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32 | spring 2014 mbabc.ca MortgageBroker
Where is the property located?
Is it urban or rural? Each lender has specific
areas where they like to lend. Some only
lend in urban areas while others prefer rural
areas. Sometimes, the urban area must meet a
minimum population threshold. Lenders tend
to focus on areas they are familiar with, so
know your lender's comfort zone.
What type of property is it?
Is it residential, commercial, land or mixed-
use property? Is it owner occupied or a rental?
Many lenders only do residential loans and
some only like commercial. Again, lenders focus
on what they know, so choose the right lender.
What type of transaction
is this?
Is this a purchase, refinance, ETO, construction
or development loan? Lenders have a different
view of borrowers if they are purchasing and
putting hard-earned dollars into the down
payment vs. borrowers that use their home as
an
ATM. Borrowers using cash they worked
for as a down payment are more likely to get
an exception to a lender's policy than someone
whose home value has ridden the market up
and now they're using their equity to pay off
their overused credit cards.
What is the use of funds?
is ties in with the last question but digs a
little deeper. If the loan is a debt consolidation,
does it pay out all debts or is it a Band-Aid that
may only delay the inevitable? No one really
wants to be 'the last lender,' ultimately sending
it to foreclosure because the loan didn't really
fix the issue. Don't forget to include your
fee, the lender's fee and costs such as legal
and appraisal fees. I've seen a lot of deals die
because borrowers were short of funds once
costs were added in.
What is the value of
the property?
We need to have a starting point when looking
at the value of the property, so what is it? An
old appraisal, the purchase price, a realtor's
opinion or the Property Tax Assessment is a
good place to start for a working number. It
won't be completely accurate, but it's better
p30-35_10Questions.indd 32 14-05-08 2:30 PM
