Monday, October 30, 2017

5 Steps to owning your own home

5 Simple Steps to Owning Your Own Home


Often, the route to owning your own home can seem like a trip to the moon and back.
Really though, it comes down to five key steps:
1 – Manage your credit wisely.
If there is one thing that will gum up the purchase of that perfect home, it’s an unwise purchase or extra credit obtained. Keep your credit spending to a minimum at all times, make every payment on time and most of all pay more than the minimum payment. Remember that if you just make the minimum payment on your credit cards, chances are you will still be making payments 100 years from now.

2- Assemble a down payment.
At first glance, the challenge of finding a down payment can seem insurmountable. In fact, you just need to consider all the sources for down payment funds. yes, you will have saved some but remember you can also, in some situations, use RRSP funds, grants ( BC Home Equity Partnership for example ) and non traditional sources like insurance settlements, severance and of course, gifted funds from a family member. Don’t forget that you’ll need to demonstrate that you’ve had the funds on deposit for up to 90 days and also that you have an additional one and a half percent of the mortgage amount for closing costs.

3- Figure out how much you can afford.
It’s at this point that most people usually stop and scratch their heads. Some even try and tough it out, using the raft of online calculators to figure it out, but new mortgage rules can make even that a challenge.
If you talk to a Dominion Lending Centres mortgage specialist ( like me! ) though, they can help you figure it out and even go as far as getting you a “pre-approval” from a financial institution. This can give you the confidence you need to actually start looking around.

4- Figure out what you want.
You’ll want to make a list of things your new home has to have and what the neighbourhood has to have. Things you want to think about are the things that are important to you now; is there access to a dog park? Is there en suite laundry? Divide the list into things you can’t live without and things you’d like to have. It’s way easier to look when you know what you want to look at.

5- Look with your head, buy with your heart.
The final step is, with the help of a realtor, look at properties that meet your requirements. Yes, the market is a little frenzied at the moment, but remember, if your perfect property is sold to someone else, the next perfect property will soon appear.
When you do finally buy, chances are, you’ll buy with your heart.
The decision which home to buy is a tricky thing, it should be made with your head and heart. Deciding, while balancing what you think and feel, really is rocket science.
I know that this may seem to be an oversimplification but really, the thing that complicates the process is your own emotions – all of the stress that comes along with making a life change can make the process challenging.

Thank-you Jonathan Barlow for this article from DLC A Better Way.

Wednesday, October 18, 2017

Do you have your 5 C's of credit


Do you have your 5 C's of credit


Your credit is made up of many things that the lenders will look at.

Character, it is determined by:
• Paying your bills on time.
• No Delinquent accounts
• Available credit – Are you using all or most of your available credit? That is not a good thing. You are better off to increase your credit limit than to use more than 70% of your limit each month. If you need to increase your score faster use less than 30% of your credit limit, and if you need to use more, pay your credit cards off early so you do not go above 30% of your credit limit.
• Your total out standing debt is considered.

Capacity: this is your ability to pay back the loan. Capacity also covers cash flow vs debt. Your employment history. How long have you been with your current employer, are you self employed, for how long? Capacity is not what you think you can afford, it is what the lender thinks you can afford based of the debt service ratio.

Capital: how much have you saved? How much do you have for a down payment and where does it come from?

Collateral: Lenders consider the value of the property and other assets as they want to see a positive net worth. If you have a negative net worth you may not be able to get a mortgage.
Not having one of these areas in order could prevent you from getting a mortgage.
Contact you Dominion Lending Centres mortgage specialist for a free review of where you stand.

Conditions: The conditions of the loan, such as its interest rate and amount of principal, influence the lender's desire to finance the borrower. Conditions refer to how a borrower intends to use the money. For example, if a borrower applies for a car loan or a home improvement loan, a lender may be more likely to approve those loans because of their specific purpose, rather than a signature loan that could be used for anything.


Thursday, September 28, 2017

Mortgage Pre Approval's made easy!




 Amy's Pre-Approval Process:


As your mortgage broker, I only represent you, my client and I am aligned with a number of lenders to secure you the best mortgage and rate.  While I am taking care of your mortgage plan, you can focus on one detail, finding your dream home!

