Dan Ahlstrand and Clinton Wilkins are joined by Mario Cloutier of Manulife to discuss the importance of risk insurance for home additions, creditor insurance, and the importance of financial literacy.
Mortgage 101 – The three cornerstones of mortgage lending | November 2021 Part 4
In this episode of Mortgage 101 with Clinton Wilkins and Todd Veinotte, as heard on CityNews 95.7, the guys talk about the three cornerstones of mortgage lending: Income, assets, and credit. Each one is important to have secure and in good standing before you start the mortgage process. Often times borrowers have trouble with one of the three cornerstones, and we’re here to talk about what you can do to have the best possible chance of getting your mortgage application approved!
Mortgage 101 with Clinton Wilkins & Todd Veinotte: 1The three cornerstones of mortgage lending | November 2021 Part 4
Don’t feel like watching the video? Check out the transcript below.
Transcript:
Breaking down barriers with financial literacy
Clinton Wilkins: [00:00:00:04] You are like the poster boy of CityNews 95.7.
Todd Veinotte: [00:00:03:22] I am the poster boy. What do you think of that?
Clinton Wilkins: [00:00:06:07] That means that you’re like the chief talk show personality, which I think is really cool. And you know, we’re proud to have you here as a part of our brand and getting the great messaging out around financial literacy. And you know what, Todd? I think you’ve broken down a lot of barriers.
Todd Veinotte: [00:00:22:29] You think?
Clinton Wilkins: [00:00:23:04] You know, with listeners. Yeah, totally.
Todd Veinotte: [00:00:24:21] How so?
Clinton Wilkins: [00:00:26:03] Nobody wants to talk about financial literacy, but you know what? We are bringing it to the forefront, which I think is really cool. And you know, we’re talking about a lot of really interesting things like building credit. We’re talking about real estate to first-time home buyers. And, you know, these are great conversations to have. And I hope it’s lots of great content.
Check out our other segments with Leanne and James
Todd Veinotte: [00:00:45:21] And I must say I truly enjoyed our chats with Leanne and James. Good guests.
Clinton Wilkins: [00:00:50:20] They’re really cool. And you know what? They’re masters of what they do. And you know, I think it’s really important, you know, do I think Clinton is the be all and end all of mortgage lending? I mean, I’ve overseen over 4,000 transactions. So, you know, I’ve certainly have seen a lot, but I haven’t seen it all.
And I think it’s really important to bring in, you know, the people that have seen it. Like, for example, Leanne does a lot of alternative lending and she does, you know, some lending that maybe it takes a little bit more, you know, work to make it happen, which is really cool.
And James is a licenced real estate professional here in the province of Nova Scotia. And you know what? I don’t think it’s a really great time to be a realtor. I think it’s a really hard time to be a realtor, in my opinion. You know, there’s not a lot of inventory out there. And if you’re working with first-time home buyers, you know, some of these buyers are, you know, getting tired and you have to make a lot of offers sometimes even get a transaction. So it takes a lot of, you know, guts to do it.
And it’s not just the opening the door and turning on the lights. And I think sometimes that’s a perception that people have of realtors. But you know, they work really, really hard and they’re really there to protect you for the biggest purchase.
You know, we are here as mortgage brokers and, you know, talking about financial literacy to protect your finances. And you know, the mortgage is the biggest debt, but it takes a village sometimes to make it happen. And we’d love to share, you know, things about financial literacy with the village, which is really our listeners here on CityNews 95.7.
Three cornerstones of mortgage lending: Income, assets, and credit
Todd Veinotte: [00:02:17:12] Okay, so when it comes to mortgage lending and the application process, and I guess we’ll kind of transition into some of that educational component to it. Might as well, right? This is what we’re doing.
We haven’t really done this yet. Let’s talk, let’s start educating people on what they should do when it comes to being financially literate and getting ready for the initial process of buying a home. What are some first things that you would recommend that they do?
Clinton Wilkins: [00:02:44:19] Well, there’s really three cornerstones of mortgage lending. You know, the first one is credit, and then there’s assets and then there’s income. I think knowing where you stand and all of kind of those cornerstones is really important.
