Economy & Mood

Recently I encountered a stark reality in the mortgage business.  I reviewed in June 2011, the profile of a couple who came to me for a mortgage.  Their situation was quite financially weak, which made them unable to get a mortgage approval at that time.  There was a gifted downpayment, a serious past credit issue, and generally limited credit scores. 

I suggested that they wait at least a few months before buying.  This advice was based on the advice of the lenders and the insurers who make the ultimate decision if a person can qualify or not.  Again, they first came to me in June, and this September they returned.  What they didn’t know was that the industry has changed.

The lenders and insurers moods have changed due to the economy:  Greece is near bankruptcy and unemployment has not improved in North America.  Those same lenders who were encouraging in June changed their minds and became discouraging in September.  The emotional part for me is, I based my advice on June’s predictions, when I encouraged the couple their deal might work.  Guess who is the bad guy now?

 I feel for people whose deals fall through, but thankfully, that doesn’t happen very often.  However, the mortgage industry is forever changing, and seems to be changing more rapidly every day.  This is not a good thing for people with poor credit and weak finances.

Lender Industry Mood

Many times you can plan your lives and actions based on the economy. When there is a strong economy, that usually means jobs are plentiful and we can feel secure in buying commodities like homes, etc. Of course, the opposite is true and you should be careful during a poor and insecure economy.

We have an interesting time now in our country when considering the above. Canada’s economy is strong and the envy of the world, yet overall the global economy is in trouble. The U.S, Ireland, Greece, Italy, Spain, etc. all are experiencing huge debt and economic challenges. How does this affect us? Well, since we depend on exports to the rest of the world, it might be wise to tread carefully if you choose to buy a home. Lenders will demand more income proof. Their mood is also cautious and that means you’ll be asked to provide whatever they want and if you don’t, you will find out how cranky they can be. Income proof such as employment letters, paystubs, T-4’s, and Notices of Assessment are important and generally asked for.

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