Real Estate

mortgage with cosignor or guarnator

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  • Feb 13th, 2018 6:22 pm
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[OP]
Newbie
Mar 17, 2012
99 posts
8 upvotes
Eastern Ontario

mortgage with cosignor or guarnator

Hi,

Our broker has told us he can get a preapproval for us but he said it is 50/50 when it goes to CMHC. I asked if we could use a cosignor and he said yes. Our income is great and credit scores are okay but not enough credit history after we paid off and closed a bunch of accounts last year. Our income is about $80,000 (can't include my $16,000 from contract work) and the house is listed for $239,900 (eastern Ontario) and we plan to offer about 230,000 as it has been for sale for about a year. We do have someone who will help. We plan to remove this person in a year or less when we have more credit history. Any advice?
9 replies
Deal Addict
Oct 29, 2010
4321 posts
670 upvotes
How much downpayment are you going to put? That will probably determine your chances.
In 2015 we got our first house with 99k income and it was 500k with 5% down. They basically gave us the option of either having a co-signer or put 10%.
I used my parents as co-signers and then removed them when I sold and bought another house instead.

Honestly, even with the new rules it seems weird that your broker would think it's only 50/50 chances...
But then again, there is a thread about mortgage rates with lots of brokers there, I'm sure you can find some great advice there.

Also, keep in mind that pre-approval is no guarantee for a mortgage approval. If something changes between the pre-approval period and the closing, the lender may change his mind and leave you hanging.
Finally, you mentioned contract work, if you have some history to back that 16k figure, the lender will also consider it. For example, they let us use bonus/overtime pay because we had 2-3 years of T4 to show for it, they just averaged those figures and let us use it as part of the income.
Deal Addict
Jan 15, 2017
4110 posts
3614 upvotes
A guarantor is used when there is weak credit whereas a co-signor is used for low income issues.

Did your broker explain why the issue with CMHC? Is your credit score at the minimum?
[OP]
Newbie
Mar 17, 2012
99 posts
8 upvotes
Eastern Ontario
Credit scores are mid to high 600s. I'm wondering if he said that because he was saying we could purchase for around 270,000 depending on the taxes. We found the perfect house for much less so we will see what happens.
Newbie
Aug 29, 2017
24 posts
1 upvote
Should the name of the cosigner or gaurantor also be on the title?!
Deal Fanatic
User avatar
Feb 2, 2014
8965 posts
2567 upvotes
Toronto
momofmen wrote: Hi,

Our broker has told us he can get a preapproval for us but he said it is 50/50 when it goes to CMHC. I asked if we could use a cosignor and he said yes. Our income is great and credit scores are okay but not enough credit history after we paid off and closed a bunch of accounts last year. Our income is about $80,000 (can't include my $16,000 from contract work) and the house is listed for $239,900 (eastern Ontario) and we plan to offer about 230,000 as it has been for sale for about a year. We do have someone who will help. We plan to remove this person in a year or less when we have more credit history. Any advice?
Unless the person is living in the property, lender won't accept a guarantor.

They will have to be a co-applicant and on title to the property. Shouldn't be an issue to remove them after your credit is established in a couple of years.
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Deal Addict
Jan 15, 2017
4110 posts
3614 upvotes
momofmen wrote: Credit scores are mid to high 600s. I'm wondering if he said that because he was saying we could purchase for around 270,000 depending on the taxes. We found the perfect house for much less so we will see what happens.
I am guessing that at $270k you would be close to the max amount. As you are looking at less expensive properties, you should be fine. Good luck.
[OP]
Newbie
Mar 17, 2012
99 posts
8 upvotes
Eastern Ontario
We found a house we would like to put an offer in at $230,000. It is listed at $239,000 and has been up for sale for about a year. They just replaced the oil furnace for gas. It has been vacant since listed I think.
Deal Guru
User avatar
Mar 23, 2008
12333 posts
8755 upvotes
Edmonton
momofmen wrote: We found a house we would like to put an offer in at $230,000. It is listed at $239,000 and has been up for sale for about a year. They just replaced the oil furnace for gas. It has been vacant since listed I think.
Don't look just at the "time on market". Also look at when the last price adjustment has been done. If it originally went on the market for 239,000 and it's been sitting for a year at that price, there should be plenty of negotiating room (as in, you may want to start at $220, even). If it was priced at $300,000 for the last year, and just last week they dropped it by 60,000, then they may not be willing to move much again. You also need to (even more importantly) look at comparables in the area. Not just listing prices, but sold prices. A realtor can help you pull those, if you can't get them on your own.

Finally, make your offer conditional on financing and inspection, if you can. In the chaos of the GTA RE frenzy, those conditions often got dropped, but not for much of the rest of Canada. You may be pre-approved for xxx,xxx, but that's only good if the appraisal comes in correctly and all your numbers check out. If you make an unconditional offer and something goes wrong, you can lose your deposit. And in the case of someone who's house has been on the market for a year, it's not like a week or two to get the conditions removed should be a show-stopper.

C
[OP]
Newbie
Mar 17, 2012
99 posts
8 upvotes
Eastern Ontario
We definitely have a real estate agent who will help us with an offer price and conditions. We would be quite happy to offer lower! lol. We chose him because he is one of the top performing RE agents in our area. He has been good to point out issues with houses that we saw.

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