Mortgage Articles & Tips
On this page you will find useful articles and tips to help make the mortgage process smoother and hassle-free. Keep watching this page as we will be adding to it on a regular basis. Click here for a handy GLOSSARY of mortgage terms.
Locking in a Mortgage Rate
Before you start house hunting, getting a mortgage pre-approval from a mortgage broker is a simple step that can make the process of buying a home smoother.
A pre-approval will provide you with a “rate hold,” which guarantees that the interest rate for which you are pre-approved will be held for you for 60 to 120 days.
This provides you with the peace of mind of knowing that if interest rates should rise while you are house hunting, the lower rate in effect at the time of your pre-approval is still available.
A Mortgage Consultant can provide you with a range of expert advice when you get a mortgage pre-approval. He or she will shop the market for the best interest rate, length of rate hold, and mortgage product to maximize your purchasing power. If you are thinking of buying a home call a Mortgage Consultant today to get pre-approved – you’ll be on your way to finding the house that’s right for you.
Cut out the Middleman and Save? Not So When Getting a Mortgage.
While most would agree that cutting out the middleman will get you the best bargain, this is simply not the case when it comes to mortgages.
An independent mortgage brokerÂ’s services are in most cases free to clients because the selected lending institution pays the broker to source a new mortgage. In addition, most lenders offer their best discounted interest rates and fast approvals to bring in more business.
There are some circumstances in which a mortgage broker will charge a fee (disclosed up-front), such as when a mortgage application must be submitted to a non-traditional lender.
A Mortgage Consultant has expertise that you need – he or she will guide you throughout the complex process of getting a mortgage. At Total Mortgage Solutions, our Consultants take the time to get to know each client’s financial needs in order to pinpoint the perfect mortgage. And the negotiating leverage of the nationwide network means extremely competitive rates.
So, getting a mortgage? In this case, you need the middleman!
At , We Negotiate with Over 30 Lenders
More and more homebuyers are recognizing that a mortgage broker can get them a very competitive mortgage rate, allowing them to maximize their housing dollar.
Working on your own, you could apply to perhaps two or three financial institutions and select from their in-house mortgage offerings. A better approach is to talk to a mortgage consultant – he or she can “shop” your application to an extensive line-up of lenders who offer a wide range of mortgage options.
A independent Mortgage Consultant has access to over 30 lenders, including chartered banks, credit unions, and trust companies, as well as other sources of funds such as life insurance companies and pension funds. Several of these funding sources are only accessible via a mortgage broker. In addition, the negotiating leverage of the nationwide network means most lending institutions offer their best discounted interest rates and fast approvals.
A Mortgage Consultant will guide you through the complex process of getting a mortgage; find you an extremely competitive interest rate and the mortgage product that best suits your individual needs and personal goals. So why wait? Access your options today.
Variable Rate vs. Fixed Rate Mortgages: Which One is Right for You?
When it comes to choosing a mortgage, Canadian homebuyers and homeowners must consider an incredible array of mortgage types as well as contend with changing interest rates. With choices come decisions, and those wanting to acquire, renew or refinance a mortgage have to think carefully about the stability offered by a fixed rate mortgage vs. the risks and potential rewards of a variable rate mortgage.
Over the past few years, when interest rates were falling to lowest-ever levels, many borrowers chose fixed rate mortgages to lock-in those great low rates. Yet variable rate mortgages remain attractive, and are currently around a full point cheaper than typical fixed rate mortgages.
A variable rate mortgage allows the borrower to take advantage of low rates as it has an interest rate that is calculated on an ongoing basis at the prime lending rate minus a set percentage. However, you have to remember that with a variable mortgage, the rate you pay will move up and down during the term of the mortgage. There are those who prefer the greater sense of stability that a seven to ten year fixed term mortgage can provide in a changing rate market.
Faced with todayÂ’s competitive mortgage market and a changing interest rate landscape, consumers need access to timely, quality information as well as trustworthy expertise. When deciding on whether a fixed or variable mortgage is best for you, a Mortgage Consultant will look carefully at your current situation and personal long-term goals to determine and which mortgage best meets your individual needs and how much you can afford to borrow.
Locking in a Mortgage Rate
Before you start house hunting, getting a mortgage pre-approval from a mortgage broker is a simple step that can make the process of buying a home smoother.
A pre-approval will provide you with a “rate hold,” which guarantees that the interest rate for which you are pre-approved will be held for you for 60 to 120 days.
This provides you with the peace of mind of knowing that if interest rates should rise while you are house hunting, the lower rate in effect at the time of your pre-approval is still available.
A Mortgage Consultant can provide you with a range of expert advice when you get a mortgage pre-approval. He or she will shop the market for the best interest rate, length of rate hold, and mortgage product to maximize your purchasing power. If you are thinking of buying a home call a Mortgage Consultant today to get pre-approved – you’ll be on your way to finding the house that’s right for you.
