9 1/2 Steps to Repair and Improve Your Credit

Mortgage Tips Giovanni Perri 10 Jan

Though credit scores aren’t always an indicator of financial health, they are used in a variety of ways that could have a major impact on your life. Interest rates (including mortgage rates) are almost always determined by your credit score. Some employers & landlords may require a credit check to see if you have past credit issues.
Remember this is your credit report, not your “I’m Fiscally Responsible” report. Lenders want to know how you have historically handled credit in order to determine if you are a good credit risk. Higher risk = higher rates!

The Rule of Two:
• You should always have 2 “tradelines” going. This can be a combination of 2 credit cards OR a credit card and a line of credit/ loan etc.
• Credit lines should have a minimum $2,000 limit
• Minimum of 2 years old

So, if your credit score sucks, it could be costing you.
The good news is, you don’t have to live with bad credit forever. There are plenty of things you can do to improve your credit score. Use the 9½ tips below, to improve your credit score

#1) Know Your Credit Score and Credit History
Request a free copy of your credit report from both of Canada’s credit agencies (TransUnion and Equifax). You are legally entitled to one free credit report yearly from each credit agency.

#2) Review both TransUnion & Equifax Reports for Any Errors or Discrepancies.
If you find any errors in your credit report, you should dispute them with Equifax or TransUnion and request to have them correct any errors.

#3) Pay On Time, EVERY time!
This might seem obvious, but you need to make your payments on time, every time! This is crucial to repairing and maintaining your credit rating. The largest percentage of your credit score is based on your payment history!! Even being a couple of days late will have a negative impact on your score. Staying current with your payments has a huge positive impact. If you can’t pay the balance off in full, pay the minimum amount on time!

#4) Don’t Go Over Your Card’s Credit Limit
Going over your credit limit, even once will have a huge negative impact on your credit score. You need to be aware of your credit limit and your current debt levels to avoid this.

#5) Pay Off Any Overdue Accounts ASAP
Paying off a collection account will not remove it from your credit report, so do your best to avoid going to collections. If you have any overdue accounts that have gone to collections, negotiate to pay them off ASAP.

#6) Reduce Your Debt
Easier said than done, but if you want to increase your credit rating, you need to reduce your debt. The closer you are to your credit limit, the lower your score. In a perfect world you only want to use about 30% of your available credit. If you have a lot of credit card debt you might consider a loan (with lower interest rates than the credit cards) to consolidate your debts.

#7) Limit Your Inquiries for New Credit
You lose points from excessive hard inquiries on your credit bureau. Any attempts to take on multiple loans/credit cards will look bad in your report.

#8) Avoid Closing Credit Cards
Account age is a factor that reflects positively on your credit score. Too many new accounts lowers your average account age and negatively impacts your credit score. For the same reason, you may want to keep an old account open, even if you are not actively using it.

#9) Time is your Friend
When rebuilding your credit, time will be your best friend. The impact of past credit problems lessens with time, so that a late payment from a year ago will have much less weight than a late payment today. Get current and stay current.

#9.5) Protect Your Credit from Identity Theft
As more of our personal information gets circulated via the internet, there’s more room for “bad people” to steal your personal details so that they can make fraudulent purchases in your name. This can be extremely damaging to your credit history. You can protect your credit history from this by paying for a service that can alert you to fraud.

If you have any questions, contact me today!

 

Original Article by Kelly Hudson, DLC

Reverse mortgage: Is this the solution if you retire cash-poor?

Mortgage Tips Giovanni Perri 11 Dec

Reverse mortgages have never been this popular in Canada.

Inquiries about them have doubled between 2016 and 2017, according to HomeEquity Bank’s CHIP Reverse Mortgage, which was, for a time, the only financial institution to offer them nationwide.

And as a wave of baby boomers crosses the work-life finish line, competition to serve those who are feeling house-rich and cash-poor is heating up. Equitable Bank became a second option for retirees looking for a reverse mortgage in January when it announced its PATH Home Plan, which is available through mortgage brokers in Alberta, British Columbia and Ontario.

The basic idea of a reverse mortgage is simple. Instead of making payments to build up equity in your home, as you would with a traditional mortgage, you draw down on your home equity and receive payments. You can opt for a lump-sum loan or get a certain amount of cash at regular intervals.

It sounds like the personal finance equivalent of having your cake and eating it, too: You generate some extra income and get to stay in your home. In a country where nearly a third of those approaching retirement has no savings, that seems like a great deal.

One catch, though, is that the bank gets a rather large slice of your cake, as well. Reverse mortgages are expensive. The current interest rate on a five-year fixed-rate loan is 6.49 per cent, almost double what you’d pay with a regular mortgage these days.

