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I have been a real estate agent for 26 years, and one of the things I always suggest to my clients is for them to contact their financial institution or a mortgage broker and get their financing pre-approval in place prior to going out house hunting.  There is nothing worse that a couple finding their dream home, only to find out it is out of their price range and they can’t afford to buy it. Mortgage Loan Approval

Recently, I was working with a past client who was looking to sell her Townhome and buy a detached home.  After working with her in the past, and knowing her for more than seven years, I knew she was financially sound and would have no problem getting a mortgage.  I still however, advised her to get in touch with her mortgage agent and get her pre-approval in place.

Pat Due StampWhile in the process of getting a pre-approval, the mortgage agent noticed a blemish on her credit report.  Apparently a company had alleged that my client had not satisfied a debt she owed seven years ago, and had sent it to a collection agency.  The alleged outstanding debt had doubled to more than $3,000 at this point.

Although the mortgage company approved her for a mortgage, she could not get a preferred rate until she paid off this outstanding debt.  My client had no knowledge of this, as she had never been contacted by the company claiming the debt.

My client was sure she had paid the debt, and is now in the process of contacting her bank to have them check through her account for a cancelled check to see if it had been paid.

Through all of this my client had submitted an offer on a property, which was accepted.  The offer was conditional on financing and inspection.  Needless to say, my client had no intention of paying off the total amount the credit company was asking for, being as my client wasn’t even sure she owed anything at all.  The mortgage company approved her mortgage, but at a higher rate, which raised her monthly payments significantly.

My client chose to back away from this deal until this could all be rectified.

So, the lesson here is… get your pre-approval in place BEFORE you go out house hunting, as you never know what is going to come back to haunt you from your past, that you may not even be aware of.