I have something shocking to tell you. Mortgage brokers are human. Gasp!! But wait, so are lawyers, lenders, legal assistants and everyone else who is involved with your mortgage transaction. Why do I choose to draw attention to this and ruin your day you ask? It is so you will have a checklist of the things to confirm after the mortgage transaction closes so you are not gobsmacked down the road by a nasty surprise.

1. Property taxes– Even if you are certain that you indicated your preference to the mortgage specialist and the lawyer and anyone else who would listen, you really should take a minute to confirm just who is paying them. If you have changed from the Tax Installment Payment Plan (TIPPS) to having the lender collect them on your behalf, then you may be facing a tax shortfall at the end of the year which will now require you to double on the tax portion of the payment to make up the difference.

2. Payment Frequency – There is a misconception that choosing the biweekly or weekly frequency will pay your mortgage down faster and this is very untrue. If your goal is to pay your mortgage down quickly, you must choose the accelerated option for either to get the benefit.

Let’s go over the numbers real quick. Based on a $300,000 mortgage with a 25 year am and a rate of 2.49%.

Monthly $1970.74 – 25 years to repay

Biweekly $619.23 – 25 years

Biweekly accelerated $671.20 – 22.4 years

Weekly $309.54 – 25 years

Weekly accelerated $335.60 – 22.4 years

As you can see, the accelerated payments are higher, which means more money goes directly to the balance of the mortgage. The benefit of the weekly or biweekly non-accelerated is mainly that it would line up with your pay schedule for the payments.

3. Mailing Address – If you live in one of the smaller areas and your mailing address is different than your home address, you should make sure your lender knows so you will receive your annual statement and other communication.

4. Phone number – Again, make sure the lender has your new number if you have moved to a new community.

5. Online Mortgage Systems – Most lenders now have an online system where you can opt to make extra payments or just check your balance. Something kind of nice about managing your mortgage on a Saturday in your pj’s while sipping your coffee.

All of the above can be handled in one phone call. That’s right – one! Call your lender a week or two after your mortgage closes to allow their system to register your new mortgage. Some lenders send a nice welcome letter after funding which will outline all of the above in which case all you have to do is take a minute to review. Of course, here at Dominion Lending Centres, we can help you with your mortgage, by getting organized for all these details surrounding your mortgage. Give us a call!

Courtesy of Pam Pikkart, AMP – Regional Mortgage Group 

For those looking to purchase rental properties, the minimum down payment has historically been at 20% for some time, and so it remains. In years gone by, this down payment money had to be proven to have originated from the buyers own resources, it could not be gifted.

In the case of an owner occupied purchase, the down payment can be (and often is) gifted from a directly related family member.

The big news from one of our key lenders at the start of July was an announcement that they would now allow gifted down payment (only from a related family member) to be applied to rental property purchases as well.

The credit score is a key focus with applicants scoring 740 and higher being eligible for 80% financing on investment properties with no mortgage insurance premium, no fees, and no higher than market rates.

For those with a credit score below 740, the down payment must be increased to 25% in order to avoid the mortgage insurance premium, although if the client opts to pay the mortgage insurance premium, then 80% financing is possible.

The 740 credit score relates only to the down payment amount, even for clients with a score under 740 the gifted option remains available.

This is a program designed to enable the smaller investor to pool resources with other family members and get into the Real Estate market. It opens the door of opportunity for many who have otherwise been locked out of buying additional properties.

Contact me for full details on this exciting new program.

Article courtesy of Dustan Woodhouse, AMP – DLC Canadian Mortgage Experts 

Most banks boast a higher than 90% renewal rate on their mortgages (some even higher than 95%). Since it costs them a lot more money to acquire a new client vs. keeping an existing one, banks love the savings of a simple renewal. So you would think that they would offer you the best rate up front on your renewal as it’ll save them money in the long run? Well…not necessarily.

With renewal rates being as high as they are, there is not much incentive for banks to give their clients the best rates up front. They know that most people will stay as they know it’s easier to just sign a form as opposed to applying for a mortgage at another bank. Hence the dreaded renewal letter that gets mailed out automatically prior to your renewal date.

