How to Prequalify for a Mortgage

mortgageIf you’re trying to get a second mortgage like a home equity loan, you’re going to need the secrets to prequalifying for a mortgage. From working with the right Canada mortgage broker to gathering up all the appropriate documentation, you’re going to have a long road ahead of you. Here we’re going to go over everything you need to know to get to the next level. It’s important you work with a professional though – the last thing you want to do is prolong the process and miss out on great opportunities while interest rates are so low.

Get a Handle on Your Financial Situation

You have to know where you’re at with your budget, your credit history and where you’re going to be in the near future. It’s never easy figuring this part of the game out, but if you want to prequalify for a home equity loan you have to do it. How much can you really put towards your mortgage payment every month? Can you afford to lose any equity in your home right now?

Get Your Documentation Together

You’re going to need the following:

Proof of Income – You need to show that you have a regular income to get a home equity loan or second mortgage. This means showing bank statements, letters from your employers, having your tax returns ready, things like that.

Proof of Identity – You need to be able to prove that you are you. If your lender doesn’t have stringent identity protection, you’re going to want to find another one to deal with. You need to know that they’re not going to cut a check to anyone pretending to be you!

Proof of Ownership – You’ll need to show how much of your home you’ve paid off. If you’ve paid it off in full you can use the letter to show. If you’re still paying bring in your most recent mortgage statements for the last 6 months and if you’re applying with a different lender bring in a letter from your current lender.

Check Online to See if You’re Pre-Qualified

You’ll want to check online to see if you’re pre-approved with one of those mortgage calculators. You’ll be able to fill out your income, your debts, your costs, all that stuff so you can make sure that you’re making the most of your equity.

What’s the Difference between Pre-Qualified and Pre-Approval?

Being pre-qualified just means that you can get a quote over the phone. Pre-approval will require that you fill out paperwork just like you’re applying for a home equity loan or a second mortgage. If you just want a quote you’re going to want to get pre-qualified. If you want to get pre-approval you’ll lock in a certain rate for the next 1 to 3 months.

You’ll want to be very careful about the lenders, mortgage brokers, anyone you let into your circle of trust. This way you’ll be able to keep hold on your equity without having to worry about getting ripped off.

Contact us today and see what we can do for you.

Most Find Mortgages Too Stressful

mortgageMost borrowers find mortgages too stressful, especially when it comes to second mortgage or home equity loans for debt consolidation. Many more brokers and lenders need to focus on their service aspect if they want to retain clients – after all only 7% of borrowers across Canada think of their mortgages as “easy” or “stress free”. But what are the most stress parts of the mortgage process? Where can lenders work more on their services and helping people through the process better?

Negotiation is Hard

Over half of all Canadian borrowers have reported that negotiation is hard; they’re not about to get the leverage that they need to negotiate without the help of their broker or financial advisor. Borrowers need to be better informed of what role their credit history, their income and their employment status plays when it comes to refinancing their mortgages or taking out another mortgage on their home. You’re a service provider, a mortgage broker, you need to be able to help them figure out how they can save and do more with less.

Finding the Right Terms and Payment Schedule

Most borrowers (over half) have reported that they’re not able to figure out what the right repayment terms, mortgage rules and even payment schedule is right for them; they’re not able to get help from their brokers or advisors and they’re left in the dark trying to figure out what’s right for them. If you can be there for them during this time they’ll recommend you to their friends and family. There just shouldn’t be this much frustration in the mortgage process.

Payment schedules are particularly important; many will choose the wrong time of month or won’t even try and negotiate for a lower monthly payment in lieu of upfront point payments because they don’t know that that’s an option for them.

Customer Service is Key

Most buyers are looking for service. Almost three quarters (73%) of borrowers today say they can’t get their lender or their broker on the phone for customer service. Hiring a person to man the phones instead of outsourcing customer service lines will do amazing things for your business.

90% of Canadian borrowers surveyed claimed that they were willing to pay 50% more for reliable customer service. Many say that despite wanting to find a good deal, they’d rather have someone they can see in person or talk to on the phone when they have a question. If you can do this you’ll be able to increase your fees and your customer base, all with a simple solution.

Buyers today want to work with lenders that will work with them. People can deal hunt for themselves on the internet, they’re hiring realtors, mortgage brokers, even home inspectors for knowledge, experience and their services. If you’re not providing people with a great level of service you’re not going to be able to retain the numbers you need to be successful.

Contact us today and see what we can do for you.

