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Mortgage 101 – revealing truths behind 4 mortgage myths | October 2021 Part 2

In this episode of Mortgage 101 with Clinton Wilkins and Todd Veinotte, as heard on News 95.7, the guys reveal the truths behind some of Nova Scotia’s mortgage myths! Are we in a housing price bubble? Are mortgage brokers and lenders the same? Do credit scores have to be perfect to get a mortgage? First-time buyers can’t possibly get a home right now, can they? Watch, read or listen to all the answers below!

Mortgage 101 with Clinton Wilkins & Todd Veinotte: Revealing truths behind 4 mortgage myths | October 2021 Part 2

Don’t feel like watching the video? Check out the transcript below.


Myth 1: Is Nova Scotia in a housing price bubble?

Todd Veinotte: [00:00:00:05] And it’s obviously that time of year, right? It’s Halloween time.

Clinton Wilkins: [00:00:04:08] It’s literally right around the corner, which is pretty amazing, like how fast the year went and how fast really September went.

Todd Veinotte: [00:00:13:17] And how fast life goes, eh? To be all existential. What do you think?

Clinton Wilkins: [00:00:17:00] I mean, life goes by pretty quick, sometimes.

Todd Veinotte: [00:00:18:28] Yeah, that’s why you need to buy a house. Don’t waste time.

Clinton Wilkins: [00:00:21:15] Don’t waste time. Because you know one of the myths that sometimes people think we’re going to wait and it’s going to be better. I don’t think it necessarily ever gets better in terms of the price point, Todd, and I think the myth is that there’s going to be a bubble and the bubble is going to burst.

I don’t necessarily think that’s what the situation is going to be here in Nova Scotia. And I think we’ve talked about it a little bit, obviously, that we might have renormalized our pricing a little bit and maybe it was low, artificially.

Todd Veinotte: [00:00:52:24] Or yeah, or maybe it’s artificially high.

Myth 2: Are mortgage brokers and lenders the same?

Clinton Wilkins: [00:00:55:07] I guess only time will tell. And there are certainly lots of myths that we kind of talk about all the time with consumers, and, you know, in October, we’re talking, you know, about myths. One of the big ones is around people thinking mortgage brokers and mortgage lenders are the same thing.

Todd Veinotte: [00:01:17:21] You mean you’re not the same thing?

Clinton Wilkins: [00:01:20:04] Imagine!

Todd Veinotte: [00:01:21:08] Oh, in French!

Clinton Wilkins: [00:01:22:12] I know, the lender, obviously,

Todd Veinotte: [00:01:25:25] Mix it up and use some Spanish.

Clinton Wilkins: [00:01:26:08] I don’t know any Spanish, so maybe I’ll have to learn some by our next time around. Lenders provide an actual mortgage themselves. So, you know, we deal with a lot of the big five.

For example, you can walk into the branch and you can get a mortgage or you can get a mortgage from the same lender through us. We basically facilitate the mortgage and we are a broker, I think, to help people understand a little bit.

Brokers are like a mortgage Costco

We review things like income, assets, and credit and figure out where the best fit for that customer will be. And we do a lot of the work that would normally be done by the branch, so we collect documents, we review the credit, we submit the application to underwriting where a branch would submit underwriting. So it’s similar in a way, but we are basically like Costco.

Todd Veinotte: [00:02:18:19] Yes. You just sell the products.

Clinton Wilkins: [00:02:20:27] We basically connect the borrower with the lender, but we’re only doing one type of product and it’s just toilet paper. That’s all we do all day long, and we’re really an expert just in this one niche. And I think that’s what’s so valuable. Mortgage lending is a complex widget.

Todd Veinotte: [00:02:38:15] Yes.

Clinton Wilkins: [00:02:39:22] And it can be daunting for, you know, a lot of people.

Lenders pay brokers a fee, not the client

Todd Veinotte: [00:02:42:14] So if you’re the lender you’re doing, they pay you, obviously, a fee. The client doesn’t pay you a fee. That’s important to know.

