Keys to the Vault Banking System
Written by Mitch Collins
The information that you need to know to get your deal done faster and with better terms while building a business relationship with your banker.
If you’re like most people, one of the things that you’re least looking forward to in purchasing a home is the banking process. You probably don’t want someone looking over your personal information, especially when you’re not totally clear about what they will be looking for. In this program we will review step by step what (and why) your banker is going to look for when dealing with you, what is most important to them and how they make a decision. Armed with this information, you will have a huge advantage. I know this system I’ve created works because I’ve used it here locally in Fort St. John with amazing results. Whether you decide to use a mortgage broker or get your loan through a local bank, this system will greatly increase your results in either case.
The program I’ve created specifically for you will give you step by step instructions on how to create a professional grade presentation package when you apply for a mortgage to get your dream home. It has worked so well locally that even local bankers have provided testimonials! Let’s get started together!
Most people are fearful or anxious about having to deal with banks for mortgages or other loans. This fear is due largely to a lack of knowledge – not understanding how to work with banks, and what a bank is really looking for in its deals. The goal of this program is to shed a light on that lack of knowledge and to give you all the information you need to totally understand how banking works, how to present your deal and above all what you need to do to get the banker to say ‘Yes!’ to your deal. This Program is created in 2 parts. The first section informs you how to understand what the bank needs, why getting pre-approved is critical, how and why to ask for what you want and much more. The second section is really the nuts and bolts of the Program. We will review how to create a ‘Professional Application Binder’ that will absolutely make you stand out from the crowd. In it we review all the formulas, and numbers and information that a banker will need to get your deal done. Let’s get started with the foundation of the Program;
Before starting my System, let’s take a moment to review the 5 C’s of Credit. Understanding these will go a long way in helping you to understand what your banker is looking for.
Character is the general impression you make on the potential lender. The lender will form a subjective opinion as to whether or not you are sufficiently trustworthy to repay the loan. Your educational background and experience in business will be reviewed. The length of time at your current employment and your current residence will be considered. The longer you have been at both, the higher you will score on the character scale.
Collateral is additional security you can provide the lender. In real estate transactions this generally means the property. If for some reason, you cannot repay the mortgage, the bank wants to know that the real estate the mortgage was taken out for is good and marketable real estate. A real estate appraisal will determine the value for the property in today's market. The appraisal will also indicate to the lender the type of property being financed and any deficiencies that may affect the ability to re-sell, in case of default. Generally, a property located in a North York sub-division is considered a better risk than a farm in rural Ontario. Simply, there are more buyers for the home in the city than for a rural farm and therefore is easier to re-sell.
Capital is the money you personally have invested in the purchase, otherwise known as your down payment. The more of your own money you invest as a down payment, the more likely that you will do all you can to maintain your payment obligations. This fact was evident during the recession of the 90s where a large number of the power of sale properties, were at one time, purchased with small down payments. Capital is also reflected by your ability and willingness to save money and accumulate assets. The higher your net worth, the more you have as a cushion for repayment in the event you run into a financial set-back.
Credit is the evaluation of your habits in performing credit obligations. The information about your credit history is stored at the "credit bureau" and indicates how well you paid your bills over the last 6 years. All major credit cards, auto loans, leases etc. are reported to the credit bureau. A lender will evaluate your ability to maintain your obligations and try and determine how well you live within your means. Some individuals make the mistake of not paying the minimum monthly obligations on loans and credit cards with the expectation of making a larger payment the following month. These missed payments appear on their credit report branding them as chronic "late-payers" for the next 6 years.
Capacity to repay the loan is probably the most critical of the five factors. The lender will want to know exactly how you intend to repay the loan. The lender will consider your income as it relates to the loan that you are applying for. Does the monthly carrying costs of the loan represent less than or equal to 32% of your total monthly income? If it is, the probability of you successfully repaying the loan is fairly high. Prospective lenders will also want to know about any other sources of income you may have to repay the loan, if your steady income stream is interrupted.
Now that we’ve reviewed this, let’s get started on my system for getting the bank you give you to keys to the vault! Each of the 5 C’s and much more will be covered in detail throughout this system.
