Mortgage 101 – Military Homebuyers

Are you relocating this posting season? Clinton Wilkins sits down with Todd Veinotte to chat about working with lenders who have Military Programs, and some of the credit requirements involved in the process of a pre-approval.

Todd Veinotte
All right! Honoring the 80th anniversary of the D Day invasion! And I think it’s important that we recognize that event which happened early in June, June 5, the anniversary of D Day.

Clinton Wilkins
And you know, we have such a huge population of military members here in Halifax, and of our client base. I always say I’m like, okay, 10% of our clients are military. I don’t know if that’s the actual number. But there are just so many. And if you’re not in the military yourself, I’m sure you know, someone who was in the military, at least here in Halifax. Yeah, we’ve such a strong representation here. And, you know, we love our military members. And there’s really so many programs that we run that are military programs. Bank of Montreal, they have their program, they’re kind of like the advertiser will call it. But other lenders do run military programs as well. And we’re certainly in the middle middle of posting season. There’s certainly some relocations happening. I don’t know if there’s as many moves this year, Todd, as there have been in the past. I think some people are reluctant to move right now, due to the cost of housing and just trying to find a new home; I get it’s tough. But there are some really great programs for those of you that are in the military. And we support those programs. We run them every day!

Todd Veinotte
So what are you hearing from people who are moving here? Where are they coming from? Obviously, if they’re coming from Ottawa, they’re probably getting deals here.

Clinton Wilkins
I think it feels like a deal, probably.

Todd Veinotte
If they’re coming from Petawawa, or some other smaller places like that, there’s probably some sticker shock as to what they’re gonna pay.

Clinton Wilkins
I do think there’s some sticker shock. I grew up in the Annapolis Valley very close to the Greenwood Air Force Base. So very familiar. And I think that’s what’s kind of interesting about the military, like we’ve people that come and go from Ottawa, and really from across the country. It just depends, if you’re in the Navy, you’re going here, or you’re probably going to Victoria. Maybe if you’re going to Victoria, you can’t afford to buy a home. That’s just reality. But, I think a lot of people when they are posted to Halifax, the dream of homeownership is possible. Although we may think it’s slightly daunting, for some people, the average house price here is still very affordable compared to the rest of the country. The average house price is still around $500,000. And, you know, it depends on obviously, what the income is. One military borrower might be able to buy a home on their own. But oftentimes, there’s two applicants on a mortgage application, and we have two incomes, which we can make that work for sure.

Todd Veinotte
How difficult is it, when it comes to what type of vehicle of mortgage, is it? Whether it be a fixed or variable, I would think for military person, a variable would make more sense.

Clinton Wilkins
I would think because they could be posted, again, they may want to break their mortgage early. You know, through the relocation program, oftentimes, they will have like three months of their interest covered if they get posted. And I mean, a lot of employers will cover a penalty if you’re asked to relocate for work. But the nice thing is the lenders that we work with that run the military programs, they will waive the penalty. If they are posted, all they need to do is give their posting message and send that in when they request the payoff statement. And that penalty is waived. So you know, if you take a fixed or you take a variable, it is a little bit more flexible for a military member if we put it through one of these military programs.

Todd Veinotte
let’s shift gears and talk about the housing stock itself. We came, we’re out of a Spring, I guess we’re still kind of in the Spring/Summer market now.

Clinton Wilkins
We’re at the end of this, Yeah! And typically the Spring is the busiest market of the year.

Todd Veinotte
Has that been true this year?

Clinton Wilkins
I’m gonna say no. I don’t think it was the busiest market. I think it’s been steady. Again, I will say it’s like 2019 and I’m okay with 2019. It wasn’t gangbusters. But it’s more balanced. Like we are seeing buyers that are getting accepted offers, and I saw a young couple today buying their first home here and I pre approved them I think back in 2020. Like, it was so long ago that I originally talked to this couple, and they made 10 offers, they didn’t get one accepted back then and experienced the discount fatigue, so they just stayed on the sidelines. I refreshed their pre-approval here just very recently. And, you know, they got an accepted offer! I always say when we do a pre-approval, people are either buying a home right away, or it takes months. And, you know, they got an accepted offer. I met with them today and they actually signed their mortgage documents and are super happy. And they said, every time they were making an offer before, they had anxiety, they were stressed. And this offer feels very calm, and so like this is probably the right place. And sometimes, as much as I say it’s business, buying a home is sometimes an emotional purchase, I get it. You know, especially when we’re worried about a place to live in many cases, it can be tough to be able to get an accepted offer. And it’s also tough for our listeners that don’t own homies yet. Its tough for even renters to find a place to rent sometimes.

Todd Veinotte
And of course, the ongoing discussion right across the country is affordability of houses. And, young people feeling as though they may not. I know you say that it’s an obtainable dream for everybody. But some people feel as though it’s a bit of a fantasy, not a dream, to get into a home because they’re young, the downpayment is an exorbitant amount of money.

Clinton Wilkins
If you’re a single borrower, and you’re in an entry level type job yes.

Todd Veinotte
Even if you’re making $80,000 a year, you’re out of the housing market.

Clinton Wilkins
You really need two incomes, yeah, to make it work. That’s just the reality of the situation, you need two incomes, you need to have decent credit, and have some money for a down payment. Sure, that’s not everybody’s situation, which we’re cognizant of. But people’s situation can change. And that’s why I think a plan is so important. If you’re missing one of these gaps, you can work on it, even if the credit is like the worst, the worst credit you’ve ever seen in your life, there’s a solution. Sometimes you just need more money down, or you need to wait out till your credit improves. And anybody’s credit can be really improved in like five or six years. So that’s not the end of the world in terms of a timeframe. Plus, it’ll give time for people to save some money.

