Mortgage 101 – Why Pre‑Approval Is Your Secret Weapon in Today’s Market

Clinton Wilkins and Dan Ahlstrand discuss the importance of early conversations with mortgage brokers.

Dan Ahlstrand
Welcome to Mortgage 101. I’m Dan Ahlstrand. He is Clinton Wilkins. It’s been a fun-filled episode. We had a caller on the line, action-packed and we’re digging into the mortgage market, so there was some valuable information there.

Clinton Wilkins
Well, you never know what’s gonna happen here on Mortgage 101. We have guests that sometimes just show up randomly in the studio, or we get someone to phone in, but it’s great. We really talk so much about real estate, and I think the one thing I will say, I’ll come back to it, I think it was a delayed market. We’ll see what happens through the summer and I always say typically we’re the busiest when the kids are in school, so we’ll see if that actually plays through this year. Usually by, week two, week three, week four, June, we kind of almost go a little bit slower, which I’m not sad about, I like to have my summer to be able to be footloots and fancy free, and do whatever I need to do on Fridays, Fridays are typically a very busy day, anyway, but it’ll be, it’ll be interesting to see if that plays through this summer or not.

Dan Ahlstrand
Clinton, I think it’s important. It’s always important, but more important now, given some of the points that Megan raised with us, that if you want to get into that, that $500,000 range, that you’ve got to be ready to go. So it’s probably a good idea, you’ve talked about this in the past, to have a conversation with your mortgage broker before you start all of this, so that you have everything lined up and ready to go, so that if you do come across that perfect house, that perfect piece of property, you’re ready to go.

Clinton Wilkins
Yeah, I think you have to start with a pre-approval if you’re going to be getting into the real estate market, even today, and I’ve been doing this for 20 years. I get accepted offers from clients, or realtors that don’t have a pre-approval, which still just… it just blows my mind. I think it’s relatively irresponsible, and I always come back to the customer to be like, “You must have seen somebody else get a pre-approval. They’re like, “No, we just knew, we knew it was going to be okay. Well, hopes and prayers, and we do the very best that we can. And I think that’s what’s so interesting about a mortgage broker, even compared to someone that works at a bank branch. I don’t get paid unless I do the mortgage, so I am motivated to make sure it works. I’m motivated to make sure my clients stay sticky. I’m motivated to get them, really, the best deal for their situation, and by the best deal, Dan, I just don’t mean the lowest rate, because someone’s always going to do it cheaper. We are a full-service brokerage; we really want to give our clients that best advice piece, but I want to make sure my clients are going to be around for the long run.

Dan Ahlstrand
What should I think of when I’m getting ready to do that, Clinton? Do I bring my bank statements with me? Do I call you first? Is there a checklist? How do I prepare myself to make this as carefree as possible?

Clinton Wilkins
I know I always liked for it to be easy, right? And I always say, I’m the happiness coordinator. Is it always easy? Is it always a little friction? No, there’s like 20 hands in the pot here. We’d really try to make it as easy for clients as it can be. Obviously, there are hiccups along the way, and what I say is, if one thing goes wrong, usually everything goes wrong. And I think this is such a high-friction widget for people. I think they just assume it’s as easy as going to buy a car or get a car loan. Well, it’s a whole different kettle of fish, really, really, truly it is when we get a new – we’ll call it a lead – in, we set up a profile for them, and then when we book an appointment, we always book a phone appointment, typically the first one, to get an application, go over the process, but our team sends out a standard request for documents, and it’s almost pick your own adventure, give us what you want to give us, but the more you give us, and if you go through the steps that we have given you up front, typically it is a very smooth process. I would say the documents are probably one of the highest friction points for customers. They either don’t know where to find their documents, they don’t know what documents are being asked for from them, or they don’t prioritize it, but we can typically move very, very quickly, and oftentimes it’s the customers that can’t move as quickly as we can. Obviously, we want to meet the customers where they’re at, but when you’re making an offer with a realtor, and you have a financing condition, we need to push you along to make sure that we’re able to meet that requirement, and you’re contractually obliged maybe to hit certain things on certain days and times. We never, never, never want to ask for an amendment to the date, unless the date that you gave us in the first place was unrealistic. Then, at that point, sure, yeah, we’ll ask for an amendment. Obviously, things go wrong, things get delayed, for a myriad of reasons why. Maybe things take longer, but we don’t want to be that bad waiter and keep on coming back to the table over and over again. We want to make sure it’s going to be very smooth, and it’s going to be a positive experience. And typically, when someone’s buying a home, it’s a higher friction transaction.

Dan Ahlstrand
It’s the biggest purchase of your life.

