Mortgage in the City | Useful Tools
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HOME BUYING FAQ

Should I wait for my mortgage to mature?

No. Have us begin to shop around for an interest rate at least 90 days before your mortgage matures. Lenders will often guarantee an interest rate to you as much as 90 days before your mortgage matures. And, as long as you are not increasing your mortgage, they will cover the costs of transferring your mortgage too. This means a rate promised well in advance of your maturity date, thus eliminating any worries of higher rates. And if rates drop before the actual maturity rate, the new lender will usually adjust your interest rate lower as well.

Most lenders send out their mortgage renewal notices offering existing clients their posted interest rates. The rate you are being offered is usually not the best one. Always ask the mortgage consultant to investigate the possibility of a lower interest rate with the lender or another lender. If you don’t, you may end up paying a much higher interest rate on your renewing mortgage than you need to.

What is a pre-approval and how do I get one?

A Pre-approved Mortgage provides an interest rate guarantee from a lender for a specified period of time (usually 90 to 120 days) and for a set amount of money. The pre-approval is calculated based on information provided by you and is generally subject to certain conditions being met before the mortgage is finalized. Conditions would usually be things like ‘written employment and income confirmation’ and ‘down payment from your own resources’, for example.

In summary, securing a Pre-approved Mortgage is one of the first steps a Home Buyer should take before beginning the buying process.

Can I use gift funds as a downpayment?

Most lenders will accept down payment funds that are a gift from family as an acceptable down payment. A gift letter signed by the donor is usually required to confirm that the funds are a true gift and not a loan. Where the mortgage requires Mortgage Loan Insurance, Canada Mortgage and Housing Corporation requires the gift money to be in the purchaser’s possession before the application is sent in to them for approval.

How does bankruptcy affect my ability to qualify for a mortgage?

Depending on the circumstances surrounding your bankruptcy, generally some l enders would consider providing mortgage financing. If you are a previously discharged bankrupt, the best way to determine whether or not you qualify at this time is to discuss your situation with us. We have many lenders to approach based on your circumstances. For more information on how Get A Better Mortgage Inc. can help you, contact one of our staff today!

How much will it cost to use a mortgage consultant?

The vast majority of mortgage clients do not pay a fee for the services of a Mortgage Consultant. To gain a larger market share, the majority of financial institutions pay a finder’s fee to Mortgage Consultants and at the same time offer them their best discounted rates and fast approvals in order to gain their business. This allows the Mortgage Consultant to shop around among the various financial institutions for the mortgage rate and product that best suits the unique needs of the client. In almost all cases, there is no cost to the client.

In situations where traditional lenders will not approve a mortgage because of poor credit, and where the application must be placed with a private or non- traditional lender, a brokerage fee may be charged to the client. This cost must always be disclosed to the client up front and must be authorized in writing by the client before it can be charged.

Why should I use Denise Pisani as my mortgage consultant?

Financial Institutions sell only their own products to the public through their own sales force. As a result, they are not able to provide unbiased advice or selection since by doing so they risk losing your mortgage to a company whose product may provide more value to you. Denise Pisani sell a variety of mortgage products and services as they deal with many lenders, not just one. Because of this they are able to search for product from a variety of lenders – banks, trust companies, insurance companies and credit unions – for the best product, rate and terms for your particular needs. Thus, their recommendations are totally objective.

Denise Pisani is also able to negotiate on your behalf, structuring deals to meet the criteria of the lenders, and therefore getting you a mortgage solution that works for you. Remember, our primary role is looking after your interests.

To gain market share from Mortgage Broker companies and individual brokers, the majority of lenders pay a finder’s fee for referred business. Due to the volume of business done by Denise Pisani, the lenders pay fees promptly and to ensure the continued flow of business, they provide fast approvals. This allows Get a Better Mortgage Inc. to shop around amongst the various financial institutions for the mortgage rate and product that best suits the unique needs of the client. In almost all cases there is no cost to the client.

When you deal directly with a Financial Institution and your mortgage is declined, for whatever reason, you must begin the application process all over again with another Lender. When you deal with Get A Better Mortgage Inc., the application can be quickly redirected to another lender, or several other lenders, for consideration.

What is a conventional mortgage?

A conventional mortgage is usually one where the down payment is equal to 20% or more of the purchase price, a loan to value of 80%, or less, and does not normally require Mortgage Loan Insurance.

