Mortgage Mastery: Navigating the Real Estate Market

Is homeownership still within reach for first-time buyers in today's challenging market?

Nicole Lopez sits down with award-winning mortgage agent Michael Dorego to break down the biggest obstacles facing new buyers—especially the all-important down payment. 

Michael shares creative financing solutions, including the little-known Ourboro program, regional down payment assistance, and strategic mortgage structuring. 

From guarantor-backed loans to cash-back mortgage options, this episode is packed with practical insights to help aspiring homeowners navigate the ever-changing real estate landscape. 

If you think owning a home is impossible in this economy, think again—this episode will change your perspective!

Listen For:

05:41 – Down Payment: The Biggest Obstacle for Home Buyers

12:24 – Is Giving Up Equity Worth It? Ourboro’s Catch Explained

28:05 – Guarantors vs. Co-signers: What’s the Difference?

38:39 – The Importance of a Thorough Pre-Approval Process

Register for the FREE Virtual Homebuyer Seminar (Sat March 8th): click here 

Guest: Michael Dorego

LinkedIn | Website | Ourboro Program 

Contact Nicole Lopez
Real Estate Agent
Royal LePage Credit Valley Real Estate, Brokerage
Email | Website 

Transcript

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Nicole Lopez (00:00):

Over the past few years, I've been reading news reports, editorials, results from surveys, really delving into those, speaking with clients and colleagues within the real estate industry, and one area keeps popping up the first time home buyer and the challenges they face today. In a prior episode of real Estate with Nicole, I spoke about the seven key factors or components that influence real estate trends, and I think the majority of these factors are in full effect for first time home buyers. At this juncture in history, I think it's actually quite unprecedented just to review population growth. A lot of people want to come to Canada, they go to primarily Vancouver, Calgary, Toronto, the big Canadian centers, metropolitan centers. There are of course economic factors such as the inflationary period that we have been going through and hopefully we are passing through at the moment. There are global factors such as a pandemic, there's job security, how secure we feel in our current jobs, given some of these economic factors or global factors or potential tariffs that may or may not be coming.

(01:32):

There's also supply, and when I talk about supply, I mean housing supply with this population growth, there is a demand for housing in Canada. There's the cost of ownership, there are regulatory changes, so programs and that the government issues or the government mandates, such as the recent CMHC changes that allow people with less than 20% down to qualify for properties that are just under $1.5 million. That's something that's probably more helpful than a detractor on the trend, but I just wanted to mention it. And of course there is replacement value versus market value. Understanding that with some of the economic factors, inflationary things, sometimes the replacement value may be a little bit more versus what the market value is for a property. So all of the factors are at play today and I have a guest on that will help us walk through and over or around one of the biggest obstacles first time home buyers face today.

(02:57):

So grab a cup of your favorite as we get ready to dive into our discussion today. I'm happy to welcome Michael Dorego to this episode of Real Estate with Nicole. Michael is an award-winning mortgage agent with a proven track record of success. During this episode, you'll see that Michael has the tools and know-how to help aspiring home buyers become homeowners. Michael brings over a decade of service in the mortgage and finance industry and has established himself as a trusted advisor and expert in helping individuals achieve their home ownership dreams. Given that about three quarters of Canadians believe this is possible home ownership, Michael is one of the people you will need on your team to achieve this Canadian dream of home ownership. Michael has helped countless clients navigate the complex mortgage process and whether he's helping first time home buyers secure their initial mortgage or assisting investors purchase rental properties, Michael's approach ensures each client receives tailored solutions that align with their unique circumstance and financial goals. Ultimately, Michael's expertise extends beyond transactional interactions as his ethos lies in fostering long-term relationships built on trust, transparency, integrity, coupled with outside the box thinking. I can say personally that Michael's very passionate about helping others. He has a lot of energy and enthusiasm as he creatively solutions for his clients. Michael, thank you for taking time to join us today.

Michael Dorego (05:15):

Thank you Nicole for the warm up. I appreciate it.

Nicole Lopez (05:17):

Alright,

Michael Dorego (05:18):

Alright,

Nicole Lopez (05:18):

Alright, let's get to it. So as a seasoned mortgage agent, what do you see as the main challenge or challenges faced by home buyers today or what is the key challenge you see for first time home buyers over the past few years, assuming maybe talking about down payment?

