Project: Nonfiction Business/Self-Help Book

Introduction

Getting the best mortgage is about more than shopping for the lowest rate, worrying about points, or comparing which company offers the best incentives. Getting the best mortgage involves developing what I call mortgage intelligence.

What is mortgage intelligence? I’ll start with an analogy: knowledge is understanding that a tomato is a fruit; intelligence means knowing not to put that tomato in a fruit salad.

Having knowledge doesn't mean you also have the ability to execute it intelligently. Intelligence comes from understanding different levels of knowledge, then having the support to strategically execute that knowledge for best results. It means having the ability to understand both sides of any question.

The truth is that nobody really understands mortgages. There are reasons for that: mortgages are complicated, and lenders[1] don’t do anything to demystify them. To the contrary, lenders have known for decades that most people are exhausted. We’re all tired: we get up, we go to work, we try to eat right, we raise our kids in the best way we can—and after all that, what we crave is simplicity. As a result, lenders give clients one simple thing to review. That one simple thing—marketed by lenders to borrowers for decades—is the interest rate. 

Yet oddly enough, the interest rate is not the most significant contributing factor to what you pay on a mortgage—a subject we’ll talk more about shortly. In fact, I’m going to share information with you that you’ve probably never thought about—things people who aren’t in the business just don’t know.

Because of their overall exhaustion, people look for the easiest way out. Give them a canned answer, and chances are they’ll follow that advice. “Want to get preapproved in sixty seconds? Step right this way . . .” No one has time to think anymore, and people are paying far too much for their mortgages as a result. What I hope to do with this book is get you to stop and think. To assess what marketers are trying to sell you and why. To figure out what is being omitted from their “best offers.”

The best mortgage strategy lies in proactive ways of thinking and in understanding what’s important when weighing several options. What I’ll tell you now—and what I’ll continue to tell you throughout this book—is that everyone’s asking the wrong question. They’re asking, “What’s the interest rate?” when they should be asking, “What is this going to cost me based on the terms?” 

I can gauge someone’s level of mortgage intelligence based on the first two seconds of the phone call. If the caller asks, "What's the interest rate?" I know right away there’s going to be some education involved in this process. We’re going to have to start with the basics. And that’s fine, because I want people to really understand what is happening; I want to save them money, and becoming educated about the process will invariably save money.

On the other hand, if the caller asks, "How do I get the best mortgage?" I know their level of mortgage intelligence is significantly higher right out of the gate, and we can get to the meat and potatoes a lot quicker. This caller hasn’t been brainwashed by marketing and is looking to deploy significant intelligence.

Gaining that intelligence is the first thing I need you to learn. Beyond that, my hope is that you’ll learn the importance of aligning yourself with the right people. What we’re discussing here is mortgages, but the questions I want you to ask are applicable in the context of any product. These questions will help you dig deeper into what you're not being told. That’s when you get the best results. 

It's impossible to shop intelligently for a mortgage on your own. Two mortgage offers might read the same way, but the history of the lender and what the product actually means to that lender are two different things. If everybody valued the same things equally, we would all drive the same vehicle. If everybody valued the same things equally, we would all just marry whoever asked us. If everyone just wanted the lowest-cost car, everyone would end up with a Ford Pinto. 

Think about aging for a moment. I use a different beauty routine and face cream than I did when I was in my teens and twenties. I had a few back-to-back pregnancies, was breast-feeding, doing a weekly radio show, managing a team, running a business… it all catches up to your face! So I adapt; we all have to adapt. We don’t all value the same things equally, or even value the same things at different points on our lives.

Before I was married, after I booked my first reoccurring spot to educate people on mortgages on the former show realty television, that ran on city TV, I decided to buy myself a used two-seater soft-top convertible BMW Z3, I was in my early twenties and single: it seemed like an awesome ride, right? I know my friends sure loved it, especially the ones who got to ride with me! Fast-forward a few years and I got married and then later was pregnant with my first child, and I thought, Uh, yeah, this vehicle won’t work anymore, I can’t put a car seat in it, and we wont be able to go anywhere as a family. So while I was pregnant and spring was approaching, I took the opportunity to sell that car and get a safer family vehicle. It was the right thing to do for the right season of our lives. In the same way, your life stage, your goals, your family life and your responsibilities and priorities will always be key factors in your decision and life modifying options moving forward- a mortgage is no different

Every situation carries different meanings for different people. The right mortgage for you depends on a number of factors: your lifestyle, your values, and your life stage. It depends on what you can and cannot control. Working through all of those options and then being able to quickly shift in a changing market or lifestyle are the keys to success.

