When a friend or client asks me if I know a good dentist, contractor, or other professional, I want to feel confident that the person I recommend will be able to meet their needs and provide outstanding service.

Do you feel the same way?

If so, then I want you to know that you can always feel comfortable contacting me with questions about the services I offer.

Should you decide to recommend me to a friend or colleague, I promise to provide them with the services, information and recommendations they need for their current home or next move.

Is there anything I can do to further earn your confidence? Give me a call.

Once again, we have seen a higher number of sales this month than a year ago, making it three months in a row that this has happened.  We do of course have to keep in mind that last year, however, we had some of the lowest sales months on record.

With September 2019’s 1,314 sales we came out just above the September 10 year average, and a whopping 30% increase compared to September 2018.  September 2019 was only 3.5% higher than August 2019 and we typically will see September outperform August by more than that.

There were 7,946 active listings at the end of September 2019 which is 2% less than a month ago and 4% higher than the end of September 2018. We saw a significant decrease in the number of new listings in September 2019 compared to August with 18% fewer new listings. 

All of this is pointing towards balance in the market. Prices are coming down to where they should be, which is evident in the miniscule month to month price changes (see HPI® Benchmark Price Activity for pricing details) which is creating a new reality for sellers as there are hard numbers to help justify selling at a lower price than a home would have sold for at the beginning of 2018. 

With the prices stabilizing and home sale numbers being very close to monthly averages, it does look as if there will be some short term stability in the market for the next month or so, however, I have been speculating that this winter will be quite slow.

I think that this “burst” of activity that we have seen in the last few months is a lot of buyers who had been on the fence for several months and finally decided to pull the trigger on a purchase as sellers started to allow their prices to drop. With that in mind, if many of those buyers were on the fence for the last year, that could mean that many of the “on the fence” buyers have already purchased, potentially leaving the buyer pool to become scarce over the winter months.  This is not to say that there are not more people who wish to buy, but that there may be fewer buyers who can actually afford to purchase the home they desire as affordability and financing options are still stifling many would be buyers. 

If sales number do dip below monthly averages for the winter months, it would likely mean that prices will drop as well. This is all of course speculation on my part, and sales numbers very well could remain strong through the winter, which would likely lead to pricing stability for the foreseeable future.

Keep in mind that it is of course all relative, so if the price of your home goes down, likely so will the next type of home you are planning to purchase.  If you are looking to make a move up in property type, now can be a great time to do so as time is on your side when purchasing.

If you are thinking of buying your first home, or an investment property, now could also be a great time to do so, as I would not speculate the price drop into the winter to be too significant. Keep in mind there is certainly no need to rush into anything.

Your situation is of course unique, and I am always happy to discuss it with you and help you make a plan for the future. Consultations with me are always free, so get in touch soon!
 

pre-approval or mortgage approval. As a result, prospective home buyers and sellers are left expecting the financial institution associated with the app to lend them hundreds of thousands of dollars, despite the fact they simply keyed their names, addresses, contact information and gross income into various online fields.
 

Getting Mortgage Approval

“Every week, as many as 40% of my new clients come to me because they’ve just bought a home and discovered that mortgage pre-qualification is meaningless and that they do not have the financing required for the purchase,” says Tracy Valko, owner and principal broker of Dominion Lending Centres Valko Financial Ltd., and a director at Mortgage Professionals of Canada. 

Let’s get real: A mortgage pre-qualification gives the financial institution warm leads (names, contact information, purchasing timeline) and tells consumers how much money a financial institution might loan them. There is no way any financial institution will actually lend consumers hundreds of thousands of dollars just because they spent 45 seconds with the company’s mortgage pre-qualification tool. 

Lenders do everything they can to ensure the borrower will repay the loan. A mortgage pre-approval looks at how an individual manages his/her money to determine that person’s creditworthiness. The next step is the mortgage approval which assesses that specific person’s ability to repay a loan of a certain amount at a set interest rate on a particular home. 