Accelerate Your Mortgage Freedom – Part 1
For most Canadian homeowners, paying off their mortgage as quickly as possible is a top priority. Paying down extra principal in the early years by whatever means possible can shorten the life of your mortgage — and dramatically lower the interest you'll pay over the long haul. Here are a few tips on how to make this happen:
Tip #1: Increase your payment annually to the most you can afford
The upside is that most lenders will allow you to reduce it again to the previous level if it turns out to be too great a burden or your circumstances change.
Tip #2: Prepayments give great return on investment
If you pay an average of 5.0% in mortgage interest, for each $1,000 by which you reduce your mortgage principal, you will save $50 in after tax cash every year. If you are paying taxes at a marginal rate of 40%, you have to earn $108.33 each year to pay the interest on every $1,000 of principal outstanding ... a heavy burden, but also a tremendous implied benefit to reducing this balance.
Tip #3: Utilize your RRSP-driven tax rebate as a mortgage prepayment method
Even if you can only prepay annually, make sure tax refunds are set aside for paying down your mortgage. Many Canadians borrow (at prime) to buy an RRSP to ensure the maximum rebate. When applied to the mortgage principal, this refund is a "gift that keeps on giving". Combining the refund with the tax-free interest earned on the RRSP over the subsequent years will quickly outpace the short-term interest costs of the RRSP loan.
Tip #4: Increase the frequency of your payments
Make accelerated bi-weekly payments to get a "free" principal reduction equivalent to one full mortgage payment every year — painlessly.
It pays to have a mortgage reduction strategy in place. Call a Mortgage Consultant today for expert advice on how to pay off your mortgage sooner.
Accelerate Your Mortgage Freedom – Part 2
Last week we noted that homeowners have much to gain by paying off their mortgage as quickly as possible. By paying down extra principal in the early years of a mortgage, you can dramatically lower the interest you’ll pay throughout the life of the mortgage. Here are some additional tips on how to make this happen:
Tip #5: Make use of double-up privileges wherever possible
Tell yourself that you will "skip-a-payment" whenever necessary ... then skip only when you absolutely must.
Tip #6: Round your payments up
By adding even a nominal amount of say, $10 per payment, the amount of interest you are saving will be unbelievable, and the extra money relatively painless to part with.
Tip #7: Pay a lump sum whenever possible
By decreasing the principal of the mortgage, your payments will not be allocated as much to interest, thereby accelerating the end of your mortgage.
Tip #8: Keep payments the same when mortgage rates have fallen
If the payment amount has not been a problem so far, then keep it the same, thereby paying down the principal faster.
Tip #9: Raise payments in line with increased income on an after-tax basis
If your income increases, don't keep your mortgage payments the same. Although the disposable income may be fun to spend on unnecessary luxuries in the short-term, the long-term benefits of being mortgage free faster a far outweighs the short-term sacrifice.
Call a Mortgage Consultant today for expert advice on how to pay off your mortgage sooner.
Before You Move Checklist
by Realty Times Staff
It's said that Rome wasn't built in a day. Many strokes topple mighty oaks. You can eat an elephant a bite at time. If you are facing a move, old axioms like these can offer some encouragement, but how about some practical advice? What you really need are step-by-step tips that will help you chip away at the daunting task of packing, moving and settling in.
Courtesy of North American Van Lines, here is a checklist of things to do to prepare to move:
Two-Three Weeks
- Fill and transfer prescriptions for family and pets. Pack them to travel with you.
- Arrange for shipment of plants and pets. Get immunization records for pets.
- Dispose of or give away all flammables.
One Week
- Defrost refrigerator and freezer, plus allow thorough air-drying to prevent mildew. Dispose of perishables.
- Transfer checking and savings accounts.
- Drain fuel and oil from lawnmowers and other power equipment. Drain water hoses.
- Pack items to be carried in the car, and label "Do Not Move."
- Gather valuables from safe deposit box, drawers, jewelry cases as well as personal records. Pack them safely to take with you.
- Send clothing, draperies, curtains, rugs out for cleaning and leave in wrapping. Take down curtain rods, shelves, and TV antenna.
- Have the car serviced for the trip and have proof of insurance in car.
Moving Day
- Remember to pack a box of basics you'll need on move-in day (tools, paper products, all-purpose household cleaners, etc.) Be sure to have it loaded last so that it will be first off at your new home.
- Pack suitcases for trip. Remove all bed linens.
- Be available to check items on inventory sheet.
- Conduct a last minute walk through with your van operator. Make sure windows are closed, closets empty, lights out and doors locked.
Dos and Don'ts
- Do keep your copy of inventory, Bill of Lading, Order for Service, Estimate, household booklet, numbers to call, etc. with you at all times when moving begins.
- Don't pack these items with the shipment.
- Do carefully wrap liquids, cleansers, and shampoos in plastic wrap or liners.
- Don't pack paint, bottles of bleach, gas cans, or other inflammables. It is against federal law for movers to transport flammables and combustibles.
- Do back up your PC with copies of all your files. Put in a scratch diskette to park your hard drive. Try to pack the PC in its original carton. Remove CD's from your player before packing and put the discs back in their cases. Wrap multi-play cartridges separately.