I want you to understand your responsibilities, what the mortgage process entails, and what you can and can't control. I want you to be ready for what is ahead of you: the responsibilities of being a homeowner and paying a mortgage. I also want you to see the opportunities your mortgage will create for you when you execute it intelligently and with the right people.

What You’re Doing Wrong

Myths and misconceptions can lead to costly mistakes. 

Most people are loyal to the bank they use. They know the tellers; they may be friendly with the bank manager; it’s a familiar place. The assumption most people make is that since you’ve been a loyal customer for a certain number of years, your bank will go out of its way to treat you well and offer you the best mortgage product available. But that’s simply not the case.

The bank is a revolving door. On average, people work between two and five years in any given bank position. Think about who moves up any bank: it’s the people who make the bank the most money, not the people who save you the most money. The banks reward the employees who sell the most.

There are two completely different goals here. Your goal is to get the best possible mortgage for your situation and save money. Your bank’s goal is to make money for its shareholders. It is that simple, that black and white.

The nice, friendly people who work at your bank are getting paid to sell their product. Their income is based on what they can sell and how many cross-sale opportunities are available within the institution. Once you realize that, you also realize they cannot have your best interests in mind. Of course they're going to give you their best product whenever possible, but they're simply not in a position to tell you if there's something better out there. That's not available to them. 

Here’s another way of looking at it: imagine the last time you went to McDonald's and the person at the counter said, "Hey, you know what? Our beef isn't that good today. You should go to A&W instead.”

Right? That just doesn’t happen. 

Let’s consider some of the terms you might be offered. Here’s an example: "To get out of this mortgage entails three months interest, or the interest rate differential." That’s fine, but it doesn't tell you how they're going to calculate their interest rate, does it? Besides that, lenders can modify their interest rates on a daily basis.

That’s right: posted rates can be modified daily, and that’s completely out of your control. A good place to start is looking at lenders who only have fully discounted rates. In that case, you know what you're going to get all the time. It's consistent, and you know it's going to be lower than someone who has posted rates.

I’m not saying banks are evil, or wrong, or anything like that. Banks can give you a good deal. We work with banks when the right product fits one of our clients’ needs. Occasionally there will be someone who needs to meet targets, and that person might be able to do something that wouldn’t generally be possible with multiple levels of compliance. Just remember one thing: by the time anything negative happens, that person isn’t going to be the one dealing with it. They’ll be long gone from that position. 

In general, lenders tend to be reactive, not proactive. Ask yourself this: When was the last time your lender contacted you to show you how to save money—even if doing so meant they’d make less? When does that happen? Never. There has to be someone else in between who’s looking out for your interests, and that’s where a first-rate mortgage team comes in. In any industry, it’s who you align yourself with that makes all the difference. 

It’s essential for you to understand that banks have a unique (and not particularly client-centered) perspective on mortgages. Banks exist to cross-sell, to make and retain money—and the people who move up within the bank’s hierarchy are the people who make the most money for the bank. They are certainly not the people who save the most amount of money for the client. Again, ask yourself: When was the last time my bank contacted me to offer me a way to save money?

Look at the promotions most banks run. "Open up an account with us, and we’ll give you something," or, "Do a mortgage with us and get a free iPad," or, "Get free checking for two years." Wait—they’re making all these offers to people who aren’t even their clients. Does that make sense? Why show loyalty to an institution that would never show you loyalty in return? Why align yourself with a bank offering all the bells and whistles to new people, but treat existing clients like second-class citizens? We do the opposite: we always make the best offers to existing clients before we'd ever offer something like that to a new one. 