How to Stop Your Mortgage Application

When you applied for your mortgage you were ready to buy a home, you were excited, but now things have changed. You need to stop your mortgage application fast, but how? Do you call the lender, do you just not sign when things come down to closing, what can you do? It’s important that you do things a certain way, and there are a few steps you’re going to have to take to get this done. You’ll want to talk to your lender, you’ll need to send a letter via certified mail and you’ll also have to complete all the forms they send back to you or it won’t really be canceled. Let’s go into more detail.

Talk to Your Mortgage Lender Right Away

You’ll want to call the mortgage lender as soon as possible; the sooner you call them the better your outcome will be. You don’t want to wait until the last second, because by then it may already be too late. You could end up on the hook for a mortgage that you don’t even need; many portable mortgage lenders can be difficult when it comes time to cancel your application, so you may want to work with a mortgage broker to see if they can help smooth the process. That way you’ll be able to get the outcome you want.

Write a Letter to Your Lender

You’ll want to send a letter in writing explaining to your lender that you want to terminate your mortgage application. Explain why, explain that you want it stopped for sure and that you’re certain that this is exactly what you want to do.

Always Use Certified Mail

You’ll need to make sure that you use certified mail to send this letter. It’s not uncommon for a lender to “accidentally” lose a mortgage termination request – so always have a way to track it. If they have to sign for it that means they received it, which means if they don’t open it up or lose it it’s on them. You’ll want to make sure that you make a copy for your own records in the event that they dispute it.

Complete the Paperwork

Once your request has been received, you’ll receive some paperwork to fill out. Again make copies for your records, fill them out as completely as possible and send them back via certified mail. This way you’ll be able to prove that you returned the paperwork and they accepted it.

Your Mortgage is Cancelled

Once they’ve accepted your paperwork, your mortgage application has been cancelled. You can breathe easy, happy in the knowledge that you won’t have to deal with a portable mortgage that you don’t want. Again, it’s very important that you get this cancelled as soon as you know that you want to cancel; the longer that you wait the less likely you’ll be able to get a refund on your mortgage application fees or be able to cancel it at all.

What Do I Need for a Mortgage Application?

Nothing is more harrowing than a mortgage application – and if you don’t know what you’re doing you could waste valuable time and money. Here we’re going to talk about what personal information you’ll need, employer details like tax returns and paystubs, any assets you have coming in, housing information and even debt information, so you’ll be prepared. It’s important that you have everything ready before you even start looking for mortgages – even if you go to a Canada mortgage broker they’ll still ask for the same information that a bank or other lender would.

Personal Information – Proving You’re You

You need to be able to prove to the lender that you are who you say you are. Having your ID card, driver’s licence, birth certificate, passport, anything with a photo on it and your ID number is going to help determine your identity. Be very wary of any lender that doesn’t look for this information when they’re processing your application. After all, if they’re not worried about you proving you’re you, what are they going to do down the road when an identity thief poses as you? Security is a hassle but it’s very important for a good reason!

Income – How Much do You Make?

You’re going to need to be able to prove how much income you have each month. This means you’re going to have to show any monthly income from your job, alimony, child support, etc. etc. You may need to bring in your divorce decree, tax statements, anything that can show that your income is steady and should be considered in your mortgage application. Things like this are going to help you make sure your application is approved. You’ll also need to bring in any employer details that you can; some banks and lenders will want to speak with your employer and verify employment before proceeding.

Assets to Consider as Income

Assets, like bank accounts, should always be considered when applying for a mortgage. You’re going to need to give access to the lender to check, a simple permission form, so they can see how much in funds you have available to you. The more you’re liquid, or have easily accessible cash in your bank account, the better off you’re going to be. It’s important to include all of your accounts so all of your assets can be considered as part of your application.

Debt Information

If you have any debts they’ll also have to be considered. Your debts, or monthly expenses, shouldn’t be more than 28% of your monthly budget. If you’re spending more than this your mortgage lender may charge you extra as in points or even deny you. Working with a co-signer can help you get a better mortgage, just make sure that they have better credit than you do. If you have a co-applicant like a spouse or a friend, they’ll be able to help you improve your attractiveness to different mortgage lenders.

Contact us today and see what we can do for you.

Three Things Every Borrower Needs to Know

canadian mortgagesBefore you start looking for any kind of Canadian mortgage, you need to know three things. You’ll want to understand the differences between a fixed rate mortgage and a variable rate mortgage, you’ll need to befriend a good Canada mortgage broker and you’ll want to make sure you’re up on the tax breaks that will help you save big that first year you buy your home. Following these steps you’ll be able to have a smashing success with your mortgage and save a bundle – just make sure that you really know what you’re doing!

What’s the Difference?

