Posted: October 9, 2009 Categories: mortgage advice No Comments
Your home is likely the single largest purchase you will ever make. Sounds a bit scary, doesn’t it? It doesn’t have to be!
The process of purchasing a home, however, should not be taken lightly, as the type of financing you will secure for your home purchase will dictate your monthly budget for years to come.
With that said, it is important to understand that finding a good mortgage rate may just be the beginning. There are many strategies that you can employ to secure the best, possible mortgage for your home.
Below are several key strategies for your consideration:
- Just like anything else, mortgage rates can be negotiated. It is not out of the question to ask for a reduction in a published mortgage rate, even if it is just a quarter of a point.
Remember that mortgage lenders are just like any other business, and they are out there, competing for your business. In other words, don’t just choose a mortgage lender without thoroughly examining other lenders and their rates in your area before committing to a particular lender. Check out the published rates and take the time to learn about all of the loan programs available so that you can find the one that best meets your needs and your budget.
- Consider the advantages of a seller concession. A seller concession essentially involves asking the seller for a percentage of the home in a concession (which is usually no more than six percent). For example, if you purchase a home for $200,000 and ask for a seller concession of five percent, the price of the home will become $210,000, but the seller will return that $10,000 seller commission to you at closing, thereby enabling you to use the funds toward your closing costs.
In other words, you are effectively rolling the closing costs of your mortgage back into the loan, thereby providing yourself with additional cash funds for closing expenses.
Another bonus to a seller concession is that, because mortgage interest is tax deductible, you can write off the costs associated with closing. Although you will end up paying a slightly higher mortgage payment, many buyers find the relief of not having to come up with the cash at closing to be a good trade-off.
However, it is important to note that the only way you can swing a seller concession is if the house is appraised for at least the amount being taken out for your mortgage.
- Assume the seller’s mortgage. You may be able to save money by simply assuming the existing mortgage on the home that you’re buying, assuming that the mortgage is at a lower interest rate than current interest rates. You may be able to save some costs this way, particularly in administrative costs, although you will need to provide enough cash to cover the difference between the purchase price of the home and outstanding mortgage.
- Pay down the principal on the home, when you are able. There is simply no better way to pay down your mortgage balance and the interest that goes along with it than to pay extra payments on your loan every year. Even one extra payment each year will allow you to pay off your mortgage years before you would have otherwise.
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage broker please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!
Posted: October 5, 2009 Categories: calgary mortgage broker, mortgage advice No Comments
There’s no doubt about the current credit market: mortgages are not what they used to be. Stricter lending guidelines can make your home buying experience all the more complicated – unless you prepare yourself and your credit in advance.
Before you begin perusing neighborhoods and dreaming of your first home, you should instead begin thinking about your credit. Because, let’s face it, if your credit isn’t in order, obtaining a mortgage may simply be unattainable, especially in today’s economic climate.
Don’t let this information scare you; instead, begin the road to understanding your credit so that you can be fully prepared to take on a mortgage lender and walk away with a mortgage for your first home.
The Road to a Better Credit Report
The first step is to understand that one of the first things a lender will do is review your credit report. In fact, the lender will likely pour over it with a fine-tooth comb.
What is the lender looking for? Evidence that you have managed your finances well; that you have a strong history of paying your bills on time; and that you aren’t overextended with debt.
Therefore, your first plan of attack should be to order a copy of your credit report from all three, national reporting bureaus: TransUnion, Equifax and Experian. Best of all, you are entitled to a free copy of your credit report, from all three credit agencies, on an annual basis.
How to Evaluate Your True Credit
Once you have possession of your credit reports, you will need to make sure they are accurate. This may involve quite a bit of your time, but it is necessary, as even minor errors or discrepancies on your credit report can lower your overall credit rating, thereby either preventing you from obtaining the best, possible interest rate or from obtaining a mortgage at all.
