January 6, 2010
Employed Persons, First Time Home Buyer, Pre Approval, Proving income
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It is very common for people at this time of year to think back about the year before and to think ahead about what they want to achieve in the coming year.
Most people say that they would like to lose some weight or to be more active. May I suggest another goal for 2010? How about making a goal that by the end of the year you will own your first home?
For most people the amount of preparation to own a home is similar to any medium sized goal.
The steps are generally as follows:
- Get a Mortgage Broker – http://jasonpeatz.com/2009/06/step-1-get-a-mortgage-broker/
- Get pre approved – http://jasonpeatz.com/2009/06/step-2-get-educated-and-pre-approved/
- Clear away any debt that is in your way – I will discuss in up coming posts.
- Get your down payment prepared – I will discuss in up coming posts.
- Start collecting paperwork - http://jasonpeatz.com/2009/07/step-3-collect-all-paperwork-you-will-need/
- Make an offer – http://jasonpeatz.com/2009/07/step-4-put-down-and-offer-and-get-approved/
- Send MLS and Offert to Purchase to your Mortgage Broker – http://jasonpeatz.com/2009/07/step-4-put-down-and-offer-and-get-approved/
- Meet conditions of the lender – http://jasonpeatz.com/2009/07/step-4-put-down-and-offer-and-get-approved/
- Go to your lawyer’s office and sign some papers – http://jasonpeatz.com/2009/07/6-go-sign-some-docs-at-your-lawyers-office/
- Pick up your keys – http://jasonpeatz.com/2009/07/step-6-move-into-your-new-home/
- Smile – http://farm1.static.flickr.com/69/175764184_471aaa850a.jpg
As you can see I have included links to all the blog posts that I have written that relate to the steps above. This process may take some people just a couple of weeks while others months. But the sooner you get started the sooner you can make 2010 a great year.
August 5, 2009
Employed Persons, First Time Home Buyer, Interest Rates, Pre Approval, Proving income
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A question I often get asked is, “How much will the lender allow me to borrow?”. For many this is the most basic and important question. While the answer is simple to figure out it is impossible to determine with any accuracy without taking a full application.
Lenders look at two key ratios to determine what you may borrow – Gross Debt Servicing Ratio (GDSR) and Total Debt Servicing Ratio (TDSR).
Each of these ratios look at key costs that all Canadian home owners carry and relate that to your income. Thereby letting us know what is the greatest mortgage payment that you can afford. From there we work the mortgage payment back to determine what the total loan amount will be.
Gross Debt Servicing Ratio (GDSR) takes into account the cost for just owning the property:
- Principle and Interest (PI) – this is your mortgage payment
- Taxes (T) – city taxes
- Heat (H) – we do live in Canada 
- Condo Fees (CF) – We use 1/2 of the condo fees and only if applicable to your situation
(PI + T + H + 1/2 CF)/Income=GDSR
Total Debt Servicing Ratio (TDSR) looks at the same things as Gross Debt Servicing Ratio but add a component for your monthly Consumer Debt Obligations (CD).
(PI + T + H + 1/2 CF + CD)/Income=TDSR
The upper limits of these ratios vary from lender to lender depending on their internal policies and from borrower to borrower depending on other factors in the application.
I would be glad to run these numbers specifically for you to help you in your real estate purchase or refinance.
July 28, 2009
Employed Persons, First Time Home Buyer, Interest Rates, Pre Approval, Proving income
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So you have moved into your first home.
It is everything you hoped it would be and you couldn’t be happier.
Lets take a moment to look back at the journey you traveled because you have come a long way.
First you made the smart move by starting working with a mortgage professional. Someone who knew what they were doing and genuinely wanted to help you through the process.
Second you figured out all about the mortgage process and how your situation fits into this. Most importantly you got a clear path forward of what needed to be done to get you into your new home.
Third you released all the stress from the process by getting all your ducks in a row before you put down an offer by gathering all necessary paperwork.
Fourth you put an offer on a place and felt relaxed and confident that it would easily get approved. Ant it did! We sent all the paperwork to the lender where it was quickly accepted.
Next you went to your lawyer’s office. They explained all the documents to you in an easily understood fashion. Then you signed the documents.
So now we are back to where you are right now – a home owner. Enjoy it because being a home owner is a very rewarding experience.
July 14, 2009
Employed Persons, First Time Home Buyer, Interest Rates, Proving income
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Over the past few weeks we have been looking at the process for getting a mortgage to purchase a house. By this point we have done all of the prep work that is required before putting down an offer. We feel confident about our situation and now know exactly how much we can spend on our new home.
At this point I will defer to any high quality realtor about the best method for choosing a house or putting down the offer. A great realtor will not steer you wrong.
Once you have an Offer to Purchase that has been signed by both parties (the buyer and the seller) send a copy to your mortgage broker along with a copy of the MLS feature sheet if available.
The mortgage broker will need to send this data to the lender as soon as possible. We want to give the lender and insurerer (if needed) all the time they will need to get your deal approved.
When the lender approves the file the mortgage broker will contact you to let you know what are the particulars of the deal. These will include:
- The amount being borrowed.
- The interest rate.
- The payment frequecy
- The conditions that need to be met before the lender will fund your purchase.
It will be our job to review the conditions and the paperwork to ensure that we can meet all their requirements and understand the particulars of the mortgage being offered. When we completely understand and have all the paperwork needed the mortgage broker will then send all the data to the lender. The lender will review and confirm that everything looks great.
And from here we move onto the next step of Signing Some Documents with Your Lawyer.
July 7, 2009
Employed Persons, First Time Home Buyer, Proving income, Small Business
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One of the most stressful parts for people in the home purchase is after the Offer to Purchase when people have to gather all the paperwork to send to the lender. The issues come when something does not jive with what was on the original application and people are left scrambling to find extra cash for the down payment or other paperwork. Why allow yourself this type of stress?
Gather the paperwork before you put down an offer to purchase. Give it to your mortgage broker so he can have a look at it to ensure it will meet the lenders expectations.
The following is what most buyers can expect to have to provide to the lender to purchase a home:
- Job letter – It will need to show:
- the day you started working there,
- the contact information for your HR department;
- Current pay stub – a paystub from the last month that shows your gross salary, deductions and net salary will be fine;
- Void cheque – this is so the lender will know where to withdraw the funds from after funding;
- Three month history of your down payment – bank statements, RRSP statements, GIC statements;
- Real Estate Lawyer contact information – so the lender knows who to send the final paper work to.
This list applies to most people who are purchasing their first home. Other paperwork may be added if you are separated, divorced, business for self, new to Canada, purchasing in a rural area, etc..
Gathering paperwork early reduces stress and gives peace of mind.
Check out the following links for more information on paperwork.
Employed persons – http://jasonpeatz.com/2008/09/income-verification-for-employed-persons/
Self employed persons – http://jasonpeatz.com/2008/06/small-business-proving-income/
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