Michael Dorego (05:41):

Sure, Nicole. I think down payment is the biggest challenge. Now, sometimes income is not quite high enough, but if the clients had more down payment, then the income wouldn't matter as much. So I think it all goes back to down payment. As you mentioned, the minimum down payment on properties at 1.5 million or below has gone down. So there was a point where if you wanted to buy a home for a million dollars, you had to have 20% down, which is 200,000. That's a lot of money for a lot of first time buyers to ever save up. Now the down payment on that same purchase price is 75,000. Now the issue there is that a million dollar purchase with 75,000 down is quite a large mortgage, and that's going to come with a very high mortgage payment as well. And the issue is a lot of people might have the 75,000 down, but they don't make quite enough money to qualify for that purchase price.

(06:42):

So what I've been able to do over the years is again, try to think outside the box and try to find programs, little known programs that will help people transition to homeowners. One of my favorite programs that has come out the last couple of years is a company called abo, that's O-U-R-B-O-R-O. And essentially what they do is to me they're kind of like drags then or Shark Tank, if you know that show. Instead of investing in your business, what they're doing is they're investing in your home. So it's made up of different investors, some of which are, Scotiabank is an investor in the program, the Canadian government, there's different company pensions like UNA and also various private investors. What they figured was instead of us buying properties to rent out to tenants, why don't we invest in real estate? But rather than buy rental properties is help homeowners buy their first home, have them live in there and manage it, and we provide a portion of the down payment while they pay the mortgage and the other expenses as well.

(07:53):

As a lot of listeners know, we've heard horror stories. Sometimes you rent out a property and the tenant doesn't pay the rent or the tenant destroys the home and the out-of-pocket costs for that. Whereas with a homeowner, generally speaking, they tend to take more pride in the home because they live there, it's their own house, right? The equity is tied to how well they maintain their property. So our borough said is we'd rather invest in homeowners, help them buy their first house and share in some of the equity growth in their property. So the way the program works, Nicole, is the home buyer needs to have at least 5% down plus closing costs. I estimate about 3% more. So if they've got at least 8% down, our borrow will pitch in up to 15% down to get a total of 20% down payment. Now what that does is it really opens up the buying power because when you have 20% down on a purchase, you now no longer need to use CMHC or any type of insurance program, which by the way is very restrictive.

(09:00):

They have very strict guidelines in terms of how much of your income is able to go towards the mortgage payments. So 20% down really opens up your buying power, and I've seen cases where it can literally open up by hundreds of thousands more in purchasing power. The other beauty too is that it does a great job of helping people who are self-employed. People who are self-employed really struggle with getting a mortgage nowadays because the banks will use your net income to qualify. And as you know, Nicole, we're both self-employed and business owners tend to write down their income and they go to the bank and bank says, so you don't make enough money on paper, but 20% down, we have access to mortgage companies that will not look at your taxes. They will qualify you based on the revenue of the business. Big difference. And now the thing is to use your revenue, you have to have 20% down.

(09:56):

So as a home buyer or aspiring homeowner, if you don't have 20% down, our borrow can pitch in. The difference needed to get you to 20% down, which in turn will let us help you qualify based on your revenue you it also helps those borrowers slightly lower credit scores. The lenders that we use at our borrow are much more lenient on lower credit scores. They're more lenient in terms of income types. They'll allow some atory income in some cases if someone's living with you and contributing to the bills, et cetera. So much more flexibility. Now what's the catch with abo? We're very simple.

(10:38):

They are going to receive their proportionate amount of growth on the property based on how much they put as down payment. So for example, if one of your home buyers, Nicole has 10% down and Arbor puts in 10%, each party put in 50 50. So if the home goes up in value by the time they sell by 200,000, for example, the homeowner will get 50%, which is a hundred thousand or a borrow gets the other a hundred thousand. Now when you have a mortgage versus a paying rent, what's the difference with rent? You're never paying anything down. It's just a constant bill come out of your account. But the mortgage, you're paying it down, so any mortgage paid down. So if you sell the home and you pay down a hundred thousand worth of mortgage, the homeowner gets the a hundred thousand pay down and then again, the proportionate amount of the appreciation. So going back to a 200,000 appreciation, the homeowner walks away with $200,000, they can then sell the property and buy their next home without needing any assistance from our borough, and they would be at that point a hundred percent owners in the new property.