If you locate any discrepancies or errors on your credit report, it is crucial that you immediately contact the appropriate credit reporting agency, who will then investigate and hopefully resolve the issue on your credit report.
What Your Mortgage Lender Evaluates
Your mortgage lender will ultimately be looking at your FICO score, which is designed to help lenders decide whether they think you are a good credit risk. Your FICO score is comprised of several factors, including:
- Your payment history – Have you paid your debts on time?
- The total amount of your debt – Also referred to your debt-to-income ratio, or how much debt you pay out each month in relation to your overall income. Now is a good time to begin paying off as much debt as possible.
- Your credit history – A lender will look for a history of responsible credit management on your part.
There is no magical formula for determining your FICO score; instead, it is a culmination of several factors, all of which work together to give a lender a good idea of how you have managed your credit in the past, and how much debt you have taken on at any given time.
The best rule of thumb is to simply pay your bills on time, keep your debt to a minimum and check your credit reports for accuracy before applying for a mortgage so you can be ahead of the game and ready to secure a mortgage.
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage broker please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!
Posted: October 1, 2009 Categories: Uncategorized No Comments
Only available for the 2009 tax year, the Home Renovation Tax Credit (HRTC) is providing Canadians a welcome incentive to improve their home. These improvements can be made to an eligible dwelling (personal residence, home, or cottage). As well, the tax credit applies on purchases over $1,000 but less than $10,000.
What Qualifies as an Eligible Dwelling?
The CRA website defines an eligible dwelling as a housing unit (house, cottage, condo, etc.) that is the principal residence of one or more of your family members at any time between January 27, 2009 and February 1, 2010.
Effectively, this means that any dwelling inhabited by yourself, your partner (through marriage or common-law), or your children are eligible for the tax credit.
What You Need to Claim the HRTC
Unlike most tax credits, that require vast amounts of documentation to verify your eligibility, the HRTC is quite simple to claim. You simply need to provide sufficient documentation to prove that you did purchase the improvement you are claiming. Acceptable documentation includes:
- Contract agreements, invoices, and receipts. So long as these documents clearly state the vendor/contractor, the business address, and the GST/PST registration number.
- The date when the goods/services were delivered/performed
- Proof of payment – Obviously this is needed to prove that you fall into the stipulations mentioned above.
Questions About the HRTC?
This is just a brief overview of the home renovation tax credit. If you have questions that aren’t addressed here the CRA has set up a minisite that should be able to answer all of your questions. It can be found here: http://www.cra-arc.gc.ca/hrtc/.
We think that the home renovation tax credit is a great “excuse” for Canadians to go out and renovate! Receiving a tax credit for performing the renovations that you have been wanting to perform only sweetens the deal!
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage broker please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!
Posted: September 23, 2009 Categories: calgary mortgage broker, mortgage advice No Comments
Interest rates sit at near-historic lows. This reason alone is compelling enough for many people to make the transition from renting to ownership. If that’s you, congratulations! You have many factors working for you right now: plenty of homes available for purchase, low interest rates, and the fact that many homeowners are looking to sell now (and are very negotiable as a result).
Mortgage Requirements Have Been Tightened
Do you recall the attitude that existed several years ago when mortgages were being handed out faster than Halloween candy? Unfortunately, the “money for all” approach that many lenders had simply doesn’t exist today. The market “crash”, along with tightened access to credit, have changed the way many people will be able to obtain a mortgage.
However, that doesn’t make it impossible. It simply means that, in regards to applying for a mortgage, you need to have everything in order. Your calgary mortgage broker will be able to provide more information in detail.
Preparing for Your Mortgage Application: Four Essential Steps
The golden rule here is to think ahead. Don’t disillusion yourself into believing that you can have everything prepared in a matter of hours or days. When you are dealing with multiple contacts across a variety of businesses, things can take days, weeks, or months to materialize properly. Thinking ahead and organizing everything a month or two in advance can save you equal that in frustration.
