Pre-Approval Before House Shopping: a few tips!

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Credit to dolphinsdock photostream on flick.com

Talk about high-stress shopping. Searching for the perfect home – the place where many of the biggest dreams of your life will unfold – is not exactly like browsing for a new pair of shoes. It’s a much bigger purchase, for starters, and you’ll certainly enjoy it for longer. And of course a good part of your personal and financial life will be riding on the choice you make.

Given all that, it’s surprising that some people who go house-shopping have no clear idea of what they can afford. It’s often a recipe for heartbreak – when the house they’ve fallen in love with is NOT a house they can afford. There’s nothing more disheartening than seeing a client’s dream dissolve when he or she is turned down for a mortgage loan. On the other hand, many homebuyers set their sights too low, too, making a conservative guess on what they can afford, then spending time and thousands of dollars on “moving up” purchases that they might have skipped.

What you want to do is to go house-shopping with a full wallet: with an actual pre-approval from a lender. This way, you will know – to the dollar – what you qualify for and exactly how much it will cost you to carry the mortgage. You’ll also have the interest rate held for you for a specified time period, typically 90 to 120 days.

What is a “Pre-Approval”

So, what exactly is involved in the pre-approval process anyway? You should expect to provide your mortgage planner with information on your employment/income, assets and liabilities, and downpayment. The planner will also obtain a report on your credit history. This diligent analysis of your information is exactly what underpins the strength of a mortgage pre-approval. Your information will then be submitted to the best lender or lenders that can meet your needs.

Most lenders will quickly prepare your pre-approval, which essentially is a conditional mortgage approval that states the mortgage amount, term, interest rate, expiration date, required documents. Of course, it’s important to be aware that you’ll eventually need to substantiate the information you provided for the pre-approval when you go back to the lender for the actual mortgage. That’s why it’s important to provide accurate information.

Even if you have a pre-approval, it’s still recommended that you include in your offer a “subject to financing” clause. A pre-approval qualifies you – the borrower – and not the property. As a result, the final mortgage approval also depends on the house you decide to buy, so it will have to meet with the lending institution’s approval guidelines too. You’ll need to provide the necessary information such as the offer to purchase, MLS listing, and any other documents required by the lender so they can assess the property. Once all of the lender’s requirements have been met, the lender will submit the documents to your solicitor, who will set up an appointment with you prior to closing so you can sign all of the documents and review your closing costs. Then you’re done; you’ve gone from pre-approval to getting ready to move.

Pre-Approval vs. Pre-Qualification

Don’t get a pre-approval confused with a pre-qualification. A mortgage pre-qualification is a much more informal procedure and more of a ballpark figure only, not a firm number of exactly how many dollars will be lent. A preapproval lets you know precisely how much money the lender is willing to let you access, and you’ll receive proof of this offer in writing.

Before you go browsing for a home then, schedule a visit with us to secure your pre-approval. Sellers will know that you are serious, agents will go that extra mile for you, and you’ll know that your new home is within your budget.

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Technorati Tags: buying, buying rental property, condo, mls, mortgage, Mortgage broker, mortgage lender, Mortgage loan, Winnipeg Real Estate Market Update

Collateral Charge Mortgages or Standard Charge Mortgages?

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Credit to dolphinsdock photostream on flick.com

The mortgage world could be confusing – fixed vs. variable, term, amortization, pre payment and other privileges, restrictions, fees for breaking your mortgage early, porting, along with other fine details. And now homebuyers and owners need to consider between”collateral charge mortgages versus “standard charge” mortgages!
TD Bank announced that effective October 18, 2010 all new mortgages will be collateral charge mortgages. TD Bank joins the many credit unions that also offer only these types of mortgages. If you are considering a collateral charge mortgage it’s worth some investigation before you sign because while there are advantages, there are also some negatives to think about.

What are Collateral charge mortgages?