Once you analyze them, the offers aren’t even that attractive. Someone new coming in the door is going to get all these perks, but you can be sure the bank doesn’t plan to lose money on that new client: they’re going to make up for those newcomer packages somewhere along the line. Maybe they’ll raise their rates over the next few years to cover what they offered as a lure. Or maybe the terms of their mortgages aren’t all that great, and what they’ve done is offer a distraction, a psychological play. They know people want an easy reason to say yes. 

And it works. The parent who’s blowing bubbles to distract the child getting an immunization knows it works. The nurse who gives the child a sticker after they've put on a Band-Aid knows it works. This is no different: The bank knows a good distraction works, too.

The real takeaways here are straightforward: not all mortgages are the same, and your bank doesn't have your back. 

Costly Mistakes

Selecting your mortgage broker is one of the most important financial decisions you’ll ever make. This is where my company is different from all the others: We are here to do the best for our client, even when the best thing for them is to not do business with us right now. I can't speak for every mortgage provider in the country, but what I can say is that's our core value. Helping our clients find the right mortgage at the right time is what leads and informs what we do.

Choosing a mortgage based on rate alone is like buying a car strictly on price. Imagine this: you see a car advertised in the newspaper for an extremely low price. Without looking at its features you buy the car and bring it home only to realize that it doesn’t have a radio, air conditioning, power steering, and has over 200,000 miles on it.

No one would buy a car without looking at the list of features first. You can’t test-drive a mortgage; all you can do is read the fine print!

Most people are unaware of how much damage taking out the wrong mortgage can do to them. A woman came in recently for a consultation. She’d received a mortgage on her own, and the lender failed to disclose that their terrific low rate came with a sale-only clause. Now she's paying tens of thousands of dollars more that she should in interest payments because she can’t refinance her mortgage early to include her outside debt and pay her outstanding taxes. She's stuck with the original mortgage terms for another three years.

She wasn’t told when she was getting this "excellent low-rate mortgage" that she’d be stuck with it until she sold. That kind of mortgage would have been fine if she’d wanted to sell, but she didn’t. Some people want to stay in their homes on their terms. Why should you have to sell in order to access your equity?

Did the person offering her that mortgage care? Of course not. They had targets to make. What if she discovered the clause later and wanted to talk to the representative about it? She would have been out of luck, because that representative would had moved on. I can’t tell you how often we hear stories like this one. I feel sorry for these people and the situations in which they find themselves. And there’s the real problem: she didn’t take the time to align herself with the right company, and she paid the price—both figuratively and literally. 

What you might not know is seven out of ten mortgages are broken between twenty-four and thirty-eight months in. So if you think that you’re not going to have any changes in your needs or life situation over the next five years, you have a 70% chance of being wrong.

When you know better, you do better. When you work with an independent mortgage professional you won’t have any unanswered questions. There isn’t anything hidden anywhere. We go through all the options available to you. 

The biggest mistake people make, and I will go back to this again and again, is that they don’t understand the difference between the interest they pay and the interest rate. If you ask for rates, you're going to be sold a bill of goods from someone who's offering a rate. It’s not the rate you should be asking about.

As we continue on this journey together, what I hope is that you’ll learn the importance of what I call the two ps of mortgage intelligence: prepayment and penalties. Those are what you should be asking about. 

When you understand true value, you understand it's the price you pay that matters, not the rate you receive. Unfortunately, most people don’t even know they should ask the question. If someone walks into a bank and says, “I’m concerned about the rate I’ll be paying,” then of course that’s the question the mortgage salesperson is going to answer. That’s just basic sales training. If you ask the average banker what indicators they're watching to determine the mortgage strategy that's best for you, you're going to get a blank look . . . and then you're often going to get the wrong answer.

You have to think about exactly what it is you’re asking. If you ask a lender, "If I take a fixed rate, am I protected against payment shock?” and they answer is yes, they're wrong. It’s that simple. Payment shock happens when a homeowner’s monthly payments increase, and a fixed rate doesn't mean you're protected against future payment shock. You have to make optimal increases on that mortgage over time in order to protect yourself from future payment shock, and that can only happen in an environment where someone's proactively contacting you and letting you know what that number is in order to get ahead. You're not protected against anything in the mortgage market—even if you have a fixed closed interest rate. Asking the right questions makes all the difference, and you can be sure that an excellent mortgage professional knows which questions to ask.