Why is it important to go through Amy's pre approval process?

 A: to avoid disappointment when you find the house you love.  Lenders and mortgage insurers have different ways of verifying incoming and determining your debt to income qualification ratios! If you are not properly pre-qualified, you may have your heart set on a home purchase that does not work.  I take the time to bring you through the process below to ensure you have a solid pre approval in place.

 I have outlined my simple mortgage process below:
Step One:

The link below is for my website, just click on the apply now button and follow the prompts – this application will come direct to me as soon as you have completed it.

Online application - minutes to fill in

Step Two:

Upon receipt of the above online application - I will send you a consent form via docu-sign – it takes less than a minute to sign and no app download is needed.

Upon receipt of the signed consent and the application, I will contact you to fill in anything that may be missed and issue you a list of required paperwork for the lender.  Below you will see a generic list to get started with and we can update it once we have the application and consent completed.

  1. letter of employment – company letterhead, job title, start date, base income paid, name and contact number to verify the letter
  2. Most recent paystub
  3. If you earn bonus, overtime or commissions please also provide last two years Notice of assessments and T-1 generals
  4. two pieces of ID - one must be a picture ID
  5. 90 day banking history with name and account number on it to verify your down payment
  6. Void cheque
If you own another home:
  1. copy of the mortgage statement
  2. copy of the property tax assessment
  3. copy of rental agreement if you have one
  4. copy of the condo fees if there are any
Feel free to contact me anytime with any questions you may have,
Contact me today to get the pre approval process started!

Tuesday, September 26, 2017

Credit Scores

Credit Scores: Here’s what you need to know

The interest rate you pay on loans for every major purchase you make throughout your lifetime depends on various factors, and is dependent on your creditworthiness – everything from the mortgage on your home to your car loan or line of credit.
And, given today’s ever-changing mortgage requirements and rising interest rate environment, your credit score has become even more important.
Your first step towards credit awareness and well being is to know where you stand. Request a free copy of your credit report online from the two Canadian credit-reporting agencies – Equifax Canada and TransUnion Canada – at least once a year.
This will also help verify that your personal information is up to date and ensure you haven’t been the victim of identity fraud.
Newly established credit
If you’re new to credit, you may wonder why your credit score pales in comparison to your friend’s.
Payment history is a key factor for both Equifax and TransUnion. As well, if you don’t talk to your friends about money, you may not realize that their financial situations are different from yours. Your friend with the better credit score may carry less debt than you, for instance.
Using credit properly helps keep your credit score healthy, as well as comes in handy when you don’t have the cash immediately on hand to pay for an expense. Planning for expenses helps alleviate reliance on credit – and the payment of interest.
If you use credit cards and lines of credit to your full advantage, you’ll never have to pay interest on these revolving credit products. In fact, you can use the borrowed money for free if the full amounts are paid on time.
Forgot to pay a credit card bill?
Your credit generally only takes a hit after you miss two consecutive payments.
You’ll likely see a drop of 60-100 points on your credit score instantly, and your credit card provider may end up increasing your interest rate.
Every point counts, however, so you obviously don’t want your credit score to take a hit, particularly if you plan on applying for a major loan – such as a mortgage or car loan.
Know your creditworthiness
Following are some key components that help determine your credit score.
  • Credit card debt. Aside from paying bills on time, the number one way to increase your credit score is to pay down your credit cards so they’re below 70% of your limits. Credit card usage has a more significant impact on credit scores than car loans, lines of credit and so on.
  • Credit history. More established credit is better quality If you’re no longer using your older credit cards, the issuers may stop updating your accounts. If this happens, the cards can lose their weight in the credit formula and, therefore, may not be as valuable. Use these cards periodically and pay them off.
  • Credit reporting errors. Always dispute any mistakes or situations that may harm your credit score. If, for instance, a cell phone bill is incorrect and the company will not amend it, you can dispute this by making the credit bureau(s) aware of the situation.
Do you have questions about your credit score or creditworthiness? Contact Amy Wilson - 780-919-0475, or amy@yourmortgagegirl.ca

Thank-you Tracy Falko - DLC Forest City for this article

Monday, September 25, 2017

What is Bridge Financing?