Section #1 – Building a Relationship will make all the difference
Action Step #1 – Understand the Banker’s Motivation
This program will show you how a banker looks at your deal, what they are looking for, and how to present yourself to them in the best possible light to negotiate the best possible terms and interest rate for your mortgage. From now on it is your responsibility to put yourself in the banker’s shoes and understand where they are coming from. Typically, bankers are career oriented people and don’t want to write loans that won’t get paid back. When this happens, it reflects poorly on the banker and might slow down their climbing of the corporate ladder. Keep in mind that banker’s need to lend money! It’s just your job to make it easier for them to say yes to you. Imagine you are a banker and you have 20 files sitting in front of you for you to work on. It makes sense that if your file is presented better than anyone else’s, you’ve created a relationship with the banker, and you’ve put in the extra effort in your presentation that the banker will want to work on your deal first above the others and maybe fight a little harder to get your deal done. When a banker goes through your application, the majority of the time your application must also be reviewed by another person in the bank branch – usually one of your banker’s supervisors. This is why you need to understand that how you present a deal will affect how confident your banker will be in presenting YOUR deal to THEIR boss! This is why you need to be sure that you’re always on time (even 5 or 10 minutes early) for meetings, respond to questions immediately and effectively, and put in the extra effort necessary to keep your banker on your side.
So, let’s get going now with HOW to present your deal better than anyone else they’ve ever seen.
Action Step #2 – Get Pre-Approved for a Mortgage Loan
Your loans officer or mortgage broker is one of your biggest allies in getting your home. The relationship that you create with this person will greatly impact how your deal gets done. This all begins with the pre-approval discussion. Before looking at a house, it is a good idea to go through the process and get pre-approved for a mortgage. There are several benefits to getting a pre-approval – here are a few;
- This discussion is the start of a relationship with your mortgage broker or loans officer at your bank. By taking the time to deal with this prior to actually looking at property, it shows the banker that you take this serious and that you’re willing to put in the extra effort. This usually has the effect of making the banker want to work harder for your deal.
- You will know of potential issues up-front and can deal with them before looking and putting offers on property. This will save everyone time and stress – your banker, your realtor, and especially yourself.
- Getting preapproved gives you an edge in negotiating. A seller will look at an offer more closely,
and will also probably be willing to deal more with someone who can show (with a copy of the
pre-qualification letter from the bank attached to the offer) that they are preapproved with the
bank. This could potentially save you thousands of dollars or get you better terms all by itself.
- This step will also allow you to get what is called a ‘rate hold’. It means that your interest rate will be guaranteed for generally 90 days, even if interest rates go up during that time. So if it takes you a while to find the property you want, you don’t have to worry about what is happening with interest rates!
Action Step #3 – Ask for what you want
When you are able to clearly communicate to your banker what you want in their language, you show that you have taken time to understand their system and you are able to have an intelligent discussion with them. By spending a little time understanding things like amortization, interest rates, floating or locked in options (or even convertible), pay out penalties and much more you show your banker that you are serious – and this in turn helps to build your relationship. Here are a few of the things you should be looking for in a mortgage;
I could continue on, but in an effort to keep this brief so you can get the most out of this system, let’s move on to the important items. The next section is guaranteed to create a lasting impression with your banker and greatly increase your chances at getting not only approved, but at better rates and terms than someone not using this system.
Section #2 – Your ‘Professional Application Binder’
The process of creating a detailed information package to give to your banker is really what will set you apart. Each step of this system will show you how to put together information in such a way that it leave the biggest impression on your banker. Along the way, I will be showing you the reasons behind why to include all this information, and other things that you will need to know. Following this program you will find blank templates for you to use when you are actually creating your own package. To get started, you will need a standard size binder with the clear plastic pockets on the outside to slide in a presentation page. You will also need 7 divider tabs for different sections of your package.
Step #1 – Your Personalized Cover Letter
This gets attached to the front of the binder with a paperclip. It is the first thing that the banker will see when you meet them and hand over your binder. You will need to clearly state the following;
Contact Mitch today to recieve the rest of this special report and find out what you need to know to get the best deal possible on your mortgage and any other loan you will ever look for!