The other obvious catch is that there will be less cake left for your kids, grand-kids and anyone else who might survive you.

“A reverse mortgage is never the first choice,” said Robert McLister, founder of rate-comparisons site ratespy.com and mortgage planner at intellimortgage.com.

Juicing your home equity to squeeze out some extra cash isn’t a retirement plan. It’s a last resort for someone who has no other options, said Clay Gillespie, a financial adviser and managing director at RGF Integrated Wealth Management.

Still, he adds, for someone with, say, a $2-million home who has minimal retirement income from government benefits, “a reverse mortgage makes all the sense in the world.”

Here are a few things you should know about reverse mortgages:

Reverse mortgage basics

Reverse mortgages are only available to Canadians 55 and older who own their home.

The overall amount of the loan is capped at 55 per cent of the value of the house for HomeEquity Bank and 40 per cent for Equitable Bank. The good news here is that you can’t borrow more than your home is worth.

However, how close you’ll be able to get to the cap depends on your age, your equity stake, the appraised value of your home, where you live and current interest rates, among other factors.

In general, “you’d have to be in your late 70s, living in an urban centre and likely male,” to be able to borrow the maximum, Yvonne Ziomecki, executive vice-president, at HomeEquity Bank told Global News. That’s because home values in cities tend to be higher and men have a shorter life expectancy.

On that note, keep in mind that your spouse’s age matters as well. You both have to be at least 55 to get a reverse mortgage, and you might not be able to borrow as much if you have a younger spouse.

When you take out a reverse mortgage, the interest on your loan comes out of your home equity. For example, if you have a $400,000 home and take out $100,000 at 6.49 per cent over five years, you’d be paying over $37,000 in interest, according to HomeEquity Bank’s online calculator. That means your equity stake in the house would be $137,000 less by the end of the mortgage term.

The lender will continue to charge you interest until the loan is paid in full. In the example above, assuming you don’t want another loan but are unable to repay what you owe at the end of year five, your rate will be reset for another five-year term, according to Ziomecki. Put simply, your new rate applies to the full $137,000, not just your original principal of $100,000.

If you sell the house, your reverse mortgage will discharge like any other mortgage: The lender gets what it is owed first, you get the rest. The same applies if you die without having moved out. Assuming you have descendants and a will, your survivors will get whatever is left, if anything.

Pros and cons

There are several pros and cons to reverse mortgages:

Equity

  • Con: Compounding – or paying interest on interest – the interest charges can erode your home equity pretty quickly, Gillespie warned.
  • Pro: On the other hand, keep in mind that your home equity will likely go up as well. In our example, even assuming a very moderate rate of appreciation of 2 per cent per year would add over $41,000 to your home value. After five years, you’d end up with $304,000 in equity, slightly more than when you took out the $100,000 loan.

  • Con: “It’s hard or often impossible to borrow against a property that has a reverse mortgage on it, apart from just increasing the reverse mortgage,” Tea Nicola, co-founder and CEO of robo adviser WealthBar told Global News via email.

Market conditions

  • Pro: Boomers are arguably the perfect generation to take advantage of reverse mortgages. Many of them, especially in Vancouver and Toronto, own homes that have doubled or tripled in value since they bought them. That appreciation is essentially money for which they did not save and which they can now easily turn into cash. Reverse mortgages help resolve the issue that “you can’t really sell a tenth of your house,” if you need a tenth of the money, Gillespie noted.
  • Con: But boomers’ timing for taking out a reverse mortgage seems less than perfect. “Economic indicators would lead us to believe that we are headed for rising interest rates and a housing correction, which is not a favourable environment for reverse mortgages. Even if housing prices hold strong, the interest-rate rise would have a negative impact,” Nicola said. According to HomeEquity Bank’s Ziomecki, home appreciation and the amount borrowers owe in principal plus interest tend to move in tandem (if you’re looking at the graph above, the green and red line tend to rise in parallel). But one has to wonder whether this might change as home prices cool off and interest rates rise from historic lows.

Your descendants

  • Con: Your home is likely your biggest asset, so if you start chipping away at the equity in old age, there may be little left for your heirs.
  • Pro: This may be less of a pro than a mitigation of a con, but it’s an important point. Even if home prices plummet and your home value eventually dips below the amount of your reverse mortgage loan, you will never end up with negative equity. “That’s the beauty of a reverse mortgage,” Gillespie said. The worst-case scenario is that you or your survivors walk away with nothing after selling the home. But your children will not be left with debts to pay.
  • Pro: Leaving no inheritance and maintaining financial independence is arguably preferable to having to borrow from family to pay your bills in old age.