Clinton Wilkins
The mortgage is the biggest debt of your life. And, but we want the mortgage piece to be the easiest part of it. When you’re dealing with a realtor, typically you’re with them like 40 hours; you’re with me maybe five hours- what I mean, maybe. But typically you’re going to talk to me many more times throughout the life cycle of your mortgage. You don’t talk to maybe your realtor as much unless you’re doing tons of transactions, but we are typically in touch with our customers a lot more. We never know when someone needs to do a transaction, and we kind of talked before the show. What’s going on in the real estate market doesn’t necessarily directly impact my business, because we’re doing refinances, we’re doing renewals. People still need to transact. I think when they’re not buying, they’re refinancing, I think, and obviously with the property values going up and people paying that down, their mortgages, typically a lot of borrowers do have equity in their home, and we can refinance at 80% of the market value. So, if the market value went up, typically people do have some equity.

Dan Ahlstrand
I think that’s why it’s important to sit with a, with a mortgage broker, because, you mean, it’s in your ads, right? It’s, it’s a, it’s a personalized service, because a lot of people, particularly first-time home buyers, it’s just.. It’s a lot. The learning curve is quite steep.

Clinton Wilkins
Well, and I think it can be very overwhelming; it can be daunting, and you want to make sure you understand, you want to make sure you have the best product for your needs. And I think sometimes people come in with an idea of what they want, and sometimes what they get is very different, but it. We really need to make sure that what they want matches what they get, and it may, it may be the same as what they initially came in for, but sometimes when we’re asking questions, we are doing the evaluating, and we’re giving them what their options are. Sometimes the wants change, and maybe or their needs change, and that’s why when we’re asking these questions, it’s not because I’m nosy, I don’t, I can see your liabilities on your credit bureau, we can see things, I talk about income, assets, and credit every single day, so it’s not that I’m just like intrigued and be like, oh, I wonder how much money this person has, well, we want to make sure that we’re giving you the best advice based on your actual situation, and we also want to make sure we are presenting, the best foot forward to a lender, we want to make sure that we’re giving them a true and accurate snapshot of what your situation is, and I think that’s why I think during this information gathering period and the application, I think it’s very important for us to really have an open and honest conversation about where you are in life and what you, your goals are.

Dan Ahlstrand
Timelines, Clinton. How long should I budget for this process, like a pre-approval process?

Clinton Wilkins
I think we can do it typically during our application, if we have all the documents up front. We don’t always have the doc zone. Sometimes when we have a meeting with someone, I’ll have like a half-hour call for a pre-approval, but I don’t have any of the documents. Well, that’s great. I can get all your information in, and I can get kind of the framework of an application, but then I will request the income documents. If you own a property, I want to get the security details. I need to get your consent, and sometimes that takes more time than it is for me to have a call with you. People can’t pull their documents together quickly all the time. A lot of people are like, I have it by the time I get off the phone, but sometimes we kind of have to chase people a little bit, and I think when we’re doing a pre-approval, we almost put the ball maybe more in the customer’s court than anything. We say, okay, customer, we need x, y, and z to secure your pre-approval, and then we put the ball in their court for them to come back to us, because I think in a pre-approval we want to match the client where they’re at. If you’re doing a refinance and your renewal is in 60 days, we need to push you along a little bit faster, because there is an actual time frame here.

Dan Ahlstrand
But the more information that you can bring to the table, the less chance that you’ll be disappointed at the end.

Clinton Wilkins
100% good, bad, and ugly. Let me tell you where those bodies are buried, because we want to make sure that we don’t have any surprises later. I never like to get to the 11th hour, then suddenly find out I have a problem. I don’t like that. I want to make sure it’s going to be smooth. Want to make sure it’s smooth for you, for me, and the lender, and we’re making sure that everyone’s going to be protected. So, tell me what’s up. Give me the skinny. I’ve heard everything, so nothing surprises me, and we also are dealing with customers from every walk of life, and I think that’s really important to understand. It’s not just first-time homebuyers, it’s not just people with high net worth, it’s not just self-employed people or people that are working in the military. We are dealing with all kinds of different people, all kinds of different credit metrics, net worth, income, etc. And I think that’s what makes this business really interesting, and that’s why we’re still doing this show, because there are so many intricacies of mortgage lending, and I’m very excited about it. I live and breathe this every single day, and I think I’ve said this before on the show. I’m going on about 21 years here. I love this business more today. Than I did 20 and 21 years ago, so I hope that comes through in what we do here with our show.

Dan Ahlstrand
Lots of great information in this June edition of Mortgage 101. For more information, what’s the best place to get hold of you, Clinton?

Clinton Wilkins
Visit us online at Team clinton.ca/radio. We have hundreds and hundreds of blog posts there; you can get links to our social media, and you can listen to our show and all other great things.

Dan Ahlstrand
Thanks for listening. We’ll talk to you next month. You’re listening to Mortgage 101 on 95.7 News Radio.