25 Sep 2017

Bridge Financing – How Does It Work?

Rarely in life do things go as planned, especially in real estate.
In a perfect world, when buying a new home, most people want to take possession of their new house before having to move out of the old one. This makes moving a lot easier and allows you time for painting or renovations prior to moving into your new home.
Where it gets complicated; most people need the money from the sale of their existing house to come up with the down payment for the new house!!
This is where bridge financing comes in.
Bridge financing allows you to bridge the financial gap between the firm sale of your current home, and the firm commitment to purchase your new home.
Bridge financing allows you to access some of the equity in your existing property, which you can use towards the down payment on the new property you are buying.
Where many people get confused is that in order to secure bridge financing, you must have a firm sale on your existing house. That means all subjects have been removed!!
If you haven’t sold your home, you won’t get the bridge financing, because there is no concrete way for a lender to calculate how much equity you have available and if you can afford your new home.
For most people, unless you can qualify and pay for two mortgages, you should always sell your existing home before purchasing a new one. Why?
• With today’s property values constantly changing, you won’t know how much money you have until you sell your home. Your home is only worth what someone is willing to pay for it NOW! Past sales and future guesses don’t count!
• You need the proceeds from your existing home to help pay for your new home’s down payment, renovations, moving costs and (if required) how much mortgage you qualify for.
If you have sold your existing home but your closing date is after the closing date of the new property you just purchased, then bridge financing is your best option:
• Your new lender must allow for bridge financing (not all banks allow bridge financing as an option). Your mortgage broker can work with you to find a lender who offers bridge financing.
• Bridge financing costs more than your traditional mortgage (i.e. Prime + 2-4% plus an administration fee).
• Typically bridge loans are restricted to 90 days.
What happens if I don’t sell my home?
Banks will not provide you with a bridge loan if you don’t have a firm sale agreement for your home since the loan can’t be open-ended. If you don’t have a firm selling date you may need to consider a private lender for the bridge loan.
Private Financing
If you have purchased your home and it is closing and your existing home has not sold, then you may have to take out a private loan:
• This option is expensive and is based on you having enough equity in your current property to qualify.
• Typically, private financing comes with a high interest rate 7-15% plus an upfront lender fee + broker fee. These amounts will vary based on your specific situation, such as time required for loan, loan amount, loan to value, credit bureau, property location, etc.
• Private financing is expensive, but it could be cheaper than lowering the purchase price of your existing home by tens of thousands of dollars to sell your existing home quickly.
Your bank doesn’t do this type of financing. You must use a specialized mortgage broker who has access to individuals that lend money out privately.
Bridge financing & private financing are solutions when your buy and sell days don’t work.
Don’t waste your time trying to sort all this out on your own.  Contact Amy Wilson for all your mortgage needs.

Thank-you to Kelly Hudson from DLC Canadian Mortgage Experst for this article.

Friday, September 22, 2017

More Mortgage Rule changes to come! Are you prepared?

Mortgage changes are coming—are you prepared?