Staying in your home

  • Pro: You get to stay at home. This is very important for many people, often for sentimental reasons. According to a recent poll conducted by Ipsos for HomeEquity Bank, nine in 10 Canadian aged 65 and over feel that way.
  • Con: According to Gillespie, many people stop feeling that way around the time they hit 80, when they can no longer climb up and down the stairs and things like gardening and minor house maintenance become impossible chores. One of the dangers of reverse mortgages is that, even if you sell the house, you won’t have enough money to cover end-of-life health-care costs.
  • Con: Staying in your home may not be the smartest financial decision if moving to a smaller home costs considerably less, Gillespie said.

Gillespie said that while he pulls reverse-mortgages quotes for clients every month these days, he has only ever recommended the product five times over his decades-long career. Instead, he generally advises downsizing.

And reverse mortgages are hardly something that people can rely on to boost their retirement income over a 30- to 35-year period, he added. Case in point, according to Ziomecki, the typical HomeEquity Bank client takes out a reverse mortgage around age 70 and stays with the lender for about 10 years.

Still, for the cash-poor and house-rich, a reverse mortgage is something that “can dramatically improve your lifestyle,” Gillespie said.

 

Original Source Article

4 Reasons Why Mortgage Brokers are Better than Banks

General Giovanni Perri 23 Nov

I am often asked if it’s hard to compete with the banks. While they may offer competitive rates at times, right now we have much better rates than the banks. However, we have certain advantages which allow us to blow them out of the water most of the time.

  1. More Choice – banks are limited to around 5 products that they can offer you. They will try to fit you into one of their products even if the financial institution next door has a better one for you. Brokers have access to banks, credit unions, trust and mortgage companies as well as private lenders.
  2. Better Representation – Brokers are your champions bankers are employees. They put their employer first . They won’t offer you the best rates unless you are a good negotiator. Brokers are licenced by provincial organizations and have to follow a code of ethics which requires that we put the consumer first. We also negotiate the best rate, terms and conditions for you. If you need to break the mortgage before the end of the term, we can assist you with that and perhaps help you to avoid paying a penalty.
  3. More Benefits – If you are moving into a home that is more than one year old, you probably do not have a home warranty. Brokers have 3 lenders who offer home warranties, which can cover repairs to the plumbing, heating and electrical systems with a small deductible. Two of the lenders even offer this as a complimentary service for the first year while the third lender offers it for the length of the mortgage. As Dominion Lending Centre brokers, we also have discounted rates for moving services and boxes from a large national moving company .
  4. Better Protection – I saved the best for last. We offer portable mortgage life and disability insurance.

It may not sound like much but we have the same coverage as the banks offer with one important difference – portability. While we take care to place you with a good lender, circumstances change and lenders may not offer favourable terms on renewal. If you try to leave a bank after developing a condition like high blood pressure or having a heart attack, you will have to re-apply for insurance coverage and may be denied. There are hundreds if not thousands of unhappy bank clients who are stuck paying high interest rates because they are forced to stay with a lender. Broker insurance gives you the independence to move from lender to lender depending on who is willing to offer you the best rates and terms. This may not sound like much to you now but it’s a real game changer for anyone who knows someone who have had this happen to them.

Is it difficult to compete with the banks? No – we have them beat hands down.

Original Article by David Cooke (DLC – Clarity Mortgages)

Congratulations On The Mortgage! Now Let’s Get Rid of It

General Giovanni Perri 22 Nov

So now that you’re a home owner, what are your next steps? Well first, you will have to figure out exactly how you are going to get RID of that mortgage. Yes, that’s right. Now that you got it, here are four ways you can pay it off and be done with it!

1. ACCELERATE YOUR PAYMENT FREQUENCY

Making the change from monthly payments to accelerated bi-weekly payments is one of the easiest ways you can make a huge difference to the bottom line of your mortgage. A traditional mortgage splits the amount owing into 12 equal monthly payments however, an accelerated biweekly payment is simply taking a regular monthly payment and dividing it in two. Instead of making 24 payments, you will make 26. The extra two payments really accelerate the repayment of your mortgage!
Here is an example of what I’m talking about.
Bob currently has a $300,000 mortgage at a 4% fixed rate with a 25 year amortization period. He will save $32,000 just by moving to biweekly accelerated payments from biweekly. Go Bob!

2. INCREASE YOUR MORTGAGE PAYMENT AMOUNT
Unless you opted for a “no-frills” mortgage, chances are you have the capability of increasing your regular mortgage payment by 10-25%. This is a great option if you have some extra cash to spend within your budget. This money will go directly towards paying down the principal amount owing on your mortgage. The more money you can pay down when you first get your mortgage, the better. At the end of the day, you will pay less interest over the lifespan of your mortgage. By voluntarily increasing your mortgage payment, it is metaphorically like you are signing up for a long term forced savings plan where equity builds in your house rather than your bank account.