Nicole Lopez (11:53):

Awesome. Just in terms of this program, and thank you for explaining who the investors are, private investors, Scotiabank and some others. How have first time home buyers or home buyers in general received this program? Are there any apprehensions? I know you explained the catch and I think it's pretty clear how that works, but how has it been perceived by homeowners?

Michael Dorego (12:24):

Yeah, it's a new concept. Anything that's new is going to sometimes be met with some reservations. I have had homeowners say, Mike, even if they put down 5%, they're going to keep 25% of the home's value appreciation rather. And sometimes they'll say, well, Mike, I'm giving up a lot of the appreciation. And the question I usually ask is, how long have you been renting for? I've been renting for 10 years. What do you think you've paid in rent in 10 years? Let's just say 2000 a month, that's 24,000 a year times 10 years, that's $240,000, give or take, my math is not the greatest, but how much of that are you getting back? And the answer is zero. Right? Also, you cannot pay anything down with rent. So at least with a mortgage, you're paying it down. So what I always say is, if you could choose to own 25% of something or own a hundred percent of nothing, what's better for you?

(13:25):

And the answer is always 25% of something. So yes, it's not ideal to have to give up some of the equity of a home, but what's the other option is you just got to keep waiting and saving up more down payments. And as we all know, house prices do fluctuate and it becomes kind of like a moving goalpost. So if house prices go up, the minimum down payment goes up with it and it just gets harder to get into the market. So I always tell people, think of Arbor as your first step. Just get into the housing market, own a home. It's much easier to save up down payment when you own a house because it organically goes up in value and you're also paying it down. And the other thing too, but ABO too, they also is, they also pay down some of the land tran tax. So if you're putting in half the down payment, they put in half, they will cover half of the land tran taxes. And because you're putting down 20%, you're no longer having to get mortgage insurance. In some cases that's like 20, $30,000 that no longer is being paid by you. So right off the bat, you're saving, let's just assume 25 to $35,000 in costs just by going with our borrow. So some of that appreciation loss is made up for by not having to pay insurance premiums and also getting a discount on the land tax as well. There's some benefits there too.

Nicole Lopez (14:47):

So what I'm hearing from you is really kind of zooming out to see the big picture of what this opportunity provides people in terms of, yes, you're renting, you're not gaining any equity, you're paying down each month, you're taking care of this property. However, there's no equity growth in zero, your current in your situation. Whereas if you have this opportunity, I call it a helping hand, a bar helps you to step into the real estate market, I think that's one of the most important things is to actually be in the market. Then when you're in the market, you're able to navigate as your financial situation is and your circumstances in order to take that next step, whether it's selling your property and getting property without our bar, selling your property, getting a new property, and maybe making an investment, growing your investment portfolio. So I think it's kind of zooming out and really seeing that big picture and not just looking at, oh yeah, they're helping me and I have to give them some of my equity, but we would've never had that ability to have equity if they didn't help in the first place.

Michael Dorego (16:04):

That's exactly it, Nicole. It's make something versus nothing. The other thing too is with our borrow, there's two ways to pay them back. One is to sell and pay them back. The other is to eventually maybe refinance the mortgage and then pay them out their share and then retain a hundred percent of the ownership going forward, so you don't have to stay with them forever. You have the potential of refinancing, which is essentially increasing your mortgage to pay out their share and then retain full ownership going forward as well. They just ask that you pay them back within 30 years, which for a lot of people, that's more than enough time to make some changes along the way.

