Mortgage FAQ’s
Frequently Asked Mortgage Questions
I am very concerned about what is happening with the economy, is it really a good time to buy a home or refinance?
- Of course it is a good time to buy or refinance! What has happened in the U.S. & the U.K. has affected the global economy, but mostly because there just isn’t as much money out there to loan consumers. Recently our Finance Minister announced that Canada’s banking system has been rated #1 in the world for stability and security. We are the most safe. Canada has always been more conservative than the U.S., the U.K., and Australia. Our lenders have removed products that they “deemed” to be higher risk, such as the 40 year amortization and zero down products, but it is business as usual in Canada. Now is the time to take advantage of the lower priced real estate, and record breaking low interest rates. IF you can buy – NOW is the time to buy, hands down. Don’t wait for property prices to go down lower or you may miss this extraordinary opportunity.
- A high ratio mortgage is any mortgage that is higher than 80% of the value of the property. The Canada Mortgage and Housing Corporation (CMHC) or Genworth insures the lender in case of default on the loan. This insurance is added to the amount of your loan and it is then blended into your payment schedule. These fees can be as high as 6.60% of the principal, depending on the product you need to utilize. There are several options for high ratio mortgages, call me today if you have any further questions.
- Every mortgage has a start and an end. At the end of your term, it is called the ‘maturity date’. Anyone can choose a term of any amount from 6 months to 25 years. This is different from your “Amortization”. The amortization allows you to base the payment on a repayment of 25+ years. Without this, mortgage payments would be too high for anyone to afford. So you may have a 5 year fixed term at 6.25% amortized over 25 – 40 years, it is your choice. On the maturity date of your term, you can either choose to go with a different lender and a different product, or you can accept your lenders invitation to renew your term. These offers are usually based on the Bank Posted rates, which are about 2% higher than what I can get for you.
- This is a response I hear every day. There are many uses for a 35 year amortization, and the main use is to make it more affordable to get into a better property right now. If you are purchasing your first or second property, and KNOW that you will not spend the rest of your life there, this is a good time to consider a 35 year amortization. A 35 year am allows you to qualify for a higher purchase price, and keep the payments lower, and more affordable. Once you sell that property, and buy your “forever” home, this is when you may want to think about a lower amortization. Keep in mind there are many ways to pay down your principal, while still enjoying the lower payment of a 35 year amortization. Mortgages in Canada come with “pre-payment” allowances of between 15-20% of the original mortgaged amount once per year, as well as increasing your monthly payments as well. At the end of your term, i.e. 5 yr fixed or 3 yr fixed, you have the option of choosing a different amortization again. So you may need the lower payment for the first 5 years, but at the end of that term, you do have the choice of reducing the amortization to a level where you are paying down the principal more aggressively.
- When your are renewing your mortgage with your current lender, they may at times charge you a fee, or try to lure you to renew by offering ‘no fee’. Banks send out renewal letters to consumers, and most consumers will simply accept the terms without realizing that they have been offered a much higher rate than what a Mortgage Professional can give them. Be pro-active, call me today to make sure you are getting the best possible product AND rate.
- It is a good idea when the cost of the penalty and legal fees are small in relation to the money saved on obtaining a lower mortgage rate over the term.
- A good time to lock in is upon the advice of your broker. If you feel that the market is getting unstable, give me a call and I will let you know what the best scenario is for your personal situation.
- # E-mail: property.tax@calgary.ca?# Fax: (403) 268-3550?# Phone: (403) 234-7480
- Mortgage Professionals work with many different lenders, all of whom are competing against the next. They recognize the fact that Mortgage Professionals can bring them a much larger pool of borrowers than they would otherwise not have access to, therefore they offer Mortgage Professionals lower rates to attract more business.
- Bank posted is what banks will try to offer you if you do not ask for their lowest discounted rates. Usually this is what they will offer in a renewal when your mortgage is maturing. Discounted rates are what mortgage brokers always offer their clients, unless a specific program offered by a lender or insurer requires the consumer qualify and get a posted rate.
- As long as you have been discharged for at least 2 years with 12 months re-established credit cards, you should be able to qualify for the lowest rates available. Every situation is unique, so please contact me for a free, no obligation evaluation.
I have no money for a down payment but great credit and a good job, can you help me?
- There are currently no Zero Down Mortgages offered in Canada that have best rates and are insured by CMHC or Genworth. Wells Fargo was the last lender to offer this product, but have since stopped lending in Canada. The only product that is close is the 5% FREE Down Payment Program. This is a program where the lender GIVES you 5% down at the current POSTED rate, not discounted. Other criteria apply, contact me for more information.
- Call me or apply online. I like to review your letter of employment, current pay stub and down payment documents so I have all the information I need to give you a solid pre-approval.
I am a first time buyer but I have a lot of debt. Can I buy my new home and roll all my current debts into the mortgage so that I will have only one easy payment?
- No, this is a general misconception. The only way you can “roll your debts into your mortgage” is when you already own real estate, and do what we call a “debt consolidation”. This means that you refinance, and use the equity in your property to pay out your existing debts.
- No. We are licensed Mortgage Originators only but I would be happy to refer you to someone at a bank that can help you. This trend may be changing, however. We do have access to commercial mortgages and loans, as well as leasing for equipment. Contact me for more details.
Why are discounted variable rate mortgages no longer available?
- Variable rate mortgages are offered at a discount, such as .15 below prime are back. The banks and lenders pulled them from the market in late 2008, but they are slowly being reintroduced with the return of a more stable lending market.
