Mortgage!

By: Derick Cavanaugh

Are you mortgage educated?

Understanding your mortgage options can save you thousands of dollars. Learn more here http://canadianmortgagespecialist.blogspot.com/.

Looking to obtain a mortgage or refinance your current one? The banking industry is changing rapidly, and it all benefits the consumer! Interest rates are heading down again and trends indicate this should continue for the next 18 months or so, its a real good time for an open mortgage, just be sure to lock in before they start to creep back up.

The increased number of insurers for lenders has given the consumer even more options and flexibility. Find a mortgage broker who understands the industry and your needs and find the products that are right for you. There are a lot of new opportunities available so even if you been turned down before, a mortgage broker can help get you approved or develop a plan that will help.

If your unsure of what your situation is, e-mail me for free no obligation consultation at derick_cavanaugh@centum.ca.

Quick Mortgage Tips for Home Loans, Equity Loans, Reverse Loans, Cash-Out Loans and Refinance Loans

by: Chris Robertson

If you're considering a mortgage loan, you might be wondering what options are available. Today, there are many options besides the conventional methods of obtaining a mortgage. Whether you're applying for a home loan for a new home, a refinance loan, an equity loan, a HELOC, or a reverse loan, you should be aware of what each loan entails.

Buying a New Home:

When buying a new home, you'll need to be approved for a new home loan through a lender, or ask the seller to finance the home for you. Before applying at a lending institution, research your options. Determine how much "house" you can afford. Use online mortgage payment calculators to figure what the payments would be for different home loan amounts. Then, you'll know what price range you can shop within, and whether or not you can afford the payments. Remember, your income/debt ratio must fit within the lender's guidelines to qualify for a conventional loan. Healthy and "Not-so-healthy" Credit Scores If you have an excellent credit score, then your income/debt ratio along with the investment capital you have available will be the main factors in determining home loan availability. However, if there are flaws in your credit history due to non-payment or repossession, you will be limited in the type of home loan you can obtain. But don't lose heart. Many homebuyers whose credit is "not-so-great" do qualify for non-prime loans. Non-prime loans can be a bit higher-priced than prime loans or have higher interest, but you might still be able to buy your dream home!

Creative Financing:

Don't settle for conventional loans if you don't have to. There are many creative ways to finance a new home loan. If you do not have the needed investment capital or a down payment, some lenders will finance the down payment for you as well as the closing costs. If not, the seller might be willing to finance part of the loan to cover these costs. This can work even if the seller doesn't have extra "money to lend!" Explain to the seller that it could be advantageous to him because of income taxes. He might much rather claim an income of $100,000 than $120,000! Spreading out payments for $20,000 of the loan amount over a period of five or ten years could make a huge difference on his taxes due for that year. Consult with an accountant to find out if this could work in your situation.

Unusual Types of Home Loans:

If you're worried about budgeting with a new home loan payment each month, try a FlexPay loan where several monthly payment options are available to you every month. These options include interest only payments, full-amortized payments, and minimum payments. There are also bi-weekly mortgages for paying more toward your premium each year through a bi-weekly payment schedule. Hard Money loans are also available when there is a large amount of equity built up in a home. The loan approval is based more on the home or property's value than the borrower's credit history or job/salary history.

Refinance Loans:

If you plan to refinance your home, there are several options. A refinance means you are re-evaluating the terms, payments and interest of your loan. You might refinance to simply get the interest rate or payment lowered. Or, you might want to keep a little cash out for yourself as well. This is called "Cash-out" refinancing. Cash-out loans are made when you want to refinance your home for more than is owed on it. For instance, you owe $60,000, but want to refinance for $80,000. You'll pocket the additional $20,000 to use for home repairs, remodeling or whatever else!