Setting Expectations

Every profession has a process. Accessing a great mortgage professional is like having a great doctor. When you have a great doctor, you don't need to go to a walk-in clinic, because you know your own doctor will give you the best information suited for your specific long-term health plan. They’re going to take everything into consideration. 

Sometimes, though, you do have to use a walk-in clinic. And when that happens, you don’t just walk through and see the medical professional. You check in first with reception, where they’ll ask you what the problem is, the reason you’re there. Why? Because the doctor needs to know everything in order to help you. If you go to a dentist, there’s a similar preparedness: they have your chart handy, your x-rays, and your history, so they can help you.

In all of these scenarios, there’s a process in place that enables the professionals to do their job and provide the best possible outcome for their patient. These processes have been tested and honed and proven to work. 

We all accept these processes in the medical field. You wouldn’t go to a general practitioner for heart surgery, would you? Your trusted GP is going to refer you to a surgeon, and you’ll also probably do your own research to find the surgeon who’s best aligned with your health goals. Once you’ve found that surgeon, you’ll trust them to do what they do best and be confident they’ll collaborate with you to accomplish your goal. You’ll trust your dentist to refer you to an orthodontist or oral surgeon, because they have years of experience knowing who will be the right fit for your particular situation and needs.

Why would a mortgage expert be any different? We too have a process that’s been tested and shown to be successful, so we can work together for the best possible outcome for our clients. We too have resources that we can align with your goals and needs.

When it comes to working toward your financial goals, why would you go to a lender—the financial equivalent of the general practitioner—when you could do your research and find the mortgage professional who is the best in their field? 

You’d be surprised at the number of people we hear saying, "Just give me your best rate, because I know I have terrific credit and I have an amazing income." It doesn't work like that. There are a plethora of factors involved, so as your mortgage professional, I’m going to invest time, expertise, and the costs associated with reviewing your documents to do it right. If we can help you, my team will sit down with you and go over your options. If we can't help you, we'll explain what the process is, what plan we can put in place to modify your situation, and when we can review it again. 

We don’t just say no; we help you get from there to where you want to be. If that means we're not going to do business with you right now, we’ll tell you so. We’re making an investment in our future together, and we’ll give you an honest answer. Maybe that honest answer is that you should sell your home. Maybe that honest answer is you should consider filing bankruptcy. Whatever that scenario is—even if it doesn't benefit us financially—we're always led by our core values to do the best thing for our client.

Transparency

Great mortgage professionals don’t take shortcuts, and they have expectations of clients. For example, we're going to send you a list of what we need, and we need that list in its entirety to review your options. We can't work together if you're not willing to give us what we need to help you.

Let’s go back to the medical analogy for a moment. You have to be honest with your doctor, or they won’t be able to help you. If you go to your doctor with a rash and you’ve been self-medicating with a topical cream, you have to share that information. If you're not honest with the doctor, then how can they give you the best treatment available?

The same goes for your mortgage. If you've shopped your mortgage around and don’t tell us, it's going to hurt your ability to move forward, and it's going to hurt how available lenders review you and your file. If you've gone to another mortgage broker who's not as experienced and you've submitted your file elsewhere, lenders are going to see that—and there’s a good chance your application will be tagged as fraudulent. 

An excellent team is going to expect transparency. They’ll expect that they’re the only people working on your file in order to do the best job for you. Lenders do the best for the top mortgage brokers; in our case, they give us new and exciting opportunities for our clients, and they do that because they know the expectations we have of our clients. If we have all the correct documents and submit them to our lenders in one fell swoop, our lenders can provide us with faster, more efficient approvals. 

Setting expectations is one of the reasons we’ve been so successful. It has to do with what we want from, and for, our clients. The way we position a client is equally important to the client getting an approval—and not just any approval, but the absolute best approval. There’s strategy behind everything we do so that our clients can be successful.

We had a self-employed graphics designer come to us for a mortgage, and I gave him a list of documents I’d need from him. He seemed bemused. "My bank just said I was approved," he said. I was astonished. How could they say he was approved without doing a full review? That sounds like a recipe for disaster. I turned the situation around for him: “What if I came to you and asked you to design me a logo, but you didn't take the time to interview me about the core values of my company, what's important to me, and what am I looking to portray. Could you possibly create the best logo for me? How could you?"