When you get a mortgage you’ll have two fundamental choices to make:

Fixed Rate Mortgages – A fixed rate mortgage is a traditional mortgage. The rate you get now is the rate you’ll have ten years from now, with no regard to inflation. Since interest rates now are at near all-time lows many Canadian borrowers are trying to get the lowest rate possible, locking in that great rate for the life of a 25 year loan. It’s one of the best types of mortgages if you’re going into this for the long haul. If you need something more short term that you can repay quickly, the other option is for you.

A caveat you need to know about fixed mortgages is that you’ll end up paying much more to interest with these, since it’s collected over such a long period of time.

Variable Rate Mortgages – These are also known as sub-prime mortgages, “hit and run” mortgages; they’re basically there for people that need funding now but plan to pay back within the term. In the initial stages, usually the first few years, you’ll have a low interest rate and an easy monthly payment. You’ll want to triple up on your monthly payments and repay this back as soon as possible. If you don’t pay up by the end of the loan term your interest rate can triple or quadruple, leaving you underwater.

Find the Right Canada Mortgage Broker

You’ll want to work with a Canada mortgage broker to see if they can help you find an amenable lender. Regardless of whether you want a variable or fixed rate mortgage, you need a broker! They’ll be able to look over your credit history, your borrowing needs and help you locate the lender that will give you a good deal.

Tax Breaks Work

You’ll want to make sure that you know what tax breaks you can take when you buy a home. Points added on top of your mortgage due at signing can be tax deductible, your state taxes, property taxes, home energy efficiency credits and more can help ease the burden of buying a home for the first (or second) time. You’ll want to work with a financial advisor or your mortgage broker to see if you can cash in on any of these credits – after all you’re going to have to start paying a lot more towards things once you own a home.

Contact us today and see what we can do for you.

Canada Mortgage Rates to Stay Low

Canadian Mortgage BrokerAccording to a recent report by the RBC, Canada mortgage rates are expected to stay on the low end of 5% for some time to come. While it’s always good to take advantage of rates while they’re low, you want to make sure you’re in the right situation to take advantage of them! Here we’re going to talk about what low interest rates mean, how you can make sure you’re getting the lowest one for you and what you can do to take advantage.

Why Are Rates so Low?

Rates are low to encourage borrowing, and borrowing is great! The more people borrow (that they can afford at least) the more homes can be built, people employed, goods bought, it goes on and on. Low rates encourage people to borrow and keep the economy moving, but rates can’t stay low forever. Low rates don’t encourage people to save their money or invest, so eventually they’re going to have to go up to help people that are saving earn an investment or return.

How Long Will They Stay Low?

No one knows, but it’s estimated that rates will begin to rise late next year. This gives you plenty of time to borrow, but you’ll want to make sure that your fixed rate truly is fixed.

This is why you should work with a Toronto mortgage broker like us to get the mortgage that’s right for you. As long as interest rates remain low, you’ll be able to lock in a great low rate that will help you get the best mortgage possible. Even if you go with a variable rate mortgage, as long as you pay it off before interest rates hit the double digits (most economic forecasts put that a long way off) you’ll be good.

What Does a Low Rate Mean?

Low rates mean that you won’t have to pay high interest rates on your mortgage.

Every dollar you pay in interest is a profit to your lender. Canada mortgage rates haven’t been this low in almost 100 years – and that translates to big savings when it comes down to it.

It’s in your lender’s best interest to make sure that you pay as much as interest as possible. Even if you’ve had a long standing relationship with your bank, this just doesn’t guarantee that you’ll be able to get a great deal. This is why you need to work with us!

Can It Help Me Save?

Low interest rates can help you save, but only if you get the right mortgage. Speak with one of our Canada mortgage brokers today; we’ll be able to help you explore your options and understand how your lender’s current offer really stacks up with everything that’s out there.

The last thing you want to do is end up in a mortgage that’s not going to help you save money – we have the business relationships and connections with lenders throughout the Toronto area to help you get the most from your next mortgage. Give us a call today and see how we can help you save.

Are Canadian Mortgage Rules Set To Change Again Soon?

Canadian Mortgage BrokerIf you thought the rules were tough now, you may not want to know that OSFI are beginning to think about changing things up again. Instead of just leaving the rules as they are, they want to cut long-term amortization rates to 25 years – instead of the current 35 years offered by some lenders. While most can’t qualify for the 35 year loan, regulators still want to close any loopholes the financial institutions may be able to abuse future. Right now, 80% of Canadian households are holding $20,000 or more and consumer household debt.