Clinton Wilkins: [00:02:49:16] Yeah, the lenders pay us for sure.

Todd Veinotte: [00:02:52:08] But it’s worth it to them because A) they’re getting the business, and B) you’re bringing them clients, but you’re doing a lot of the work.

Clinton Wilkins: [00:02:59:23] Yeah, we do the bulk of the work, obviously, and we have a bit of an economy of scale where, typically, a customer will get a lower rate from us than they will if they walk into that same lender. I know it necessarily shouldn’t be that way, but it is cheaper to deal with me than it is to deal with, you know, maybe the employee at the branch. They’re not paying me a salary or paying the rent in my office space. We’re doing those type of things.

Myth 3: Your credit does not have to be 900/900 to get a mortgage

So it does, we give everyone the lowest rate that we can. I know a lot of banks kind of price on a model, where our clients, obviously, we try to give them the very best rate that we can. You know, another big myth that we talk about all the time, Todd, is, you know, a customer’s credit has to be perfect to get a mortgage. And that’s not true.

I hope people know that by now, but I still get inquiries all the time to say, “You know what, maybe I’ve had some credit challenges in the past.” “You know, my credit isn’t 900,” it’s out of a score of nine hundred. But we see customers all the time that maybe have a score that’s decent. But maybe they had a bit of a nuance-y period in their life that maybe they missed some payments. You can’t change it, but I think if we have a good story, obviously we can present the best foot forward.

You know, another big thing is around utilization, and sometimes that’s just a snapshot in time. You know, we see customers all the time that buy a home five years ago. They do a bunch of renovations and they put the cost of those renovations on their credit cards and their lines of credit, and the utilization has brought down their score. They still have good credit, quote-unquote, but the score is low due to the utilization. So we can make some,

Utilization vs credit score

Todd Veinotte: [00:04:39:24] Define more what you mean by utilization, for those who don’t know.

Clinton Wilkins: [00:04:41:16] Utilization would be basically the amount that they owe compared to what their credit limit is. So maybe they’re high on their credit or, you know, sometimes over limit. That can really be a killer to that score.

And it doesn’t necessarily mean that you can’t get a mortgage. It just means maybe it might be a little more tough for us to make it work. And depending on obviously where the property is located, you know, there’s a variety of different lenders that will look at clients with lots of different kind of credit matrixes as well.

Todd Veinotte: [00:05:08:21] Yeah, you say it could be, but it would be harder, obviously, to pull it together. If you’ve got credit issues or not to say that you can’t, but it will be, it will create challenges and you probably will pay. And again, this is why it’s good to be a broker like you, because you can go to different lenders.

Clinton Wilkins: [00:05:23:19] Of course, yeah. And it’s not necessarily that you’ll pay a higher rate. It may just be that we have to do some work with you before we can get that approved with a normal traditional lender.

A missed credit card payment stays with you for six years

You know, and the one advice that I have on credit, Todd, is make your bill payments on time. I see it all the time, I see clients that have, you know, a $30 credit card payment that they don’t make.

The number one issue, I think, is probably cell phones. The number two issue is student loans. People like, “Oh yeah, I deferred my student loan payment.” No, that means that you missed the payment, they’re going importantly to your credit bureau, and you just don’t have to pay them right now.

But I would say cell phones, student loans definitely a huge issue, but it still shocks me to this day, you know, people are like, “Well, I made all my car payments and I made all my mortgage payments,” but they missed like a $10 payment on a credit card. Like that it stays with you for six years.

Todd Veinotte: [00:06:25:23] A $10 payment stays for six years?

Clinton Wilkins: [00:06:28:16] And that can really drive down your score. So I think knowing when your bills are due is obviously very important. I think, you know, opening your mail is important. If you move, change your address. Like, these are some basics and you think common sense is common, but it’s not always.