3. MAKE A LUMP SUM PAYMENT

Again, unless you have a “no-frills” mortgage, you should be able to make bulk payments towards your mortgage. Depending on your lender and your mortgage product, you should be able to put down anywhere from 10-25% of the original mortgage balance. Some lenders may be particular about WHEN you can make these payments, however if you haven’t taken advantage of a lump sum payment yet this year, you will be eligible.

4. REVIEW YOUR OPTIONS REGULARLY

As your mortgage payments are withdrawn from your account, it is easy to put your mortgage payments on auto-pilot especially if you have opted for a 5-year fixed term. Despite the term of your mortgage, it is highly encouraged to give your mortgage an annual review. This review gives you a conscious look at the overall stance of your mortgage which could rise to opportunities of refinancing or lowering your interest rate!
If you have any questions about your mortgage, how to get a mortgage, or how to get rid of the mortgage you have, please don’t hesitate to contact a Dominion Lending Centres mortgage professional today!

 

Original Source Article – Chris Cabel (DLC HomeHow)

Pre-approved for your mortgage… what does that really mean?

General Giovanni Perri 15 Nov

There is a myth out there that once you’re pre-approved for a mortgage, you’re good to go out and buy a home… with a no subject offer… DON’T do it!

A pre-approval means that based on being able to PROVE (through documentation) your CURRENT income, expenses, down payment and credit bureau you SHOULD be able to get fully approved once you find the right property (this is the first half of the equation).

Remember that there cannot be any major changes to the your mortgage application details prior to the completion of their purchase as it may affect the your qualifications and change the conditions of the approval.

I always recommend my clients put in a “subject to financing” clause with their realtor when they are putting in an offer to protect themselves.

Here’s why:

The lender can like you and your financial picture, BUT the lender doesn’t know which property you want to purchase (this is the other half of the equation). Here are 3 examples:

  • A bidding war has bid up the price and the best offer (yours) has been accepted. YIPPEE!!! The lender sends in their appraiser to determine the value of the property. The appraisal comes in at a lower price than your accepted offer DRATS!! You now have to come up with the difference between the appraised value and your offer, since lenders will only offer a mortgage based on the appraised value of the home.
  • You are buying a condo/townhouse and the strata minutes indicate that there are: leaks, electrical issues, roofing problems, etc. that the strata needs to act upon. If the Strata doesn’t have a big enough contingency fund, the lender can decline due to potential special assessments down the road.
  • Property zoning – if the zoning is anything other than residential then your options will be limited. Some condos are zoned commercial if there is a large commercial component to the complex. Industrial, Agricultural Land Reserve (ALR) in B.C., or leasehold (government or otherwise) limit a buyer’s options.
    As you can tell “you may be pre-approved” but most certainly the subject property is not!!

There are several properties that most lenders will not touch these days. Here’s a (partial) list of property details that can affect most lender’s decisions on approving your mortgage:

  • A remediated grow-op or drug lab
  • Leased land or co-op
  • Age-restricted property
  • Special assessment (pending or otherwise)
  • Any reference to water or leaks in the minutes
  • A “fixer upper”
  • Contains asbestos, vermiculite insulations or has (even partial) knob-and-tube or aluminum wiring
  • Is on land with a commercial zoning component
  • Livestock is present, etc.
  • Self-managed strata’s (no strata management company)
  • Size of the property- below 500 sq. feet,
  • Doesn’t use municipal sewage or waste
  • Over 1 Acre and/or multiple buildings
  • Ongoing or upcoming assessments or legal proceedings
  • Strata with small contingency fund

The lender reviews the details of each property in detail once you have an accepted offer in place.

It’s important that the real estate agent discloses the information to their buyer ASAP so that it can be brought to the lender’s attention. The agent should be proactive in getting all documentation pertaining to the building/property, so that the buyer can make an educated buying decision. Many of the issues stated above can affect the long-term value and marketability of a property.

If you have a “subject to financing” clause in your purchase agreement, and you can’t find a lender (for whatever reason), then you can back out of the deal with no financial repercussions.

In my opinion you need to always put in a “subject to financing clause” as that’s the best protection you have. With subject free offers you could forfeit your deposit (and facing potential legal action from the seller) should you want to cancel your contract after the agreement has been made, even though you were technically “pre-approved”.

As you can tell there is lots to discuss about buying homes including pre-approvals! If you have any questions, contact a Dominion Lending Centres mortgage broker near you.

-Kelly Hudson (DLC – Canadian Mortgage Experts).

Original Source of Article

Documents you need for your Mortgage Pre-Approval

Mortgage Tips Giovanni Perri 1 Nov

Being fully pre-approved means that the lender has agreed to have you as a client (you have a pre-approval certificate) and the mortgage broker has reviewed and approved ALL your income and down payment documents (as listed below) prior to you going house hunting. Many bankers will say you’re approved; you go out shopping and then they  say ‘sorry you not approved’ due to some factor. Get a pre-approval in writing!