Collateral charge mortgages can make it easier for homeowners to tap into their equity if their properties increase in value, although making it harder for them to switch to another lender when their mortgages show up for renewal.
For TD Bank customers, they’ll now be able to register their mortgage for approximately 125% of the value at closing, that allows them to take equity out free of charge should their homes rise in value. The downside comes at renewal. For consumers who want to keep their options open at maturity, this isn’t the best product feature because collateral charge mortgages are hard to transfer to another lender. Which means if someone wants to change lenders for a better rate or product feature, they have to start from the beginning and pay new hips. Technically they can be assigned but lenders don’t accept the transfer. With regular standard charge mortgages, you can switch for free, although certain minor charges may apply.
The ability to take out equity is one of the primary options that come with Home Equity Lines of Credit, that are collateral charges for this reason. In these cases, clients want the ability to extract equity once they need it or as it becomes available. If you feel that there is a very good chance you’ll refinance to consolidate debt in order to extract equity for a renovation in order to invest, then a collateral charge mortgage can be a wise decision.

Standard Charge Mortgages

If you don’t believe that you’ll need to refinance or extract equity, then a regular standard charge mortgage will fit you fine, and it will give you the capability to move to another lender at renewal if you want to without incurring hips. In other words, it’s easier for you to maintain your options open.
Whenever the situation looks confusing and complicated, go to a mortgage professional, whose only focus is on mortgages and what each of their over 50 lender partners have to offer. They will analyze your situation and assist you to determine what’s right for you – collateral charge or standard charge mortgages, among the many other mortgage options and privileges that you need to consider.

For information on standard charge versus collateral charge mortgages, talk to an experienced Mortgage Professional.

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• Mortgage Rates: Why ‘Variable’ Rates may be a good choice (bokauffmann.com)

Technorati Tags: buying a house, first time buyer, Home equity line of credit, Mortgage broker, mortgage lender, Mortgage loan

Mortgage Broker: Now the primary source for new mortgages!

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Photo by Feathered Tar on Flickr Photostream

A Fall 2010 study commissioned by the Canadian Association of Accredited Mortgage Professionals (CAAMP), in collaboration with Maritz, reveals that Canadian mortgage debt has exceeded one trillion dollars, an increase of 7.6 per cent over the same period last year. CAAMP expects this debt load to continue increasing, but at a slower pace.

The study highlights the excellent value provided by a mortgage broker (options from a wide range of lenders, expertise), with 40 per cent turning to a mortgage broker as the professional of choice for their new mortgages. Clearly, today’s generation of home-buyers are very savvy about seeking out options. They don’t feel like they’re tied to a particular bank. No one “owns” them, in their view.And when it comes to all homeowners with a mortgage, 40 per cent consulted a mortgage broker when shopping for their financing, up five per cent from last year.

Overall the report points to a healthy mortgage and real estate market in Canada. Some of the highlights include:

• The vast majority (84 per cent) are able to afford increases of $300 or more in their monthly mortgage payments.
• Overall home equity is at 72 per cent, and for homeowners who have mortgages, home equity levels average 50 per cent.
• Over one third of mortgage holders are making voluntary additional payments: 16 per cent have increased monthly payments during the past year, 12 per cent have made lump sum payments, and 7 per cent did both.
• The majority (66 per cent) continue to choose fixed-rate mortgages, highlighting the general conservatism of Canadian homeowners.

A Mortgage Broker can help

According to the study, 18 per cent of mortgage borrowers took advantage of their property’s value to take equity out of their homes .The most common purpose for equity take-out is debt consolidation (45 per cent), home renovations (43 per cent), purchases or education (19 per cent) and then investments (16 per cent). Several respondents used their equity for a combination of these purposes.

This increase in mortgage debt is not necessarily negative. It makes sense for many homeowners to refinance their high interest debt at today’s low mortgage rates, which allows them to save considerably on interest costs and boost their cash flow if needed.  Home renovations not only improve the quality of life for homeowners, they very often increase the value of the home (see http://www.aicanada.ca for tips on which renovations have the greatest payback). And of course, when borrowing to invest, the interest on the amount borrowed may be tax deductible (a tax and investment professional must be consulted when borrowing to invest).

