FORECLOSURE, BANKRUPTCY, CONSUMER PROPOSAL & CREDIT COUNSELING

Mortgage Tips Darick Battaglia 17 Jul

The Canadian Bankers Association’s latest report on mortgage delinquency shows that Saskatchewan has the highest per capita of all the provinces. The national average shows that .24% of home owners are having difficulty paying their mortgage. Saskatchewan is more than triple that at .80% with next in line Atlantic Canada at .51% and then Alberta at .46%. At first glance these numbers seem relatively small until you note the fine print that “delinquency” in this report only represents those homeowners that are more than 3 months behind.

I thought that I would take the time to go over the mortgage ramifications of foreclosure, bankruptcy, consumer proposal and credit counseling.

Foreclosure
This is when the mortgage has gone unpaid to the point that the bank is forced to take back the security for the mortgage which is the home. First of all, the bank doesn’t want to have to do this. Non-payment of the mortgage for an extended period of time forces their hand. The foreclosure process is different in every province. Saskatchewan has the most difficult foreclosure process for the bank and gives the homeowner many chances to catch up and stop it. This process can take months to work through for the bank to take possession of the home to be able to sell it to recover their losses. The long-term effect on a client that goes through foreclosure is permanent. A record of the foreclosure is placed on each clients’ credit report. Unlike a bankruptcy or consumer proposal that are eventually removed, the foreclosure stays on their credit report for life. What that will mean is that when they want to eventually purchase a home again, they will more than likely require at least 20% down payment.

Bankruptcy & Consumer Proposal
Both bankruptcy and consumer proposal are administered through a licensed insolvency trustee. Typically, every creditor that you have debt with will participate in the process. This includes student loans and arrears with Canada Revenue Agency.
If you have gone through either of these insolvency actions, the mortgage industry sees them as them as the same thing. What is most important after either of those is to get back up on the credit horse and walk before you run. Canadians that swear off debt of any kind after insolvency are better known as lifelong renters. Never having a credit card or loan again is certainly fine until you apply for a mortgage to buy a home. Banks and mortgage lenders want to see that you can walk with small amounts of credit before running with hundreds of thousands in a mortgage. Once discharged from either a bankruptcy or consumer proposal obtaining a credit card should be your very first step. The next thing to do is advise both Canadian credit reporting agencies that you were discharged. You may be required to send documents related to the insolvency. It is a good idea to keep all your paper work from this process in a safe place for at least 10 years.

Credit Counseling
Credit counselling could be a viable option for those that are keeping up with their debt payments but need help in making a household budget to get out of debt faster. For those that have fallen behind on their debts and 1 or more have gone into collection status, credit counselling may not be the answer. There are 2 distinct differences between working with a credit counselor and a licensed insolvency trustee.
1. Student loans and debts to Canada Revenue Agency cannot be addressed within credit counseling.
2. If the credit counseling requires debt negotiations and/or payment arrangements, some of your creditors may decline to participate. This leaves debts outside of the credit counseling arrangement that you must address on your own. It’s a little like having 2 flat tires on your car and only 1 spare. The spare may work well to fix one flat but your car still isn’t roadworthy.

Courtesy of Kevin Carlson – AMP – DLC The Mortgage Firm based in Regina, SK.

5 WAYS YOU COULD USE A CHIP REVERSE MORTGAGE

Mortgage Tips Darick Battaglia 12 Jul

Reverse mortgages are continuing to grow as a retirement solution for Canadians 55+. Homeowners 55+ are unlocking their home equity for tax-free funds that improve their cashflow and pay-off higher interest loans. Consider your own financial needs. Do any of these 5 common scenarios sound familiar?

1) You have missed a payment/made a late payment.
Credit card payments can become a vicious cycle; you make monthly interest payments and elongate the process of chipping away at that debt. Alleviate the stress of credit card debt by consolidating smaller loans with a reverse mortgage at a much lower interest rate. By consolidating your debt with a reverse mortgage, you can eliminate the stress of having to make monthly payments towards your loan and in turn, free up your monthly income.