Nicole Lopez (16:44):

Right. Awesome. Awesome. Thank you for sharing that. You actually kind of delved a little bit into my next question, but I think it all makes sense or it all fits together nicely. So yes, so it's the down payment that seems to be the big concern with regards to first time home buyers and ultimately that leads to affordability. That's the buzzword. However, I want to note because hearing this, the news, the media, they seem to be painting a doom and gloom scenario that people will never be able to afford to purchase a home that it's out of reach. However, from my research and all the reading that I recall doing and watching some clips of similar stories from the 1980s, that was kind of like what was happening then? Oh, we're never going to be able to do it. We can just forget about ever owning a home. Yet Canadians were resilient and found a way, and I think there's a lesson to be learned from all that angst that was happening in the 1980s. So if we fast forward today, I think yes, it's definitely more challenging to purchase a home and come up with that down payment, Michael, but you indicated people are still buying homes and our borrow was or is one of the outside of the box opportunity that's available.

(18:16):

And I also see it on the ground. People are purchasing, it's still happening. It might not be happening at breakneck paces as in the past years, but people are out there. And as I kind of alluded to earlier, there was a recent survey of Canadians that indicated that we, Canadians are hopeful and include owning a home as part of the Canadian dream. So in my mind, there seems to be a disconnect in terms of what we're hearing on the news or reading. And I'm asking you to give us some additional things. About what other ways are you helping to facilitate the process for first time home buyers outside of our bar?

Michael Dorego (19:01):

Great question. Yeah, so actually another down payment program is various regions across Ontario have a program as well where they will give existing renters either five or 10% down to buy their first home. So for example, I'm in Waterloo, that's where I live, and in Waterloo they have a program where the region will give you 5% down to buy a home in Waterloo region. Now their qualifications are, again, you have to be currently a renter for the last 12 months, I believe it's you can make a household income up to about 109,000. That doesn't include child tax benefits. If you're getting child tax benefits, it doesn't count against you. However, we can use that money towards qualifying for the mortgage. And then you also have to buy a property at a maximum price. In Waterloo region, for example, it's 600,000. So the only money you have to come up with is the closing costs, which is about one and a half percent of the purchase price.

(20:02):

So basically if you're buying something for 500,000 in Waterloo region, one and a half percent is about $7,500, which is maybe like two and a half months rent nowadays. So I've helped people with 10,000 or less in savings who are renting, get the five or 10% down from their region towards buying their first house. Now, some regions are Waloo region, Guelph and Wellington County, Simco, which is like the berry area, din County, which is Orangeville area. All these different regions have a program, some do 5% down, some do 10, and they have different income thresholds and different purchasing prices. But the idea is to start off with a starter home, not at Dreamhouse. And then the catch, as we say with this one is that if they give you 5% down, you just have to give 5% of the appreciation only, plus the down payment they gave you.

(21:01):

So the down payment was $20,000 and the appreciation is a hundred thousand of growth, 5% of a hundred thousand is 5,000 plus a 20,000 down payment, 25,000 back to them. You keep the other 95,000 worth of growth on the property. So regional programs are a great way to get into your first home. You don't have to be a first time buyer by the way you can by buying your second or third home, but it has to be a home that you're going to move into. It's got to be an owner occupied house. So that's another down payment program that we have available. Another thing too is being a mortgage agent, I work with many different banks. All different banks have different qualification processes. I had a gentleman one time that bought a house. This was during Covid. His business was deemed, so his income was basically non-existent, but he continued to pay his employees their full salaries, which I thought was amazing.

(21:57):

So what happened was his income on paper wasn't very high. He went to his own bank of 20 years for mortgage. They said, sorry, you didn't show enough income on paper this past year to qualify to buy the property. The problem was he was already firm on the purchase, meaning for him to back out, he'd have to give up his $50,000 deposit. As you can imagine, him and his wife were very stressed out. They gave us a call. I looked at his file, and the crazy thing was looking at the income, his wife had a full-time job. She actually qualified on her own income. We didn't even need his income. So I took the mortgage to another bank and we got him approved within, I think it was like 24 to 48 hours. And I remember calling them, and the wife was on the phone crying because she was so happy and relieved that they weren't going to lose her deposit.

(22:45):

And they were just shocked that their own bank didn't even look at it from a different perspective. Again, we didn't need his income to qualify. She qualified on her own, but they were so hung up on his income that they didn't look at the big picture. So that's the thing is different banks have different qualifications. They have different minimum credit scores. A home buyer might go to their bank and find out they don't qualify because their credit score is not high enough, but I can easily take them to another company that will give them a similar rate, maybe better with no issue. So it's very similar to being like an insurance broker for auto insurance, right? Everyone has a different driving record, a different type of car. They want different coverages. My job is to figure out which mortgage company makes the most sense for that person or that couple.