Overall, the Canadian housing and mortgage market is sound, and Canadians continue to appreciate that real estate is an excellent long-term investment.

For your mortgaging or re-financing needs, consider using a Mortgage Broker.

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• Mortgage Rates: Why ‘Variable’ Rates may be a good choice (bokauffmann.com)

Technorati Tags: buying a house, first time buyer, mortgage, Mortgage broker, Mortgage loan, real estate

Winnipeg Mortgage Broker:  Top questions a home buyer should ask

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So you’re thinking of checking out  a Mortgage Broker in Winnipeg?

Good for you. Actually, there are at least 10 reasons to use a Winnipeg Mortgage Broker.  You’re about to make what is likely the most significant purchase of your life; it’s good to get some financial advice. Stop thinking of a mortgage as a big fat loan – and start thinking of it as a tremendous financial tool. Properly structured, the right mortgage can build your wealth, protect you from a  financial downturn, and save you thousands of dollars. A  experienced, skilled mortgage broker in Winnipeg is going to give you the best overall view of what’s out there for you in the marketplace – and can tailor a mortgage that suits you perfectly.

Firstly, understand that your bank – great as they are at your day-to-day banking – may not always be the right choice for your mortgage. That’s because there are many options for getting a mortgage in Canada – including about 50 major lenders. Your bank represents one available lender – and  it doesn’t always make sense to restrict yourself to a single lender. That’s where a mortgage broker come in.  Home-buyers are increasingly savvy, demanding more information, more choice, and better value with their mortgages. And that’s why they’ve been increasingly turning to a professional mortgage broker, who can offer almost instant access to rates and features from a huge range of lenders.

How do you pick a good Winnipeg mortgage broker? Here are a few questions to ask:

1. How long have you been a Winnipeg mortgage broker? Experience is critical, as it is in every industry. But sometimes a fresh young broker is working with the support of an experienced broker – so ask about that person too. Your young broker may be dynamite – and can lean on a more experienced planner if needed. It’s actually a good sign to see this kind of mentoring in the workplace; it shows they’re in it for the future. Don’t be afraid to ask what the broker’s annual volume is. A broker doing over $10 million annually is not that “young’ in terms of mortgage transactions experience..

2.  Do you have your AMP designation? The Accredited Mortgage Professional designation means that the mortgage broker has professional training, and meets certain ongoing education and professional requirements.

3. How many lenders do you work with? While there are over 50 lenders in the marketplace, most brokers work with a shorter list, where they are able to get to firmly know the company and their guidelines. You want to be sure that your Winnipeg mortgage broker has a solid stable of lenders, but you don’t want all of their business going primarily to just one, otherwise they likely aren’t being as objective as they should be, unless they specialize in a specific product that is only available through that lender.

4.  How much of your business is referral business? Where the business comes from says a lot about the mortgage broker’s service. The best brokers receive a very high majority of their business from referrals from satisfied customers.

5.  Do you charge fees? For most standard “conventional” deals, a mortgage broker does not charge fees.  They may charge a fee if the lender isn’t paying a commission or where the deal is complex and takes considerable time to package and close.  Charging fees isn’t necessarily a negative, you just have to understand the situations where they are charged.

Trust your instincts. A good mortgage broker will look professional, will have a high-quality website or other materials, and will make you feel comfortable asking questions. After they’ve told you what they’ll do for you, ask them what happens if your mortgage isn’t approved. A good broker will work with you – to help you improve your credit, for example. If the broker is just interested in the deal on the table, move on.

The right Winnipeg mortgage broker will make a significant difference in your financial life. When you’ve got a partner to help you achieve your financial and home ownership goals, you’re on your way!

If you’re interested in speaking with a Winnipeg mortgage broker, call or send an email and we’ll set something up.