The banks would love nothing more than for you to just pick the term, sign the document, and send it back to them. It costs them relatively little to process it and they don’t have to follow up with you after that (other than sending you a new copy of the agreement).

Since the renewal documents are printed automatically (and yes they may include a “preferred rate” which makes it even more tempting to sign) they don’t factor in any rate specials that may occur after they’re printed.

Recently a client’s mortgage was coming up for renewal and they received the automatic renewal letter. Just calling the 1-800 number saved them an extra .10%, which on a $500,000 mortgage was an extra $500 per year in interest. Not bad for a 5 min phone call.

There are also some important questions to answer:

-are you planning on selling your home anytime over the next 5 years?

-do you need to access any equity from your home for renovations, children’s education, etc.

-what are your long term goals with the property?

These are important questions to ask as they help us suggest the right product for you.

So it’s important to treat your renewal as if you’re obtaining a new mortgage and spend some time researching your options. When I worked at the bank I was always shocked at the number of people that just signed the form and sent it back.

That’s why (in addition to the financial institution where your mortgage is now) you need to contact your Dominion Lending Centres Mortgage Broker and have them give you an unbiased view of which mortgage product is right for you, as they have access to hundreds of different financial institutions.

Courtesy of Joe Cutura, AMP – DLC Origin 

With 80% loan-to-value being the maximum you are now able to refinance your property, property for values increasing at a slower rate, and 25 years being the maximum amortization on high ratio deals, it’s not as easy as it once was to simply refinance and pull some money out of a home when it’s time for some upgrades.

In addition to the above, it seems that many of the new homes being developed lack a decent sized yard for the average family to live in and enjoy. Many of my clients are facing the dilemma of buying a new home with all the bells and whistles, but a lackluster yard or, purchase an older home with a yard that their kids and pets can enjoy, but face the reality of having to upgrade or renovate the home they purchase.

The Purchase Plus Improvements mortgage is a great option for many people in this situation. They get credit for the increased home value right off the bat, they get their money at a great interest rate, and they get to complete the upgrades right away and live in the home they really want!

Here’s how the program works:

* The amount allowed for improvements is typically 10% -20% of the purchase price, or up to $40,000 maximum. The money is to be used for “improvements” or “upgrades”, not necessary repairs like leaks or structure issues. It also must be for something that adds value to the home, not a chattel like appliances.

* You need to get quotes for the cost of the improvements that you wish to complete. Add the amount of the quote(s) to the purchase price, and this becomes the “value” of the home that the lender considers. The down payment is now based on this new higher value as well.

* The mortgage is funded based on the contractual price, but the money to be used for improvements is held at the solicitor’s office until the work is complete.

* The work can be done by yourself or a company/contractor, but sweat labor is not something that can be reimbursed for. If you do the work yourself, only the cost of the materials is released. If a contractor or company does the work, simply provide the invoice and they will be reimbursed directly for the full amount.

* An inspection report from an appraiser is required when all is done so the lender can confirm that the said work was completed and is of good quality.

* If the final costs end up being less than expected, the left over money is applied back against the mortgage.

This program is available at the best rates, both fixed and variable, and may help to make it easier for you to decide which home is best for your family.

Think this program might work for you or someone you know? Call your Dominion Lending Centres Mortgage Broker for further details!

Courtesy of Jeff Ingram, AMP – DLC Canadian Mortgage Experts 

It may seem an odd question with a very obvious answer but you would be surprised how few people consider this question when approaching their bank for mortgage advice. When you deal with a bank employee or a mobile mortgage representative (also a bank employee), you need to know that their primary responsibility is to look out for the bank’s best interest. Banks are morally and legally obligated to provide the best return for their shareholders. This can present an issue, especially if you are seeking “unbiased” mortgage advice. As one of our clients recently found out, dealing with a bank isn’t all that it is cracked up to be.

In 2009, when the clients approached their bank’s “Mortgage Specialist” to explore their refinancing option, the Specialist had them approved for what they considered to be a good rate with good terms. The clients happily signed their mortgage documents and went on their way happy with their new terms. If that was the end of the story I wouldn’t be writing this blog, however, that was not the case.