It was his “aha” moment. I could almost see the light bulb go on over his head. When it's put in those terms, anyone would say, "Oh that's obvious," but the trouble is they don't see it as being obvious in the mortgage sector. I find that inexplicable.

Documentation Do’s and Don’ts

The most common forms of income documentation we need are letters of employment and pay stubs, and it’s important to understand right away that both of these documents have a shelf life of thirty days. We also need notices of assessment that show a zero balance, and we need T1 and T4s.[2]

When we ask for these documents, we need them in full. Don't send us your work contract and say it’s your letter of employment. A work contract is a work contract; it’s not a letter of employment. 

When it comes to requiring things like T1 Generals, we need company documents and financial statements if people are self-employed. We don’t want you to pull your financials off QuickBooks. And, while we don’t want fewer documents than the ones we requested, we also don’t want more. Don't send us things we don't ask for because that takes time. Legally, we have to process everything, review it, and then destroy it if it's not applicable. When you give us too much ancillary documentation, you're taking time away from us being able to do what we do best.

We're going to ask you for specific information. If you have a question about whether something will assist your file, it’s fine to ask us—but don’t just send it. Don't ever send us anything with blacked-out areas or something that doesn't have your name on it. That won’t meet compliance, and we’ll just have to come back to you and request the whole document, and nobody is getting the result they want.

You’d be amazed at the number of people who feel a need to question the process. They may say, "I don't understand why. Why do you need this? I don't want to give it to you." As you can imagine, it’s impossible to work in that kind of atmosphere of mistrust. 

Moving up the Property Ladder

In general, people start with the home they can afford, which isn’t always the home they want. But as you build equity in your property, and your income changes, you can move up into a more suitable place. Moving up the property ladder takes an analysis of your current scenario, including your current mortgage, current equity, existing debt, existing income, and credit. Once you have the analysis, you need to develop a strategy.

Depending on your current mortgage, there might be a specific time that’s best for you to make a move. Your income scenario and your credit may also dictate when is the optimal moment. Finally, what you’ve done between when you first took out the mortgage and now is going to be a major factor. 

If you bought a condo, then took out a car loan six months later for eight hundred dollars a month, and then used your ten-thousand-dollar line of credit to renovate your condo, these factors are going to make a difference in qualifying for a new mortgage. Believe it or not, that monthly eight-hundred-dollar car payment, along with the monthly three-hundred-dollar credit payment, just removed $300,000 in mortgage qualification. Before you can qualify to buy another home, you’ll have to pay that debt out by refinancing your existing home to consolidate the debt or through making more money or selling an asset. 

When you're planning to move, you have to make sure everything else is in order first. Sometimes that means doing things in stages. We helped one couple—a social worker and a school principal—who started out not knowing what to do; they didn’t understand the potential impact of their actions. As soon as they bought their house, they went ahead and got lines of credit, credit cards, and vehicles, and the husband finished his MBA. They ended up with about one hundred thousand dollars in debt to consolidate before they could qualify to move up the property ladder. 

With all those factors considered, you can't just go ahead and list your home one day and think that you can get a mortgage easily because you already have one. Mortgage guidelines and qualifications change every day, and that changes how your situation will be viewed. That's why having a proactive mortgage strategy is key to being able to reach all your goals. When clients work with us, we're reviewing their mortgages on a consistent basis to ensure that the market, their lifestyle, and their home are always being optimally used. That way they can make these changes with a lot less delay because they're continually keeping on top of them.

What my team does is use one credit check to shop all the lenders. If an individual went from lender to lender to lender, points would be taken off their score every time they submitted documents, impacting the mortgage price.

When your lower credit score affects the price you pay, it’s because varying interest rates are available based on your score, and rates are premiumed accordingly. If you've already gone to one of the lenders we may have sent your mortgage to, then you no longer qualify as a "new client." If they come up with a last-minute, quick-closing special or a special offer, you wouldn't qualify because you disqualified yourself by doing this on your own.