Reverse loans are available for those over 62 years of age who own their home free and clear or have much equity built into it. They can receive a monthly payment, a lump sum or a line of credit. This does not have to be repaid until the borrower moves or passes away. Then, the estate can be sold to pay the note. Another option for leveraging your home equity is to create a HELOC (home equity line of credit) that is secured by the equity in your home. HELOCs can be used to pay debts, make purchases, or anything else. Be aware, however, that the interest rate can fluctuate monthly. Now that you are armed with many options for obtaining a home loan or refinancing your mortgage, check with an online lender to find out what plan will work best for you. Use the available tools and calculators to do some budgeting on your own as well. You'll be moving in that new dream home in no time!

by: Chris Robertson

Get Protected : Shattered Dreams Caused By Life Insurance Complacency

by: Derek Rogers

Margaret Donaldson sat in the living room of her smart 3 bedroom home near Fulham Road in London. Her eyes were watery and her hands shook as she finally signed the sale papers of her house; the very house where her life, her dreams and her hopes had taken root.
She remembered when, almost ten years to the day, when she, a receptionist in a small company married Michael, who was the Sales Manager in her company. She remembered their wedding day, the vows, her friends, her relations, everyone. Her honeymoon with life had just begun.
It seemed like only yesterday when Michael had grabbed her in his arms and carried her into this very house. Michael was so charming, so full of fun and energy and there was never a dull moment in Margaret’s life.
Margaret remembered the days when she had brought her two sons, David and Jonathan, into their lives. She remembered the joys of raising her two boys and how Michael helped her in their parental duties every step of the way.
Michael was a good husband and a great father. He spared no expense to ensure that his sons went to the best schools, he worked overtime to repay the mortgage on their modest property. He had done everything in his power and ability to keep his family happy. Margaret had never felt the need to work nor did she develop any new life skills.
And then, out of the blue, Margaret’s life changed forever. Michael was diagnosed with an aggressive type of cancer. The hospital did its best to cure him; they tried chemotherapy, radiation, etc. Nothing helped and within a month, Michael had passed away, leaving his loved ones behind.
And that is when Margaret’s honeymoon with life really ended.
Whenever the bread winner in any family passes away, everything boils down to money. Michael had not protected himself financially and had neither health insurance nor life cover. He'd always believed that he was too young and it would be something he'd get around to. He didn’t leave much behind. The schooling and the living costs ate up his salary and all that was left was the house. The very place where Margaret had lived her life and now she was being forced to sell.
Margaret had to sell the house to pay debts. There were school fees due. Then there was that loan Margaret had taken from a friend to pay the funeral expenses. After that, there were the daily living expenses. And there was no one to provide for the house.
If only Michael had provided for his family by covering himself with a life insurance policy. Things would have been different today. Margaret would not have to sell the house and move to an unfamiliar area to buy a cheaper property. Nor would her sons be exposed to the harsh realities of life at such a tender age.
Her eyes still wet, Margaret signed the sale deed. She had sold the house for just under £300,000. She would now use half this money to buy a small 2-bedroom semi and use the rest to pay the hospital bills and other debts. What little was left was deposited in the bank.
Margaret was starting life all over again. A life where she needed to work, where she needed to pick up new skills and a life that would never be the same again.
That was Margaret’s tragic story. And, for all you know, this could be the story of thousands of Britons.
If you have financial responsibility for others, you need to realise that anything can happen in life and you must be prepared for any eventualities. You owe it to your family, to those left behind, just in case the worst should happen. You need to be protected.
by: Derek Rogers

Mortgage Refinancing

By: Rituraj

You might think that deciding to refinance a mortgage requires only a quick comparison of loan interest rates. Unfortunately, that’s not really true. Refinancing is trickier than that! Fortunately, three useful rules of thumb can often help you make sense of refinancing opportunities.

Rule 1: Don’t Ignore Total Interest Costs

You really want to use refinancing as a way to reduce the total interest cost you pay. While that sounds simple in principle, it is sometimes difficult to do. The interest costs you pay are a function of the interest rate, the loan balance, and the loan term period. When people refinance, they tend to focus solely on the loan interest rate. But they often don’t pay as much attention to the loan term or the loan balance. When you use refinancing—even refinancing at a lower interest rate—to increase your borrowing or to extend the time over which you borrow, you often aren’t saving money.