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Technorati Tags: first time buyer, Loan, mortgage, Mortgage broker, mortgage lender, Mortgage loan

You don’t have to tell the average Canadian homeowner that real estate is a good investment. With very few exceptions, home equity has been building across Canada, and many Canadian homeowners have determined that two or more roofs are better than one. There are several reasons why a growing number of Canadians are purchasing investment properties:
1. Return on investment. Certainly, residential real estate is a solid long-term investment, typically appreciating faster than inflation. Even Canadians who have chosen their stock portfolio very carefully may find that their home is their best-performing investment. Many investment advisors recommend diversifying stock and bond portfolios to include real estate. Initially the goal is to have rental income cover all or most of the costs of the property. Over time the goal is to see an increase in the value of the real estate, with rent turning to profit once the mortgage is paid off. Expenses related to the property are of course tax deductible, offsetting the rental income.
2. A pension plan for the future. Over the long term, an investment property or multiple real estate holdings can be a great source of retirement funds. Many Canadians do not have a pension plan, which means they need to take their own action to create sources of retirement income.
3. A better alternative to student residence. Many Canadians are shipping off their university-age children, and housing them in an investment property purchased specifically for that purpose. They can save money on out-of-town accommodations for the student, and use revenue from other renting students to pay the mortgage and maintenance expenses.

4. Earlier access to a first home. For first-time home-buyers, a duplex or triplex can be a terrific way to get onto the home ownership ladder. Rental income from the extra units can help offset the cost of the mortgage as the new homeowners get on their financial feet.  Rules have changed however for investment property mortgages since the government’s new mortgage rules that came into effect April 19, 2010. A minimum downpayment of 20% is required for an investment property i.e. you’re not personally living in the property that you own, which is up from 5% prior to the new rules. You can put down less than 20%, but you’ll need to use an uninsured lender, which can mean higher interest rates. If you only have 1 to 4 properties, there are several CMHC lenders from which to choose from. Once you have more than 4 properties you need to start spreading out your business among several lenders so as to not reach the maximum number of mortgages a lender will approve per investor.
Other underwriting or qualifying rules have also come into play; Canada Mortgage & Housing Corp (CMHC), Canada’s largest mortgage insurer, has changed the way they treat rental income in their debt service calculation, which can make qualifying more difficult.
Sound confusing? It absolutely is. That’s why you need to speak with an experienced mortgage planner who can help you better understand what’s involved in financing investment properties. There’s no cost or obligation. We’re up-to-date on current rates and all of the opportunities available for property investors from all of the lenders in the marketplace. Whether you need an investment property mortgage or just looking for some advice, a mortgage broker is ready to help!  See my website at Igloo Mortgage

Technorati Tags: buying, buying a house, buying rental property, investing, mortgage, mortgage lender

That first fresh breath of spring always sets us in motion: we can’t wait to sweep away the clutter. Sure it’s a bit of work, but it feels great when the lawn is raked, the windows and curtains are washed, and the closets are cleared. Just like the clutter that sneaks up in your closets, you can also accumulate debt clutter: credit cards, car payments, tax bills and other obligations.

If you’re concerned about your debt clutter, then this may be the year to spring clean your debt. With mortgage rates still at historic lows, this spring you have an incredible window of opportunity. By using your home equity, you can consolidate your high-interest debt into a new or existing mortgage, giving you interest savings and a new lower monthly payment. In almost every case, you’re better off holding your debt in a mortgage than in any other lending vehicle.

Why? Because we continue to benefit from mortgage rates that are still among the lowest in decades. Worried about penalties to break your current mortgage? We can assess your situation; there’s a good chance that the savings each month will far outweigh any penalties. Here’s an example.

Consider the following situation:

Your current mortgage is $155,000 at 5.5% with a monthly payment of $946.
You also have a car loan of $20,000 and credit cards maxed out at $20,000, both of which cost you $920 a month
Your total monthly payment is $1,866

Your mortgage planner presents the following scenario:

You get a new mortgage for $202,000 to cover the original $155,000, the $40,000 in credit cards and car loan, and $7,000 to break your mortgage.
Your new mortgage is at 4.10% and you now have a much lower overall monthly payment of $1,074 With this new scenario, monthly payments are $792 less each month; a great improvement in cash flow!