(23:32):

So just having every bank having different qualifications will help us get more people into the market. A lot of parents are also giving some money as a gift to buy a property. So gift to down payment is an option. So if you have parents that are generous enough, that's an option. And what some people are doing too is some parents are doing reverse mortgages. They've got a home that's fully paid off, let's say worth a million dollars. They're in their the say mid sixties, seventies, and they have their children that are in their thirties, forties, maybe, and don't have a house yet. And what some of them are doing is they're taking out maybe a hundred, 150,000 and they're doing as a reverse mortgage and giving them money to their adult children as a down payment. And what it is is really it's a living inheritance.

(24:21):

So instead of waiting to pass away to give some money, so we say instead of giving with a cold hand, you give with a warm hand, here's some money now to buy your own property. And the parents get to enjoy seeing their children buy a home, see the grandkids grow up in there as well. And one of the biggest gripes about reverse mortgages is that if you get a reverse mortgage, you're leaving less inheritance for your kids. But if your kids are able to buy their own home and build equity there, then in a sense it becomes a non-issue. So that is an option as well too, that I've helped facilitate people with getting some reverse mortgages to basically help their kids buy house as well too. But those are some of the main ones that I can think of right now.

Nicole Lopez (25:03):

That's excellent. I really love that story. You saved the day and it just shows your thinking outside the box, looking at the big picture and really tailoring the service for your particular client and not just thinking everything is cookie cutter. And I love the insurance analogy. Yes, everybody has a different record. Everyone drives a different car, lives in a different location, so you have to factor in everything in order to put the package together. Exactly. Great suggestion, great suggestion, story and process. All right, so I just want to interject if you like what you hear and want to hear more, Michael will be my guest speaker at an upcoming real estate webinar focused on first time home buyers on Saturday, March 8th, and a link to register for the webinar is posted in the show notes. So we hope to see you there. Michael, do you have any other stories about how you help people get into their first home just to help encourage everyone in terms of that it is a possibility and it's something that can happen now even in this current economy?

Michael Dorego (26:21):

Yeah, well, our borough has a great story there, whereas I had a couple, they were living with their child and renting with her parents. So they were renting a full home parents in the basement, a couple upstairs, and the landlord gave them notice that they were going to sell the home soon. Now they've been living there for I think like 10 years. So their rent was very cheap, so they knew they were going to face a massive rent increase when they moved and they figured, you know what? It's about time we buy a home, but we need something where there's a finished basement that the parents could live in, the basement, wife and husband upstairs with the baby, and then everyone kind of pitch in and pay them mortgage together. Now, they had some down payment, but not quite enough to buy at the price they needed to.

(27:11):

So with our borrow, because we're able to bump up the down payment, we're able to help them buy their first home with the fully finished basement, just the exact house they needed based on their goals and their lifestyle, and it wouldn't be possible without the down payment assistance from Marlborough. So we got them into their first home, they're very happy. That's one way that we got them in was essentially through the higher down payment. Another method is through a guarantor. Now, a lot of parents, they do not want to co-sign for their children because they're concerned that if I co-sign for your mortgage, John and Mary, what's going to happen now is your mortgage is going to show up in my credit report. So if I need to redo my mortgage or if I want to buy a new property or refinance or anything related to mortgages, I'm going to be carrying your mortgage on my credit reports.

(28:05):

Even though you're making the payments, it still ends up affecting me. So what some mortgage companies allow us to do is put the parents as a guarantor. It's more of like a silent partner. We get to use the parent's income to qualify for a higher mortgage amount, but the best part is that the children, their mortgage does not show up on the parent's credit report whatsoever, and the parents do not go on title, so it doesn't tie back to them. What this does is we can use the parent's income to help the buyers qualify for a higher purchase price. One case I used this was I had a gentleman that was self-employed again during Covid. His business was deemed non-essential and his income was basically negligible because of it. Him and his wife are pregnant, they're about to have a baby, but they wanted to have a place of their own to raise the child.

