Archive for May, 2013

Why You Should Pre Qualify for a Mortgage

Tuesday, May 28th, 2013

The obvious reason to get pre-qualified for a home loan is so that you know how much home you can afford. The purpose of the pre-qualification process is much broader, though, than simply crunching income vs. expenses numbers to see what mortgage payment you can afford!

Averbach's Onlne Calgulator

As mortgage professionals we use your income vs. expense ratio as a starting point in determining the “big picture” of your home purchasing process. We will run a credit report to determine your credit card and loan balances. Also, the credit report will show whether or not you are current on all your debt payments.

After all this information is compiled, you will have a good idea as to your creditworthiness, the mortgage amount you can comfortably afford and what, if anything, you need to do to improve your credit rating.

Your Averbach consultant may suggest you pay off credit cards and will certainly advise you to clear up any problems or incorrect information in your credit report. It’s a good idea to begin the pre-qualifying process several months before you actually plan to begin shopping for a home. That way you’ll have time to clear up any credit report issues. About 90-120 days before you close on your home, you can lock in a favorable interest rate as a hedge against rising rates in the future.

A not-so obvious reason you may want to visit a mortgage broker before you begin house-hunting is so that the seller knows you are able to acquire a mortgage without any surprises. Your offer to the seller is much stronger when you don’t have to put “qualifying for a mortgage,” as a subject-to clause!

If you have any questions about the steps necessary to pre-qualify for a mortgage please give Justin (604-736-1855 ) a call or fill out the form on our Contact Us page.

What is YOUR Renewal Risk

Tuesday, May 14th, 2013

Came across an interesting article in the Globe and Mail.  Bruce Joseph, a mortgage broker in Ontario is advising his clients to take out 10 year mortgages to reduce their “renewal risk.”

Averbach's Onlne Calgulator

Joseph’s  spin on it is that he is not really worried too much about bank rates increasing dramatically.  Rather he asks, what if you are on “the edge”  with a minimum down payment and a high mortgage. What would happen if your financial circumstances were to change … what would happen IF your mortgage holder were to “refuse” to automatically renew your mortgage?

Mr. Joseph’s concern isn’t that people will have to renew mortgages on homes that have fallen in value. Rather, it’s that someone will have to requalify after having been hit with a drop in household income or a job loss.

According to the Globe and Mail …

. . .  draft regulations issued last year by the regulators at the federal Office of the Superintendent of Financial Institutions did raise the idea of lenders requalifying borrowers at renewal. The measure was left out of the final rules, but lenders can use it if they want.

What do WE think?  The risk of not having your mortgage renewed is exceedingly small unless you have NOT been paying your mortgage payments regularly.   IF you are in an extremely volatile job market, or are unsure of a steady income you MIGHT consider a 10-year mortgage.

We think a better choice is getting a one to three year fixed mortgage  with rates currently ranging from 2.49 to 2.75%.  In comparison a 10-year fixed mortgage is at about 3.69%.  (NOTE: rates are constantly changing and are very volatile, so be sure to check with us before making your plans.)

Talk to us, and we’ll walk you through the decision making process.


Call Justin at  604-736-1855.

You can read the Globe and Mail article HERE.

 

Five Tips On Qualifying For The Best Mortgage Rates

Wednesday, May 1st, 2013

Your credit report will be one of the primary documents a mortgage lender will reference when determining whether or not you qualify for their best mortgage rates. That means the process of qualifying for a mortgage begins long before you decide to buy a home!

Here are Five Tips that will help you qualify more easily:

The number one tip on qualifying for the best mortgage rates is pay your bills on time – every time. If you can, set up on-line automatic payments from your checking account so you don’t miss a payment deadline.

The number two tip is to not accumulate too much credit card debt. Having too many credit cards or just two or three cards charged to their maximum negatively impact your credit rating, even if you pay the balance due on time each month.

The number three tip is to have enough cash on hand to make a substantial down payment. The more you put down on your mortgage, the less risk the lender perceives in giving you a loan, because of the dollar amount you invest up front.

The number four tip is to be prepared. Gather together all your paperwork including pay check stubs, proof of self-employment income, listing of debts and assets and a current bank statement and any other information needed.

The number five tip is to talk to us about your financial situation. Find out if you can pre-qualify. We’ll give you information  about what lenders require in order for you to qualify for a more favorable interest rate (more income, less debt, higher down payment, etc.).

Be sure to contact us when you are ready to take that next step.  Call Justin at  604-736-1855