Buying a home is more than likely one of the biggest financial decisions you will make in your life. Here is a great explanation of  Mortgage pre-approval, which is essentially the starting point of the home buying experience.

 

 

If you are looking for a great mortgage broker, please let me know as I work with many great ones all the time and would be honoured to refer you to one that will do whatever they can to help you.

 

Because YOU Deserve the Best ...

 

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Getting pre-approved for a mortgage before looking at properties gives you a more realistic expectation of what you can afford.

 

However, keep in mind that the pre-approved amounts can overestimate what you can actually afford to pay.

 

Pre-approval does not guarantee you will be approved once you actually apply if market conditions, interest rates, or your personal circumstances change.

 

Many realtors will ask if you’ve been approved. A lender will look at your finances and figure the amount of mortgage you can afford. Then the lender will give you a written confirmation, or certificate, for a fixed interest rate. This confirmation will be good for a specific period of time. A pre-approved mortgage is not a guarantee of being approved for the mortgage loan.

 

Even if you haven’t found the home you want to buy, having a pre-approved mortgage amount will help keep a good price range in mind.

 

Bring these with you the first time you meet with a lender:

 

  • Your personal information, including identification such as your driver's license
  • Details on your job, including confirmation of salary in the form of a letter from your employer
  • All your sources of income
  • Information and details on all bank accounts, loans and other debts
  • Proof of financial assets
  • Source and amount of down payment and deposit
  • Proof of source of funds to cover the closing costs (these are usually between 1.5% and 4% of the purchase price)

 

Let's work together to make sure everything works in your favour.

 

Because YOU Deserve the Best ...

 

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Before you start house shopping there are a few things about getting a mortgage that are very important for you to consider:

 

Mortgage

 

  • what can I afford
  • will i get pre-approval

 

According to ratehub.ca: "Affordability is based on the household income of the applicants purchasing the house, the personal monthly expenses of those applicants (car payments, credit expenses, etc.), and the expenses associated with owning a home (property taxes, condo fees, and heating costs)."



Here is a great tool for you to determine how MUCH you can afford!  Thank you again, ratehub.ca for this great tool!

 

``Lenders look at two ratios when determining the mortgage amount you qualify for, which generally indicate how much you can afford. These ratios are called the Gross Debt Service (GDS) ratio and Total Debt Service (TDS) ratio. They take into account your income, monthly housing costs and overall debt load.``


If you do not know a mortgage broker yet, please let me know and I will introduce you to one of my recommended and trusted colleages to help you with your mortgage questions.


Till next time ...


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Providing you with useful mortgage information is something I like to be able to do for you.

 

Here is an article from the Globe and Mail online that I just had to share with you. 

 

"When it comes to interest rates, most of the attention is on the Bank of Canada’s overnight rate, which governs short-term lending. But it’s long-term fixed income rates that have the most affect on people’s wealth. Rising five-year, 10-year and 30-year yields impact everything from mortgage rates to portfolio returns.

 

Unlike the overnight rate, which the Bank of Canada is responsible for moving, the long-term rates shift based on what’s happening around the world."

 

Many people still think that the lowest rate is the best deal.  That is not always the case.  Getting the best mortgage deal that fits you and your lifestyle is a very delicate business and should be dealt with by a professional. 

 

If you are in need of a mortgage professional I have a few that I like to recommend, so please don't hesitate to ask me.

 

Till next time ...

 

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I received some great information on Preparing for Rising Mortgage Rates, and wanted to pass that on to you today, and also to thank Christopher Collins for this great information! You can find out more about Christopher here.

 

Christopher reports:

 

"The interest rate party for borrowers is almost over. Following almost five years of historically low rates, we’ve started to see some upward movement in the cost of money.

 

Most people watch the central banks for indications that rates are about to take off. But that’s not where the real action is for fixed-rate mortgage holders. This actually takes place in the rarefied world of the bond market, where institutional traders like banks and pension plans operate. By the time the Bank of Canada gets around to acting, the bond market will have left it in the dust.

 

In order to save as much money as possible, a proactive approach is recommended when dealing with rising interest rates:

 

1.     Budget for future plans. Many borrowers opt for the maximum mortgage for which they can qualify. The problem with this approach is that life happens. It’s important to plan ahead for future changes such as starting a family, maternity leave, relationship changes, health issues, career changes, and so on.

 

2.     Ensure you would still qualify for your mortgage if rates continue to increase. For instance, if the five-year rate reached 5.2%, could you still afford the payment? We can sit down and run the numbers to ensure we build a buffer zone into your mortgage.

 

3.     Use your prepayment options. This will enable you to increase your payment in relation to the increased rate. For instance, if you have a five-year fixed mortgage at 2.89% and rates increase to 3.49%, increase your monthly (or bi-weekly) payment to the equivalent. That way, you won’t experience “rate shock” when your mortgage is up for renewal. It’s important to remember that any extra payments you can make will go straight towards paying down your principal faster, which means you will be mortgage-free quicker!

 

It may be worth your while to take advantage of a free mortgage check-up before rates increase any further. This will help you determine if it makes sense, for instance, to renew your mortgage a few months early if this means being able to lock in to a new five-year term before rates increase even more.

 

With rates on the rise, it’s more important than ever to take advantage of mortgage brokering services, since we can shop different lenders and advise which ones not only have the best rates, but also which lenders have the best prepayment options and mortgage offerings to suit your individual needs."

 

Do you have any questions for Christopher?  Please contact him here.

 

 

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Thank you Globe and Mail for the inspiration for today's post:

 

Ever heard of mortgage cancellation fees? You soon might.

You are probably used to seeing cancellation fees from hotels, airlines and cellphone providers, but not when you’re getting a mortgage.

 

Such fees are slowly becoming more common as a small but growing number of discount mortgage brokers are tying cancellation fees to rock-bottom rates. Here’s why.

 

Many Canadians use mortgage brokers, who have access to multiple lenders, to get the lowest possible mortgage rate. To get the best terms, lenders require brokers to maintain high “closing ratios.” That means brokers must generally complete three out of four mortgages that they get approvals for.

 

But as mortgage shoppers become more informed and more rate sensitive, many become less loyal. And that is leading to an increase in costly cancellations, as borrowers use one lender’s approval to get a better deal with another lender or broker.

 

One may rightly ask, “What’s wrong with that?".

 

You can read the answer to that question here.

 

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