(28:59):

Unfortunately, with her income on her own, it just wasn't enough to qualify for anything. So what happened was I said, Hey, can any of your parents help? Do they have decent income, decent credit, because my parents do. I just don't think they're going to want to have our mortgage on their credit report. I said, that's not a problem. We can take care of that. We have a guarantor program. May I talk to your parents? She said, sure, I got to go ahead. I called the parents, I explained everything to them how it works. Long story short, they were able to buy a duplex and rent out the second unit, which basically covers our mortgage payment to begin with. And then we had, because we able to put the fathers a guarantor, that's what helped bump up the price just enough where we got them into that home.

(29:45):

Without the guarantor, they would've barely qualified for a condo even, right? So that's where the guarantor helps. It's not designed for you to buy a home for 500,000 more than you qualify. Fors got to be a reasonable amount where you have a couple, they have newer jobs and they have an annual bonus that they're supposed to get, but they've only been there for less than a year or a year, and they haven't got those bonuses yet. So banks do not count bonuses until you've got them for at least two years, but I know that they're going to get that bonus. So it's more so where we don't want them to overextend themselves, but we know that they've got more income coming their way soon or they got some raises along the way. And the idea is just to get that purchase price up a little bit, maybe 50,000, 70,000, just enough to get them in the home, but it's not going to change the monthly payments all that much.

(30:37):

So it's within reason. And like I said, they can get into the housing market and then when they do qualify on their own, they can always remove the parents as guarantors after once they qualify on their own. So that's another way. And a third way is people will say, Mike, I've got my down payment, but I got 10,000 worth of debt, but I can also put 10,000 more towards a down payment. So what's better, Mike? Do I put 10,000 down payment more or do I pay off 10,000 worth of debt? And the reality is, you're actually better off paying off the 10,000 worth of debt because it'll boost up your purchasing power a lot more because that 10,000 worth of debt, if it's a credit card, the mortgage companies and banks will attribute a $300 per month payment on that, and that could reduce your qualifying by about a hundred thousand purchase price close to it.

(31:30):

It's pretty crazy. Now, if someone has just enough down payment and they don't have that extra money to pay off the debt, what some companies will do is we have companies that will actually give you cash back and then we use the cash back to pay down the debt. By paying down the debt, we increase your purchasing power because the bank says, okay, well, you no longer have this 400 arm month payment, so therefore we're more comfortable lending you more money. So I had a case where I had a couple where they needed to buy a detached house. They weren't qualifying because they had just enough down payment, but not enough to pay off the additional debts. So in this case, what we did was you got some cash back, we paid off some of the debt, and what it did, it bumped up their purchasing price. It got them from maybe qualifying at best for a townhouse into a detached home. And then on top of that too, yeah, maybe the house costs a bit more, but that 400 bucks a month more debt payment is gone. So again, we're not trying to overextend you, but it's like let's just revamp the finances in a way where it just makes more sense for everyone. So cash back in some cases also helps bump up the purchasing power as well too.

Nicole Lopez (32:44):

Awesome, thank you. Thank you for sharing those kind of house buying hacks.

(32:49):

I have one more question for you, and it's related to, well, first of all, buying a home, it's a real estate is a team activity. It's important to have the right players on your team, the right members on your team. Of course, you as the home purchaser, first time home buyer investor, you're basically the quarterback. You'll have a trusted realtor and having a trusted lawyer and mortgage broker or a mortgage specialist. So I'm asking this question, Michael, just to get your sense or give everyone a little bit more clarity on the difference between a mortgage broker and a mortgage specialist who works at the bank, or rather perhaps provide us with what are the benefits of working with a seasoned investor, savvy mortgage broker, because you kind of mentioned it earlier, but let's be explicit in terms of what those differences are and maybe the benefits.

Michael Dorego (33:55):

Sure. So a mortgage agent is licensed, have a license to offer mortgages. Mortgage specialist is an employee of the bank who's not licensed. These mortgage specialist as a bank. They will only have access to their bank's mortgage products. So what ends up happening is you as the client, if you do not fit that bank's mold in terms of what their requirements are for a mortgage, you're basically out of luck. So the mortgage specialists, they do specialize, but in one product, it's just their own bank's products, whereas a mortgage agent, we're not tied to one single bank. We can work with a lot of different kinds. So essentially it's a one-stop shop with us. I've had cases where people are falling a hard times and they need to restructure the debt, and their bank said, no, we can't do it for you. And we've had other companies say, yeah, we can do it, no problem.