Excited! Of course. You are venturing into your first or possibly your next biggest loan application and investment of your life.

What documents are required to APPROVE your mortgage?

Being prepared with the RIGHT DOCUMENTS when you want to qualify for your mortgage is HUGE; just like applying for a job or going for a job interview. Come prepared or don’t get hired (or in this case, declined).

I assist all my clients along the way to ensure any questions are asked and YOU are prepared UPFRONT and fully PRE-APPROVED before you go house hunting.

No stress, no running around, no surprises.

Why is this important?
You can have a leg up against the competition when buying your dream home as you can have a very short timeline (ie: 1 day to confirm vs 5-7 days) for “financing subjects”.

Think? You’re the seller and you know the buyer doesn’t have to run around finding financing and the deal may fall apart. This is the #1 reason deals DO fall apart. You will likely get the home over someone who isn’t fully approved and has to have financing subjects. The home is yours and nobody’s time is wasted.

If you just walked into the bank, filled an application and gave little or no documents, and got a rate – you have a RATEHOLD. This is NOT a pre-approval. This guarantees nothing and you will be super stressed out when you put an offer in, have 5-7 days to remove financing subjects and you need to get any or all of the below documents. That’s not fun is it? Use a Dominion Lending Centres mortgage broker ALWAYS. We don’t cost you anything!

When you get a full pre-approval, you as a person(s) are approved; ie: the broker did their work of reviewing (takes a few days) to call your employer, review your documents, etc. All we have to do is get the property approved, which takes a day or two. Much less stress, fastest approval…faster into your home!

Here is exactly the documents you need MUST have (there is NO negotiation on these) to get your mortgage approved with ease. Keyword here is EASE. Banks/Lenders have to adhere to rules, audit files and if you don’t have any of these or haven’t been requested to supply them…a big FLAG that your mortgage approval might be in jeopardy and you will be running around like a crazy person two days before your financing subject removal.

Read carefully and note the details of each requirement to prevent you from pulling your hair out later.

Here is the list for the “average” T4 full-time working person with 5-15% as their down payment (there is more for self-employed, and part-time noted below):

  1. Are you a Full-time Employee?
    Last 2 paystubs: must show all tax deductions, name of company and have your name on it.
  2. Any other income? Child Support, Long Term Disability, EI, Foster Care, part-time income? Bring anything that supports it. NOTE: if you are divorced/separated and paying support, bring your finalized separation/divorce agreement. With some lenders, we can request a statutory declaration from lawyer.
  3. Notice of Assessment from Canada Revenue for the previous tax filed year. Can’t find it? you can request it from Rev Can to send it to you by mail (give 4-6 weeks for it though) or get it online from your CRA online Account.
  4. T4’s for your previous 2 years.
  5. 90 day history of bank statement showing the money you are using to put down on your purchase.
    Why 90 days? Unless you can prove you got the money either a sale of a house, car or other immediate forms of money (receipt required)…saved money takes time and the rules from the banks/government is 90 days. They just want to make sure you aren’t a drug dealer, borrowed the money and put it in your account or other fraud issues. OWN SOURCES = 90 days. BORROWED is fine, but must be disclosed. GIFT is when mom/dad give you money. Once you have an approval for “own sources” you can’t decide to change your mind and do gifted or borrowed. That’s a whole new approval.

Down Payments
Own Sources: For example “own sources” include if you are a first time buyer and your money is in RRSP’s then, have your last quarterly statement for the RRSP money. If your money is in three different savings account, you need to print off three months history with the beginning balance and end balance as of current. The account statements MUST have your NAME ON IT or it could be anyone’s account. I see this all the time. If it doesn’t print out with your name, print the summary page of your accounts. This usually has your name on it, list of your accounts and balances. Just think, the bank needs to see YOU have X$ in your (not your mom’s or grandparents) account.

GIFT: If mom/dad/grandparents are giving you money…then the bank needs to know this as the mortgage is submitted differently (this is called a GIFT).

If you are PART-TIME employee? All of the above, except you will need to bring three years of Notice of Assessments. You need to be working for two years in the same job to use part-time income. You can have your Full-time job and have another part-time gig… you can use that income too (as long as it’s been two years).

If you are Self Employed?

  1. two years of your T1 Generals with Statement of Business Activities
  2. Statement of Business Activities.
  3. 3 years of CRA Notice of Assessments
  4. If incorporated: your incorporation license, articles of incorporation
  5. 90 day history of bank statement showing the money you are using to put down on your purchase.