And if you put $425 of that cash flow into your mortgage payment, you reduce your amortization from 25 years to 15. We’re a fortunate generation of homeowners. We can benefit from low mortgage rates to enjoy our lives and our homes – and to manage our debt wisely. Independent mortgage planners – who have access to more than 50 different lenders, including most of the major banks – have become specialists in helping Canadians restructure debt. In addition to offering access to a broad range of mortgage options, these experienced planners provide credit advice and debt management tips that can help save thousands of dollars.

Consider if you need a clear and simple look at what you’ve got to gain from spring cleaning your debt. We don’t know how long these great rates will last but right now, it is a historic opportunity. If too much debt has slowed your monthly cash flow to a trickle, it’s time to talk to a mortgage planner. And why not? It will be the easiest spring cleaning task on your list; your mortgage planner will do all the work!
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Technorati Tags: financing, mortgage, mortgage lender, winnipeg, winnipeg real estate

Hi everyone:

For most of us, buying a home means financing your purchase with a mortgage. Most often, getting a mortgage depends on your how good your credit score history.

While most consumers know that they have a “credit rating,” not all know their scores or how they were calculated. If your mortgage application is refused, or approved for less than expected, there’s an opportunity for you to improve the score.

Your creditworthiness is assessed two ways:

• Beacon score, and
• A detailed history.

Credit scores range from 350 (low) to 850 (high), with 680 being the median. The numerical score is calculated based on previous payment history, current indebtedness, credit history length, number and frequency of new credit inquiries and, the types of credit held. Two so-called “Beacon killers,” are payments more than 30 days late (even small amounts) and maxed-out credit cards. The detailed history adds personal information, banking information and specifics on accounts and payments.

Maintaining and improving credit depends upon:

1)            Pay all bills on time – late payments hurt your rating

2)            Keep credit balances below 75%of the maximum

3)            Avoid applying for additional credit; too many applications in a short period signals financial difficulties

4)            Make sure that personal information in your credit file is correct

You should also review your credit history at least once a year, it is free when requested in writing or by fax.

How can a Mortgage Broker help?

Getting your finances in order can be a daunting task. A Mortgage Broker can help you assess your current credit situation and help you determine a path for credit improvement. A Mortgage Broker will work with you to find a solution for your unique financial situation.

For more information on managing credit refer to Service Canada’s website or contact your Mortgage Broker today!

Technorati Tags: buying, buying a house, condominium, first time buyer, mortgage, mortgage lender

Building and maintaining good credit can help to ensure mortgage approval!

For most of us, buying a home means financing your purchase with a mortgage. Most often, getting a mortgage depends on your how good your credit score history.

While most consumers know that they have a “credit rating,” not all know their scores or how they were calculated. If your mortgage application is refused, or approved for less than expected, there’s an opportunity for you to improve the score.

Your creditworthiness is assessed two ways:

• Beacon score, and
• A detailed history.

Credit scores range from 350 (low) to 850 (high), with 680 being the median. The numerical score is calculated based on previous payment history, current indebtedness, credit history length, number and frequency of new credit inquiries and, the types of credit held. Two so-called “Beacon killers,” are payments more than 30 days late (even small amounts) and maxed-out credit cards. The detailed history adds personal information, banking information and specifics on accounts and payments.

Maintaining and improving credit depends upon:

1) Pay all bills on time – late payments hurt your rating
2) Keep credit balances below 75%of the maximum
3) Avoid applying for additional credit; too many applications in a short period signals financial difficulties
4) Make sure that personal information in your credit file is correct

You should also review your credit history at least once a year, it is free when requested in writing or by fax.

How can a Mortgage Broker help?

Getting your finances in order can be a daunting task. A Mortgage Broker can help you assess your current credit situation and help you determine a path for credit improvement. A Mortgage Broker will work with you to find a solution for your unique financial situation.