What is a high-ratio mortgage?

A High-Ratio mortgage is one where the amount to be borrowed by way of a mortgage is greater than 80% of the purchase price, or the appraised value, whichever is less. High-Ratio mortgages generally require Mortgage Loan Insurance provided by either, Canada Mortgage and Housing Corporation (CMHC) or GE Capital (GE), a private Insurer.

The Mortgage Loan Insurance premium is paid to CMHC or GE and protects the Lender in the event the mortgage is not repaid and the bank has to take back the property. The benefit to the borrower is that it allows them to purchase a home with less than 20% down payment. The insurance premium is paid by the borrower and can be added directly onto the mortgage.

Mortgage Loan Insurance premiums range from .50% to 3.70%(depending on the type of mortgage product and amortization) of the mortgage amount and are calculated based on the overall loan to value. For instance, borrowers with a 5% down payment, a loan to value of 95%, would pay a premium of 3.60% while those with a 15% down payment, a loan to value of 85%, would pay an insurance premium of 1.80%

Mortgage Loan Insurance is not the same as Mortgage Life Insurance.

What is mortgage loan insurance?

Mortgage Loan Insurance is insurance provided by Canada Mortgage and Housing Corporation (CMHC), a crown corporation, and GE Capital Mortgage Insurance Company, an approved private corporation. This insurance is required by law to insure lenders against default on mortgages with a loan to value ratio greater than 80%. The insurance premiums, ranging from .50% to 3.70% (depending on the type of mortgage product and amortization), are paid by the borrower and can be added directly onto the mortgage amount. This is not the same as Mortgage Life Insurance.

What is the minimum downpayment needed to buy a home?

Mortgages with less than 20% down must have Mortgage Loan Insurance provided by either the Canadian Mortgage and Housing Corporation (CMHC) or GE Capital Canada.

While most Canadian homebuyers save for a down payment, with selected lenders the minimum 5% of the purchase price can come from resources other than your own. These lending arrangements are subject to certain restrictions based on income level and credit score. The 5% down payment can come from borrowed funds (from a line of credit or family member, for example). The amount borrowed for a down payment is factored into debt service ratios (which determine how much you are eligible to borrow).

The 5% down payment can come from a cash-back feature of the mortgage. Keep in mind that in this case, the posted rate (that is, an undiscounted rate) will be required by the lending institution.

In addition to the down payment, according to CMHC and GE rules you must have 1.5% of the purchase price available to cover the applicable closing costs (including, but not limited to, legal fees and disbursements, appraisal fees and survey certificate, where applicable).

What is a home inspection and should I have one done?

A home inspection is a visual examination of the property to determine the overall condition of the home. In the process, the inspector should be checking all major components (roofs, ceilings, walls, floors, foundations, crawl spaces, attics, retaining walls, etc.) and systems (electrical, heating, plumbing, drainage, exterior weather proofing, etc.). The results of the inspection should be provided to the purchaser in written form, in detail, generally within 24 hours of the inspection.

A pre-purchase home inspection can add peace of mind and make a difficult decision much easier. It may indicate that the home needs major structural repairs, which can be factored into your buying decision. A home inspection helps remove a number of unknowns and increases the likelihood of a successful purchase.

How much can I afford to pay for a home?

To determine ‘affordability’, your Denise Pisani  will first need to know your taxable income, along with the amount of any debt outstanding and the monthly payments. Assuming it is your principal residence you are purchasing, they will then calculate 32% of your income for use toward a mortgage payment, property taxes and heating costs. If applicable, half of the estimated monthly condominium maintenance fees will also be included in this calculation.

Secondly Denise Pisani , your Mortgage Consultant will calculate 40% of your taxable income and deduct all of your monthly debt payments, including car loans, credit cards and credit line payments. The lesser of the first or second calculation will be used to help determine how much of your income may be used towards housing-related payments, including your mortgage payment. These calculations are based on Lenders’ usual guidelines.

In addition to considering what the ratios say you can afford, make sure you calculate how much you think you can afford. If the payment amount you are comfortable with is less than 32% of your income you may want to settle for the lower amount rather than stretch yourself financially. Make sure you don’t leave yourself house poor. Structure your payments so that you can still afford simple luxuries.

To calculate how much of a mortgage you qualify for contact Denise Pisani toll free at 905-566-5363.

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