Because we are in the “mortgage business” and engage in “mortgage talk” all day long, we often forget that new buyers may not understand what we are talking about.  The other day someone asked, “What does locking-in mean?”   We’re glad they asked, because we regularly advise locking-in as a strategy for home buyers and for those who are considering refinancing to take advantage of lower rates. (Lock-ins are also known as rate locks).

We advise buyers to lock-in at several critical points.

• When they have been pre-approved for a mortgage
• When they anticipate a rate increase

After applying for a mortgage, a lender will make you an offer.  You can lock-in that rate to protect yourself against rate increases.  This gives you time to find and purchase your home, or decide whether to refinance your mortgage.

What if the rates actually go down?  You get the lower rate!  So locking-in gives you the best of both worlds.  It protects you against rate increases and gives you the lowest rate possible.

How long can you lock in for?  Lock-ins can be normally be held for 90 and some lenders allow 120 days.

Most of us are familiar with the concepts of fixed and variable rate mortgages.  A hybrid mortgage combines the features of both.

For example you might see a hybrid mortgage that is made up of:
60% – 3 year fixed rate
40% – 3 year variable rate

As interest rates rise, buyers might off-set their risk by choosing a hybrid mortgage.  Some experts predict that hybrid mortgages may be more popular in coming years, but at this point in time, there are not many lenders offering them, which ultimately means you do not have as much flexibility in choice.

As always, if you have any questions about getting a mortgage, or about renewing or refinancing give us a call at 604-736-1855.

Along with flowers and new veggies, spring and summer seems to come with a list of renovation projects ranging from minor “paint the back door” type projects all the way to major renos such as roof replacements or deck additions.

Many home owners tackle projects that will hopefully increase the value of their property such as kitchen and bathroom fixes or even a new garage.

The Canadian Mortgage and Housing Corporation website has a number of really useful resources specific to renovations.  From guides, lists and checklists to over a dozen informational videos. If you are even considering a renovation project, their Renovation Guide gives you a great “before you start” look at what you are getting into!

As always, if you are looking for options for financing your renovation project … give us a call first.  604-736-1855

Think of your mortgage renewal as a valuable opportunity.  A chance not only to take advantage of today’s great rates, but also get a mortgage product that better fits your current needs.  When you receive a renewal form from your current lender, don’t simply sign it without knowing all your options.

If you do so, you could be paying a higher rate, and end up with a mortgage that might not be best suited to your needs.

Instead, talk to Averbach Mortgages’ manager, Justin Blacklock.  He will discuss your interest rate options, and can arrange a rate hold for you.

Justin will also help you with a customized mortgage strategy.  By the time your mortgage comes up for renewal, you are most likely in a different financial position than when you first obtained the loan.  As our financial and life circumstances change, so does the mortgage product that is best for our needs and goals.  For example, you may wish to access your home’s equity to consolidate other debts, or perhaps help pay for post-secondary education.

At renewal time, make sure you get the most from your financing.  Justin can speak to any concerns you may have about interest rate trends and advise you on what to do as your mortgage renewal approaches.

Call Justin Blacklock today at (604) 736-1855.

When we meet someone new, inevitable the “What do you do?” question comes up. In my circle of friends everyone knows what I do and so I start assuming that EVERYONE  knows what a Mortgage Broker is.  Apparently I am mistaken (a rare occurrence!).

The other day it was apparent from our conversation that a new acquaintance thought I worked for a bank.  Well, as you can guess there was NO WAY I was going to let that pass without correction, so it was back to the basics!

What Does a Mortgage Broker Do?

Mortgage brokers are experts at every aspect of home purchasing. They constantly search out lenders with the lowest interest rates and best overall mortgage package for buyers. Mortgage brokers are current on all laws and regulations in the provinces where they sell property.

Especially first-time home buyers are wise to use a mortgage broker for their home purchase. Juggling and keeping up with appraisers, lenders, lawyers and real estate agents can be confusing and time-consuming. Mortgage brokers serve as the “middle-man” or as “information central” for your real estate transaction.