(34:56):

And the difference is that every bank has different risk thresholds and what they can or can't do. And the question becomes is if you're making a huge decision like buying a home or refinancing your home or something, do you want to do it with a company that has one option or would you rather have a lot of options? And I think that's what sets us apart, is having the multiple options. Another important thing too is just the communication between the mortgage agent and the realtor. I've had realtors call me and say, Mike, my client likes a home. They want to put an offer on it. The problem is they call their bank and the bank said the earliest they can see them as one week from today and offer date is it's Monday, but offer date is on Wednesday, and they're not going to be able to see their bank until Friday, for example.

(35:46):

And the ironic thing is, I've actually had, I've had a case where they can get their number, let me call the client and see if I can help them. I've gotten their paperwork, and the crazy thing is I've gotten them a mortgage approval from that same bank that needed one week to see them in person for an appointment. Same bank, much quicker timelines. The difference is I don't need a week to meet with someone. I can talk to someone today, get their paperwork, find out if they're pre-approved or not very quickly, and then send it to the bank that makes the most sense for them. So speed is very important in real estate. As you probably know, Nicole, you don't have a week sometimes to find that if they're pre-approved, right? Especially if a couple's found the home of their dreams, they need to know very quickly if they're pre-approved or not.

(36:36):

I also do very thorough, and what I mean by that is I check people's paperwork, income credit that I find out where the down payment's coming from. We get a lot of phone calls at my office from people in a panic where they're saying, my bank told me I was pre-approved. I ended up buying a home for less than I was qualified for thinking I made a great decision. I now went back to the same bank for the mortgage and now they're telling me that I'm not qualified. And this exact story happened last week with another buyer. She went to her bank to get a pre-approval to buy a home, to downsize into. So she's retired, she owns a home now it's fully paid off, but she wants to buy a smaller home. She found this property she loves, but she wasn't able to sell her home in time.

(37:23):

It hasn't even been listed yet. But she went to her bank, says, Hey, I need a line of credit. I had to buy this property, and then once I sell my house, I'll pay off line of credit. Bank. Said, no problem, you're good to go ahead and put the offer in. So sure enough, she did. She put the offer in, thank goodness she had a condition of finance, but she went back to finalize line of credit and the bank said, sorry, we made a mistake. You don't qualify for that line of credit. So now she's facing, she's got maybe four days left to find out if she's approved or not. Her realtor got in touch with me, said, this is the situation. I got her paperwork and within 24 hours, I had a mortgage approval for her from a company that I was able to basically help her purchase the property upfront. We're doing in her case as a reverse mortgage. So we're putting the mortgage on our current house. It's a fully open reverse mortgage, meaning when she pays, when she sells her house, there's no pre-payment penalty whatsoever. And the beauty, because it's a reverse mortgage, there's no monthly payments either. So she's literally borrowing the money with zero monthly payments. And then the beauty is she can sell her home when she's comfortable. She's not being pressured by making monthly payments

(38:39):

And she can get the home prepped and sold when she feels more comfortable doing it. And again, the difference here was that the bank has one set of options. She did not fit the mold. Me being a mortgage agent, working with many companies, we found a solution for her within 24 to 48 hours. So obviously she's very happy, very ecstatic. She's very thankful that I was connected to her by her realtor, and that's just one of many stories where clients said, Hey, I thought I was good to go to financing. Now I'm not. And realtor connect me with them, and I've been able to help them close on the mortgage in the end. So just again, it's the difference of having more options and how thorough the person you're working with is. Again, I'm very thorough and I just find that it's better to uncover issues upfront before you buy a house versus doing it after you put a firm offer on a property just makes the whole process much easier.

Nicole Lopez (39:35):

Exactly. I'm so happy you shared that particular scenario. I think it really does happen more often than we

(39:44):

Realize.

