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.

Here are Five Tips that will help you qualify more easily:

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 us about your financial situation. Find out if you can pre-qualify. We’ll give you information  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.  Call Justin at  604-736-1855

Check out our current rates here.

The rates that YOU will be offered are based on the amount of your down payment and your credit rating.

In this market place we look for the BEST combination of rates and features. Depending on your needs and circumstances we look for a package that has great flexibility and good terms.

Here are some of the features that are available:

Prepayment – With a pre-payment privilege, you can make payments toward the principal portion of your mortgage over and above your monthly payments.

Closed mortgages have different types of pre-payment options. The amount you can pre-pay becomes important if you get bonus payments, a windfall or an inheritance.

An open mortgage means you can pay the entire principal sum without notice. This is a good option if you are self-employed or if you get regular bonus payments.

Do  YOU Prefer Security or Flexibility?

Mortgages are available with closed, open and convertible options, with fixed or variable rates. The options you choose should be based on the market (going up or down), on your financial goals and on your risk tolerance (desire for long-term security).

There are Two Rate Structures to Choose From:

A fixed-rate mortgage will remain the same for the length of the negotiated term. Your payment schedule is established in advance. You can choose either an open or closed mortgage, depending on the term.

A variable-rate mortgage fluctuates with the current market rates. Your monthly payment will remain constant (usually for a year or two), but the amount allocated to your principal will vary. If rates are going down, this may be a good option. If rates are start rising, you may want to convert to a fixed-rate mortgage.
If you are on a tight budget, you may be willing to pay more for peace of mind.

Closed Mortgage – Interest rates are fixed for the full term of the mortgage, and you will have to pay a penalty to change the agreement conditions. This type of mortgage is ideal for buyers who think that interest rates will rise and who are not planning to make any moves over the term of the mortgage.

Convertible Mortgage – With this mortgage you have the flexibility to convert to a longer closed mortgage at any time without penalty. If  rates rise, you can lock in.

Need a Mortgage?

If you are planning on buying for the first time, moving to a new home or renewing your mortgage, you should know where you stand. Please give us a call at 604-736-1855

Scores range from 300 to 950.  If you get a score of 750 or above you’ll qualify for the best loan rates and terms. If you get 620 or lower, you’ll pay higher rates IF you qualify. The absolute minimum credit score for insured mortgages is 620.

In determining a credit score, a number of factors in your bill-paying history are considered:

Payment history – approximately 35%

Do you pay your bills? Tardy or missed payments, collections, and especially bankruptcies all affect your payment history. If you have not paid bills in the past, but are paying on time now, this will be factored into the equation.

Credit utilization – approximately 30%

Credit utilization involves the amount of debt you currently have in comparison to the credit you have available. The higher your credit utilization, the lower your credit score will be. Keep your credit card balances at less than 30% of your credit limit.  For example, if you have a total limit of $20,000 on your credit cards, you need to keep the balances under $6000.

Credit history – approximately 15%

The longer your credit history the better.  Don’t close credit cards or bank accounts that you’ve had for a long time.

Credit History Inquiries – approximately 10%

Every time you apply for for credit, the inquiry is added to your credit report. Too many applications put up a warning flag to lenders.  For example, if you are shopping for a mortgage with a number of banks and finance companies each one will request your credit history.  *One of the benefits of working with a Mortgage Broker is the fact that we only ask for your credit history ONCE!

Only those inquiries made in the past year are part of the credit score calculation.

Mix of credit – approximately 10%

Though this isn’t a significant part of the equation, having a mix of different types of credit is a good thing.  For example credit cards, personal bank loans, and a car loan show a range of credit situations that include installment and revolving credit.

Make sure you have at least one credit card as soon as you are eligible, but don’t take out other loans just to improve your credit score!

If you are applying for a mortgage with us, we will request your Credit Score.  We can discuss the results with you and let you know if you need to improve your score and how to do it.

Call Justin at  604-736-1855

According to a new report created by the Royal Bank of Canada . . .

Owning a house became slightly more affordable in Canada during the second half of 2012, but that’s mostly due to rock-bottom mortgage rates.

The sharp drop in house sales that occurred during the final six months of the year led to some small month-over-month declines in house prices in many cities. And, as sales fell, banks made further small cuts to their already-low mortgage rates. Those two factors helped to take a tiny bite out of the cost of home ownership during the final three months of the year, for the second quarter in a row.

. . . the latest data suggests falling mortgage rates and rising incomes are offsetting the effects of high house prices in most markets.

“remain vigilant,” pointing to a number of major exceptions, namely the markets for detached homes in Vancouver, Toronto and Victoria, each of which are vulnerable to a significant correction if incomes fall or rates rise.

Our advice?  It’s spring. If you’ve been considering a new home purchase, now is the time to get a pre-approved mortgage, lock in your rate, and start house hunting.

Read full Financial Post article here

What Are The Requirements For Eligibility?

The home you plan to purchase must be located in Canada and the minimum mortgage term is six months with maximum amortization period (term of the loan) of 35 years.

Borrowers must make a down payment equal to at least 5% of the purchase price and your income must be adequate to afford the mortgage payments as well as other debt payments.

Mortgage insurance premiums may be paid in a lump sum at closing or may be included in the monthly mortgage loan payment.

How Much Will I Pay?

The fees for mortgage insurance premiums range between 1% to 7+% of the principal value of the home. The rates are established based on the borrower’s credit rating, the loan to value ratio (loan amount divided by the purchase price) and the term of the loan amortization (process of paying off a mortgage in regular payments).

These fees are usually added to the mortgage amount and are not paid in advance. One of the advantages of paying for mortgage default insurance is that you can make a smaller down payment on your mortgage.

Where Can I Buy Mortgage Default Insurance?

In Canada mortgage default insurance is required by a majority of lenders when a homeowner puts down less than 20%.  The biggest mortgage insurers in Canada are CMHC, Genworth, and AIG–in that order.

Be  sure to ask me about the various kinds of Insurance you should obtain in order to protect your biggest financial asset!

Call Justin at 604-736-1855