February 16, 2010
Employed Persons, First Time Home Buyer, Interest Rates, Mortgage Insurance, Rental
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As I am sure that you have heard the Finance Minister of Canada has decided to make some adjustments to the lending requirements.
The following is a link to the official press release - http://www.fin.gc.ca/n10/10-011-eng.asp
The most important points are below.
- Require that all borrowers meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term. This initiative will help Canadians prepare for higher interest rates in the future.
- Lower the maximum amount Canadians can withdraw in refinancing their mortgages to 90 per cent from 95 per cent of the value of their homes. This will help ensure home ownership is a more effective way to save.
- Require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation.
I believe that the industry has a number of clarification questions that we need answered before we fully understand how this will affect the market place this spring.
When everything is all sussed out I will be sure to update you.
November 24, 2009
Book, Employed Persons, First Time Home Buyer, Mortgage Insurance, Pre Approval
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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.
August 19, 2009
Book, First Time Home Buyer, Mortgage Insurance
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Conventional Mortgages
A mortgage is considered conventional if you have a down payment that is greater than 20% of the value of the property.
Why is this important?
It is important because if your mortgage is Conventional you will not have to pay the Mortgage Insurance fee but you may have to pay for other smaller fees like an appraisal.
High Ratio Mortgages
A mortgage is considered High Ratio if the down payment on a property is less than 20% of the value of the property.
Why is this important?
It is important because if your down payment is less than 20% you will be required to get Mortgage Insurance.
To find out more about why we have mortgage insurance check out my earlier post.
http://jasonpeatz.com/2008/05/lenders-mortgage-insurance-part-one/
To find out how the mortgage insurance is calculated check out my earlier post.
http://jasonpeatz.com/2008/06/mortgage-insurance-fees/
May 23, 2009
Book, Case Study, Credit, Employed Persons, First Time Home Buyer, Interest Rates, Mortgage Insurance, News, Pre Approval, Proving income, Small Business, Switch
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Over the past few months I have confirmed something that I have suspected for the last several years – People need to know more about mortgages and the mortgage process.
So in an effort to address a number of the key issues I have began writing this blog.
Through this blog I have attempted to inform people about some of the basics of the mortgage terminology, products and process. The response has been outstanding to say the least. People really appreciate the straight forward information that I have been giving them.
I think that this is worth while and fun so I will continue to blog, but I want to do more. So I am officially announcing that I am in the process of writing a book for people who live in Alberta and who are looking to purchase or refinance a property. The working title of this book is “So you want to get a mortgage in Alberta”.
I am excited about giving Albertan’s clear information about mortgages.
The chapters and topics have largely been decided but feel free to leave a comment below to let me know what you would like to see included in this book.
If you keep reading then I will keep writing.
March 31, 2009
Employed Persons, First Time Home Buyer, Interest Rates, Mortgage Insurance, Pre Approval
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Buying a home can be a stressful experience.
There are many people involved in the process. The process moves fast. And you are the one who is stuck with the payments at the end of it all.
But I have some great news for you. While you are not in control of the process, you are in control of who is representing your interests – your team:
- So choose a great realtor.
- So choose a great real estate lawyer.
- So choose a great mortgage broker.
What a great mortgage broker will do for you is:
- Understand your circumstances
- Give you a clear and defined process for moving forward
- Be non judgmental about your past
- Mitigate most blemishes on your file
- Collect your paperwork before you put an offer to purchase down
- Tell you your payments
- Find the right lender for you
- Get you a great rate
- Explain mortgage insurance
- Answer all of your questions.
Just knowing that you have someone on your side as you go through the process reduces your stress.
Your team may not be able to make the home buying process stress free but we can reduce the stress to a level you can easily handle.
Call me to see if I can be a great fit for you and your team.