A young couple was once out to purchase there first house together. They both had recently graduated from university, and had started there first jobs after graduating. After several months of renting, they were ready to purchase there first home together, but where to start. A mortgage seemed like a challenge, and they didn’t have all the knowledge to do it on there own.

The first step, they thought, is to search for a house in the local real estate magazines. Once they found a property they were interested in, then they contacted the realtor who was pictured with the property. The realtor was very eager to talk with the couple; unfortunately, the house they had been interested was already sold, but the realtor assured the couple that there were better houses available.

The first signature occurred when they first met with the real estate agent, and they signed the exclusivity agreement. This meant to the client that they have a real estate agent that will work for them. They began visiting many different properties in search for a location that they could call home.

Finally, after several weekends looking, they found a house that would suit there needs. The realtor asked them how much they were willing to paying. The realtor had negotiated a price that was slightly less than there maximum but it was still within budget.

They had signed all the paperwork, and everything was confirmed. They extremely excited to move into there new home when the re estate agent asked ‘who is your mortgage approved with?’. The young couple had not even thought about the mortgage. They had figured that the real estate agent would take care of this for them; however, they didn’t know that they had to do it on there own. They contacted the bank they did business with since they were young to discuss there options. The young couple setup an application, and they were advised of a list of documents that they would need to provide for the approval.

They worked diligently to collect all the items that the bank had requested to get the mortgage approved, and when they thought they were almost ready to go, the bank phoned them.

“Hello, we regret to inform you that we cannot proceed with your mortgage application. We discovered some collections in your credit history, and we cannot proceed with your application.”

Upset, but not fully deflated, the couple tried applying at multiple banks; however, they kept receiving the same result:mortgage declined. They finally came to the conclusion that they were not ready to get a mortgage. They called there real estate agent to advise him that they had to cancel the contract for purchasing that house; however, when they called the real estate agent there worst nightmare happened.

“What do you mean you can’t get approved for a mortgage? I thought you said you were ready to buy a house. When you made an offer, you said you wanted to make a firm offer, right? Do you know what a firm offer means?”

The couple had no idea what they had got themselves into. In the excitement of purchasing a house, they overlooked all the details to do so. The exit clause on the purchase agreement costs the clients not only there deposit, but also the expenses incurred by the client for them not proceeding.

To escape the contract, it ended up costing them 10% of the purchase price of the property and they got off easy. In most cases someone could get sued for tens of thousands of dollars.

The moral of the story is that mortgages are not something to be taken lightly. Read and understand every line before signing and hire good solid people to represent you. Do not leave your mortgage to chance. Educate yourself before even considering a mortgage.

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