2) You have asked to skip a payment or are accessing your investments earlier than you’d like.
If your debt has led to missing payments or touching your RRIF or retirement accounts, consider using a reverse mortgage to unlock up to 55% of your home equity. This way you can pay off debts while your investments keep working for you.

3) You want to start crossing things off your bucket list, yet can’t afford to.
Maybe your dream is to purchase a second home like a cottage, take a vacation, or even just dine out or attend the theatre regularly. A reverse mortgage can improve your retirement lifestyle by supplementing your monthly income without affecting your OAS and pension.

4) You want to financially assist your aging parents/kids/grandkids.
As the sandwich generation, you’re caring both for kids and aging parents. That can place huge financial stress on a household. A reverse mortgage can give both you and your aging parents financial independence and the ability to help your kids/grandkids pay for their education or even assist with a down payment for their home.

5) You are facing unexpected expenses.
Maybe it’s a leaky roof or a flood in your basement. Or you might have to renovate your home, allowing you to stay in your home long term. A reverse mortgage gives you quick access funds to pay for unplanned expenses without worrying about making any payments until you move or decide to sell your home.

If any of the above examples resonate with you, the CHIP Reverse Mortgage from HomeEquity Bank could be a great solution. Choose to receive funds as a lump sum or a monthly advance, depending on your needs. Your DLC Mortgage Broker can tell you more!

Courtesy of Eric Bisaillon
HomeEquity Bank – Executive Vice President, Referred Sales and Partnerships

20 TERMS THAT HOMEBUYERS NEED TO KNOW

Mortgage Tips Darick Battaglia 10 Jul

Buying a home is one of the most important financial decisions you will make.

It’s common for a first-time homebuyer to be overwhelmed when it comes to real estate industry jargon, so this BLOG is to help make some of the jargon understandable.

To help you understand the process and have confidence in your choices, check out the following common terms you will encounter during the homebuying process.

1. Amortization – “Life of the mortgage” The process of paying off a debt by making regular installment payments over a set period of time, at the end of which the loan balance is zero. Typical amortizations are 25 years or if you have over 20% down payment – 30 years.

2. Appraisal – An estimate of the current market value of a home. A property is appraised to know the amount of money that a lender is willing to lend for a buyer to buy a particular property. If the appraised amount is less than the asking price for the property, then that piece of real estate might be overpriced. In this case, the lender will refuse to finance the purchase. Appraisals are designed to protect both the lender and buyer. The lender will not get stuck with a property that is less than the money lent, and the buyer will avoid paying too much for the property.

3. Closing Costs – Costs you need to have available in addition to the purchase price of your home. Closing costs can include: legal fees, taxes (GST, HST, Property Transfer Tax (PTT) etc.), transfer fees, disbursements and are payable on closing day. They can range from 1.5% to 4% of a home’s selling price.

4. Co-Signer – A person that signs a credit application with another person, agreeing to be equally responsible for the repayment of the loan.

5. Down Payment – The portion of the home price that is NOT financed by the mortgage loan. The buying typically pays the down payment from their own resources (or other eligible sources) to secure a mortgage.

6. Equity – The difference between the price a home could be sold for and the total debts registered against it (i.e. mortgage). Equity usually increases as the mortgage is reduced by regular payments. Rising home prices and home improvements may also increase the equity in the property.

7. Fixed Interest Rate – a fixed mortgage interest rate is locked-in and will not increase for the term of the mortgage.

8. Gross Debt Service Ratio (GDS) and Total Debt Service Ratio (TDS)
a) GDS – Typically mortgage lenders only want you spending a maximum 35-39% of your gross income on your mortgage (principle & interest), property taxes, heat and 50% of your strata fees.
b) TDS – typically, lenders want you spending a maximum 39-44% of your gross income on your GDS – PLUS any other debt obligations you have (credit card debt, car payments, lines of credit & loans).

9. High-ratio mortgage / Conventional Mortgage – a high ratio mortgage is a mortgage loan higher than 80% of the lending value of the home. A conventional mortgage is when you have more than 20% down payment. In Canada, if you put less than 20% down payment, you must have Mortgage Default Insurance (see below) and your mortgage affordability (GDS & TDS) is “stress tested” with the Bank of Canada’s qualifying rate (currently 4.64%).