Getting the Right Advice 

I’m hoping that by now you’re starting to understand you won’t get the best deal when you try and negotiate a mortgage on your own, with a bank, or with the wrong mortgage provider. It’s not always apparent who the best professional might be, but here are four questions you should ask your mortgage provider to help you differentiate among them: 

• What do you base your mortgage rates on, and why? This gauges the provider’s mortgage intelligence. There's only one answer: Fixed interest rates are based on the bond market, and variable interest rates are based on the Bank of Canada.[3] If the provider isn’t watching the right market indicators, how could they possibly help you with the best mortgage?

• Am I protected from changes in the mortgage market if I have a fixed rate? The answer should be no. Nobody's protected. When you have a mortgage, you need to make consistent modifications in order to ensure you're optimizing the market and taking advantage of the current situation you're in. We have strategies that will keep you ahead of inflation and protect you from payment shock, and these strategies involve the client following our advice. 

• What strategy are you recommending, and why is it important? This helps you gauge whatthey're doing, and their commitment level in proactively managing your mortgage. There have been enormous changes in the mortgage market since the Great Depression, but every moment creates its own opportunity. Regardless of what is happening, you need a strategy, so if your professional isn’t approaching you to develop one and is just relying on interest rates, there’s a problem.

• What personal commitment do you have to your clients? Does this broker have a proactive communication system? Do they review mortgages and contact you when some new development might work in your favor? I can guarantee one thing: If your mortgage isn’t being reviewed, it’s costing you money.

If you get a mortgage on your own, you’ll find lenders are reactive. They'll send you a notice after the rates have gone up, when it’s not particularly helpful. What are you supposed to do about it then? The increase has already happened. 

Most lenders send you mortgage statements every year, but unless you walk into their office or call them, they're not going to do anything else for you: being proactive isn’t to their advantage. What's advantageous to them is selling you mortgage products—and spending the fewest resources on you after that. Lenders will call you to sell you a credit card; they won’t call you to make changes to your mortgage that will save you money.

And that’s the true difference. Mortgage professionals like me want to save you money; in fact, I’m absolutely committed to saving you money. I keep helping clients review the market, not once or twice, but continually. Any time there's a point-five percent difference in the mortgage market, you can be sure we're reviewing your mortgage to see how you can best optimize it. We know that regardless of where you are in your mortgage, there's always an opportunity to optimize it or protect yourself from what may be happening in the future. 

Doing It Right

I’m thinking of a couple I worked with from Coquitlam, Laura and Ryan. She was a schoolteacher and he was a social worker. They were considering moving up the property ladder, but weren't sure if they should wait until their mortgage renewal date. They’d gotten a mortgage through a mortgage broker before, but after the mortgage completed, they hadn't heard back from that broker. They decided they needed guidance from someone else. 

They were smart to review their options around choosing a mortgage professional. There’s been tremendous change in the mortgage market over the last ten years. You can’t just set up your mortgage and forget about it—there’s an analogy here for all my foodie friends: this isn’t crockpot cooking! When Laura and Ryan contacted us, they had a good mortgage, but they also had about a hundred thousand dollars in outside debt. Their idea was to wait until they sold their house to pay out that debt, and then move up the property ladder. What they didn't know was those payments were going to keep them from moving up the property ladder, and their credit score was negatively impacted by all those debts. By consolidating the debt, they were able to save sixteen hundred dollars every month.

Within a year, their credit was much better, and they qualified to buy their dream home. In other words, they moved up the property ladder. They had no idea their existing debt was impacting them because they weren’t used to thinking like that. They were both high-income earners so didn’t think there was a problem with carrying debt they knew they’d be able to eventually pay off. But once they acquired the necessary mortgage intelligence and worked with the right mortgage professionals, their lives improved substantially.

Not everybody gets it right, unfortunately. We followed up with another couple who had come to us inquiring about preapproval so they could buy a home, but they didn’t follow through with sending us their documents. Then they made an offer on a home, the offer was accepted, and that’s when they sent us the required documentation—marked “urgent,” of course.

Things went downhill from there. It turned out they also sent those documents to a bank and to another broker, without mentioning it to us. When we submitted their package to a lender, the lender red-flagged it. We’d pulled the credit report before the others had, so we weren’t aware of any problem, but now the whole process halted because it was unclear who was working on the file or what exactly was going on. They ended up getting flagged for fraud and didn’t get their approval in time, all simply because of a lack of transparency.