Department Of Finance Keeps Tinkering With Mortgage Rules

The Department of Finance keeps “fine tuning” the mortgage rules, hoping to close any gaps that the lenders can exploit to cause instability in the market. While this makes everyone’s job harder (especially ours as Canada mortgage brokers trying to find you the best rate), it is important that the rules keep adapting to the market. The Americans didn’t keep up with their market and look what happened to them. As much as many brokers complain about how things are and how they should be, I think we’re all happy that the market is doing so well and that we can keep helping people like you find the Canadian mortgage that they need to finance their projects.

What does OSFI do?

OSFI is a branch of the government that keeps on top of all kinds of financial stuff. They work with private mortgage lenders and conventional mortgage lenders to make sure everything’s on the up and up. Right now they’re working with lenders across the board to make sure that the new mortgage rules end up working out for all involved. It’s hard to say just who will benefit from the Canadian mortgage changes around the corner, but if it’s coming, it’s best to deal with them now.

Is the great Canadian housing downturn around the corner?

It could be, but most analysts think that the housing market will have a soft landing – meaning that most home owners won’t even notice it’s happening. Double digit home valuations going up each year will start to ease off and we’ll see a return to numbers that are more sustainable. This is good for just about anybody, and if you want to borrow against your home, you may want to do it now while the value is high. Talking with one of our Canada mortgage brokers can help you get the most out of your Canadian mortgage, regardless of how the rules change.

What do these rules mean for homebuyers?

Most homebuyers won’t feel the crunch, but some will. It’ll all come down to where you’re at with your equity situation, what kind of credit you have and what lender you work with to get your Canadian mortgage. Don’t be afraid to search for the better deal; call us today and see what one of our Toronto mortgage brokers can do for you.

How Luxury Homeowners Avoid the Axe

conventional mortgagesDid you know if you’re a luxury homeowner lenders will pay you tens of thousands of dollars to accept a short sale on your home so they can find a profitable buyer? It’s true. Owners of high end properties have options available to them the rest of us simply don’t. Here we’re going to talk about how mortgage lenders treat different tiers of borrowers differently and see how the other half lives. Let’s check it out!

Foreclosure Not Always the End Result

If you own a luxury property in default, a foreclosure isn’t always a foregone conclusion. Amazingly enough, lenders will work to make mortgage payments more manageable for the borrower and more profitable for the lender. Where a lender would come to your home with the Sheriff to quickly move you out, the process is a little different for owners of luxury homes.

Instead of filing the usual paperwork and following the usual procedures, lenders will actually avoid doing this as long as possible. A shocking statistic from a few years ago showed that homes worth $1m or less had a repossession rate of about 79%, while homes worth more than $1m only had a repossession rate of 27%. That’s an amazing difference, no matter how you look at it.

It’s Just Not Worth it for Lenders

Lender can make more money by keeping delinquent borrowers in luxury homes than in “normal” homes for one fact: luxury homes are much harder to sell. Even with competitive Canadian mortgage rates, potential buyers in the luxury market can be quite fickle. It’s easier to hedge your bets with the guy already invested in the home than to go out and try and find someone else that’s interested in the property to sign off at lower interest rates.

But these borrowers will also employ lawyers to tie up the lenders in red tape – leaving the lender with more bills than with the usual foreclosure. When it comes down to it, they just end up making more money by giving them a better deal. Some lenders go so far to offer homeowners a large cash payment to agree to a short sale – up to $100,000 in some cases.

Most Luxury Homeowners Take the Hit

Most luxury homeowners will run with a short sale or work to avoid foreclosures – a foreclosure stays on your credit history for up to 7 years (longer if the lender gets tricky about it), and your credit score can take a hit of up to 100 points. Even if you have excellent credit when you start out, lenders aren’t going to want to deal with someone with a foreclosure on their record.

This is why lenders tend to treat people with “jumbo loans” a little differently than they will borrowers carrying a $300,000 note. While it might be “one rule for them, another rule for us” when it comes to the mortgage game, there are ways you can make sure you end up with a mortgage structured well for your situation.

We’ll Help You

If you want to get the right mortgage for you, regardless of the size of your mortgage, talk to us! We’re Toronto mortgage brokers that know what it takes to make the most of any situation. From bad credit to no credit to help with a down payment, we’ll help you understand what you need to know to come out on top. Don’t get stuck with a bad mortgage because you didn’t know any better, talk to one of our Canada mortgage brokers today and see what we can do for you.