10. Interest Rate – This is the monthly principal and interest payment rate.

11. Mortgage – A legal document that pledges property to a lender as security for the repayment of the loan. The term is also used to refer to the loan itself.

12. Mortgage Broker – A professional who works with many different lenders to find a mortgage that best suits the needs of the borrower.

13. Mortgage Default Insurance – Is required for mortgage loans with less than a 20% down payment and is available from Canadian Mortgage & Housing Corp. (CMHC) or 2 other private companies. This insurance protects the lender in case you are unable to fulfill your financial obligations regarding the mortgage.

14. Open / Closed Mortgage
a) An open mortgage is a flexible mortgage that allows you to pay off your mortgage in part or in full before the end of its term, because of the flexibility the interest rates are higher.
b) Closed mortgages typically cannot be paid off in whole or in part before the end of its term. Some lenders allow for a partial prepayment of a closed mortgage by increasing the mortgage payment or a lump sum prepayment. If you try and “break your mortgage” or if any prepayments are made above the stipulated allowance the lender allows, a penalty will be charged.

15. Pre-Approval – A lender commits to lend to a potential borrower a fixed loan amount based on a completed loan application, credit reports, debt, savings and has been reviewed by an underwriter. The commitment remains as long as the borrower still meets the qualification requirements at the time of purchase. This does not guaranty a loan until the property has passed inspections underwriting guidelines.

16. Refinance – Refinancing is the process of replacing an existing mortgage with a new one by paying off the existing debt with a new, loan under different terms.

17. Term (Mortgage) – Length of time that the contract with your mortgage including interest rate is fixed (typically 5 years).

18. Title – The documented evidence that a person or organization has legal ownership of real property.

19. Title Insurance – Insurance against losses or damages that could occur because of anything that affects the title to a property. Insurance Title insurance is issued by a Title Company to insure the borrower against errors in the title to your property.

20. Variable Rate Mortgage or Adjustable Rate Mortgage (ARM) – A variable mortgage interest rate is based on the Bank of Canada rate and can fluctuate based on market conditions, the Canadian economy. A mortgage loan with an interest rate that is subject to change and is not fixed at the same level for the life of the loan. These types of loans usually start off with a lower interest rate but can subject the borrower to payment uncertainty.

Courtesy of Kelly Hudson – AMP – DLC Canadian Mortgage Experts based in Richmond, BC

5 MORTGAGE TIPS TO HELP YOU AFFORD A HOME

Mortgage Tips Darick Battaglia 9 Jul

Buying a home is more difficult now than ever—and this is not news to anyone! No matter where you live, the recent stress testing measures, increase in housing prices in major cities, and continued increase of the cost of living all combine to make home ownership a daunting task. But we do want to offer some help and solutions for young families looking to get into the market as we truly to believe it’s not impossible and have helped many families do just that!

1. Take a step outside of the downtown core. Typically, property right in the heart of the city is more expensive due to the location and the continued demand. Stepping out to one of the outlying suburban areas can offer more affordable options and can also lend you with an increased inventory of properties within your price point.
2. Consider finding a rent to own property. A Rent to Own (RTO) property can allow you to rent a property while subsequently saving up for a down payment.
3. Talk to a mortgage broker. Speaking with a broker and going through a pre-qualification process can help you by allowing you to see the areas in which you will need to improve to help make you more attractive to lenders. This can include things such as:
a. Increasing your credit score
b. Decreasing your overall debt or consolidating your current debt.
c. Looking at increasing your overall income options and the ways in which you can do that.
4. Consider using a co-signor(s) for your mortgage to start with. One solution we have found that works well for certain clients is having a co-signor(s) on the mortgage with a planned exit strategy to remove them once the client’s personal income increases or they are able to qualify for the mortgage on your own (ex. By paying down debts and/or improving their credit score). This solution is situation specific, so speak to your broker for more details.
5. Save, Save, and Save some more. We know this is common sense but speaking with a financial advisor can help show you ways in which you can save and make your money work for you. We can happily recommend a few as can your mortgage broker.