There are many incentive programs that most people are simply not aware of. Your mortgage broker keeps on top of what is available and what you need in order to qualify. They can save you time and money by helping you tap into these programs.

Mortgage Brokers are licensed and regulated in BC by FICOM (Financial Institutions Commissions) and keep current on their mortgage education and ethics via continuing studies courses led by their governing bodies. Mortgage brokers in Canada can and should be Accredited Mortgage Professionals with the AMP designation offered by CAAMP (Canadian Association of Accredited Mortgage Brokers). Be sure to ask your mortgage professional if they are licensed by FICOM and are AMP certified.

All Averbach Mortgage professionals are professionally certified.

Won’t it Cost Me More to Use a Mortgage Broker?

Mortgage brokers are paid in one of two ways. Most commonly, they are paid a commission by the lending institution that finances your mortgage. In the unlikely event that a mortgage is placed at a lender that does not pay a commission to the broker for whatever reason, the broker would then assess a fee to the client. This is very rare and typically only occurs if one of these three possibilities occurs: 1) a client has very poor credit. 2) if it is a second mortgage or  3) it is a commercial mortgage. Another rare case is with construction financing. At Averbach Mortgages, typically 99% of our business is from “triple A credit” clients that are professionals with good, provable income.

Mortgage brokers are paid by the bank or lending institution so it is in their best interest to find you the best financing package for your situation. If they don’t do a good job for you, they know you won’t use them again, and you’ll tell all your friends about it!

What’s the Catch?

There IS no catch! Your mortgage broker works in your best interest … they make sure you get the best rate available to you. In fact you might wonder what the catch is when you deal with your bank. They often do not offer their best customers their best rates. Be sure that you do not assume that your bank will give you the best rate … find out if there are better rates and products available to you before you sign!

What’s the Bottom Line?

> Each home purchaser needs to decide what will work best in their situation. One important consideration for home buyers: mortgage brokers don’t get paid until your loan closes. That means they have an incentive to make sure the home buying process goes as smoothly as possible for you and closes in the time frame that works for you.

Sometimes part of a borrower’s regular mortgage payment includes mortgage insurance costs. There are several types of insurance, some of which are required and others which are optional.

Mortgage Default Insurance

Borrowers who make a down payment of 20% or less must be insured by Canada Mortgage and Housing Corporation (CMHC) or a private insurer. This type of insurance is a credit risk management tool for lenders. The three largest private mortgage Insurers in Canada are CMHC, Genworth and AIG.

Unlike other types of mortgage insurance, mortgage default insurance insures the mortgage loan itself. If the person(s) who owe the mortgage defaults on their loan, this insurance ensures the mortgage lender will recover all outstanding principal of the mortgage.

Mortgage Payment Insurance

This type of insurance is offered by some financial institution and guarantees that if you lose your job or your income is reduced for some other reason, your regular mortgage payments will continue to be made. This may be a good type of insurance to purchase for a borrower who works seasonally or on a commission basis.

Mortgage Life Insurance

This is an optional insurance coverage you can obtain when you take out your mortgage. In the event the borrower(s) dies before the mortgage has been paid off, mortgage life insurance will cover the balance of the mortgage loan, usually up to a predetermined maximum amount.

Mortgage Disability Insurance

Some financial institutions also offer mortgage disability insurance that protects the borrower(s) is you are injured or become ill and cannot make your mortgage payment.

In some cases, purchasing one of these policies from an insurance company may be a better value than through a mortgage lender. Whether or not you decide to acquire the mortgage payment, life or disability insurance is a personal decision you should discuss with your lender, your attorney and any co-borrowers.

Before you purchase Mortgage Insurance, be sure to read the article Choosing the RIGHT Mortgage Insurance by Adam Stephanson. This article will help you better understand much of the fine print. It will help you make sure you are REALLY covered, rather than “just thinking” you are covered!