We know – more changes?! How can that be! With this ever-changing landscape, mortgages continue to get more complicated. This next round of changes is predicted to take affect this coming October 2017 (date not yet available). These new rules contain three possible changes, the most prominent being the implementation of a stress test for all uninsured mortgages (those with a down payment of more than 20%). Under current banking rules, only insured mortgages, variable rates and fixed mortgages less than five years must be qualified at a higher rate. That rate, of course, is the Bank of Canada’s posted rate (currently 4.84%, higher than typical contract rates). Going forward, it will be replaced by a 200-basis-point buffer above the borrower’s contract rate. source
The other proposed changes include:
• Requiring that loan-to-value measurements remain dynamic and adjust for local conditions when used to qualify borrowers; and
• Prohibiting bundled mortgages that are meant to circumvent regulatory requirements. The practice of bundling a second mortgage with a regulated lender’s first mortgage is often used to get around the 80%+ loan-to-value limit on uninsured mortgages.
These two proposed changes are minor, and would only affect less than 1% of all mortgages in Canada. The main one, the stress testing, will have a far greater impact.
Why is this happening?
You may recall that the stress test requirements were announced by OSFI in October of 2016. This rule followed a long string of new rules that occurred in 2016. At the time, they primarily affected First Time Home Buyers and those who had less than 20% down to put towards a home. Now, those who are coming up to their renewal date or wishing to refinance may find that this will have an impact on them. They may not qualify to borrow as much as they once would have due to the stress testing implication. For example:
A dual-income family with a combined annual income of $85,000.00. The current value of their home is $610,000.00.
Take off the existing mortgage amount owing and you are left with $145,000.00 that is available in the equity of the home provided you qualify to borrow it.
Current Lending Requirements
Qualifying at a rate of 2.94% with a 25-year amortization and with a combined annual income of 85K you would be able to borrow $490,000.00. Reduce your existing mortgage amount of 343K and this means that you could qualify to access the full 145K available in the equity in your home.
Proposed Lending Requirements
Qualify at a rate of 4.94% with a 25-year amortization and with a combined annual income of 85K you would be able to borrow $400,000.00. Reduce your existing mortgage amount of 343K and this means that of the 145K available in the equity in your home you would only qualify to access 57K of it. This is a reduced borrowing amount of 88K.
They have a mortgage balance of $343,000.00. Lenders will refinance to a maximum of 80% LTV (loan to value). The maximum amount available here is $488,000.00
As you can see, the amount this couple would qualify for is significantly impacted by these new changes. Their borrowing power was reduced by $88,000-a large sum of money!
With the dates of these changes coming into effect not yet known, we are advising that clients who are considering a renewal this fall do so sooner rather than later. Qualifying under the current requirements can potentially increase the amount you qualify for—and who wouldn’t want that?
For more information on how these changes affect you specifically, or to refinance your mortgage, get in touch with Amy Wilson, Amy's website

Thanks Geoff Lee from DLC for this excellent article.

Tuesday, August 29, 2017

Spousal Buyout Mortgage

Spousal Buyout Mortgage?

Spousal Buyout Mortgage?
If you happen to be going through, or considering a divorce or separation, you might not be aware that there are mortgage products designed to allow you to refinance your property in order to buyout your ex-spouse.
For most couples, their property is their largest asset and where the majority of their equity has been saved. In the case of a separation, it is possible to structure a new mortgage that allows you to purchase the property from your ex-spouse for up to 95% of the property’s value. Alternatively, if your ex-spouse wants to keep the property, they can buy you out using the same program.
Here are some common questions about the spousal buyout program:
  • Is a finalized separation agreement required?
Yes. In order to qualify, you will be required to provide the lender with a copy of the signed separation agreement. The details of asset allocation must be clearly outlined.
  • Can the net proceeds be used for home renovations or to pay out loans? 
No. The net proceeds can only be used to buy out the other owner’s share of equity and/or to pay off joint debt as explicitly agreed upon in the finalized separation agreement.
  • What is the maximum amount that can be withdrawn?
The maximum equity that can be withdrawn is the amount agreed upon in the separation agreement to buy out the other owner’s share of property and/or to retire joint debts (if any), not to exceed 95% loan to value (LTV).
  • What is the maximum permitted LTV?
Max. LTV is the lesser of 95% or Remaining Mortgage + Equity required to buy out other owner and/or pay off joint debt (which, in some cases, can total < 95% LTV). The property must be the primary owner occupied residence.
  • Do all parties have to be on title?
Yes. All parties to the transaction have to be current registered owners on title. Solicitor is required to do a search of title to confirm.
  • Do the parties have to be a married or common law couple?
No. The current owners can be friends or siblings. This is considered on exception with insurer approval. In this case, as there won’t be a separation agreement, there is a standard clause that can be included in the purchase contract that outlines the buyout.
  • Is a full appraisal required?
Yes. When considering this type of a mortgage, it is similar to a private sale and a physical appraisal of the property is necessary.
If you have any questions about how a spousal buyout mortgage works, contact Amy Wilson for all your mortgage needs.   Be assured that our communication will be held in the strictest of confidence.

Thank-you  Michael from DLC for this article