Thinking ahead is actually pretty easy. All you have to do is:
- Know your lendability - Order a copy of your credit report from the major bureaus so that you know what your credit score is. If it’s good (above 650), great! If it isn’t (below 600), work on getting it better (lower debt, pay bills on time, pay more than minimums, etc.). Reducing your debt-to-income ratio before you apply for a mortgage is always a good idea (lenders are looking at your debt-to-income ratio more than ever now).
- Gather all necessary documentation - Proof of income, down-payment source, bank statements, bills, insurance, etc. The sooner you have it the more prepared you are.
- Freeze all credit gathering until after the mortgage process – Applying for credit makes you more of a risk to a lender. This is especially true when the lender could possibly provide you with hundreds of thousands of dollars. Don’t apply for a new credit card until after you have your mortgage.
- Remain stable, accessible, and trackable - Not you specifically, but the source of where your money is coming from. Lenders will want to see your down-payment in a location that is verifiable, such as a guaranteed investment account or savings account. They’ll also want to see that your day-to-day lifestyle is sustainable, and the addition of a mortgage won’t create too much financial risk.
Taking the time to gather your financial documents and proof of good candidacy is essential. A mortgage broker that specializes in Calgary mortgages is key in streamlining this process for you.
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage broker please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!
Posted: September 18, 2009 Categories: calgary mortgage broker No Comments
A recession hit us. I know, I know, brace yourself. That’s a bit of surprising news, isn’t it?
Sarcasm aside, there’s no denying that the global economic crisis (AKA, the recession) really put a lot of people in positions they weren’t used to being in. For many people born post 1980, a “recession” was an entirely new, completely foreign concept. For others, it was a case of lather, rinse, and repeat.
However, how you feel about the recession doesn’t change the fact that it has made life a little more difficult for those looking to obtain a loan or mortgage. Before the recession, banks and lenders alike seemed to hand out zero-down mortgages like candy. Now? Well, be prepared to save some cash.
Obtaining a Mortgage Post Recession
People can still get mortgages, and unless you have absolutely no income, no credit, and no cash, there’s a good chance that you can get one too. Many banks have dramatically tightened their purse-strings, which is why Calgarians looking for a mortgage may find that using a Calgary mortgage broker is the way to go, but that doesn’t mean that they’re impossible to obtain.
Your credit is more important than before, but it doesn’t have to be squeaky clean for a lender to provide you a mortgage (especially if you’re using an experienced calgary mortgage broker). As always, make sure that you have your ducks in a row:
- Clean up your credit - Pay off as much of your debt as possible a few months before approaching a lender. This will make you more applicable for credit as your debt:income ratio will have been reduced.
- Build a down-payment – Save money to be used as a down-payment. The more you have, the better your chances of getting a mortgage (and the more you may be able to get approved for).
- Show consistency and stability in your lifestyle - If a lender runs your credit bureau and sees that you’ve been trying to get a ton of credit in a very short period of time it makes you look like a serious risk. Avoid seeking any more credit than you absolutely need.
Are the Days of Zero-Down Long Gone?
For some people, yes, the days of zero-down mortgages are over. However, these people are also the people that likely should not have necessarily obtained a mortgage in the first place (due to financial/economic reasons, stability reasons, or otherwise).
As always, your mortgage broker will let you know about what your best options are and how they’ll work for you.
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage broker please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!
Posted: September 14, 2009 Categories: calgary mortgage broker, mortgage advice 2 Comments
A common myth that is very prevalent is that people who are self-employed, or who work on a commission basis, can not get a mortgage/have difficult time getting a mortgage. While this myth is true in certain situations, it is not a universal rule. In fact, obtaining a mortgage when you’re self employed can be a very streamlined and simple process assuming that you have certain things in order. There are many people in Calgary who are self-employed who enjoy the same access to mortgage products that those who are not self-employed do.
Things Necessary to Obtain a Mortgage When Self-Employed
As previously mentioned, it is possible to obtain a mortgage when you are self-employed or on commission. If you are newly self-employed the process will be different than if you have been self-employed for a number of years.
