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Shawna makes clients feel like family that she cares a lot for!

posted by The Mortgage Associates    |   April 30, 2014 09:15

Shawna MacDonald"Such a pleasure to deal with Shawna - she makes clients feel like family that she cares a lot for!  She says what she does and does what she says."

Anonymous, April 2014

Should you get pre-approved for a mortgage? Ten things to know.

posted by The Mortgage Associates    |   April 29, 2014 08:30

As posted by Robert Mclister, The Globe and Mail, April 21, 2014

"Putting your full faith in a mortgage pre-approval is like betting on a heavy favorite in a horse race. You’ll probably win but there’s room for major disappointment.

Sure, pre-approvals have benefits.
- The best ones accurately measure your qualifications and how much house you can afford.

- Their 90- to 120-day rate guarantees protect you if rates rocket up while you’re home hunting.

- They make you seem more serious to sellers and real estate agents. (In competitive bidding situations, they’re almost mandatory.)

- They’re free and there’s no obligation to use the lender that pre-approved you.

But here’s the problem: pre-approvals are not full approvals. So if you’re going to rely on one, you need to understand their limitations.

“I would caution consumers when a lender only holds a rate, versus asking for documents and confirming qualification,” says Rob Regan-Pollock, a mortgage broker with Invis. “It’s heartbreaking to be told by a lender they cannot qualify after being told they were ‘pre-approved’.”

2. Advice goes only so far.
Mortgage advisers can “pre-qualify” you to confirm that you meet general guidelines, but only a lender’s underwriter can confirm that your income, down payment, purchase agreement, property information, credit and debt ratios meet their full approval

Unless you have a 20 per cent down payment from your own resources, rock-solid employment, provable income, pristine credit, and low debt, then pick a lender that reviews your application and preferably your documentation before granting its pre-approval.

3. Appraisals are the missing link.
Appraisals aren’t done at the pre-approval stage. But they’re mandatory for getting a mortgage. The issue, of course, is that you can’t get an appraisal on a home you haven’t found yet. And that’s the big risk with pre-approvals. If the lender's or mortgage insurer's valuation appraisal reveals that you overpaid, or the property has defects, it can render your pre-approval worthless. That’s why you’re always wise to insert financing conditions in your purchase offer (or at least appraisal conditions) or get an appraisal before you make an offer.

Adding a financing condition is especially important if you’re putting down less than 20 per cent, which typically requires an insured mortgage. That’s because default insurers like CMHC don’t even look at pre-approvals. They can decline you or your property for any number of reasons, leaving those without financing conditions at risk of not closing, losing their deposit and being sued.

4. Don’t over-rely on appraisers.
Even if you get an appraisal before making your offer, “you can’t rely on appraisers to identify every problem with a property,” says Jason Upton, president of Aedis Appraisals. That’s especially true for condos where most appraisers (due to cost and time constraints) won’t review condo board minutes, condo finances and engineering reports. That’s where risks like special levies, reserve deficiencies, legal problems or structural issues can turn up, all of which can kill a lender’s interest and make a pre-approval worthless.

5. Your actions after pre-approval matter.
Beware that missing payments, adding debt, changing jobs, moving around your down payment money or co-signing for someone, among other things, can void your pre-approval.

6. Pre-approvals don’t come with the best rates.
Statistically, only around one in six pre-approved homeowners actually take the mortgage they got pre-approved for. But the lender still has costs (like rate hedging and application processing costs) for the five in six pre-approved mortgages that don’t close.

Given this expense, pre-approvals don’t typically come with the best pricing. They’re often 0.10 to 0.15 percentage points above market rates – which is peanuts compared to your costs if rates soar and you’re not pre-approved.

That said, the best mortgage rates are often for 30- or 45-day closings. Check rates 30 days before closing. If they’re more than 0.10 percentage points below your pre-approval rate, ask your lender to match them. If they won’t, consider re-applying elsewhere. But avoid trading a flexible mortgage for a restrictive one that’s only marginally cheaper. Homeowners routinely underestimate their need for refinancing flexibility later.