 

Original Article by Kiki Berg – DLC

7 things every self-employed individual should know – before applying for a mortgage

Mortgage Tips Giovanni Perri 26 Oct

Self-employed individuals are quickly becoming one of the most common clients that we handle. Daily we have successful business owners come into our offices who enjoy the perks of being an entrepreneur. One of these includes fantastic write-offs that allow them to bring their income down to a low tax bracket.

However, this benefit can also mean that the same business owner may have a hard time qualifying for a mortgage all because their income is significantly reduced on paper… how frustrating ‘eh? But these savvy business owners know that there is advanced planning that is involved in being able to qualify for conventional financing. Back in 2015, Statistics Canada reported that there were about 2.7 million people self-employed in Canada… which is an astounding 14% of the total population of Canada! What does that stat mean? Two things:

1. That being self-employed is a more than viable way of earning income in today’s world.
2. That 14% may not fit into the conventional lending “box”

The Conventional Lending Box
To fit into this box, self-employed individuals must meet certain qualifications. For example, they must be able to provide:
>Two most recent years of personal tax returns
>Two most current years Notice of Assessments
>Two most current years financial statements
>Statement of Bank Account Activity
>Investment Income Statement
>Photo ID

Now, the one area that raises a red flag in the above is the tax returns. As we previously mentioned, their income claimed on the return itself might be significantly different than their actual income. Tax deductions related to business often reflect meals, rental spaces, credit card interest etc. The result is that the income the self-employed business owner shows on their tax return is a significantly lower figure than what their actual take home pay is. However, the conventional lending box requires income to justify the mortgage. So how do we pull this off?

The Unconventional Lending Box
Now please keep in mind that “unconventional” in this box just means that as a self-employed individua,l you are going to work with a Mortgage Broker to find an alternative to allow you to show that you can justify the mortgage. There are several well-known and consistently used pieces of advice that we would like to pass along to you:

1. If you are organized and planning (think 2 years out) you can plan to write off fewer expenses in the two years leading up to the property purchase. Yes, you will pay more personal taxes. However, your income will be higher, and it will be easier to qualify you for the mortgage amount you are seeking.

2. Set up your finances through a certified accountant. Many lenders want to see self-employed income submitted through a professional rather than doing it yourself. The truth is that the time you spend doing your own taxes will not be nearly as efficient both financially and time-wise as a professional. Make sure that you discuss with them what your goals are so that they can set up your taxes properly for you!

3. Choose your timing carefully. If you are leaving for an extended holiday within the two years before purchasing, your two-year average income may fluctuate. Plan your vacations and extended trips away with income in mind.

4. Consider using Stated Income. You have the option to state your income. This is based on you being in the same profession for 2+ years before being self-employed. The lender looks at the industry and researches the mean income of someone in that profession and with your experience. You will be required to provide additional documents such as bank statements, showing consistent deposits and other documentation may be asked of you to show your income.

5. Avoid Bankruptcy at all cost…. or if you do declare bankruptcy have all your discharge papers on hand to present to the lender and ensure you have two years of re-established your credit.

6. Mortgage Brokers can state income with lenders at the best discounted rates. But if you do not qualify with A lenders using stated income, then a broker will work with you to utilize a B Lender who are more lenient but may come with higher interest rates and applicable lending and broker fees.

7. Last but not least, if A or B lenders don’t fit, private financing can be looked at as an alternative option in order to get you into the market and offer a short-term solution to improve credit or top up your reporting income. Then you and your broker can refinance into an A or B lender at that time. Just keep in mind that private lending will have a higher rate associated with it , with lender and broker fees added on as well, if you choose to go with this option.

So, to all of our self-employed, hard-working, determined individuals, take heart! You can qualify for the mortgage you want, it just takes a little more planning to get everything in order. Keep in mind to that every lender has different guidelines as to how they view self-employment. Working with a Dominion Lending Centres broker leading up to your property purchase can help you ensure you get the mortgage you want.

Original Source

By: Geoff Lee – DLC GLM Mortgage Group

Mortgage Switches… don’t just blindly sign your mortgage renewal letter.. you have options!

Mortgage Tips Giovanni Perri 13 Sep

Mortgage switches and transfers are becoming one of the more popular sources of revenue for certain lenders which means great incentives for borrowers as the banks and financial institutions fight for your business.

When your mortgage is up for renewal, your lender will typically send you a letter either 6-months or 120 days before your mortgage matures. When it is up for renewal and matures, you will need to commit to a new term and commit to a new interest rate. Most of the time, the bank’s offer is in the letter they send, and you circle your choice and mail it back; simple and quick.

But what happens when your lender isn’t offering you their lowest rate? Or is hoping you just circle one of the options and don’t look into the other options that are out there and available to you?

