Archive for the ‘Mortgage Advice’ Category

Look at MORE than JUST the Mortgage Rates

Monday, September 16th, 2013

It’s easy to get caught up in the idea that comparing mortgage rates will guarantee you get the best bang for your mortgage buck. While this may be true for particular situations, there are many scenarios where this strategy is not effective. Following are three reasons why it doesn’t always pay to make a decision based solely on rates.

mortgage-cloud

Reason #1
Your long-term plan and risk tolerance should determine which mortgage product is right for you. This product may or may not have the lowest rate.

For instance, there are cases where lenders will offer lower rates for insured mortgages. With insured mortgages, however, you’re charged an insurance premium, which is usually added to the mortgage amount. But if you’re not planning on keeping the property for a long enough time to offset that cost, it may be better to take an uninsured mortgage with a slightly higher rate. The cost difference you will pay with the higher interest rate may still be less than what you may pay in insurance premiums.

As another example, if you prefer to budget for a consistent payment and can’t handle rate fluctuations, it may be better to go with a higher fixed-rate mortgage. If you think current rates are low enough and you will be living in your property for at least five years, it may be wise to also opt for a mortgage with a longer term.

Reason #2
One of the biggest mistakes people make when merely comparing mortgage rates is failing to consider important factors such as prepayment options to help pay off the mortgage faster, whether secondary financing options are allowed, early payout penalties, or what fees are involved.

It’s not enough to simply compare mortgage rates because you have to know what “clauses” are contained within the mortgage deal. There may be cases where you will find a lender with the lowest rate and willing to pay for your closing costs, or even provide you with cash-backs after closing. I will always look at the clauses and inform you on what’s truly involved in signing up for your mortgage.

Reason #3
Lenders can change their rates at any time. As such, if you’re shopping for rates with one lender and then approach another that gives you a lower rate, it’s quite possible that the first lender has also dropped its rates. This is why it’s important to get pre-approved with a lender once I’ve helped find you a mortgage that fits your needs. In some cases, we can secure your rate and conditions for up to 120 days.

These are just three reasons why it’s not enough to merely compare mortgage rates. The mortgage rate you may qualify for is also highly dependent on your credit score among other things. In order to get the best mortgage deals, you need to have solid credit.

As always, if you have any questions or concerns about finding the best mortgage product for your unique needs or your credit score, Justin Blacklock and Mike Averbach are here to help! Just give us a call 604-736-1855  or fill our our on-line contact form.

Tips for Home Buyers, Home Maintenance and Renovations

Sunday, September 8th, 2013

I just spent an hour browsing through the CMHC (Canada Mortgage and Housing Corporation) website and was amazed by the wealth of information they have for home buyers and home owners.

Canada Mortgage and Housing Corporation

 

For those of you new to home ownership and mortgages,  CMHC provides mortgage loan insurance that enables you to buy a home sooner with a minimum down payment of 5%.

The  CMHC  site has dozens of informative articles and videos aimed at helping you buy, maintain and renovate your home.

Here’s a synopsis of the information and where to find it:

Buying a Home

The information in this section includes a Five Step Home buying Primer as well as information on; Buying Your First Home, Choosing a Neighborhood, Buying Condos and information on Government of Canada Home Ownership Incentives.

CLICK HERE for information on buying a home.

Maintaining a Home

For most Canadians, their home is their most important investment. It’s where your family spends a lot of time, so keeping it healthy, well tended and safe is important. A regular schedule of seasonal maintenance and repairs can help you protect your investment by putting a stop to the most common and costly problems before they occur..

CLICK HERE for information on maintaining your home.

Renovating Your Home

Planning is the key to a successful renovation. To help you plan your renovation project, CMHC has information and easy-to-understand tips that can help you assess your requirements and learn the key questions before you get started.

CLICK HERE for information on how to successfully renovate your home.

Are you buying a home for the first time?  Do you need CMHC backing?  Let us guide you through the whole process … it’s easier when you know how!    Call me now (Justin Blacklock)  and we can get started right away!  604-736-1855

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Find Your Perfect Home

Sunday, July 21st, 2013

Your perfect home is “out there” somewhere! After you have been pre-qualified for a mortgage, you will know how much you are comfortably able to spend on a mortgage payment (including all applicable fees, taxes, etc.). Even if you don’t think it’s possible to find your ideal home on your current budget, you can take a first step in that direction.

 The first step after pre-qualification is to make a list of all the features you want/need in a home. These should include number and size of rooms, type of home (detached, town home, condominium, etc.) and nearby community amenities. Then divide your list by what is non-negotiable and what are “nice to have” features. Your real estate broker will be better able to better serve you by knowing not only your home price range, but also the features that are important to you.

Some options to consider: Purchase a home that meets most of your “must haves” and plan to set aside savings each month toward a remodeling fund. If you love the family room and bedroom sizes but want to update or remodel your kitchen, you can move in now and begin getting estimates for your dream kitchen.

 Another option is to buy a home that is slightly less than the maximum you can afford now. It may not qualify as your dream home, but you will be accumulating equity in your house and after several years, you’ll have additional funds available to finance another home that does offer everything you hope for in a home!

If you have any questions about buying a home talk to us, and we’ll walk you through the decision making process.   Call Justin at  604-736-1855.

Common Reasons Your Mortgage May Be Declined

Sunday, June 9th, 2013

 There are numerous reasons your mortgage may be declined. Some of them are more obvious than others. The home that you plan to purchase will be collateral for your mortgage loan. If the home you want to buy doesn’t appraise for the amount you hope to borrow, the bank will decline your mortgage application.

Your credit rating could be lower than the lending institution guidelines allow for a mortgage loan. If you have late payments on credit cards, have defaulted on loans in the past or even if you have several credit cards with high balances, you may be denied a mortgage loan. Another possible reason for your mortgage being declined is that you are asking to borrow more than you can afford to repay.

All mortgage brokers use standard guidelines for determining whether or not you are a good credit risk. Each loan type and lending institution has specific criteria and/or requirements. In other words there are rules that must be followed when determining not only whether or not you are likely to make your mortgage payments on time, but also whether or not the institution feels you can reasonably afford to repay your loan.

You must provide all documentation needed for the type of loan you are seeking. Historical proof of income, evidence of other sufficient financial resources a credit score above a certain number and other criteria will vary from loan to loan. If you fail to let us know about retirement funds or other financial assets, for example, we won’t have a full picture of your financial resources. The more we know, the better we are able to represent your best interests.

Underwriting criteria can vary among lenders and since our job as mortgage brokers is to be familiar with a wide range of financial institutions, we are able to find a suitable fit and help you choose the best mortgage for your needs.

If your credit history is causing problems, we will let you know what you have to do to repair your credit rating, and what you will need in order to qualify.

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.

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.