If we’d known they were shopping it, we would probably have declined the file in the first place. People coming to us and to mortgage professionals like us know the value we offer. They know our reputation and why we're doing what we're doing. If I don't feel someone's being honest with us, it’s an immediate hint as to how the relationship will continue. 

Other things can go wrong, of course. I mentioned another client, a couple who had a preapproval, and then—for reasons best known to themselves—bought a car and some furniture in the weeks that elapsed between the preapproval and the final approval. Most lenders pull a final credit score before physically approving the file, so when that happened, the client's score had dropped twenty points, disqualifying them from the rate we’d secured at the preapproval. 

There are scenarios in which people just aren't going to qualify based on certain circumstances, no matter whether those variables are self-inflicted or the result of fraud. It’s not the end of the world. When they can’t qualify, we show them what they can do to improve their chances. Some self-employed clients, for example, don’t have the kind of paperwork favored by traditional lenders, and we have a different set of lenders best for them. The interest rate is higher, and there will be fees, but the point is that we know where to go to give any client their best option.

Whatever the scenario, it’s important to navigate the market and give clients clarity so they can make the best decision moving forward. 

Don’t Make Comparisons

Everyone knows someone else who got a mortgage. Your parents got a mortgage, your colleague got a mortgage, your neighbor got a mortgage, and you saw how it worked for them. That’s how it’s going to work for you, right? Wrong. Everyone is different, and every day is different, too. Everything in the mortgage industry changes daily. Comparing yourself to others is a pointless and unfruitful exercise, period. 

Yes, there was a time when you could get an equity lender. That time is not now. There was a time when you could just give a pay stub and get a mortgage. That time is not now. What happened in the past isn’t relevant. What is relevant is what experts tell you about your particular scenario and your particular timing right at this moment.

The medical analogy holds true here, too. "My friend had this same cough, and she got better, so I want the same prescription you wrote for her.” No. What worked for your friend might not work for you. It might even be harmful for you. You can't compare yourself to others. It's an exercise in futility.

My Journey and Success

The reason I became a mortgage broker is a combination of two factors: my passion for real estate and investing, and my core value system. I've always believed that people deserve to get the best and they shouldn’t have to play a game to get what is best for them. I sincerely love to save people money. I want to help make their lives better. From the beginning I saw mortgage advice as an opportunity to help normal people get ahead. 

I once had a teacher who told me, "Hey, if you bring me one hundred dollars today, I'll guarantee you'll have a million by the time you're sixty-five." He didn’t have to ask twice! I brought him the hundred dollars the next day and he said, "Okay, now go to the bank and get them to invest it in something for you with compound interest. They’ll be able to show you how you'll have a million by the time you're sixty-five." When I went to the bank, however, I learned they weren't interested in helping me with my hundred-dollar investment. Why? Because it wasn't a moneymaking opportunity for them.

It was a lesson I would learn and re-learn over the years. Financial advisors gravitate to people who already have millions of dollars, because managing those millions is how they earn their living. It's not bad or shameful; it's just how it works. The banking system puts a value on people, too. It's nothing personal; it's just the way it works.

My parents always owned their home, and I saw first-hand the opportunities home ownership afforded us over the years. They taught me to start early and make smart decisions. When I learned about what mortgage brokers did—that they helped average people make those same smart decisions—I knew that was what I wanted to do with my life. 

I became a mortgage broker in 2004 and immediately realized not many people had mortgage intelligence. Sixty percent of Canadians had a mortgage, but nobody knew anything about those mortgages. No one knew how to use them as a wealth tool, and certainly no one knew about the potential opportunities that could come from aligning themselves with someone who was proactive on their behalf.

I became passionate about helping people use information to their advantage and helping them develop mortgage intelligence, so I quickly became an educator as well. Media outlets starting coming to consult me, as I grew into being perceived as an expert in the field. People were attracted to me early in my career because they knew my core values were transparency and integrity. I quickly became somebody to watch in the industry, and that media attention developed simultaneously with growth in my business.