Most lenders will allow you to finance up to $3,000 back into your mortgage balance for legal fees, admin fees, and costs associate with moving from your current lender to them. With the move being cash free, you can take advantage of very low rates offered to new potential clients in order to win their business.

The mortgage amount (other than the $3,000 for costs) will need to remain the same though. When you change the mortgage amount, you are refinancing your mortgage, which moves you into a new category and changes the process as well as the different interest rates that are available to you.

For more information on mortgage switches and transfers please reach out to a Dominion Lending Centres mortgage professional. We will be able to tell you what kind of low interest rates and new mortgage privileges we are able to give you access to!

-Ryan Oake

Original Source

How to Renew Your Mortgage With a New Lender

Mortgage Tips Giovanni Perri 13 Aug

When you first got your mortgage, you might have carefully weighed all the details, compared mortgage rates online, and done all your research to make sure you were getting the best possible mortgage rate and terms. Or, maybe you called your bank and took their first offer.

But now that your mortgage is coming up for renewal, what’s the best way to go about it?

At the end of your mortgage term – typically five years, unless you specifically arranged something shorter – you will need to renew your mortgage. In most cases, your current lender will send you a document outlining all the terms of the renewal. Similar to when you got your mortgage in the first place, the lender will offer you a term (the length of the contract), mortgage rate, and payment schedule, as well as spell out any penalties associated with making additional payments. If everything looks good to you, a few signatures are all it takes to complete your renewal.

CMHC’s 2017 Mortgage Consumer Survey reports that 79% of Canadians stay with their lender when renewing their mortgage. But no matter how detailed you were when you first got your mortgage, your renewal is a chance to make sure you have the best rate.

That’s why you may want to consider moving your mortgage to another lender. Different mortgage lenders might be able to offer you a better interest rate. They may also have more preferential terms, like the ability to make extra payments or offer more flexibility if you need to break your mortgage before the term is up.

Your mortgage renewal is the perfect time to move to a new lender because it’s the only time you can refinance without paying your current lender any penalties. Your new lender pays your old lender the balance of what you owe, and you carry on.

So how do you renew your mortgage with a new lender?

Start by doing some early research. You’ll want to start this process about four months before your mortgage ends. This will give you time to find a new lender and take care of all the paperwork. It’s also the approximate length of time many lenders will hold a rate for you, so you won’t end up paying more if rates go up before your new mortgage starts.

If the rate is your motivating factor, compare mortgage rates online and contact the broker offering the lowest rate. Note that rates for renewals and refinances tend to be slightly higher than rates for new mortgages because of some rules that make them riskier for lenders.

If you’re motivated by something else, you may want to contact a mortgage broker and discuss your situation. A Canadian mortgage broker can help you find lenders that offer flexible prepayments, or whatever terms you’re looking for (within reason, of course).

This is also a good time to take out equity or get a home equity line of credit (HELOC) if you need one. Taking out equity simply means you’ll receive a cash payment and repay it with your mortgage. A HELOC is a revolving line of credit secured by your home that allows you to withdraw money. and repay it at any time. Both of these require a real estate lawyer and lots of paperwork, so it’s most convenient to do them at the time of your renewal.

Once you’ve found the right mortgage, the process will look similar to when you first got your mortgage. You’ll need to provide documentation to your mortgage broker (identification, proof of income, and bank statements are common requests).

You may also need to pay to have your property appraised, and pay minor fees to your old lender to discharge your current mortgage.

Then you’ll need to hire a real estate lawyer and make some time to sign a very large stack of papers. Your lawyer will take care of all the background work to register the mortgage and make sure all the money goes to where it’s needed on your renewal date. Then all that’s left for you to do is make your regular payments like you promised.

There are some times when opting for a straightforward renewal with your current lender will make more sense, however.

If you’re changing lenders to get a better interest rate, you might find that the expense of a real estate lawyer negates any savings in interest rate. For example, a $25 monthly saving on your mortgage payment adds up to $1,500 over five years. If that’s what it costs to hire a lawyer, it’s not worth the headache to break even. If you have to pay extra fees, like for a survey or to discharge your old mortgage, you might even lose money by switching.

If your financial situation has changed, you might also find it more difficult to move to a new lender. New mortgage rules require “stress testing” that forces you to prove you would be able to pay your mortgage at a much higher interest rate than most people pay. The 2017 Annual State of the Residential Mortgage Market in Canada study from Mortgage Professionals Canada estimates that five to 10 per cent of borrowers are at risk of failing the stress test. But renewals with your existing lender are exempt from the stress test. If you’re worried about your mortgage renewal, your mortgage broker can review your options with you and recommend the best course of action.

