Quality of the Property

November 24, 2009 Book, Employed Persons, First Time Home Buyer, Mortgage Insurance, Pre Approval No Comments

Whenever the lender decides to lend money on a particular property they take into account two separate yet equally important parts.

Firstly, they look at the quality of a borrower- their credit worthiness and their ability to make the mortgage payments.  The evaluation of the borrower typically takes place in the pre-approval process.

Secondly they look into the quality of the property. What they want to ensure is that in the event of a borrower not being able to make their payments and in turn goes into foreclosure that they can easily market the property and get their investment back.  So you can understand that if the house is not at least of average quality then the typical purchaser is not going to want to buy it.  The lender evaluates value of this in one of two different ways.  If the file is insured then the insurer does their own internal evaluation.  If the file is not insured than the lender may request that a third-party appraisal is completed.

One important thing to note is that the quality of the property may take into account things that are beyond the scope of the physical property itself. For example, in a condominium complex, even though the condo complex may be in great condition sometimes the condo financials are not in order.This would be something that the lender would consider to be a serious issue and therefore may not lend of this property.

Why I am telling you this is not to warn you not to go to try different properties but rather to let you know what type of resistance you might find if you decide to purchase a house that is considered a fixer upper.

This is a critical area that needs to be addressed before financing conditions can be met. This is why it is so important that you send all data about the property to your mortgage broker as soon as you can after the Offer to Purchase has been accepted by the seller.

Portability – What is it? And how can it benefit you?

November 18, 2009 Book, First Time Home Buyer, Interest Rates No Comments

Most mortgages that people get are closed. See my post describing Open vs Closed here.  Closed mortgages typically have lower rates because the lender knows the term of the mortgage (and therefore their revenue).  But closed mortgages have penalties associated with them when people do not carry though until the end of the term.

So for example if you get a 5 year fixed closed mortgage and decided to move to another house 3 years later then you would be forced to end your mortgage and pay the penalty fee.

But portability is an option in most mortgages of this type.

So in this example you may be better off to port your mortgage to the new property.  This means that you would not have to pay the penalty and you would get to keep the rate that you had for the past three years.  If further money was needed you would borrow that amount at the rates of that time.  These two amounts and their rates would be blended into one convenient payment.

So by using this option people can really save themselves lots of money and get the home they want.

MortgageGroup.ca

November 3, 2009 News No Comments

The company that I work with has a great website that gives great information on the most up to date rates.

Feel free to take a quick peek to find out what the rates are for the terms you are looking for.

www.mortgagegroup.ca

Cheers!