This year the clients decided to sell their home and move up to a larger house that could accommodate their growing family. After consulting a realtor, they phoned their bank to find out what options were available to them. The rate and terms offered by the bank were not competitive with current market offerings so the clients asked what the cost to buy out their mortgage would be. After using the bank’s online calculator, they figured their prepayment penalty would be in the $5300 range. Needless to say, the clients were completely floored when the bank representative told them their penalty would be in the neighbourhood of $22,000.

After several moments of shock, the clients asked the representative how this could be. The answer they received was that their “Specialist” had provided them with a “Discounted” rate on their last refinance and because of that they were penalized an additional 1.85% in their penalty calculation which accounted for the additional $16,000+. In the end, the additional penalty did not leave the client with enough equity in their home to sell and purchase a new property.

So that “great rate” that the clients received from their “Specialist” resulted in a considerable amount of hardship down the road. So the next time you go to your bank for mortgage advice, it would be prudent to consider who your banker works for…and then come to Dominion Lending Centres!

Courtesy of Jason Humeniuk, AMP – DLC Hillside Financial 

The Canadian Mortgage and Housing Corporation (CMHC) recently announced that in order to facilitate affordable housing choices for Canadians, it would be making some policy revisions on how they consider income derived from secondary suites. Considering the last 4 years have been nothing but tightening of rules, making it harder for Canadians to secure mortgage financing, this news is certainly welcome.

INSTEAD OF USING JUST 50% OF THE INCOME DERIVED FROM A SECONDARY SUITE, CMHC WILL NOW FACTOR IN 100% OF RENTS PAID, WITH SOME CONDITIONS OF COURSE!

As of September 28th 2015:

• CMHC will consider up to 100% of gross rental income from a 2-unit owner-occupied property that is the subject of a loan application submitted for insurance. The annual principal, interest, municipal tax and heat (P.I.T.H) for the property, including the secondary suite, must be used when calculating the debt service ratios.
• For 3 – 4 unit owner-occupied and 1 – 4 unit non-owner occupied properties, the net rental income (gross rents less operating expenses) can form part of the borrowers’ gross annual income.

Additional conditions when 100% of gross rental income is used include:

• The income must have been sustained over at least two years.
• The income amount must not exceed the average of the past two years, to address income fluctuations, smooth out cyclical trends and unexpected events such as vacancies.
• Up to 100% of gross rental income may be used only where prospective borrowers can demonstrate a strong history of managing credit, generally considered to be a minimum credit score of 680.

SO WHAT DOES THIS MEAN FOR YOU?

If you have been on the fence about getting into the housing market, this recent announcement highlights an option you may have not already considered. What about buying a property with a legal secondary suite to use the income to help pay your mortgage? CMHC has just made it a little more affordable to qualify for buying properties like this – certainly worth a look!

If you would like to discuss how much mortgage you qualify for and look at different scenarios of qualifying with a secondary suite rental income, we here at Dominion Lending Centres would love to have an in depth look at your finances and provide you with mortgage options! Let’s talk!

Courtesy of Michael Hallett, AMP – DLC Producers West Financial 

Last time, we discussed mortgage fraud using “straw buyer” schemes and the red flags that come up when they happen. This time we are taking a look at an even more insidious type of fraud, where the red flags are hard or even impossible to spot until it’s too late.

Title Fraud

When you purchase a home, you purchase the title to the property. Your solicitor registers you as the owner of the property in the provincial land title office.

Unlike with mortgage fraud, during title fraud, you haven’t been approached or offered anything – this is a form of identity theft.

This occurs when your personal information is collected and used by someone identifying themselves as you. There are several ways criminals can steal your identity without your knowledge, which includes:

• dumpster diving;
• mail box theft;
• phishing; and
• computer hacking.

Sadly, the only red flag for title fraud occurs when your mortgage mysteriously goes into default and the lender begins foreclosure proceedings. Even worse, as the homeowner, you are the one hurt by title fraud, rather than the lender, as is often the case with mortgage fraud.

