Benefits of A Mortgage Pre-Approval

If you're ready to start looking for a new home, one of the first things you want to do is contact your
mortgage broker for a 'pre-approval'. Here are three great reasons to get pre-approved BEFORE
you start house-hunting:

1) Find out how much you can borrow.
    -Realtors often want to see a pre-approval in place prior to helping clients search for a home.
    -A pre-approval can save you and your realtor time by narrowing down the price-range you can
     afford and decreasing the inventory of potential homes to view.


2) Guarantee an interest rate while you shop.
    -A pre-approval will lock you into a rate for 90-120 days, and will bring you peace of mind
     knowing you can afford the houses you are looking at.

3) Put yourself at an advantage over other buyers.
    -In some cases, numerous buyers will be interested in the same property.  A seller is more
     likely to accept an offer from a pre-approved buyer because there is more of a guarantee that
     your offer will be financed over the buyer who has not taken similar steps. Showing the initiative
     to get a pre-approval from a lender will put you a step above the rest.

4) Speed up the conditions of financing process.
    -A pre-approval can speed up the financing process because a lender has already begun
     analyzing and researching your file.

Keep in mind that a pre-approval is not a complete guarantee that your loan will be funded. 
It really is just a preliminary check and the mortgage underwriter will still need to do an in-depth
analysis of all your documentation once your submit a LIVE deal.

Real Estate Frenzy of 2007: A Tragedy For Some in 2012???

It's January 9, 2012 and the fallout of 2007's real estate market frenzy is already peering it's ugly head!  Remember the bidding wars that almost always resulted in prospective home purchasers offering tens of thousands of dollars over the asking price just to outbid the other guy?  It was an exciting, but terrifying time for real estate clients who just wanted to get into the house of their dreams.

I met with a lovely couple this evening who, like so many others, purchased in 2007 at the height of the market. Their 5 year term is set to end in a few short months, and what they have discovered is that their mortgage balance now exceeds their 2011 assessed property value.  What now?  Refinancing and re-qualifying with a new lender may be out of the question. You may need to stay put (with your present lender) for another term and ride the wave.  Let's hope our economy proves to be more resilient than the United States' and that property values recover by summer.

Are you a victim of the "Frenzy of 2007-Tragedy of 2012"? What do you plan to do in the months to come?

Stricter Mortgage Lending Rules in Canada?

In the middle of December TD Bank CEO, Ed Clark, expressed his belief that mortgage rules for home
loans should be even more stringent than they already are (http://bit.ly/vbIcqD).  He would like to see federally insured mortgages go from a maximum of 30 years down to 25 years. 

What would that change mean for you, the consumer?  You would need to have very good credit and
would need to have 20% or more for a down-payment (on a purchase) or 20%+ home equity to
efinance if you wanted an amortization period of more than 25 years.  At present the maximum is 30
years amortization with less than 20% down.  Here is an example of what a change of this nature
would do on your monthly payments:


Loan Amt.           Interest Rate           Amort. Period         Term        Monthly Payment

$400,000                   3.29%                        30 yrs                 5 yrs          $1,744.71

$400,000                   3.29%                        25 yrs                 5 yrs          $1,953.00

With this scenario, you are paying approximately $208.29 more per month, $2,499.50 more per year
and a whopping $12,497.49 more for the term of your mortgage loan.

In January, 2011 the Canadian government, in an attempt to curb consumer debt/spending, decreased federally insured mortgages from a 35 year maximum to 30 years.  Do you feel even stricter home loan
rules would improve or hinder the overall state of the Canadian economy?

What Can A Mortgage Professional Do For You?

With the numerous benefits involved in working with a mortgage professional, it is interesting to me that so many individuals still have no idea what it is they do.

A mortgage professional works on your behalf to find the very best rates available to suit your specific situation.  A huge percentage of the population is content to take whatever interest rates their financial institution is willing to offer without even considering there may be a better rate out there for them.  Did you know a mortgage professional will almost always be able to get a better rate?  Why, you ask?  It's simple, really.  The mortgage associate/broker does a large volume of mortgage deals each month and lenders are willing to offer them volume discounts and the ability to buy down interest rates.  The savings to a consumer can be quite substantial. 

Finding the best rate is a mortgage professional's primary focus and the best part is that in most cases you do not pay him/her for services rendered.  A mortgage associate/broker is paid directly by the lender. 

Next time you are in the position to buy a new house, refinance, consolidate or purchase investment property, a mortgage professional could be your closest ally!