We know that the state of real estate can seem overwhelming and depressing at times. Keep in mind though that not all hope is lost, and you do have options available to you! Remember the “dream” of the white picket fence detached home is not for everyone…now more than ever multi-family properties such as townhouses and condos are offering more and more amenities and beautiful properties for less. The bottom line is considering all your options and work with a dedicated broker who can help you reach your goals—whatever they might be!

Courtesy of Geoff Lee, AMP, DLC GLM Mortgage Group based in Vancouver, BC

TECHNOLOGY IN MORTGAGES AND REAL ESTATE

Mortgage Tips Darick Battaglia 4 Jul

Technology is already playing a huge role in the mortgage industry. In the past, mortgage applications had to be physically taken by hand and faxed in (what’s fax anyways?!)… It may soon by possible, with technology’s help, for borrowers to be able to fill out their own application and send it, along with all supporting documentation, straight to lenders without a mortgage professional’s help – kind of scary.

On the Realtor side, there is DocuSign, Realtor.ca, Zillow, and a host of other technology driven solutions that help Realtors be more efficient in their business. However, just like in mortgages, it’s coming to a point where buyers and sellers may see value in going to discount brokerages such as Redfin.

Let’s first look at the mortgage side.

Quicken Loans’ Rocket Mortgage in the States started out as an online-only mortgage application tool. The promise is faster service, with little headache, and everything done “from the comfort of your own home.”

In Canada, Scotiabank just rolled out their eHOME Mortgage application. RBC has had a Pre-Qualification Application for a year and TD rolled out their Digital Mortgage Application in early 2019.

Our own parent mortgage company, Dominion Lending Centres, brought out their “My Mortgage Toolbox” application for Mortgage Brokers to use, and other Broker houses are fast on the trail. All lenders are trying to capitalize on a Millennial’s and Generation Z’s comfort level with providing their personal information to a computer system.

The promise with all of these digital tools is to make a borrower’s mortgage journey easier, and with how technology is progressing, this digital experience is going to keep getting better and better.

Unfortunately, as with any process change, problems arise…

The first and most glaring issue with the digital mortgage experience is that because mortgages are complex, with timelines to follow and anxiety to manage, borrowers are continually requesting human interaction to answer their questions. Rocket Mortgage’s own website now advertises being able to chat online with a specialist right up front.

Secondly, although digital applications promise speed and ease of use, all mortgage files still have to have “eyes” on an application. We’re not there yet (nor will we be for the foreseeable future) where humans do not have to touch mortgage applications for final approval. This human requirement means that a mortgage file must wait in queue to be approved.

Lastly, if any file has the slightest hiccough and doesn’t conform to exactly what the computer systems need to see, an expert will have to be called in during the process to troubleshoot. As an aside, the “experts” who look at these files are salaried individuals; more on that later.

All-in-all, technology alone is not changing the mortgage market.

On the Realtor side, the biggest issue with using Redfin, or relying too much on technology driven companies, is that the Realtors who work there are most likely going to be sub-par… Yeah, I said it… Just like 1% and 2% Realty, if someone is working for half the commission, they are, by nature, not going to be as good or competent as someone who prides themselves on working for their due.

Additionally, I firmly believe that in life, we get what we pay for. The best advisers and salespeople will gravitate to where they are better compensated. Salaried individuals and discount mortgage and real estate professionals will invariably move to become independent if they are any good. If they are just so-so, bad at their jobs, or are just happy to provide the bare minimum in service, they stay and let someone else hunt for business – see the “more sinister” reason for technology and apps below.

Technology as a Benefit:
There are ways that technology is being used for the benefit of borrowers.

The first is that in our hyper connected world, a borrower’s credit, income, and down payment can all be verified at the touch of a button. Mortgage Brokers can already pull someone’s credit bureau in seconds, and there are also services to allow us to get 3-months of bank statements for down payment verification with a client’s permission. The last step is to have our systems validate income by way of a national employer registry or by other means. In the States, this is done through their IRS and the credit bureau companies and it will come to Canada in the future. All of this means that a borrower can get firm approvals more efficiently (not having to download bank statements, get employment letters, etc.) and it will allow the professionals more time to provide advice and cater to the client’s needs.