Here’s what happens with title fraud. A criminal – using false identification to pose as you – registers forged documents transferring your property to his/her name, then registers a forced discharge of your existing mortgage and gets a new mortgage against your property. Then the fraudster makes off with the new home loan money without making mortgage payments. The bank thinks you are the one defaulting – and your economic downfall begins.

The following are ways you can protect yourself from identity theft:

• Ensure you keep personal information confidential when on the internet or phone until you know who are dealing with, how it will be used and if it will be shared with anyone.
• Only carry minimal information and identification in your wallet, don’t have your social insurance card with you.
• Check your credit report regularly. You can get them free in the mail when you request copies from Equifax or Transunion. If you notice anything suspicious, contact the credit bureau right away.
• Check your financial, bank and credit card statements regularly for any inconsistencies and unknown charges.
• Consider obtaining a title insurance policy, as title insurance protects against many title risks associated with real estate transactions.
• Check your mailbox regularly, if not every day.
• Shred and destroy any financial and personal identification documents, as well as any unsolicited credit card applications rather than just simply throwing them away.
• If you don’t receive your bills or other mail, follow up with your creditors.
• If you receive credit cards that you didn’t apply for or if you did apply for them and didn’t receive them follow up with these card companies.
• Contact your mortgage lender first if you are having difficulty making your mortgage payments.

The following are ways to protect yourself from title fraud when purchasing or refinancing a home:

• Make sure you work with a licensed real estate agent who is familiar with the area you are interested in buying. Choose to work with someone that can provide trusted referrals and check on them.
• Check listings in the community where the property is located – compare features, size and location to establish if the asking price seems reasonable.
• Always view the property you are purchasing in person – don’t buy without seeing it first.
• Beware of a real estate agent or mortgage broker who has a financial interest in the transaction.
• Ask for a copy of the land title or go to a registry office and request a historical title search.
• In the offer to purchase, include the option to have the property inspected and appraised.
• When giving a deposit while purchasing a property, ensure the funds will be held “in trust” with a solicitor or a real estate agency and not directly with the seller.
• Insist on a home inspection to guard against buying a home that has been cosmetically renovated or formerly used as a grow house or meth lab.
• Ask to see receipts and permits for recent renovations.
• Consider the purchase of title insurance.
• Review and make sure you are comfortable with the terms and conditions of the mortgage commitment letter or approval.
• Review the “cost of borrowing disclosure statement” and be aware of any additional fees or charges. Ask questions if you are not sure.
• Know and understand what you are signing. If you have questions, ask. If you are not comfortable or something is not right, do not sign the documents.
• You might want to consider using your own solicitor for legal advice if you are asked to use the same lawyer as the seller.

  Courtesy of Alisa and Jorge Aragon, AMP – DLC Mountain View

Nowadays, with the amount of information that is shared on the internet and social media, identity theft and Ponzi schemes are happening regularly. Homeowners are taking the necessary steps to protect one of their largest investments, which is their home.

The last thing you want to worry about is yet another way to lose your hard-earned money. But as a homeowner, you need to be aware of crimes on the rise, known as mortgage fraud and real estate title fraud.

In this first part, we will look at mortgage fraud and “straw buyer” schemes. 

Mortgage Fraud

Some borrowers may think that providing false documents and making false statements is not a big deal. However, the Criminal Code clearly states that obtaining funds, including mortgages, by providing false information is a crime.

The most common type of mortgage fraud involves a criminal obtaining a property, then increasing its value through a series of sales and resales involving the fraudster and someone working in cooperation with them. A mortgage is then secured for the property based on the inflated price.

Here are some red flags for mortgage fraud:

• Someone offers you money to use your name and credit information to obtain a mortgage.
• You are encouraged to include false information on a mortgage application.
• You are asked to leave signature lines or other important areas of your mortgage application blank.
• The seller or investment advisor discourages you from seeing or inspecting the investment property you are purchasing.
• The seller or developer rebates you money on closing, and you don’t disclose this to your lending institution.