But for many people, the path to getting the best mortgage rate will be by comparing rates and considering a new lender at renewal. If you find you’ve already been offered the best rate by your current lender, then you know you’re making the right decision. If you find a way to save money, then you’re saving money.

When your mortgage renewal arrives in the mail, don’t assume your lender is giving you the most competitive offer. Do your homework, and if there’s a better deal to be had, consider renewing your mortgage with a new lender.

-Jordan Lavin (RateHub.ca)
Original Article

First-time Homebuyers’ Five Biggest Mistakes

Mortgage Tips Giovanni Perri 20 Jul

“Buying a home for the first-time is an exciting time. You’re making quite possibly the most significant financial transaction of your lifetime.

You’re also making the exciting jump from renter to homeowner.

While buying a home is something to celebrate, it’s important to do your homework. As a property virgin, this experience is entirely new to you. The last thing you’d want to do is make a mistake that will cost you dearly.

Here are five of the biggest mistakes first-time homebuyers are prone to make and how to avoid them.

    Mistake #1: Buying Too Much Home

Before house hunting, it’s a good idea to get pre-approved for a mortgage. When you’re pre-approved, you’ll know exactly how much you can afford to spend on a home.

Your mortgage broker is going to tell you the maximum amount you can spend, but keep in mind, that doesn’t mean that you should spend the entire amount.

Take some time to crunch the numbers and see if you can afford the mortgage payments on a monthly basis. Don’t forget to take into account property taxes and strata (condo) fees.

You’ll want to leave yourself some financial breathing room in case mortgage rates go up or you run into a financial emergency.

By overspending on a home, you could find yourself “house rich, cash poor,” with very little money to save, let alone to spend on having fun (say goodbye to dining out at restaurants and going on vacation every year). Don’t make this mistake.

By buying a home within your home-buying limit, you’ll be better prepared the next time life throws a financial curveball at you.

    Mistake #2: Forgetting to Budget for Closing Costs

If you’ve never bought a home before, it’s easy to overlook closing costs.

They’re just a drop in the bucket, right? Wrong. Closing costs can add up to four percent of your home’s purchase price.

On a $600K home, you could be spending upwards of $24K in closing costs.

And your lender won’t cover these costs, so it’s your responsibility to put this money aside in addition to your down payment.

Examples of typical closing costs include land transfer taxes, real estate lawyer fees and home inspection fees. First-time homebuyers do get some breaks on closing costs, but they’ll still cost you a pretty penny.

    Mistake #3: Buying Based Solely on Looks

Have you ever stepped foot inside a house and it became love at first sight? You see everything you’re looking for in a home: granite countertops, stainless steel appliances and an open kitchen. You’re ready to make an offer right then and there.

But before you do, take the time to look at the bones of the home.

I’m talking about the roof, windows, furnace and structure. Anyone can install a new backsplash in a kitchen or toss some fresh paint on the walls, but replacing something significant like the roof can cause a lot of heartache.

Don’t get distracted by the stuff that’s supposed to “wow” homebuyers. You want a home that’s sizzle and substance, not just sizzle.

    Mistake #4: Skipping the Home Inspection

In red-hot housing markets, a new trend is for homebuyers to skip home inspections. And it makes perfect sense – when you’re competing against 10 other buyers for a house, including too many conditions can cost you your dream home.

What’s worse than losing your dream home? Winning what turns into your nightmare home.

For example, the home could have flooding issues. But if you don’t know the signs to look for you’ll totally miss it. That’s an expensive mistake.

A home inspection sounds like a lot, but once you get the report you’ll be happy you did it. This is especially important for older houses. The report will provide you with a handy checklist of all the things you should do to make sure your home is in great shape. Don’t cheap out on it.

If you’re worried about including the home inspection condition in your offer, consider getting a “pre-inspection.” That’s a home inspection before you make an offer. That way you can make an offer with the confidence and peace of mind that you’re buying a rock-solid home, not a money pit.

    Mistake #5: Not Shopping Around for a Mortgage

We comparison shop for everything from televisions to vacation packages, but so many people just take whatever mortgage their bank offers them.

There’s nothing wrong with your local bank branch being your first stop for a mortgage, but it shouldn’t be your only stop. By just taking the first offer, you’re likely leaving money on the table.

Buying a home is quite possibly the single-biggest financial transaction of your lifetime

Let that sink in for a moment.

Your local bank may have the best mortgage, but you won’t know for sure without shopping around. And the best way to do that is with an experienced mortgage broker.

There you have it, five of the costliest first-time homebuying mistakes.

When you’re buying a home for the first time, you don’t have to be alone. When you leverage a team of experienced professionals, including a mortgage broker, real estate agent and real estate lawyer, your first homebuying experience is more likely to be a pleasant one, setting you up for financial success for years to come.”

– Alan Harder (January 11, 2018)

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