Technorati Tags: buying, buying a house, mortgage, mortgage lender, real estate, real estate agent, real estate market, realtor, realtors

Top 10 Reasons to use a Mortgage Broker

These days, every home or condo buyer in Winnipeg knows that, at a very minimum, they need to be pre-approved before shopping for a new home.  But being pre-approved by the RIGHT lender is just as important.  With almost unlimited choices, between Banks, Credit Unions, private lenders and mortgage brokers, whats the best choice for today’s home buyer?  Many are turning to a Mortgage Broker, for a variety of reasons.  Here are some very important ones to consider:

A home is the biggest purchase most of us will ever make.

And a mortgage can be a powerful financial tool. No surprise, then, that a growing number of Canadians have started to ask some smart questions about their mortgage. In fact, more than 30% of all Canadian mortgages are now arranged through a mortgage broker. Why? Here are 10 great reasons:

1. Choice.

A mortgage broker has access to mortgages from a huge range of lenders – so their clients have by far the best choice of rates and mortgage options. With partnerships in a vast network of over 50 lending institutions, including banks, credit unions, trusts, national and regional lenders, and non-traditional lenders, your broker can help design the perfect mortgage for you.

2. Independence and objectivity.

A mortgage broker actually works for you, not for any one lender. That kind of objectivity means that you – the client – are the focus. They fit the mortgage to the client, not the other way around.

3. Negotiating power.

A mortgage broker has negotiating power because the lenders compete for their business. You’ll get the best rate for your situation.

4. Access to rate promotions.

You may not realize it, but there are sales and promotions in the mortgage world, too. Lenders often offer special rate promotions, for example. Your mortgage broker will know about these special offers, and whether they might work in your situation.

5. Expertise.

An AMP-designated  broker is a financial specialist. That’s the kind of expertise you want to guide you through today’s plentiful mortgage market. With 35-year amortizations, re-advanceable mortgages (mortgage combined with a line of credit), no income documentation products for the self employed, credit repair and debt consolidation solutions, today there are mortgages for almost any situation. And your independent mortgage broker knows them all.

6. A focused specialist.

A mortgage is a very significant financial event. A mortgage broker is in only one business, and they do it exceedingly well. That’s what you want: someone who’s focused on the mortgage marketplace and your needs.

7. Rates.

Getting a lower rate can potentially save you thousands of dollars. That’s why more homeowners are more likely to call a mortgage broker to check out their options for their first mortgage and at renewal.  Call early; your mortgage broker can usually guarantee an interest rate for 90-120 days.

8. One credit inquiry.

Rate-shopping on your own can actually be hazardous to your credit. Every time a lender checks your credit, the credit bureaus take notice. Too many inquiries and your credit rating can weaken, possibly affecting the rate and terms of your mortgage. Your mortgage broker does one inquiry only, regardless how many lenders you’re looking at.

9. No cost to you (o.a.c).

As a rule, the winning lender pays compensation to your mortgage broker for the services and solution provided.

10. Personal attention.

You need a mortgage plan that is a custom fit for you, and a broker who keeps in touch with you during your mortgage years. Keep in mind that their business is built primarily through referrals from satisfied customers, so your positive mortgage experience is essential for their ongoing business growth.  Your mortgage is a big decision and a powerful financial tool.

So if you are in the market for a new home, or need to re-finance a current home, consider using a mortgage broker to get the best deal possible.

Technorati Tags: buying, buying a house, Financial Services, first time buyer, Interest rate, mortgage, Mortgage broker, mortgage lender

http://www.WinnipegHomeFinder.com/buying.html Whether you are a first-time buyer, or moving up to a larger home or condo, if you need financing, this video will help you choose the mortgage lender thats right for you!

For Home-Buyers, getting pre-approved is an absolute necessity.  But these days, being pre-approved is only half the battle.  The real benefit comes from being pre-approved by the RIGHT lender.

With dozens of banks, credit unions and mortgage brokers to choose from, how does the home-buyer make his selection?

The answer is: ask a qualified REALTOR to make a referral.  The benefits are many, as this video explains.