7. Sometimes waiting pays.
If you’re very well qualified, a mortgage broker can sometimes time the submission of your pre-approval to get you better rates. “If rates are flat or trending down, the discussion with the client becomes one of monitoring the market and not actually submitting the file until they are within the window of [rate] specials,” Mr. Regan-Pollock says.

8. Reset if appropriate.
If rates have stayed low and you’re still actively home hunting, reset your pre-approval every 45 to 75 days. This extends your rate hold, protecting you if rates jump before you close. If your lender restricts rate resets, you might need to look elsewhere.

9. Get a second pre-approval, if needed.
Lenders don’t issue more than one pre-approval at a time. So if 45 to 60 days have elapsed, rates have jumped, and you need more time to find a home, consider getting a second pre-approval elsewhere. On the other hand, if you know you won’t close within your original pre-approval’s time frame, save time and try to reset the rate hold period with the existing lender.

10. Features matter.
Choose the pre-approval with the longest rate hold (e.g., 120 days), the deepest discount rate, full underwriting and the best mortgage features (i.e., good prepayments, a fair penalty, good port and refinance policies, etc.). Only a minority of lenders meet this criteria."

Click here for the full article.

In latest bid to tighten rules, CMHC targets second homes

posted by The Mortgage Associates    |   April 28, 2014 09:40

As reported by Tara Perkins, The Globe and Mail, April 25, 2014

"Canada Mortgage and Housing Corp. is cutting the types of mortgage insurance it offers, meaning the era of tighter rules for home buyers hasn’t come to an end.

The Crown corporation said late Friday it will stop insuring mortgages on second homes, effective May 30. Anyone who has an insured mortgage will no longer be able to act as a co-borrower on another mortgage that CMHC insures. In addition, it will stop offering mortgage insurance to self-employed people who don’t have standard documents to prove their income.

CMHC said it does not expect the new rules to have a big impact on the housing market, but hinted more changes are on the way.

Mortgage insurance is mandatory in Canada for banks issuing mortgages to home buyers with down payments of less than 20 per cent, and changes can have significant effects on home sales.

Former finance minister Jim Flaherty tightened the rules that determine which mortgages are eligible for insurance on four occasions in the wake of the financial crisis. He last imposed stricter rules in July, 2012, when he capped the amortization of insured mortgages at 25 years, down from 30. That caused home sales to plunge.

His successor, Finance Minister Joe Oliver, has signalled he wants to play less of an active role in the housing market. Real estate players were hoping that meant rule changes were a thing of the past.

But back in 2012, Ottawa told CMHC it was going to have to start ensuring that its activities contribute to the stability of the country’s financial system. In other words, it should not be selling insurance products that encourage borrowers to take on too much debt and add to the risks in the housing market. CMHC began a review of its business to ensure it is abiding by the new part of its mandate, and this is the “first set of changes” to result, it said.

Drew Donaldson, a mortgage broker with Safebridge Financial Group in Toronto, said he frequently has clients who own a condo with an insured mortgage and decide to rent it out when they buy a house. Those people will no longer be able to buy that house with a mortgage that’s insured by CMHC.

Similarly, parents who have a mortgage that’s insured will no longer be able to act as a co-borrower for their children on an insured mortgage.

CMHC was created in 1946 to help returning Second World War veterans buy homes. The Crown corporation grew into one of the country’s largest financial institutions.

The federal government backstops CMHC’s business, and CMHC said Friday its review is designed to ensure that it is “reducing taxpayers’ exposure to risk.”

It said second-home insurance and its program for self-employed people who don’t have their incomes validated by third parties account for less than 3 per cent of its insurance business volumes, in terms of the numbers of mortgages it insures. “Given the limited use of these products, their discontinuation is not expected to have a material impact on the housing market,” it stated in a press release.

The Crown corporation has been offering insurance on second homes since 2005. It has been offering insurance to self-employed people without strong income validation since 2007.

