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!

There are many different types of mortgages and rates available in today’s marketplace. The fixed rate mortgage loan offers the most stability and terms that do not change over the life of the loan. Adjustable rate mortgages allow borrowers to take advantage of hoped-for decreasing mortgage rates in the future. Low-Interest/High ratio loans are ideal for home buyers who don’t have a large sum of money for a down payment.

A conventional mortgage is a mortgage for less than 80%-in other words the borrower provides at least 20%-25% as a down payment, and is either fixed or variable rate loans.

With fixed-rate loans, the payments remain the same throughout the term of the loan.  This is ideal for someone whose income is expected to remain stable throughout the year and who has a low tolerance for risk.

An adjustable rate mortgage loan is a good idea if the borrow believes rates will decline in the near future. This loan rate is tied to the prevailing market prime rate and rises and falls as the prime rate goes up or down. Variable rates are typically lower than adjustable rates and the initial rates are usually very low to make them attractive to borrowers.

If rates do decline, the payment remains the same, but more of the payment is applied to the principal, allowing the loan to paid off earlier. If rates do begin to rise, the loan can be refinanced to a fixed rate.

Low-Interest/High Ratio Loans

A low-interest/high ratio mortgage is a mortgage where the borrower provides a down payment of less than 20%. Mortgages for 75% or more require mortgage insurance, usually provided by Canada Mortgage and Housing Corporation (CMHC) or Genworth. The insurance premium (of up to 7.3% of the mortgage amount) offers the lender the assurance that they will be repaid should your default on your mortgage.

This is merely an overview of mortgage products available to borrowers. Check back often for information on the vast array of products and variations offered to today’s Canadian home purchaser.

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! 

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 your mortgage broker about your financial situation. Find out if you can pre-qualify. Talk 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.