I was also a real estate investor. Believe it or not, I was still living with my parents when I purchased my first home, and that turned out to be very powerful because later I was able to show people how I’d saved enough to do it so young—and how they could do it, too, if they wanted the same result. I continue to be an active real estate investor as well as a longtime television, radio, and print mortgage expert; I’m often called upon to comment or clarify news in media of all sorts. The awards piled up, the phone was always ringing off the hook, and I developed a huge practice to the point where I’m now consistently receiving a dozen awards a year—from Top Producer to Woman Influencer to Young Gun. I’ve been awarded the Accredited Mortgage Professional of the Year—the highest award in our industry.

One of the reasons for my success is because I’m able to see clarity and opportunities in chaos. I can't control the market, but I can relay information and be clear about it. When you have a passion and desire to be the best that you can be for your community, your industry, your neighbors, and your associates, the rest just follows. 

It was the 2008 market shift that put me on the map in an important way. Interest rates fell to half of what they’d been, and everything just froze. Everyone was stunned. Nobody knew what to do. This is a common occurrence when markets are changing, and I was surprised more professionals weren’t seeing the opportunities inherent in this particular change.

I began to work the numbers. Although penalties were huge for most people who wanted to get out of their mortgages, the numbers made sense for many of them. When we worked the numbers and showed clients what the end result could be if they qualified, in average they cut their payments and amortization in half—even after those significant penalties.

I still don't understand why everybody was freaking out at the time. It seemed to me that once you took the fear factor out of it, the recommendations were obvious. 

This wasn’t even the first time it had happened. In the 1980s, people paid interest rates of twenty-one percent, and the rates were going down. In the 1990s, the rate was 11 percent, with dips as low as seven percent. People who had been through this pattern for decades were familiar with the trends. Rates go up and down; that's a part of life. What we have to do as mortgage brokers is understand the math behind the situation and gain clarity for consumers.

When it comes to the mortgage world, it's all about getting to the facts. If a client is intimidated about a penalty, it's because they don't understand. It's either worth it to do it, or it's not. There were some cases where it wasn't worth it for clients to make a move, but that doesn't mean that it wouldn’t be worth it in the future. It’s just about the numbers. I had clients who would have had significant penalties imposed. It didn’t make sense at the time to make an immediate change to their mortgages, but it might make sense when they came up for renewal. We diarized it accordingly and contacted them at the right time, and they appreciated our honesty and follow-up. 

One of those clients was an officer in the Royal Canadian Mounted Police. I told him we’d keep reviewing his numbers every year until it did make sense, and that’s what we did. I reviewed that mortgage twice, in fact, before it actually did start to make sense. Everything finally aligned for him, and we moved forward. The idea is to always place our clients first with a monoline lender so they have the most amount of flexibility to make changes in any market.

This client wasn’t initially on board, by the way. What he said is something I hear constantly: "I'm never going to need to make a change again." Experience has taught me this: the people who are the most insistent that nothing is going to change in the next five years are the same people who always have something change in the next five years. That's exactly what happened in this case. Three years later he said, "Hey, I need to make a change."

He was only able to make that change (and save that equity) because of the mortgage we’d put him in. He admitted as much—and since then we’ve helped his mother and his brother, as he didn’t want anyone else he cared about to make the costly mistakes he’d made. 

That happens all the time. People always say they’re not going to get a divorce, they’re not going to want to sell, their job isn’t going to change, their health is never going to change, but none of that is true. 

None of us can foresee the future, but being as prepared and intelligent as you can will help you navigate it—especially when it comes to mortgages.

[1] When we talk about “lenders,” the term can include anyone who actually finances the mortgage: banks, credit unions, insurance companies, monoline lenders, trust companies, etc.

[2] The T1 General (entitled Income Tax and Benefit Return) is the form used in Canada by individuals to file their personal income tax return. The U.S. equivalent is the Form 1040. The T4 is a Canadian employer’s form indicating salaried workers’ income. The U.S. equivalent is the Form W-2.

[3] The fixed-rate mortgage interest rate is compounded every six months in Canada, but not in the United States. In the U.S., the major factor influencing rates is the movement of the 10-year Treasury bond.