The second benefit to borrowers is that the new applications are now able to receive documentation, communicate on application status in real time, and much more, all in one easy-to-use platform. It’s incumbent on the professional to make sure that their technologies and systems are properly integrated to provide a seamless, but better, mortgage experience for their clients.

To recap, technology will be playing a larger and larger role in how mortgages are obtained in the years to come, and in order to thrive in the 2020s, Mortgage Brokers and Realtors are going to have to use technology to the best of their abilities. The marriage between human interaction (building rapport) and providing a seamless experience through leveraging technology should dominate our thinking!

Courtesy of Eitan Pinsky – AMP – DLC Origin Mortgages based in Vancouver, BC

HOW TO GET A 5% DOWN PAYMENT FOR A $500,000 PURCHASE

Mortgage Tips Darick Battaglia 21 Jun

We have seen a return of the buyers’ market and many people are asking, how long will this last? While some renters without a down payment might be asking, how can o put a plan in place to own?

With the cost of living so high, and student debts coming out of school, many consumers question how they’re going to come up with a down payment for a home.

Here are some ways you can get it done.

Decide how much you can save and pick a plan that works for you: a) A 36-month plan saving $700/month will get you $25,200 (you will need about $2,000 for closing costs if you qualify as a first-time homebuyer) b) A 24-month plan savings $600/month for $14,400
Get a gift from a family member
Borrow the down payment, or a portion (which may also help with credit building)
A combination of all of the above
For those of you that want to partner with government for down payment and profit of home ownership, a new government program can be a helpful tool provided it stays past the October election. https://www.cmhc-schl.gc.ca/en/nhs/shared-equity-mortgage-provider-fund

You might me reading this and thinking, ‘yeah right, that is not reality.’ Or for some people, you know it might just be exactly what will help them move forward.

Perhaps you have graduated from school and your parents don’t charge you rent. Imagine if you could put one of your paycheques every month aside and try living within those means and budgeting accordingly.

Or say you have a partner and one of you just started work in a specific trade and the other’s paycheque went towards the “home purchase plan.”

Also, if you are within the qualifications to buy, you will be earning a combined household income of $125,000-plus per year, so taking those funds right from your paycheque into your RRSP will have additional tax benefits too where you can use the refund for closing costs or amp up your down payment.

Here’s an example of how this worked for a lab technician and chef with a two-year old daughter.

They did a combination plan as they moved up to Canada from the U.S. two years ago, both got stable jobs and had no outside debt. They were paying $1700 a month rent. They used a $10,000 line of credit they took to put into investment to help establish Canadian credit. After getting the line of credit and placing it into a safe investment, they:

Set up an RRSP and placed $600 a month on the loan and $700 a month into their RRSP.
Now this family is used to having a cash outlay of $3,000 per month which will be the actual expectation they have for when they buy a home.
With this plan, they take a mortgage for a test drive, save money on taxes, establish a great credit score and worked away toward their goal.
Are there holes in the plan? Yes, home prices may go up, there was interest on the loan they paid and they may have to adjust or modify their plan. Their employment can change, however, this practice will only benefit them no matter what life brings their way and there is a sense of empowerment when you have a plan and can see how you can get there.

Do you or someone you care about want to know how they can be set up with a multifaceted plan to help them move forward with a goal of owning a home?

Courtesy of Angela Calla – AMP – DLC Angela Calla Mortgage Team based in Port Coquitlam, BC

MORTGAGE BROKER HISTORY AND MORTGAGE APPLICATIONS

Mortgage Tips Darick Battaglia 20 Jun

In the past, we had banks (bank as a catch all for credit unions and trust companies) and Mortgage Brokers.

Writing mortgage applications is extremely difficult; there are a lot of moving parts in a mortgage. Because of this, banks employ mortgage specialists whose sole role is to provide mortgage advice.

On the other hand, previous to 20 years ago, a Mortgage Broker’s main job was to get financing when a bank declined a borrower’s application. Basically, Mortgage Brokers were a borrower’s last resort: “if you can’t get financing from the bank (RBC, TD, Scotia, etc.), come speak to me.” This is generally why we see older generations having never used mortgage brokers – they didn’t have a need.