Todd Veinotte: [00:06:42:27] Yeah. So, a small little balance of 10 bucks, the credit card company, they’ll send that to the credit bureau?

Clinton Wilkins: [00:06:50:29] Oh yeah, they’ll mark. That is late. If you’re more than 30 days late, they’ll market it as late.

How much does one missed payment impact your credit score?

Todd Veinotte: [00:06:54:21] Oh, is that right? And how much would that impact your credit score?

Clinton Wilkins: [00:06:58:22] One missed payment? It’s hard to say how much it will. It kind of depends on like what the rest of the matrix of your score looks like. And it depends on how recent that late payment was.

Obviously, if we look at it today and its reporting as late on the credit bureau, that’ll bring your score down. If you look at it a month or two from now and you’ve brought it back up to date, but there was a recent missed payment. Yeah, that’ll probably bring the score down.

But the further that we get away from the late payments and if everything else is in good order, things are paid down, low utilization, it’ll probably bring the score back up and the score really, sometimes we work with customers and within like a month, two months, three months, they can increase their credit score, sometimes by like a hundred points.

Todd Veinotte: [00:07:42:12] Wow, just by doing a few little things.

Sometimes there are errors on consumers’ credit reports

Clinton Wilkins: [00:07:44:24] Small things. And sometimes there are errors on consumers’ credit reports that you know, we’re able to fix. We’re able to do a commercial investigation, like we deal with Equifax here.

Todd Veinotte: [00:07:57:27] What’s the other one?

Clinton Wilkins: [00:07:57:27] TransUnion.

Todd Veinotte: [00:07:58:07] Right.

Clinton Wilkins: [00:07:58:27] And we’re able to, you know, work with the customer to be able to get that credit score to really where it needs to be. We want to present the best foot forward when we are submitting a file for approval.

And you know, it’s not all just about credit, Todd. Obviously, that is a big piece of the pie, but it’s not all of it. You know, the income and the assets are also, you know, play a big role in that mortgage approval. The other myth that we really do hear quite a lot is it’s impossible to buy your first home.

Myth 4: Is it impossible for first-time buyers to buy a home?

Todd Veinotte: [00:08:32:13] What do you mean it’s impossible to buy your first home?

Clinton Wilkins: [00:08:34:15] First-time home buyers think that it’s just not possible to get into the market right now?

Todd Veinotte: [00:08:38:23] Yeah.

Clinton Wilkins: [00:08:39:20] And for some of them, yeah, it might be challenging. But let’s think about Toronto a little bit. If you can’t afford to live downtown, I know people who work in downtown Toronto that live like an hour and a half outside of the city. Yes, it might be less than ideal.

But if you really want to get that dream of homeownership, there are homes available. It might not be in HRM, but maybe it’s going to be in a more rural area of the province of Nova Scotia.

Todd Veinotte: [00:09:12:28] Right. You can drive.

Clinton Wilkins: [00:09:14:01] You can drive. And we’re in a driving culture here, like, let’s be honest. But I think the culture has changed a little bit, Todd. You know, more and more people are working at home and more people kind of have changed the way that they’re working. So maybe a more rural property could work for you.

Coming up on the next segment

Todd Veinotte: [00:09:31:09] All right. Well, we need a break. What do you want to talk about next, Clinton? You’re the guy. You’re teeing things up today.

Clinton Wilkins: [00:09:35:20] Maybe I’m like the host today.

Todd Veinotte: [00:09:37:19] Sure. You’re the host.

Clinton Wilkins: [00:09:38:10] I’m sure we’ll talk a lot about, you know, obviously, the fall, you know, we can certainly dig into some other, you know, issues around, like what happens at the back end.

Todd Veinotte: [00:09:48:28] I’d like to talk a little bit more about credit, if you don’t mind.

Clinton Wilkins: [00:09:50:20] Yeah, you know what? We love talking about credit, and it’s certainly a big piece.

Todd Veinotte: [00:09:54:05] Ok, we’ll be back on News 95.7.

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.