“Always get a mortgage pre-approval before you start searching for a home and have a mortgage approval in place before you waive your financing condition on the offer - back out of a deal after it’s firm and you could be sued by the seller.” says Valko. “A mortgage pre-approval will tell consumers and their realtors what they can realistically afford to buy.” 

Let’s further define the terms consumers need to fully understand before they commit to a real estate agent and start shopping for a home.
 

What is Mortgage Pre-Qualification?

It takes less than 60 seconds because it requests only the most basic information, whether it’s submitted to an online app or a financial representative. Mortgage pre-qualification never requires supporting documentation that proves the consumer actually has a full-time job, is paid a weekly salary and has earned a good credit score. At best, a mortgage pre-qualification can provide a very loose, broad estimate of a consumer’s home-buying power based on the consumer’s unverified data. Because the consumer typically inputs the information into an online tool, it takes just seconds for the software, not an experienced, professional underwriter, to pre-qualify a consumer for a mortgage. 

If consumers notice and bother to read the apps’ fine print or legal disclaimers, they’ll likely see a statement like this one: “This is not a mortgage approval or pre-approval. You must submit a separate application for a mortgage approval or a mortgage pre-approval and a full credit report.” 

In other words, they’re not actually promising you a dime, let alone enough the hundreds of thousands of dollars you’ll likely need to buy a home anywhere in Canada. 
 

What is Mortgage Pre-Approval?

In general, it will take two to five business days to investigate an individual’s financial circumstances and the risk that a person might represent to the lender. The underwriter will need the basics, such as name, address and contact information in addition to detailed data on their income, assets (e.g. stocks, RRSPs, property, vehicles, savings), liabilities (e.g. debt, loans, mortgages) and their credit rating and report as well as the available down payment. Supporting documentation may be required to prove any or all of the above. 

Unlike a pre-qualifying app, lenders’ underwriters may request a letter of employment, a Notice of Assessment, pay stubs, or T4 for the two most recent years as well as documentation indicating the down payment is available. The lender or mortgage broker will also require the consumers’ permission to pull credit scores and credit reports from organizations such as Equifax.

Your credit score, typically 300 to 800+, is based on feedback from lenders who confirm that you do or don’t pay your bills in full and on time every month. The credit report includes your name, address, social insurance number and date of birth as well as your credit history, for example, your debts and assets and whether you’ve ever been sent to collection or declared bankruptcy. 

“Lenders want to know how well or how poorly you manage your money and will be looking for patterns of insufficient, late and missed payments,” says Valko.

A mortgage pre-approval is generally valid for up to 120 days at a specific interest rate unless the consumers’ circumstances change, for example, employment status, down payment, or income. For example, a consumer may not realize it, but their probationary status with a new employer, whether it’s three, six or 12 months, does matter to lenders. Likewise, a move from a salaried to a contract or self-employed position will also be seen as a higher risk. 

“I’ve had clients believe they were full time, salaried employees, then discover they’re still on probation when we start underwriting,” says Valko. “An electrician client left his full-time salaried position to work independently and didn’t realize it negated his mortgage pre-approval, which was based on the guaranteed weekly paycheck versus the sporadic earnings associated with self-employment.”
 

What is Mortgage Approval?

This is the big one. Once consumers have identified the homes they want to purchase, they need mortgage approval to buy that specific home. Lenders assess the age and condition of the homes and consider comparable homes to confirm the price being paid is fair and market value. The mortgage approval is valid until the closing date unless the buyers’ circumstances change. 

“Only the mortgage approval accounts for property specifics, such as taxes or condo fees, so give your underwriter/lender time to ensure the numbers previously used are still valid and that the property is acceptable to the lender,” says Valko. 

If you’re serious about the home search and purchase process, skip the mortgage pre-qualification apps. Instead, take the time and make the effort to get mortgage pre-approval, then find the home suits you best, then get mortgage approval to close the deal. Then? Enjoy your new keys.