Rule 2: Trade Expensive Money for Cheap Money

For refinancing to make economic sense, however, you do need to swap higher interest rate debt for lower interest rate debt. This calculation, however, is tricky. To make an apples-to-apples comparison, you must look at the annual percentage rate that will be charged on your new loan—this is the best measure of the new loan’s interest rate cost—and then compare this to the loan interest rate on your old loan. You don’t want to compare interest rates on the two loans nor do you want to compare annual percentage rates on the two loans. Again, just to make this perfectly clear: You want to compare the loan interest rate on the old loan to the annual percentage rate on the new loan. When the annual percentage rate on the new loan is lower than the loan interest rate on the old loan, then you are truly paying a lower interest rate. Comparing annual percentage rates with loan interest rates seems confusing at first. But note that you would pay only interest on your old or current loan, so that’s all you need to look at in terms of its costs. With a new loan, however, you would pay both interest and any origination or closing cost fees. The annual percentage rate wraps the interest rate charges and setup charges, origination charges, and closing cost fees into one interest rate-like number.

Rule 3: Don’t Lengthen the Repayment Period

Be careful that you don’t extend the length of time you borrow by continually refinancing. For example, one common rule of thumb states that every time interest rates drop by two percentage points, you should refinance your mortgage. However, there have been times in recent history when following this rule would have had you refinancing your mortgage every few years. This could mean that you would never get your mortgage paid off.

By: Rituraj

Liar, Liar, Pants On Fire…"Liar Loans" Lead To A Spike In Mortgage Foreclosures

by: Dale Rogers

It starts out all so innocently, the loan application is filled out while gathering the income and debts verified through credit reports and mortgage payoffs. Then the Debt To Income Ratio (DTI) is calculated dividing the debts including the new housing expense by the income and wham, it happens. The DTI is over 60%. Conventional loan guidelines historically have been around 28% for housing expenses including taxes, insurance, private mortgage insurance and homeowner maintenance fees. The total debt ratios had been around 36% for all monthly debts including the housing expense. With computer modeling and automatic approvals some DTI ratios have been allowed to float up in some cases to 50% to 60% if the borrower has lots of assets and the loan is on a full doc basis. As time passed, more and more hybrids began to show up. Mortgage Brokers were inundated with this new loan product called Stated Income. Simply the borrower would state their income on the mortgage loan application and ratios would fall within lender acceptable limits. The original thinking by lenders were grounded in the premise that many busy well to do borrowers didn’t have time to compile tax returns and a litany of proof of their assets. This especially applied to borrowers who owned a multitude of income producing properties or had filed for extension on filing a personal or corporate return for a self-employed borrower. This was a very popular plan and billions of new mortgage originations were sold using the Stated Income or other derivations of the basis plan. It was great for self-employed borrowers who found it difficult to compile in a timely manner all the documentation for a fully documented loan which would use tax returns and a year to date statement from a CPA.

Later on, due to the heavy volume of mortgage business and a desire on part of lenders to expand this popular niche into other areas W-2 wage earners were allowed to state their income as well as those on fixed income such as social security, disability and pensions. For a few years this seemed to be ok. However, as time went on, and the economy in various parts of the country began to slow down, borrowers with stated income loans began to have an inordinate amount of foreclosures. At this time, Stated Income mortgage loans rival the Option ARM for frequency of foreclosures. Fraud reared its ugly head as participating players in the loan process were structuring deals with phony baloney borrowers who didn’t exist. These phony buyers are called “straw buyers” by prosecuting attorneys. Many times the first payments were never made. Most mortgage brokers and lenders have buy back agreements from the secondary markets so when a loan goes bad the originator is on the hook to buy the loan back. If fraud was involved, that shop many times already closed up and had run away with any ill-gotten gains together with the rest of the crew who were working the scam. Those players are prosecuted and serve prison time for their sins.