Rising Interest Rates Won’t Kill Housing, Economists Say

variable rate mortgagesWith the Bank of Canada sticking to low interest rates, many are worried when the US’ rates rise Canada will be affected – but will it? Are slightly higher interest rates a bad thing or just something that has to happen? Here we’re going to talk about why interest rates rising won’t be bad for mortgages, but if you want to lock in the lowest interest rate now might just be the time. Interest rates can’t stay this low forever, so you may as well take advantage of them now! Let’s get started.

Biggest Impact Seen with Refinancing

Not many people are refinancing this year as they were last year – and that’s a big deal. Last year people were refinancing their homes left and right, while this year we’re seeing fewer and fewer people looking to completely refinance the mortgages they already have.

This doesn’t mean that they’re not looking for mortgage help with buying a home, second mortgages or home equity lines of credit however.

Just How Affordable Are Mortgages Right Now?

Let’s say you make $50,000 – this could be you on your own or you and a partner together. If the average home price is sitting around $550k in the Greater Toronto area and you take out a 3.5% interest mortgage, you’ll still end up saving 39% over the course of a year AND build up equity. Calgary and Toronto just happen to be some of the most expensive areas to buy in at the moment, but the average price drops throughout the rest of Canada.

But what does this mean? Aren’t lower interest rates what you want?

We’re Toronto mortgage brokers and we know that each and every point of interest matters – but in the grand scheme of things an extra point or two isn’t going to cause a housing crisis. With 70% of Canadians being approved their first time applying for a mortgage and the average credit score being 700 when they apply, even if interest rates rise you probably won’t feel the pinch.

Why do Interest Rates Have to Rise?

Interest rates have to go up eventually if Canada wants to remain competitive with the US, the UK and other countries abroad. Just because interest rates take a hike doesn’t mean that mortgage rates will – if you’re looking to refinance right now for example we’ll be able to help you find many lenders that are willing to give you a great deal. Like many other things, supply and demand come into play.

If you’re trying to find a mortgage and you’re worried about interest rates going up, give us a call. While you might need to fuss over finding the right home, the last thing you should have to worry about is your financing. We’ll help you get preapproved for a mortgage that suits your needs, as well as compare different offers from lenders that want to work with you. Why get the one that’s wrong when you can get the one that’s right? Give us a call today!

All Cash Can be All Bad: Why You Need a Mortgage

conventional mortgagesNo one wants to be in debt for THAT much money – but without a bank to hold you back, all cash buyers can end up in a serious pickle. Yes, you may be able to save some serious money, but if you end up buying a home that’s falling apart or paying more than it’s actually worth, is it really worth it? Here we’ll talk about why most buyers do better with mortgages, even if they have an 80% down payment. After all, a home is one of the most expensive purchases you’ll ever make, why make the wrong one?

Mortgages can be a Hassle

Let’s face it, mortgages can be a hassle. Trying to get one, even if you go the private mortgage route, is fraught with worry. You don’t know if they’re going to approve your application, you don’t know how much they’re willing to give you and you won’t know what the terms are until after the process is over with. Even worse, most people don’t get preapproved for a mortgage before they start looking for a home – leaving them in the lurch. We’ve said it once, we’ll say it again, the worst part of getting a mortgage is waiting too late to get a mortgage.

That Red Tape Protects You

When it comes down to it, all those approval processes that you have to go through actually protect you when it comes to buying a home. The house has to pass muster, it can’t be overvalued and it’ll have to go through an exhaustive provenance check to make sure that the person selling the home OWNS the home. It’s not uncommon for people to hold a title but not own a title – without title insurance and the title services that a mortgage company will run the home through, you may wind up with a big mess on your hands.

Cash Buyers Rarely Get Appraisals

Many cash buyers approach real estate as a “what you see is what you get” process – but this is rarely true. As Toronto mortgage brokers we’ve worked with many people that have tried to go all cash and run into problems later – don’t be one of these people! If you do have to buy with cash, make sure you get an appraisal.

There are many appraisal companies in the Toronto area that you can talk to, expect this to run anywhere from $200 to $1000, depending on the property. You’ll also want to make sure that you consult a title or real estate attorney to run a check on the title of the home; if there are taxes, liens or debts outstanding on the property when you buy it, you could inherit the debt.

Think Ahead

When it comes to buying property, even when you go all-cash, you need to think ahead. Banks are so finicky with who they do business with because they’ve had the bad experiences. Even if you’re thinking about going all-cash on buying your home, talk to one of our Toronto mortgage brokers first! We can show you how a large down payment can help you establish credit, save you money and help you make sure that the property you’re buying is on the up and up. Don’t get careless because you’ve got the cash to buy a home – know what you’re getting into before you buy.