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•Step 5 – Arranging Your Mortgage 

Why use a Mortgage Broker? 

A Mortgage Broker can offer you a lot of advantages over your bank.  As a Mortgage Broker, we will take all of your information once, pull your credit bureau once and offer it out to numerous financial institutions for approval.  We have the opportunities to go to over 60 financial companies to get you the best rate, terms and conditions.  You are probably thinking, "Well, I could do that by myself, why would I use a broker?"  Well first, this is my job, you already have one, so it will save you time and inconvenience in your life.  Secondly, every bank or credit union you will go to will pull your credit bureau.  Every time they do an inquiry, it lowers your credit score just a little bit more.  Thirdly, how many mortgages will you place in your lifetime?  I will place literally hundreds, even thousands, who is going to be able to get favors with a financial institute.  I have relationships with many banks and if we are looking for something special, chances are, we are going to get it.

 

Best of all, it is FREE to use a mortgage broker. Mortgage Brokers are paid by the bank.  In a few cases, there are times when you will charged a fee.  That will only happen if you have a huge credit problem or there are some special circumstances in you case.  Remember, we are working for you, not a bank, it is our pleasure to take your interests to the bank.  Let's get them fighting for your business.

 

Preapproval vs. Prequalification 

One of the most important things you have to do in this process is to find out what you can afford to buy.  Not getting pre-qualified or pre-approved is like going to the mall to buy new clothes and not knowing how much money you have in your wallet.  It is just something you would not do!

 

The question is.....What is the difference?

 

Pre-qualification is when we just ask a few general questions,(usually over the phone or on-line) to see how much you could possibly afford...How much do you earn?...What is your debt load?... etc. I can take this information and give you a rough estimate of how much of a loan you might qualify for.

 

Pre-approval is a more in-depth process.  Most of this can still be done over the phone or on-line, but at this time we will perform a more extensive check of your financial standing.  We will do a credit rating check, a debt load check and will want to know how much you are putting as a down payment.  At this time we will usually lock you into an interest rate hold.  This way you will get locked in at today's rate.  It can be held anywhere from 90 to 120 days.  The rate is reviewed just before you pay for your property purchase.  If the rate has gone down you will get the better rate, if the rate has gone up you keep the rate that we have locked you into already.

 

With rates on the upward swing it is advisable that you lock into a rate as soon as possible.

 

In most markets, someone who is pre-approved will get more interest at the offer presentation time when the realtor can be sure you will get the financing.

 

The extra advantage of having your realtor as your mortgage broker is that I can assure the seller you are totally qualified as I have done it myself.  You now have the biggest advantage!!


!!!!!! Caution !!!!!!

Your beacon or credit score is lowered if it is checked several times over a short period of time. It is critical that you do not have you credit pulled more than a few times as this may effect your ability to qualify for a mortgage. Your Mortgage Broker will pull your credit once and provide that to the lending Institutions. Resist the temptation to do anything that may impact your credit score untill you check with your Mortgage Broker. Some of the ways you can impact your credit score by applying for credit include:

Car shopping

Cell phone shopping

Applying for credit cards

 

Opening a new bank account

Shopping your mortgage around to several Banks or Mortgage Brokers


Your Mortgage Broker will pull your credit score once and can provide it to the lenders they feel best suit your needs. 

 

Also resist the temptation to buy that new couch/bed/curtains/vacation.... untill after you have the keys to your new home in your hands. Pizza for your Friends on moving day should be your first optional home expense.

Mortgage Basics

•Interest rates – Cost of borrowing money paid to the lender.

•Fixed rate vs Variable rate

•Term – determines the length of time your mortgage rate is set for varying from 6 months to 10 years.

•Amortization – The length of time over which the entire debt will be paid. The longer the amortization the smaller the monthly payment. Now you can go as long as 25-35 Years!

 

The Dominion Lending Centres Advantage

 

•Dominion Lending Centres Mortgage Experts are equipped to offer you your best possible “mortgage strategy”. Enabling you to save thousands over time.

•Dominion Lending Centres Mortgage Expert offer multi-brands including our own Dominion Mortgage. 

 

Types of Mortgages

Mortgages can be a confusing subject. Buying or selling a home is an emotional decision and can be very stressful. As a mortgage expert, I will take the confusion out of mortgages and make the process as smooth as possible.

 

In Canada, there are two major categories that mortgages fall into, either closed or open. Most mortgages are closed, meaning that you can’t pay out the mortgage in full without paying a penalty to the lender. You can, however, often make lump sum or extra payments each year.

 

An open mortgage allows you to pay out the mortgage anytime without penalty. But you typically pay a higher rate than when opting for the same closed version. Open mortgages may have an administration fee that is higher than a closed mortgage if you do, in fact, decide to fully pay off the mortgage. This is partly why it’s so important to read the fine print and ask about these charges. In most cases, it’s better to take the closed product if you don’t intend to fully pay out the mortgage in a short period of time.

 

Closed mortgages are offered in terms starting at six months. The interest rate is fixed during that term. (The term should not be confused with the amortization. Amortization is the time period it would take to fully pay off the mortgage by making regular payments.) Variable-rate mortgages, on the other hand, have a rate that floats with the prime rate and are often closed mortgages.

 

Let me help you make one of the biggest decisions in your life by providing options and advising you on the best scenario for your specific needs.

 

Conventional Versus High-Ratio Mortgage

Information contained on this page does not take into account changes to mortgage insurance parameters announced by the Government of Canada on December 11, 2015. These changes will come into effect on February 15, 2016.

 http://www.fin.gc.ca/n15/15-088-eng.asp

 

Whenever possible, it’s advisable to try to put a 20% down payment into the new home. Most individuals are unable to do this, so their mortgage needs to be insured by either Canada Mortgage and Housing Corporation (CMHC), Genworth Financial or Canada Guaranty. This is the case because the Bank Act will only allow financial institutions to lend up to 80% of the price without mortgage default insurance.

 

The mortgage is insured so that if you default on your payments, the lender is paid out in full and the insurer is left to deal with the borrower. The insuring companies charge an insurance premium. The premiums are based on the loan to value (LTV), which is the amount of the loan versus the value of your home.

  

Loan to Value (LTV)

Insurance Premiums (Last Increase: May 1st, 2014)

Up to and including 65%

0.60% of the loan amount

Up to and including 75%

0.75% of the loan amount

Up to and including 80%

1.25% of the loan amount

Up to and including 85%

1.80% of the loan amount

Up to and including 90%

2.40% of the loan amount

Up to and including 95%

3.6% of the loan amount

90.01% to 95% – Non-Traditional Down Payment

3.85% of the loan amount

  

You may borrow up to 95% of any price for an owner-occupied purchase, in most urban areas. If you’re buying a property for investment purposes, the maximum loan amount is 80% and the insurance premium is higher than shown above.

 

•6 – What Does a Lender Consider When Looking at Your Mortgage Application?

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