- Do moisten plants before placing them in cartons. Know that professional movers are prohibited from moving plants unless delivery is scheduled within 24 hours or is less than 150 miles away.
- Do have your appliance motors bolted to ensure safe arrival.
STUFF YOU'LL NEED LIST
More than likely, you already have 80% of the following list and you can borrow the rest. Print it out, cross off what you already have, start a pile and go get the rest:
- 2-4 big, black permanent markers
- several rolls of wide masking tape
- scissors
- tissues
- toilet paper
- paper towels galore and/or cleaning rags
- old toothbrush
- hand soap
- body soap
- shampoo
- bottled water
- Soft Drinks
- food for everyone helping
- sealable baggies
- trash bags (get a roll of 50. You'll need them)
- cabinet liner
- scrubbing brush
- sponges with one side that scrubs
- rubber gloves
- broom/dustpan
- mop
- vacuum cleaner
- bleach
- bathroom cleaner (get an all purpose cleaner. The more it does, the less you have to buy.)
- dust cleaner (ex. Endust, Pledge, etc.)
- carpet cleaner
- glass cleaner
- dishwashing detergent
- laundry detergent
- tile floor cleaner
- small jam box
DON'T FORGET TO CHECK BEHIND THE STORE FOR BOXES
There were way too many times during the move where I wiped my sweaty forehead and said: "[insert expletive of your choice here]! I forgot the stupid [pick from the list below]!"
Sellers: If You Want It, Ask For It!
by Julie Garton-Good
There's nothing more frustrating to a ready, willing, and seemingly able buyer than to lose an offer to another buyer --- especially since the seller was not specific (down to the letter) about what he expected to receive.
Sure, there's the list price; but in today's fast-paced market, a buyer/ prospect may offer thousands more than the list price and STILL not be the lucky buyer who gets the property!
That's why sellers should be as specific as possible with buyers in what they want to receive and achieve in a successful offer.
Let's tackle the major elements the seller should be prepared to address with serious buyers. I suggest that sellers (or their real estate agent) prepare a "Suggested Contract Requirement" sheet to give to buyers, outlining what they expect in the following:
Loan pre-approval
By now, it should go without saying that buyers without loan pre-approval shouldn't be competing in the current market; but sadly, some are. That's why it's important for the seller to specify that buyers be pre-approved for loans ample enough to fund the purchase price.
Or what about the buyer who claims to have "cash" coming to him to fund the purchase (often coming from proceeds of an estate or settlement of a law suit.) The buyer's funds are delayed. In order to close the sale, he must borrow the money, causing the seller a three-week delay in accessing his proceeds. Verifying the buyer's funding (which is tougher to do in a "cash" sale) is vital for sidestepping potential delays for the seller.
Big Deposit Money
In the old, slower school of home buying a decade or more ago, buyers would offer a meager amount of money or even a post-dated check with the idea that they could always up the ante if need be. In today's market, more (rather than less) deposit money is advised in most situations. Not only does it subtly signify to the seller how financially motivated a buyer is, but can serve as a buyer's first (and often only) shot at a strong first impression to the seller.
By letting prospective buyers know the minimum amount of deposit money the seller is seeking, it places a strong buyer on equal footing with competitors. It also gives a heads-up that if you want a stronger foothold with the seller in this area, exceeding the suggested minimum amount is certainly in order! If a buyer structures an offer to include minimal contingencies like obtaining financing in a certain amount and the property appraising for at least the sales price, etc., deposit money would be at little risk of loss.
And what about contingencies? Should a seller require that buyers make all offers free of positively all contingencies if they're serious about the property? Hardly. But keeping contingencies to a minimum definitely gives buyers an added advantage over their competition and results in a smoother sale for you as a seller.
If a seller specifies a list price when putting his house on the market, why not set other minimum requirements for offers and share them with prospective buyers? While this hasn't been the common practice of most sellers in the past, many are finding it a practical way to sort through the myriad of offers received in order to go with the strongest possible buyer (not to mention reducing anxiety and headaches for potential buyers!)
By the seller noting suggested contract requirements on a printed sheet circulated to prospective buyers, buyers have an idea of minimum requirements and should attempt to meet or exceed them if they plan to compete for the property. Obviously, buyers are free to make any offer regarding the items. Likewise, a seller would be free to accept an offer that didn't contain the suggested requirements.
NET PROCEEDS
Real estate consumers have learned over the decades in purchasing and selling property, that there can be a marked difference between the sales price and net proceeds. If a buyer pays a seller his "list" price, those are gross proceeds. Deducted from the gross will be the costs of sale (commissions, closing fees, etc.) as well as any outstanding liens against the property (like mortgages or property taxes) Once these costs are deducted, the remainder is termed the net proceeds. Sometimes the difference between gross and net is slight; but other times, it's a huge chasm.
The best way to achieve definitive results is to make sure that you (or your real estate agent) estimate your sales costs before listing the property, and that you determine the type of offer (including the type(s) of financing programs) you'll consider in order to achieve your net proceeds amount.
