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Mortgage-Matters

Before you list your home

If you are considering listing your home for sale in the near future then there are some things that you need to know.

You may think that your first call should be to a realtor, but it should really be to a mortgage broker – not your mortgage lender, but a mortgage broker.

Why?

A mortgage broker is going to give you unbiased advice and has many options available to ensure that the financing process goes smoothly for your planned move.

You may not fully understand the limitations and conditions of your current mortgage:

  • Is it portable to a new property?
  • What are the potential interest penalties?
  • Do you need to re-qualify for financing?
  • What costs are involved?
  • Does the mortgage still fit your current circumstances?
  • What happens if you want to buy a new home before your current home is sold?

Here is some information to consider and questions to ask.

  • Not all mortgages are portable such as variable rate mortgages and Home Equity Lines of Credit. Other conditions on your mortgage may also prevent you from moving it to a new property. Many low-rate or no-frills mortgage products are not portable.
  • The timing of the sale of your home may affect the amount of interest penalties being charged. The anniversary date of your fixed term mortgage will determine the amount of the interest penalty. Waiting a couple of months could significantly reduce your potential penalties. If the purchase of your new home does not line up with the sale of your current home you will still have to pay the penalties to your lender upfront and the amount will be credited back to you upon closing of your new purchase.
  • You may understand that your current mortgage is portable but did you know that you will most likely have to re-qualify for financing to be able to move your mortgage to a new property. Has your overall debt or employment status changed since you originally qualified for your mortgage? It’s possible you may not qualify with your current lender.
  • Discharge fees and re-investment fees may be charged by your current mortgage lender. Are you aware of the potential costs to either payout or move your current mortgage? There can be times where there may not be sufficient proceeds to provide clear title to your home.
  • If you find a new home before your current home sells do you have sufficient funds available to cover the required deposit? Will you qualify to carry two mortgages or bridge financing?

An experienced mortgage broker can review all of the above with you to ensure that the sale of your home goes smoothly with no unexpected surprises.

We can calculate penalties, discuss options for bridge financing as that is not available with all lenders, provide an option for deposit funds and check the mortgage market to make sure you have the right mortgage with the best rates, terms and conditions for your current circumstances.

We will complete a full review so you can move to your next home with ease.

If you have any questions please reach out to me by phone at 888-561-2679 or email [email protected]



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Review your mortgage

Stick out your financial paperwork and say, “Ahhh!”

It’s time for a check-up.

Thankfully, this check-up doesn’t require you to face your weight on that maddeningly accurate doctor’s scale, or sit in a cold and drafty little room with an open hospital gown. Actually, it’s a mortgage check-up that’s in order, and making time for a quick review may yield some amazing results.

About 80% of Canadians visit their doctor at least once a year to help ensure they remain physically fit but far fewer are checking their financial fitness annually.

Life changes, families grow, jobs move, retirement objectives shift. There are any number of reasons why your mortgage and possibly your entire financial picture should be evaluated from year to year.

Maybe there are no changes needed but if there are it’s better to identify them early.

The mortgage you signed up for a few years ago may no longer be the best fit for you. Doing a financial check-up is a very smart thing to do annually.

Many often just wait for the renewal letter before they look at their mortgage and then go back to their current lender without considering whether that mortgage meets their current needs.

There are so many things that a mortgage can do for you. It can help you:

  • become more tax efficient
  • build wealth for retirement
  • renovate your home,
  • consolidate high interest credit card debt
  • perhaps invest in a business
  • purchase a vacation or rental property
  • and so much more.

When you obtain a mortgage it is most likely the largest financial transaction of your life.

Here’s a thought for you – instead of focusing solely on the interest rate perhaps it might be important to consider various strategies that you can utilize within your mortgage that will assist you with your goal of mortgage freedom and financial freedom when you are ready to retire.

Having the same mortgage strategy your entire life is not always the best financial decision. If you are applying different mortgage strategies at different stages of your life, just like your other investments, it can lead to the financial wealth and the independence you are hoping for in retirement.

Don’t wait for your mortgage to come up for renewal and don’t wait until after you have made a major change in your personal situation.

By reviewing annually you will ensure you stay financially fit.

Give me a call today at 1-888-561-2679 or email me at [email protected] so we can schedule your check-up. I promise it won’t hurt!



Brokers can save you money

Do you have a full understanding of the role of a mortgage broker?

A recent report indicated that three quarters (74 per cent) of the respondents admitted they had at best only a ‘partial’ understanding of the role of a mortgage broker.

Here are the top five reasons from the survey for potentially not using a mortgage broker and clarification of exactly how a mortgage broker can assist you.

I don’t want to pay for mortgage broker services

This is the primary misconception about using the services of a mortgage broker. Mortgage brokers are independent and work with many banks and direct mortgage lenders.

The lender pays mortgage brokers on terms agreed upon between the lender and mortgage broker. You are not charged a ‘direct fee’ for their services.

The mortgage broker works with the lender until the closing of your mortgage and then receives their fee from the lender. Occasionally a ‘broker fee’ might be charged in very difficult situations but these fees would always be fully disclosed in advance.

I would rather deal directly with the lender

There are many direct mortgage lenders in Canada that can only be accessed through a mortgage broker.

Your mortgage broker will analyze your financial situation which includes your credit and employment history and provide you with your mortgage options.