(39:45):

I know personally, I, I've seen it happen, and it's amazing just the level of accountability sometimes working with some specialist. The one thing I did want to mention is, yeah, it's really important to have that person on your team who's a trusted advisor, who helps you to know more. So having someone who's knowledgeable, who's really digging in. So as Mike says, he does a lot of upfront work on the pre-approval process. So he's knowing more about you as a client, as what kind of fits your profile. Then that helps him and you to be prepared, and then obviously that will help you to be more confident in whatever you do with regards to your real estate journey. So Michael, you kind of just laid out, my key words are to know more, to be prepared and to be confident, because what's really important with regards to your real estate journey, you're making this big decision and you really need to be well-informed so you can make an informed decision.

(41:01):

Exactly.

(41:02):

With that, Michael, any last words that you'd like to share with us today?

Michael Dorego (41:07):

Yeah, just I know buying a home can seem daunting. I'm a homeowner myself. I remember buying my first house. I did it when I was not a mortgage agent, but I did work with one, and I saw how great the process was, got me. It piqued my interest in doing it myself about my second home as a mortgage agent, and even then, I'm the one doing my own application, and of course I was even nervous. It's human nature. The main thing is plan ahead. Don't just up one day and decide to buy a house. You might not be right yet. Plan ahead. Make sure you have enough down payment. If you don't, find out what programs are available. I discussed 'em today, more than happy to help any listeners listening today if they have questions about that. But plan ahead, make sure your job is stable or your business is stable.

(41:52):

Make sure that you're not in probation. Brand new job. Maybe you're not ready yet. Just make sure everything's in order. If you have down payment, make sure not all your money's going towards it. Make sure there's some money left over because if things happen, you don't want to put a hundred thousand down as a down payment and have nothing left over. Just prepare ahead. Also know that mortgages are not all equal. So you can have two mortgages from different companies with the same rates, but they can be totally different in terms of what you can or cannot do with the mortgage. So some of them offer mortgage portability, which is essentially you decide to sell your home and move somewhere else. Can you take the mortgage with you and not pay a penalty? Do they offer bridge financing? So meaning if you sell your home and your closing dates don't match up, can you bridge the mortgage and not pay a penalty?

(42:43):

Can you borrow more money without paying a penalty or you subject to penalties? There's a lot of things. The fine print matters more in the mortgage than the rate, because I've seen many cases where someone got a 0.05% lower rate, so 0.05 perspective is like 5.5 versus 5.45. They jumped on the 5.45 and all they saved was $14 a month on a 500,000 mortgage. 14 bucks a month is maybe too small or too tall, Starbucks coffees. But now a couple of years later, they have to move. Job opportunity comes and they want to buy a better house. Now they find out that their mortgage is not portable or the mortgage is not, they don't have a bridge financing option, and now they have to make changes or break the mortgage. It's going to cost them sometimes tens of thousands of dollars to do so. And I ask them, was that $14 a month worth it in the end? And they say, absolutely not. The problem is the person they worked with, whether it was a bank or the broker, never explained what the fine print was with the mortgage.

(43:49):

And that's what I try to do different is I try to explain to people, listen, here are the pros and cons of the mortgage. Here's what's good about it. Here's what we got to look out for. And again, maybe a bank may have a little bit of a higher rate. It might cost you an extra $10 a month, but it's got a built-in insurance. What I mean by that is if you need to make changes, it's not going to cost you a fortune to do it. I heard a colleague of mine say, don't trip over dollars to pick up nickels. Right? Focus on the main things. That's pretty much it. Plan ahead, ask a lot of questions. Be prepared and ask a question about the mortgage product, not just the rate, but focus on what the mortgage allows you to do. Well,

Nicole Lopez (44:32):

Awesome. Thank you, Michael. If you found this episode insightful, be sure to follow on your favorite podcast app, leave a rating and share with a friend. Remember that preparation and knowledge help you to feel more confident with your investment. This is Nicole Lopez signing off and wishing you a fabulous day. Oh, by the way, if you want to dive deeper into the topic or start or refresh your real estate action plan, join us at an upcoming real estate webinar Saturday March 8th. The session will be focused on first time home buyers. A link to register for the webinar is posted in the show notes.