CMHC noted that “self-employed Canadians can still qualify for CMHC insured financing through CMHC homeowner products with a validation of their income using traditional methods.” Those might include audited financial statements, or unaudited financial statements prepared by an independent third party.

CMHC’s two private-sector competitors, Genworth MI Canada and Canada Guaranty, already had less stringent standards than CMHC for self-employed borrowers. It is not clear if they will adopt these product changes, or any future ones that CMHC might make."

For the full article, click here.

Shawna went above and beyond what was required to ensure our mortgage process was smooth

posted by The Mortgage Associates    |   April 25, 2014 10:21

Shawna MacDonald"Shawna went above and beyond what was required to ensure our mortgage process was smooth.  She exceeded our expectations for a Mortgage Broker.  She was always available to answer any questions and concerns we had.  Thank you Shawna for excellent service!  We appreciate all your hard work!"

Fred and Shauna, August 2013

Canadians can bank on low interest rate environment for years to come: Poloz

posted by The Mortgage Associates    |   April 25, 2014 08:15

As reported in The StarPhoenix, April 25, 2014

"SASKATOON - Canadians can expect to enjoy relatively cheap borrowing costs for some time to come — even after the economy returns to full capacity and the Bank of Canada starts hiking interest rates, bank governor Stephen Poloz said Thursday.

But the central banker doesn't think sending that message means people will go on spending sprees.

Poloz says it will likely take until early 2016 before the economy is firing on all cylinders and inflation is back to two per cent. But even when it does Canadians shouldn't expect a sudden increase in interest rates to fight inflation, he told a business group in Saskatoon on Thursday.

"Our economy has room to grow and when we do get home, there is a growing consensus that interest rates will still be lower than we were accustomed to in the past," said Poloz.

"Both because of our shifting demographics and because after such a long period at such unusually low levels, interest rates won't need to move as much to have the same impact on the economy."

For the full article, click here.

Canadian home buyers putting up bigger down payments, lenders say

posted by The Mortgage Associates    |   April 24, 2014 08:33

As reported by Tara Perkins, The Globe and Mail, April 23, 2014

"Sean Amato-Gauci, senior vice-president of home equity financing at Royal Bank of Canada, the country’s largest mortgage lender, tells me that the bank has seen average down payments in its uninsured portfolio of mortgages rise by about 10 per cent in the last two years (uninsured mortgages are generally those where the down payment is greater than 20 per cent).

Down payments in the bank’s insured portfolio (banks must insure mortgages if the borrower puts down less than 20 per cent) are also increasing.

And, interestingly, Mr. Amato-Gauci says that down payments are rising not just in terms of dollar value, but also in terms of the percentage that they make up of the mortgage loan. That suggests that there’s more going on here than just rising home prices forcing buyers to put down more cash up front. And since down payments are rising even in the bank’s uninsured portfolio, the trend appears to be something more than people just trying to avoid paying for mortgage insurance.

Mortgage insurance premiums are set to rise by about 15 per cent on average, effective May 1. They vary depending on the size of the borrower’s down payment, but generally add thousands of dollars to the cost of a mortgage.

“Consumers have saved more for down payments in recent years, driven by a number of factors, including improvements in income levels, employment and equity markets,” Mr. Amato-Gauci says.

Canadians have also been inundated with warnings to save more. Top officials in Ottawa have been sounding alarm bells for a few years now about growing debt loads, much of which stem from mortgages.

“I think with all the focus on consumer debt, people are understanding that it’s more important to save for larger down payments before taking on a mortgage,” Mr. Amato-Gauci says."

For the full article, click here.

My Appraised Value Doesn't Match The Purchase Price

posted by The Mortgage Associates    |   April 23, 2014 10:09

My Appraised Value Doesn’t Match The Purchase Price

Steel Van Veen

Steel Van Veen, April 21, 2014

“On a purchase transaction, then lender and/or the insurance company (CMHC, GE & Canada Guaranty) reserve the right for an appraisal. Let’s discuss an appraisal and how it can affect your approval.