The other borrowers who were just trying to get a loan to pay off debts and a few months down the road after the new mortgage was in place were not able to make their payments. A Notice of Default is sent to the borrower with foreclosure action following when mortgage payments are not made. In a foreclosure process, the lender holding the bag goes back through all the files looking to perform an autopsy on the loan to determine what happened. Every piece of paper is examined, verifications are double-checked with a high powered microscope. All who committed a fraudulent lending practice are sought out and demands are made for redemption and loan buy back. Some enterprising participants had provided false bank statements and other loan documents, which were in fact fraudulently created on a fine computer word processor. The fix had been in.

Many of these stated loan products were all the rage then the fraud hit the fan. Borrowers could not afford the payments and did not even come close to having enough to even live on. Major changes are afoot. Many mortgage brokers exercise much self-discipline and will not even consider a Stated Loan with someone on fixed income. Where is the “real” money going to come from? Guidelines are tightening well after the horse has escaped from the barn. There is a web page called www.salary.com that gives the high and low range of income for various occupations. Lenders will immediately check this to see if the Stated Income is within this range. In the past, many times, these loans were done with a wink. This is no longer the case. Recently, Form 4506, which is an IRS form that a borrower signs allowing the lender to check with the IRS and determine income from the borrowers tax returns and W-2s if any. Formally this verification process with the IRS was a time consuming endeavor, but this is not the case anymore. For like $4.00 per file, a lender can access, with the borrower’s written permission, an online web site and access the IRS site to verify income. Many lenders will not close the Stated Income loan without an IRS Form 4506 being signed. Many of these loans are sold into the secondary market that helps keep the mortgage money supply flowing. As more and more foreclosures ensue from the Stated Income Mortgage Products there will be a major shake out with tightening of regulations and a search for any player, including the borrowers, who may have had a hand in this “Liar Loan” product. The fallout is already underway.

What is a borrower to do? For one, look for mortgage products that do not require stating a phony income number. A No Doc loan requires stating No Income on the loan application. A No Ratio does not require income to be listed but verifies employment and term on the job. It has to make sense. The days of loose lending may be over for many. Bottom line, if it doesn’t make sense, it probably is not a good loan. Think long and hard about using a Stated Income loan product. If it conforms with what it originally designed loan program for the busy borrower with lots of cash and assets and no time to pull things together, great. If not, think about passing for some other loan product. It could impact your walk around freedom. A negative loan experience will certainly impact a borrower’s credit and help precipitate a long and painful recovery from this credit blemish resulting from a foreclosure. Find another mortgage product to achieve your financial goals.

by: Dale Rogers

Tap Into Your Equity!

- Renovate / Expand Your Home!

fix a roof, build your dream kitchen, landscape your property, accommodate your growing family, etc.

- Make A Large Purchase!

pay for a wedding, buy that recreational vehicle you've been dreaming of, go on a well deserved trip, etc.

- Finance Your Child's Education!

give your children the financial support they need to go further with their education

- Save Your Money!

consolidate your debts, reduce your monthly payments and increase your disposable income immediately

Maybe it's time you thought about tapping into your equity - contact a mortgage broker today!

THE TOP 5....

Here are the TOP 5 Reasons to Deal with a Mortgage Broker

1. Product Selection

Mortgage brokers have access to many different mortgage products as well as success to a variety of mortgage options for customers with previous credit issues, self employed persons and even bankruptcies.

2. Mortgage Brokers Represent You

As your representative, brokers find the absolute best mortgage solution for you. We don't work for lenders or banks, your best interest is a mortgage broker's number one priority!

3. Market Knowledge

Mortgage brokers have the training, experience and local market knowledge that will help customize the best mortgage solution for you while helping you understand the mortgage process - which can be complicated for some.

4. Mortgage Focus

Mortgage brokers search for the best combination of pricing, interest rates, discounts, conditions and overall value for you. Your focus is our focus.

5. It's A FREE Service!!!!!!

Mortgage brokers are not paid by you. They are compensated for their services by receiving a commission from the lender. We don't get paid until you have the mortgage solution that works best for you!

These are just a few reasons why it makes sense to choose a mortgage broker for your next home purchase, mortgage renewal or to help consolidate current debt. Contact me today to ask about the full benefits of having a mortgage broker do all the leg work for you!