But, there have been many changes over the decades. In most cases, Mortgage Brokers can provide better interest rates for most mortgage applications. This is specifically due to wholesale lenders.

But, when it comes to prime (bank or Monoline Lenders) financing, Mortgage Brokers find they are sometimes at a disadvantage when banks make “exceptions” to regulatory mortgage rules. Mortgage Brokers are sometimes held to a higher standard because all of our files are picked at with a fine-toothed comb.

For example: in 2016/7 CIBC, which does not procure mortgages from Mortgage Brokers, underwent a mortgage audit. The regulator found that every single one of the 50 mortgages audited failed their audit… and CIBC hardly even got a slap on the wrist. As an side, remember when banks would provide financing for foreign students with no income? Yeah… that was primarily CIBC!

Notwithstanding, Mortgage Brokers (by definition) have access to many different types of lenders and are not beholden to the employer institution. Non-prime lenders can lean more heavily on a specific property and less so on the strict guidelines that the government requires.

Long story short, Mortgages Brokers have access to many different lenders, but in come cases, a bank specialist can get something done that a Mortgage Broker cannot do due to the bending mortgage rules. Notwithstanding, in 99% of cases, if all rules are followed (which are being more strictly enforced since 2018), Mortgage Brokers have more access and more complete solutions to bank specialists.

Courtesy of Eitan Pinsky – AMP – DLC Origin Mortgages based in Vancouver, BC

99 YEAR MORTGAGES AND THE POWER OF AMORTIZATION

Mortgage Tips Darick Battaglia 13 Jun

Back in the late 80’s, the Japanese housing market came to a grinding halt. Homes were no longer affordable for your average Japanese consumer. The government came to the rescue with a novel idea: 99 year mortgages. You could buy a house, pay lower more affordable payments, your son or daughter would take over and pay the mortgage down and finally your grandchild at some time close to retirement age would finally pay off your mortgage.

Who would want to do this? This was a short term solution. In 2007, we had 40-year amortized mortgages which allowed a great number of people to buy homes who normally would have continued to rent. This created a housing boom, but it made the banks nervous and terms were cut back to 35 years, then 30 and finally back to where they were in 2005 at 25 years. While longer amortizations mean lower monthly payments, the flip side is that you end up paying a lot more interest over time.

Mortgage professionals use amortization as a tool to help their clients at various stages in their lives. Often we use the maximum 25 years to help people get into their first homes. The idea is to get them into home ownership regardless of the cost. Later when they renew we often suggest a shorter amortization if it’s possible.
For example, after paying down a mortgage for 5 years, a couple with a $300,000 mortgage renewing today would be offered a 20-year amortized mortgage with monthly payments of $1659. In 5 years the couple will have paid $40,356 in interest $59,214 in principal and have a balance of $240,785 left on the mortgage.
If the amortization was shortened to 17 years the payment would go up to $1,874.95, an increase of $215.95. but at the end of 5 years they would have paid $39,365 in interest, $73,131 in principal and have a balance of $226,868.11. In addition, they would now only have 12 years instead of 13 years on their mortgage.

Now, if they are at a stage in life where their twins are going to be going to university or if they need to build a granny suite for aging parents, they may need to lower monthly payments in order to pay for renovations. If they have 20% equity in their home, they could extend their amortization to 30 or even 35 years with some lenders.
Now their monthly payment drops to $1,260 with a 30 year amortization.
And it drops to $1,149 with a 35 year amortization.

Amortization is only one tool that your Dominion Lending Centres mortgage professional can use to save you interest, help you to pay off your mortgage quicker or to lower your mortgage payments. Be sure to call and ask them for help.

Courtesy of David Cooke – AMP – DLC Jencor Mortgages in Calgary, AB.

WHO REALLY SETS INTEREST RATES?

Mortgage Tips Darick Battaglia 12 Jun

A recent article in the Huffington Post addressed the pricing strategy for the Big Six Banks, BMO, CIBC, National Bank, RBC, Scotia and TD and who really sets interest rates. RBC announcing a rate drop in January and the other banks soon followed. For consumers the banks are seen as leaders of the pack and everyone waits to see what else they will do. The reality is the bank rates were higher than the market for some time.

