at the application stage.
- Validate registered mortgages
This is a critical item to check because sometimes:
- Clients do not realize a line of credit or credit product is on title to the home.
- There are undischarged mortgages.
- The client has recently registered a mortgage in a much higher amount but thinks that more has been paid down than it actually has.
- There are undisclosed mortgages.
The solution: run an Equity Estimate to learn details about all registered mortgages on title and estimate the equity available in a property.
The above three items can cause deals to implode but are completely avoidable with upfront due diligence. In most cases, deals that have issues in any of these areas should not even make it to a lender.
By knowing more during the mortgage application process, you can save yourself – and your partners – a lot of time, effort, and money.
Purview offers AVMs, Property Details Reports, Equity Estimates, and more for Ontario mortgage brokers. Contact us today to learn how to get started. Call 1-855-787-8439 or visit www.purview.ca.
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