With the recent regulation changes in Canada, being approved for a mortgage has become a little more difficult than to pre qualify for a mortgage in 60 seconds. So why are we receiving contradictory information about how quick and easy getting a mortgage can be? Transparency, as we all know, is not a word that would be dominantly used to characterize the banking world, and in many other industries unfortunately. We thought it was time to unveil some of the misleading interpretation that might have been adopted due to recent promotional content within our industry. Technology is evolving with…
Why do Lenders ask for Employment letters?
Why do Lenders ask for Employment letters? Checking for employment letters might seem like just one more piece of paper, but it’s important. It’s due diligence. And it works on your behalf. A borrower will provide employment letters if requested when applying for a mortgage. You will also need a current pay stub dated within 60 days. The mortgage broker informs the borrower for additional income documents. A lender requests the most recent 2 years Notice of Assessments or T1 Generals (tax return) or T4s certainly if overtime or bonus income is used to qualify. Employment letters should provide the…
What is the biggest misconception with using a Mortgage Broker?
What is the biggest misconception with using a Mortgage Broker? One of the biggest misconceptions of using mortgage brokers is that brokers place their residential mortgages with private lenders and not banks. That is misguided information often passed down to borrowers. There are 3 types of residential mortgage lenders that borrowers are placed with. What are the Different types of Residential Mortgage lenders? ‘A’ Lenders – ‘A’ Lenders are the big name Banks, Credit Unions and Monoline lenders. The big name Banks in the broker channel are Scotia, TD, and ATB. Brokers in Alberta can deal with Servus Credit Union and First Calgary. There are different Credit Unions that…
9 Things to do before you list your home for sale
9 Things to do before you list your home for sale Thinking of putting your home for sale? A homeowner can be well prepared by following these 9 things to do before you list your home for sale. 1. Know why you really want to go Some reasons are obvious, such as the need to sell if you’re moving to another city or putting in an offer on a new home. Other needs may be less definite, such as outgrowing your space or concerns about cash flow. By working with a mortgage professional, you can assess financing options and the…
6 Mortgage terms Homebuyers should know
Mortgage terms can be daunting for a homebuyer . Understanding these 6 mortgage terms homebuyers should will be helpful when you consider buying your first home! Here are the 6 Mortgage Terms: High-ratio mortgage A Homebuyer that purchase a home with a downpayment of less than 20% will have a high-ratio mortgage. All high-ratio mortgages are covered by mortgage loan insurance also known as mortgage insurance. The three mortgage default insurers in Canada are CMHC, Genworth and Canada Guaranty. Low-ratio mortgage Also known as a conventional mortgage, a low-ratio mortgage is one where the homebuyer has made…
3 Quick Tips for Making an Offer on a Home
Making an Offer on a Home? Ideal homes often receive offers within days of being listed. A buyer can increase their chances of securing their ideal home by being prepared! 3 Quick Tips for Making an offer on a Home: 1) Visit a Mortgage Broker Sit down with a Mortgage Broker and find out what you qualify for. It isn’t just about getting preapproved with a great rate. It is about being prepared for when you do put an offer in. Know what you qualify for, know roughly what your payments will be and what costs are associated with purchasing…
Interest Rates Rise
Prime Interest Rate Increased: What is the affect on your Variable Rate Mortgage?
It had been anticipated that Bank of Canada was going to increase their lending rate and they did by 0.25%. Banks followed suit and increased their prime lending rate by 0.25%.
There has been quite a stir recently putting many homeowners in a panic that rates were going to spike up quickly and concerns with those who are currently in variable rate mortgages. Banks prime rate increased to 2.95%, just under 3% that it was at September 2010. It is a small increase of a quarter of percent. Nothing too major.
My inbox and phone has been going steady with homeowners concerned with these changes. Let’s have a look at the historical rates and the impact a 0.25% increase has on mortgage payments.
CMHC premiums increase for Homebuyers
CMHC premiums increased on March 17, 2017. Mortgage insurance or mortgage default insurance, commonly referred to as CMHC insurance, protects the lender in the case the borrower defaults on the mortgage. Mortgage default insurance is required on all mortgages with down payments of less than 20%. This CMHC premiums is added onto your mortgage balance and factored into your monthly principle and interest payment. How Much more will I be paying for my Mortgage Default Premium? Say you are purchasing a $300,000 home with 5% down ($15,000), 5 yr fixed rate is 2.69%. Before March 17, 2017: Premium: 3.60%…
New Rules Limit First Time Homebuyers
Last week (Oct. 2016), the Federal government announced tighter mortgage rules that will affect home buyers, especially First Time Homebuyers. The tightened mortgage lending rules will limit the amount many Canadians can borrow to help ensure that when interest rates rise, they’ll still be able to make their payments. These new rules take effect Oct 17, 2016 Under the new rules, there is a stress test for all home buyers that are putting less than 20% down. The stress test is where borrowers must qualify for their mortgage using a higher interest rate than they will actually be paying on their mortgage. Currently the…
Types of Insurance when buying a home
4 Types of Insurance Related to your home MORTGAGE DEFAULT INSURANCE is an added premium into your home mortgage. Mortgage default insurance is required for those with a High-Ratio mortgage (less than 20% down) or borrowers with higher risk. This policy is in place to protect lenders from risk of borrower default. The 3 mortgage default insurers in Canada are CMHC, Genworth & Canada Guaranty. You purchased a big investment and you are going to want to insure the building & contents with FIRE & HOME INSURANCE. Fire insurance policies pay out the mortgage lender if the house burns down. Mortgages won’t fund…