The Huffington article states “Canadians pay attention to the big guys, however, because they’re either too comfortable to make a change or simply not aware they’re being taken for a ride. The banks have a 90-per-cent stranglehold on the Canadian mortgage market and we’ve been slow to start paying attention to the alternative — often cheaper — options out there.”

The drop in rates was a measure to bring bank rates in line with the non-bank lenders who have already been offering lower pricing. The only difference is the banks have high market share of the business and more profit each year so they can afford to spend money on media and other forms of advertising. The media attention helps them to capture more business with a rate drop after a lag time of passing on higher rates to consumers. The informed consumer working with an independent mortgage broker will already know the market and what mortgage product is best for their needs.

However, interest rates are not the only consideration when choosing a mortgage. Each time you make a purchase, renew your mortgage or take equity out to renovate, invest or other reasons, it is always best to consult with your mortgage broker for a review.

One of the big factors is the cost to exit that mortgage before maturity. Life happens. There are costs to breaking the contract early in the event of sale, marital break-up, death or need to consolidate other debts. Bank penalties for early payout are higher than non-bank penalties by a factor of 4 times. By reviewing your needs with your Dominion Lending Centres mortgage broker, we can discuss all of the options available from lenders including bank and non-bank, to ensure you are making an informed decision.

Courtesy of Pauline Tonkin – AMP – DLC Innovative Mortgage Solutions based in Coquitlam, BC

3 STEPS TO TAKE YOU FROM PRE-APPROVAL TO GETTING THE KEYS

Mortgage Tips Darick Battaglia 11 Jun

Picture this: You’ve finally been able to put away enough for a down-payment on your dream home. It’s taken you five years of diligent saving, but you did it! You have also been diligently working on improving your credit score and paying off debts and are at a place of financial stability. So, first of all, KUDOS TO YOU! Second…now what do you do? Here are the three steps that will take you from browsing new homes to getting the keys to your new place.

STEP 1: PRE-APPROVAL
This should actually be the step BEFORE house hunting. Visiting your mortgage broker to get pre-approved is the first step anyone looking to buy a home should do. When you meet with your broker for the first time they will:
• Have you fill out an application (or you might be able to fill out one online)
• Pull your credit
• Determine what your maximum purchase price will be.

Be aware that you will also be asked for additional information when you visit your broker to apply, including a letter of employment/pay stub, down payment verification, two years notice of assessment and/or T4’s, a void cheque, and a number of other potential documents.
Once you are pre-approved it’s house hunting time for you! The benefit of having this done BEFORE you start looking is that you can work with your realtor to find properties within that price range.
When you do find just the right home for you, it’s on to step two.

STEP 2: APPROVAL
If you were able to provide the bulk of the paperwork for your pre-approval, then it will be smooth sailing from here. You may have to supply a few pieces of updated information but otherwise, it’s up to the lender to do the hard work at this point.
Your application will be re-assessed, and the lender will take a look at the property you are purchasing. Once they confirm that it aligns with the guidelines they have laid out for your loan, then it is sent off to the mortgage default insurer for approval. At this point, make sure that you do not remove the financing condition until all the lender conditions are met.
Now that you have final sign-off and are waiting for the final conditions to be met, it’s on to step three.

STEP 3: FINAL STEPS
Your broker will notify you once the conditions have all been met, and the lender will send the paperwork over to the Lawyer’s office. The lawyer will take a few days to go through the mortgage and prepare it for your final sign off. When you go, you will be asked to present:
• Void Cheque
• Two forms of identification
• Balance of the down payment in the form of a bank draft

On the day of funding, the lender will send the funds to the lawyer who sends them to the seller’s lawyer who upon receiving the funds will give you the all clear.
All that’s left is to hand you the keys to your new home!
As one final step, keep asking questions at each stage of the mortgage process. You should check in with your Dominion Lending Centres mortgage broker if you have any questions along the way. They are happy to guide you through the process of not only getting a mortgage but also having a mortgage too!

Courtesy of Geoff Lee – AMP – DLC GLM Mortgage Group based in Vancouver, BC.