And sometimes consumers, you know, might have an issue with one of those cornerstones, and it doesn’t mean it’s the end of the world. It doesn’t mean that you can never get a mortgage, ever. There’s always a solution. But I think, you know, as we’ve stated, sometimes the more challenging files, you might have to have a little bit more skin in the game. It might be higher risk to the lender. That’s okay.
There’s always a way to make it work. And sometimes it’s just about that feedback and making a roadmap and making a plan. You know, we talk a little bit about the blog post that we have on our website. You know, we have, I think, over 500 blog posts on there.
“Any consumer can get a mortgage in 72 months or less”
And several years ago, I wrote a blog post that said, you know, any consumer can get a mortgage in 72 months or less, regardless of what their situation is. Yeah, 72 months is a long time, you know, that’s six years. But you know, the sins that you’ve done today are going to stay with you, maybe for a while, but usually, if people have a bit of a challenge, and I’m usually talking about things like credit, if there is a challenge, it doesn’t stay on there forever.
Clinton Wilkins: [00:04:02:18] It does eventually go away. It’s not like you’re in purgatory forever. And I think the real key is. If there have been some challenges before, you need to learn from your mistakes, and I think some of that is education, and we love educating the consumers.
I think, you know, that’s really sometimes what differentiates an unbiased mortgage professional from maybe someone walking into the branch. We see the actual credit bureau. So we see the skinny. We know what’s going on. You know, we know when there’s missed payments, we know what the utilization is. We know kind of what the high limit on that account was. We can see all these things and I sometimes feel at the branch level, they don’t necessarily see the credit score or the report kind of in detail of what we see.
So I think for us, we’re able to, you know, work with the consumer and we also use a commercial account with Equifax. And, you know, we’ve done investigations for consumers because sometimes there’s errors on the credit report. But credit isn’t the be all and end all of mortgage lending. It’s not just the “I have good credit, yes! I’m going to get the best rate. I can do five per cent down.” It’s,
Todd Veinotte: [00:05:08:24] One of the pillars.
Clinton Wilkins: [00:05:09:19] It’s definitely one of the pillars, but I think income is just as important.
Todd Veinotte: [00:05:13:15] Yeah, absolutely.
Clinton Wilkins: [00:05:14:20] You need to be able to service the debt. You don’t want to sit in a home that you can’t afford and you need to eat Kraft Dinner. I’m going to bring back some of these things that I’ve said in the past.
Todd Veinotte: [00:05:21:21] I like Kraft dinner.
Clinton Wilkins: [00:05:22:25] Yeah, I like Kraft dinner, too, but you don’t want to have eat the Kraft dinner and you don’t want to sit in a home that you can’t furnish. So, you know, obviously having income and being responsible with your indebtedness. And that’s the house. But the indebtedness might also talk about car loans or maybe unsecured debt.
Don’t buy a new car when you’re buying a house
Todd Veinotte: [00:05:42:15] That’s a bee in your bonnet is car loans.
Clinton Wilkins: [00:05:45:08] I would say car loans is probably one of my biggest bees in my bonnet. And, you know, in our Guide to Homeownership, our actual hard copy of our guide, it’s in there. It’s on our website. I’ve even shared the meme to be like when you’re buying a house, do not buy a new car.
And I’ve even had consumers that we have a pre-approval for, and, you know, maybe there’s some room in the ratios and they write me to me like, “Clinton, I think I’m going to buy a new car.” Please cease and desist. Immediately. And you know what? The people that are listening, that are working at car dealerships. And if you work in the car business, we definitely have clients.
Cars are a necessary thing. They’re usually a depreciating asset, but they’re necessary and everyone needs a car, probably in Halifax. We have a very driving culture, so I understand you need it, but you don’t need to go out and buy a new car when you’re buying a house, usually.
Todd Veinotte: [00:06:40:26] Yes. Especially when you’ve got an offer in and you’re waiting for it to close.