They will then present your application in the most favourable way to the lenders that the broker has determined will best fit your needs.

They will also clearly explain all of the terms and conditions including how pre-payment penalties are calculated so there are no misunderstandings should you need to exit your mortgage early.

The thought of using a mortgage broker didn’t cross my mind

That is totally understandable. Your first thought is to walk into your local bank to apply for a mortgage because this is your main financial resource.

Mortgage brokers are not transactional like your bank and will continue to be a source of information for the life of your mortgage.

Your local bank can offer you decent rates and you may be comfortable with them but financing your home is most likely the largest financial transaction you will ever undertake.

Getting the best possible mortgage can literally save you thousands of dollars so working with a mortgage broker who will explore ‘all’ of the available options for you is a prudent choice.

I don’t want to deal with a lender that I’m not familiar with

The monoline lenders (non-deposit taking lenders) that are only accessible through mortgage brokers are a very important part of the mortgage industry in Canada.

Their mortgage products and low pricing improve consumer choice and force our dominant banks to be more competitive.

Monoline lenders do not have store front locations so these costs are not passed along to the consumer and as a result they generally offer better interest rates and lower penalties should you decide to pay off your mortgage.

They source their business through mortgage brokers and can have more flexible lending programs than the major financial institutions.

I don’t understand what services mortgage brokers provide

Mortgage brokers provide you with more choice as they have access to a network of many lenders that offer different products and services providing you with objective recommendations for your financing options.

Mortgage brokers have access to the best rates and negotiate on your behalf to ensure you receive the best terms on your mortgage for now and into the future.

Mortgage brokers are professionals that have on-going educational requirements to ensure you are always receiving the best independent advice.

If you would like to learn more about how a mortgage broker can assist you with finding your best mortgage options, please give me a call at 1-888-561-2679 or email [email protected]





Killing mortgage approval

We have worked hard together to get your mortgage approved and have been successful in securing great rates and terms for your mortgage financing.

There is going to be a period of time between receiving the final approval for your mortgage and the date that it will actually fund with the lender.

Things can go wrong within this time frame, so here is a brief list of things to never do between the approval and the final closing of your mortgage as most lenders are going to re-verify information before they fund your mortgage.

If anything has changed, it could kill your mortgage approval.

Change your job; quit your job; become self-employed

Do not change your employment status even if you are moving to a job that pays you more than you are currently making. Most employers have a probationary period that you must complete and the lender may no longer feel comfortable with granting you a mortgage because you are making a change in your employment status.

Quitting your job might seem like an obvious thing not to do, but losing the income might also disqualify you for the financing even if you are not the primary borrower.

Make a change to self-employment – wait until after your mortgage closes. The mortgage rules for the self-employed are different than if you are an employee.

Buy a new car or truck or van or motor home or new furniture

Most lenders are going to pull a new credit report right before they fund your mortgage. If they discover credit inquiries from car dealerships or a new car loan or any new debt now reporting on your credit report, the new payment could put your qualifying budget ratios out of line making it so you no longer qualify for the mortgage.

It might also be tempting to go shopping for furniture and dishes for your new home but you should wait until after you move into your new home. By increasing the amount that you owe to your creditors you are jeopardizing your mortgage approval because you didn’t owe those funds when your mortgage request was reviewed by the lender.

Another side effect of applying for new credit – it could pull down your credit score to a lower number that means you no longer qualify for your mortgage as there are minimum credit score requirements.

Don’t use those credit cards or close any accounts

As above, lenders are going to update your credit report before they fund your mortgage. Significantly increasing the balances outstanding on your credit cards could disqualify you for your mortgage financing.

The lender has also approved your mortgage based on your current financial situation. There are minimum requirements for open accounts by both lenders and mortgage insurers so conversely by closing accounts you may no longer meet those minimum requirements for open credit accounts.

Do not co-sign for someone else’s mortgage or loan

If a family member asks you to assist them by co-signing or being a guarantor on a mortgage or a loan, please don’t. You may have the best intentions to assist a family member but this could also jeopardize your approval.

Adding any extra debt could throw your borrowing ratios out of line as the new payments must be included in your debts even if you aren’t the one who is making the payments.

Don’t stop paying your bills

We may have approved you for a refinance of your mortgage to payout your debts but you need to continue making your payments until the mortgage has funded and the balances owing have been paid off.

Your credit score may be affected by not paying those bills and that could result in you no longer qualifying for the refinance.

The best course of action is to check with whomever approved your mortgage financing before making any changes to your financial situation. Making changes without the proper advice could actually cause your mortgage financing to be declined.

Unfortunately, these examples are from real-life situations. Give me a call at 1-888-561-2679 or email [email protected] and I will be happy to ensure that you don’t do anything to jeopardize your mortgage approval.



More Mortgage Matters articles

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About the Author

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. She has been assisting clients to purchase, refinance or renew their mortgages for over 20 years.

April has experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution and as a licensed Mortgage Broker. By specializing in Strategic Mortgage Planning she has the tools available to build a customized mortgage plan, with the features and options that meet your needs.

April provides a full range of residential and commercial mortgage financing options for clients all over the province of British Columbia and across Canada through the Mortgage Architects network.

Contact e-mail address: [email protected] or by phone at: 888-561-2679.

Website:  www.reddoormortgage.com



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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