Thinking Of Buying A New Home?

Use this calculator to get an idea of what you'll be able to afford:

A - Your annual salary (before deductions/Line 150 on your tax return)

$_____________

B - Your spouse's anual salary (if applicable)

$_____________

C - Other income (rental, dividends, etc.)

$_____________

D - Add total income (A+B+C)

$_____________ (= D)

E - Multiply D (total income) by 3.3 to get approxamite size mortgage you can afford.

$_____________ (D x 3.3)

$____________ (= E)

F - For home purchases, determine the money you have for down payment

$ _____________

G - Add your amount of potential mortgage to your own payment, to help you asses the home purchase price you can afford.

$_____________ (E + F)



***NOTE - any fixed expenses may reduce the amount you can afford

~ The Right Mortgage For You ~

FIXED OR VARIABLE INTEREST RATE?

In very broad terms, home buyers who chose a fixed interest rate mortgage take comfort in the knowledge that their interest rate is fixed (or "locked in") for the the full term of the mortgage and their principal and interest payments will remain constant for a specific period of time. But not all fixed interest rate mortgage customers are the same. Some prefer to choose a very short term for their mortgage (as short as six months) in order to get a lower interest rate. Others are more comfortable choosing longer terms, such as two or five years. What they all have in common is the need for something more predictable.

Home buyers who choose a variable interest rate are usually more apt to accept a little risk in hopes of lowering their overall cost of borrowing. With most variable (or changing) interest rate mortgages, your interest rate may vary from month to month. Variable rate mortgages have typically had lower interest rates than long-term fixed interest rate mortgages. When interest rates change, the payment amount remains the same. However, the proportionate amount that is applied toward interest and principal will change. If interest rates go down, more of the mortgage payment is applied to the principal balance owing. This can help a homeowner pay off the principal portion of a mortgage faster.

NO DOWN PAYMENT?

Many Canadians find themselves able to afford the cost of owning their own homes but not having enough of a down payment to make a purchase.

As mortgage brokers, we can offer you the opportunity to purchase a new home, without the strain of having to come up with a down payment. If a lack of a down payment is keeping you from buying a home - you should talk to a mortgage broker immediately about their "No down payment mortgage" options. If you can cover your closing costs, this mortgage solution may be exactly what you've been looking for! We can help you buy the home you want, with the savings you have now. Contact me to find out how the "No down payment mortgage" may be right for you!

RENEWING YOUR MORTGAGE

Although a mortgage is one of their most important financial decisions, many Canadians don't put as much thought into renewing their mortgage as they should. We, however, see your mortgage renewal as a unique opportunity to make sure it reflects your current needs. Are you considering paying off your high-interest credit card debt or loans, or are you interested in financing a home renovation, dream vacation, recreational or investment property? Contact a mortgage broker today to discuss how you can save money on your next re-finance.

SHOULD YOU USE YOUR RRSPs?

Today, about 50% of first-time home buyers use their RRSP savings to help finance a down payment. With the federal government's Home Buyers' Plan, you can use up to $20,000 in RRSP savings ($40,000 for a couple) to help pay for your down payment on your first home. You then have 15 years to repay your RRSP.
To qualify, the RRSP funds you're using must be on deposit for at least 90 days. You'll also need a signed agreement to buy a qualifying home.
Even if you have already saved for your down payment, it may make good financial sense to access your savings through a special home buyers plan. For example, if you had already saved $20,000 for a down payment - and assuming you still had enough "contribution room" in your RRSP for a contribution of that amount you could move your savings into a registered investment at least 90 days before your closing date. Then, simply withdraw the money through the a special home buyer's plan.
The advantage? Your $20,000 RRSP contribution will count as a tax deduction this year. Use any tax refund you receive to repay the RRSP or other expenses related to buying your home.
While using your RRSP for a down payment may help you buy a home sooner, it can also mean missing out on some tax-sheltered growth. So be sure to ask your mortgage broker whether this strategy makes sense for you, given your personal financial situation.

Every situation is unique and there are different options for each case - that's why mortgage brokers are there for you as a free service!