Clinton Wilkins: [00:06:44:19] People still do it. Trust me, they do it. And it’s like the shock and dismay. I find the number one issue is new construction. It takes a long time to get a new construction completed. So guess what? Sometimes we need a new credit bureau. What pops up?
Todd Veinotte: [00:06:57:07] New vehicle!
Clinton Wilkins: [00:06:58:04] New vehicle!
Todd Veinotte: [00:06:59:11] F150? Ouch. $800 a month. Oh no.
Clinton Wilkins: [00:07:02:08] Here’s the one thing. Not many people can buy new cars right now because there’s not a lot of inventory, just like there’s not a lot of inventory of new homes.
So you drive by these car dealerships, there’s no cars. I had my vehicle in to get serviced this week and guess what? No cars there. They have a whole dealership, all these vintage cars on display. There’s not a new car there to buy.
Todd Veinotte: [00:07:22:04] They would love a trade-in from you, though.
Clinton Wilkins: [00:07:23:17] I mean, they would. They probably pay me top dollar, but then I wouldn’t have a car. So you know what? It’s the same thing. And you know what? I’m in looking actively to buy a new home.
Your home as an asset
I’ve joked about, you know, I’m going to buy the cottage on the shore. I’m looking for that too, but I’m actively looking for a new home in Halifax. So guess what? I’m not going to go buy a new vehicle. I know better. To take my own advice. You know, like, I, you know, I can listen to myself. So we’ve talked about credit and we’ve talked about income, and that really sometimes is the debt to income ratio.
Todd Veinotte: [00:07:53:17] What about my place in Spryfield?
Clinton Wilkins: [00:07:55:01] Your place in Spryfield, the asset has really increased it. So you know, that’s a little side note for Todd and I to chat about later, and maybe we’ll talk about this later in the month. But the other thing that’s really important is asset.
And we can’t just think that, okay, we’ve good income. We’ve good credit. We can buy a home. You still need to have the assets and the assets could be RRSP. It could be savings. It could be a gift from mother, father, brother, sister. The assets are just a very important piece of the pie, and the minimum down payment in Canada is five per cent of the purchase price for the first $500,000. And then you would need to get a high ratio insured mortgage.
And you know, we can certainly go down the rabbit hole of all of the mechanics of mortgage lending. And, you know, we’re certainly going to drill down into this income and the assets and the credit. And we’ll certainly really want you to phone in and ask us all kinds of great questions later this month live on the air.
Tune in for our live show November 16 & 23 from 12 p.m. to 1 p.m.
Todd Veinotte: [00:08:53:11] So to that, let’s tee up the rest of the month, let everybody know what they can expect here in CityNews 95.7.
Clinton Wilkins: [00:08:58:12] It’s going to be financial literacy all month, all through November. We’re going to be doing two live shows, then we’re going to do phone-ins. So if you really do want to get on the air, we’ll certainly tee that up and Todd will obviously let the listeners know.
I’m going to take calls live on the air, and at the end of the month, we are going to really talk about how can we keep Financial Literacy Month going, all through the year because really we want our consumers, we want our listeners to be in the best financial position that they can be going into 2022.
You know, we’ve gone through a hard couple of years here, Todd. There’s going to be a light at the end of the tunnel. And, you know, we’re going to talk about other things like inflation and probably the Bank of Canada. We’ll talk lots more about mortgage lending and real estate.
Todd Veinotte: [00:09:40:08] Lovely. Thank you so much. It’s been a great chat, as always.
Clinton Wilkins: [00:09:42:20] Thanks for having me.
Todd Veinotte: [00:09:43:05] We’ll do it all month, all November. Thank you.
Clinton Wilkins: [00:09:45:00] Thanks, Todd.
Todd Veinotte: [00:09:45:10] That’s Clinton Wilkins and myself Todd Veinotte, Mortgage 101: Your Guide to Homeownership. Financial Literacy Month. We’ll be talking all month. We’ll be back on CityNews 95.7. Thanks for listening.
If you have any questions, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.
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