Todd Veinotte
Never know what’s going to happen, right? Things change in a hurry!

Clinton Wilkins
Changes are really, really quick. And I sometimes find somebody’s situation can be changed in one month. Sometimes it takes five years. But you know, I always say that there’s always a solution to a mortgage situation. And that’s why I think making a plan is like really important.

Todd Veinotte
The number of people that come to you for pre-approvals, or a transaction, you’re a numbers guy, what’s the turnover rate for you, when it comes to getting a customer approved for a home?

Clinton Wilkins
I think right now, it’s somewhere around 50%.

Todd Veinotte
Is that down?

Clinton Wilkins
I think it is going down, in the sense of we getting a lot of people doing pre-approvals, but not as many accepted offers. So I think it is bringing those numbers down a little bit for me. Or, we think that if we start transacting with someone, if they do a transaction or not, I still consider them a customer. Because, either they’ll come back to us when they’re ready, or they’ll continue getting information. And it may be even years down the road when they’re ready to transact. Sometimes, for as long as 19 years. There are people that I talked to 15 years ago that we’re just finally doing a transaction with, and sometimes they come to me, and maybe they went with another lender for whatever reason. And they come and they say, I wish I would have went with you the first time, I would be in better financial shape, but I didn’t for X, Y, or Z reason. And I always say, you know what, that’s fine. Anytime that a client decides that they don’t want to transact with us, I always say to them, we’d love for you to circle back with us in the future. And people’s situations change. Maybe they got different advice, maybe their situation changed, maybe it’s just easier for them to renew with their existing lender. And that’s why I think price isn’t everything. Sometimes people choose to take a higher price due to convenience. And that’s not necessarily the right decision. Typically, when I say we’re doing mortgage lending, it’s an investment of time. Usually, we tell the consumer, you’re investing five hours of your time. But five hours oftentimes, Todd can mean $5,000. I would like to make $1,000 an hour. I don’t currently, don’t get me wrong, I don’t do it now. But I would love to make $1,000 an hour. And I think sometimes it is short sighted when a consumer is looking at their situation that way. I sometimes find people just throw their hands up in the air and get frustrated. And I think the number one frustration really comes down to documentation. People can’t find their documentation. Sometimes that is overwhelming but break it down you know get one document a day.

Todd Veinotte
Have your taxes filed! That’s a big detriment.

Clinton Wilkins
Get them filed in a day. You can get that done. Go down to H&R Block, that’s something that you need to take care of.

CRA really is stepping up their collections. And I think that’s one thing that consumers need to be aware of. You need to pay your taxes, and you need to file your taxes. On the last show, I said, you can’t avoid two things; that’s death and taxes. And, you know, I’ll continue to say that!

Todd Veinotte
So if you owe CRA that will make it difficult?

Clinton Wilkins
Being self employed, that can certainly be prohibitive. And oftentimes, people that owe income tax that own a home, they are coming to us sometimes to refinance to get their taxes paid. CRA is a preferred creditor. So technically, CRA is even in before a mortgage. That’s why you need to make sure you have your taxes paid. Because CRA needs to get paid first before the bank.

Todd Veinotte
For sure. So you’ve said this many, many times; open your mail. I mean, these are things we’ve repeated over and over. But know your situation, go online, get your credit, there’s a couple of apps, remind people these apps.

Clinton Wilkins
Borrowell and Credit Karma. Borrowell is tied on to Equifax and Credit Karma is tied on to TransUnion. They are free apps. Yeah, they’re gonna try to sell you something, you don’t need to buy it. But it’s free.! And you can trust them, they’re available on the App Store. And you can monitor your credit, they’ll send you alerts, they’ll send you emails, if anything changes with your credit. And I think if you’re going to do a big financial transaction, like get a mortgage, you should know what your credit looks like. I see consumers even today, they make an offer on the home, and they don’t even have a pre-approval, then suddenly I get to see them and they have a Beacon score in the five hundreds. It’s like, well, I can get you a mortgage, but you need 20%, 25%, or 35% down, you’re not getting a high ratio mortgage, with a Beacon score below 600. It’s just it’s not permitted.

Todd Veinotte
Yeah. So again, knowledge is power, open the bills.

Clinton Wilkins
Information is power. And hopefully we are breaking down some of these barriers. Hopefully, everyone who’s listening to our show, whether it’s on Saturday, or Sunday, or later on, wherever you get your podcasts; Apple Music, or Spotify, or you’re listening to us on the City News website, or seeing some of our social media clips. Hopefully, you are talking to your friends and family about the things that we talk about. Sometimes people just feel alone when you’re talking about finances, or you’re talking about your credit, or you’re talking about your assets. Have those conversations, sometimes they’re tough conversations to have even with your spouse, but it will make you stronger and better to just talk. And, you know, get advice from the professionals. I hear so many clients, and I’m not going to pick on teachers, but I’m just gonna use teachers as an example. We give them in the the advice, and then they’re getting advice in the lunch room. It’s all great. I’d like to get teaching advice from a teacher. But hopefully you’re getting mortgage advice from a mortgage professional, that’s usually the route that you need to go. Everyone will have an opinion about what the right way to go is. But everybody’s situation is different. And that’s why we really ask a lot of questions. And it’s not just to be nosy. I want to give people the best advice.

That’s important. It’s all great solid information. That’s what we do. That’s what it’s about right information is power. Information is indeed power or Mortgage 101, your guide to homeownership with Clinton Wilkins and myself Todd Veinotte. We’ll be right back!