Real estate agents who work only with clients capable of being pre-approved may be finding that their market is shrinking, thanks to mortgage changes implemented earlier this year.
Only a few months ago, self-employed home buyers, new Canadians and even those with less-than-stellar credit but who were not sub-prime could be pre-approved for a mortgage loan. With the introduction of new mortgage rules, all that has changed.
Now, even the number of lenders who give pre-approval is shrinking, with the exception of the banks, which are still pre-approving “A” clients. And some banks are only pre-approving “AA” and triple “A” clients.
Unfortunately, not all your potential clients qualify for “A” lending.
There is a strong market for sub-prime and “B” lending, and many of your clients can qualify. Take the example of the client who has been self-employed for less than a year, doesn’t have much cash for a down payment and has some derogatory credit on his file.
In the past, you may have dismissed him, but don’t be so fast; these are the types of deals that mortgage professionals do best. There are lenders who will give this client a mortgage loan. They won’t, however, give them a pre-approval; they’re going to need a live deal. And if the financing condition can be longer than five days, this is even better as an appraisal is usually required.
Discuss this issue with your mortgage professional, who will help you understand the different requirements of banks and equity lenders.