Find Your Perfect Home

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.

Different Types of Mortgages and Rates

July 10th, 2013

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.

 

Qualifying for a Mortgage

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.

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.

 

Qualifying For a Mortgage – How Much Can I Afford?

June 22nd, 2013

 

 

 

 

 

 

 

 

Key Components

Components of a mortgage payment include the principal (dollar amount of loan) and the interest cost, taxes and heat. These figures combined equal your mortgage payment.

Insurance

Sometimes other costs, such as insurance payments and Homeowner’s Association (HOA) fees can be included as part of the mortgage payment. Borrowers must obtain fire insurance prior to closing on a home, but the payments may be made in a lump sum or can be paid for separately. If you borrow more than 80% of the home value, you will also be required to pay for Private Mortgage Insurance.

Taxes

In many cases, mortgage companies escrow monies to use for paying property taxes and homeowner’s insurance. These payments are often included as part of the mortgage loan payment, but sometimes a borrower can opt out and pay the fees to the parties directly.  Whether you pay them as a part of your mortgage payment or pay them independently, be sure to include the expenses when determining your total monthly expenses.

Mortgage Calculators

To determine the maximum amount a borrower is eligible for, a mortgage broker will use one of several calculators or formulas to help you decide the mortgage payment you are comfortable paying and if your income is sufficient to satisfy a lender. To see the Averbach Mortgages calculators, click here.

Other Debt and Expenses

Other costs that should be considered to determine how much you can afford to borrow include property taxes and payments for other debts such as credit cards. When determining your total monthly payment, you would be wise to include your monthly expenses for telephone, electricity, water and cable as well as any other regular payments you make.

The more accurate and complete information you provide your mortgage broker, the better he or she will be able to match you with the lender that will best be able to meet your needs.

 

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.

Common Reasons Your Mortgage May Be Declined

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

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

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.