Real estate appraisal, property valuation or land valuation is the process of valuing real property. The value usually sought is the property’s market value. Appraisals are needed because compared to, say, corporate stock, real estate transactions occur very infrequently. Not only that, but every property is different from the next, a factor that doesn’t affect assets like corporate stock. Furthermore, all properties differ from each other in their location – which is an important factor in their value.

An appraisal can be requested by your lending institution or bank for a number of reasons, such as:

- Location

- Private sale (as opposed to an MLS listed property)

- Amount of down payment - putting more than 20% down can result in an appraisal

- Down payment is being gifted from an immediate family member

- The property has been flagged by the insurer or lender and they require more information

The appraisal MUST be completed by a certified appraiser who is on the lender’s or insurer’s approved appraiser list. You can’t simply send your Realtor out to appraise it for you. The appraisal must also be completed for that specific lender and must be no older than 60 days to be accepted.

A question that often comes up is “What happens if the appraisal doesn’t match the purchase price?” Which is a VERY GOOD question! But before I get into that, let me ease your mind. The likely hood of that happening is very small, less than 1% of the time this happens (especially on an MLS listed home). But it can happen and has happened on 4 of my files … thats 4 times in 11 years of writing Mortgages. Three of those files were private sales, and two of them were acreages.

People sell their homes privately simply to save money on Realtor commissions (although I don’t recommend this method, its still common). When they do this, they expect to get paid what they would have paid the Realtor. Which usually results in an asking price that is out of line, or too high. Acreages are also common, as there is usually more land that is being sold, then the lender/insurer will approve. Usually they will only accept 5-10 acres of land on top of the home, as a value. So if there is a ton of land being included, they don’t recognize it as value. So, we are now sitting with a purchase price of say $350,000, but the appraisal shows $320,000 – what do you do?

There are a couple of options for you:

Re-Negotiate the Purchase Price with the Seller
You will get a copy of the appraisal or a note from the lender stating what the appraised value of the home is, which you can negotiate with. This is a very simple process – The purchase price needs to be brought down to the appraised value. Let’s say you run into a snag w the seller and they say “No”, purchase price stays the same. Well, now you have this option …

Pay the Difference
If the home appraised at $320,000 and the purchase price was $350,000, you pay the difference of $30,000 out of your pocket. I don’t usually recommend this, as we have determined the value is less than the purchase price. Why over pay for it? Now there MAY be other circumstances than warrant paying the difference, but it better be a good one in my opinion. Don’t want to pay the difference? Well then this next step is for you …

Walk Away from the Home
Its that easy. The purchase price wasn’t approved, you don’t want to, or can’t afford to, pay the difference, so you cancel the contract and find a new home. Because you wrote the offer subject to financing, your deposit will be 100% refunded to you.

This scenario doesn’t come up very often and if it does, usually it can be sorted out with the seller. Because let’s be honest – the next person who tries to buy the home will more than likely need an appraisal as well. If they are using the same insurance company or lender, the home will already be flagged with THIS appraised value. So the seller isn’t going to get any more for it anyways.”

Article can be viewed here.

You really do feel like a client for life with Scott

posted by The Mortgage Associates    |   April 23, 2014 08:28

Scott Trainor"Scott's yearly mortgage review allowed me to refinance a year after I bought my home to a lower rate and save money because he stays on top of his clients mortgages. You really do feel like a client for life with Scott."

Ali, Saskatoon, SK

Variable mortgages are the way to go this spring!

posted by The Mortgage Associates    |   April 23, 2014 08:23

Video posted by The Globe and Mail, April 23, 2014

Click here to go directly to the website.

Steel made the transaction smooth, quick and stress free!

posted by The Mortgage Associates    |   April 22, 2014 08:35

"Thank you SO MUCH Steel for helping us with our renewal.  The transaction was smooth, quick and stress free.  We had many questions and there wasn't one that you couldn't answer on the spot.  You did a FANTASTIC job and it was easy working with you.  We've definitely been recommending you to everyone we know.  Thanks again!!!"

Roman and Elaine Luchka, Saskatoon, SK