“Straw Buyer” Schemes

Another kind of mortgage fraud is the “straw” or “dummy” homebuyer scheme. For instance, a renter does not have a good credit rating or is self-employed and cannot get a mortgage, or doesn’t have a sufficient down payment, so they cannot purchase a home. They, or an associate, approach someone else with solid credit. This person is offered a sum of money (can be as much as $10,000) to go through the motions of buying a property on the other person’s behalf – acting as a straw buyer. The person with good credit lends their name and credit rating to the person who cannot be approved for a mortgage for a home purchase.

Other types of criminal activity often dovetail with mortgage fraud. For example, people who run “grow ops” or meth labs may use these forms of fraud to “purchase” their properties.

It’s important to remember that if something doesn’t seem right, it usually isn’t – always follow your instincts when it comes to red flags during the home buying and mortgage processes.

Courtesy of Alisa and Jorge Aragon, AMP – DLC Mountain View

There is a misconception out there that once you’re pre-approved, you’re good to go. A pre-approval simply means that based on your CURRENT income, expenses, down payment and credit you SHOULD be able to get fully approved once you find the right property (this is the first half of the equation). Many places won’t even pull a credit check (which is extremely important) and will just run a basic mortgage calculator and say “everything looks good” but that doesn’t mean anything. You leave thinking great, I’m pre-approved!

I always recommend that people put in a “subject to financing” clause with their realtor when they are putting in an offer to protect them each and every time. Here’s why:

You could be pre-approved but the lender still doesn’t know which property you’re purchasing (that’s the other half of the equation). Let’s say you find the house of your dreams (well within the maximum price that the mortgage broker went over with you) but we find out that the house was a former grow op. In this case, very few lenders will even look at this (even if it’s been fully remediated and there’s a stamp from the city saying it’s all good) and if they do, they’ll usually require a substantial down payment and further air quality testing that you must pay for as mould spores can grow behind walls and become airborne years later. Yes this is an extraordinary example but it can also happen where a bidding war has bid up the price and the best offer (yours) has been accepted. The lender sends in their appraiser to determine the value of the property and it may come in at a lower value than your accepted offer and so you’d have to come up with more money for a down payment (which you weren’t prepared for or don’t have).

If you have a “subject to financing” clause in your agreement, then you have a way out and can look for another property with no issue at all. If you don’t have a “subject to financing” clause at all and you’ve already given your deposit to the realtor (because you were under the impression that you were going to be approved), then you’re out of luck and will be stressed out and scrambling to find a lender that will help you out, even though you were technically “pre-approved”.

So in summary, always put in a “subject to financing clause” as that’s the only protection you have. This is much cheaper than forfeiting your deposit (and facing potential legal action from the seller) should you want to cancel your contract after the agreement has been made.

Better yet, contact your local Dominion Lending Centres Mortgage Professional and have them do a proper pre-approval and have you fully prepared for what most likely will be the largest purchase in your life!

Courtesy of Joe Cutura, AMP – DLC Origin 

Securing a rate hold is like having insurance on your mortgage rate – you no longer have to worry about mortgage rates increasing while you find your new home over the next 90-120 days. And if rates drop within that same period, so too will your preapproved rate.

For instance, if you obtain a 2.69% rate hold and there is a shift in the economy that forces the bond yields to rise, fixed rates could easily jump closer to 3.00%. In this case, your rate hold for 2.69% would have saved you more than a quarter of a percentage point, which would translate to a savings of a significant amount of money over the term of your mortgage.

Keep in mind, however, that a rate hold is only half the battle and means nothing if you don’t meet the lender’s qualifications when you have an accepted offer and your deal is now “live”. This is where an actual pre-approval comes in. Only a handful of lenders will actually look at the fine details of your employment and banking history without an accepted offer in place. Fact of the matter is, in the past only less than 15% of all pre-approvals actually turned into funded deals. Most lenders realized that they were wasting too much time and resources by pre-approving applicants that would never turn in to a customer.

Thankfully your Dominion Lending Centres Mortgage Professional will know which lenders still fully underwrite pre-approvals and which ones simply offer a rate hold. If you are able to obtain a preapproval AND a rate hold, you can be confident you have access to mortgage financing and you’ll know how much you can spend before you head out shopping for a property.

Courtesy of Jeff Ingram, AMP – DLC Canadian Mortgage Experts