If you are newly self-employed (under three years) it is important to have the following in order:
- An excellent credit rating - Lenders will look at your “beacon score” first, before assessing other things such as equity, assets, down-payment, etc. A score of 600 or more is considered “good”, while a score of 680 or more is considered “excellent”. Unless you have a significant down-payment your credit will need to be very good. If it isn’t, you can raise your score by maintaining a low balance on your credit cards, paying more than the minimum payments on your loans, and reducing your overall debt to income ratio by eliminating debt. Unfortunately, this process does take time.
- Your last two NOA’s (Notice of Assessment) from Canada Revenue Agency - Your NOA is your proof to the lender that you have filed and paid taxes on the income that you are presenting to them. In many cases you will need to ensure that you have your last two NOA’s (at least), and that the income shown on your NOA matches what you are presenting to the lender, but with stated income mortgages offered by some lenders if your NOA’s do not match its not game over.
- A down payment - Unfortunately, most (if not all) lenders will not lend to someone who is self-employed without at least 5% of the purchase value as a down-payment. If you have excellent credit, a 5% down-payment should be sufficient (assuming you don’t have a large debt overhead). If your credit rating is still good (over 600) but not as high as it could be, a down-payment of 10% or more may be required.
If you have been self-employed for a number of years, and have maintained good credit, you will find that a good Calgary mortgage broker will be able to get you a mortgage without too much fuss. Remember, those who are self-employed are a larger risk for a lender since there is no guarantee of income.
What To Do If Your Local Calgarian Bank Turned You Down
You will find that banks do not like to offer mortgages to those who are self-employed as earnestly as they will to others. However, if you are using a mortgage broker who specializes in Calgary mortgages, your options are not as limited as they may seem. Remember, a bank is only able to offer you its particular set of products and services- this fact in itself can be very limiting. A mortgage broker is able to offer you a wide range of products and services that extend across a platform of multiple lenders.
If you aren’t sure if a mortgage broker will benefit you, read our article on what a good calgary-area mortgage broker can do for you.
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage broker please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!
Posted: August 10, 2009 Categories: calgary mortgage broker, mortgage advice No Comments
Do you remember the days when getting a mortgage was easy? Simply show up to your favourite broker or banks office with a pay stub and a decent credit score, and after signing a few papers, you walked out the door with a mortgage! Okay, perhaps it was never that easy, but the global financial crisis has effectively ended the days of banks handing out 108% mortgages.
Lenders, in a bid to act more responsibly, have tightened their lending criteria. However, this doesn’t mean that you need a perfect credit rating or no outstanding debts to qualify for a mortgage. Being savvy, and following the advice of a good mortgage specialist, will net you a mortgage that is perfect for what you need it for (not all mortgages are the same). When it comes to home loans, knowledge is power.
Confused? Talk To Your Mortgage Broker.
If you are unsure about home loans it is always a good idea to talk to your mortgage broker. As with just about anything, there are many ways that you can borrow money- and that money doesn’t always have to come directly from a bank. Your mortgage broker is a specialist and knows the ins and outs when it comes to finding a suitable lender for you. Not only that, but your mortgage broker is a trained professional who knows the Calgarian marketplace.
Your goal as a home buyer is to find the ideal home for you needs. All factors, from price to square footage, play a role in that. Your mortgage broker can do a lot more than simply connect with you with a lender; mortgage brokers can offer sound financial advise in regards to lending products that are tailor made for your specific situation. After all, if you are a first-time buyer with no equity your product needs may be different than someone with a lot of equity built up.
How a Mortgage Broker Operates in Calgary
Calgary is a big city, both by geographical size and by population. Because of this fact there are dozens of mortgage brokers that can assist you in finding a lending solution. All mortgage brokers will follow a structured process:
- Initial consultation - Your mortgage broker will discuss your lending needs and circumstances based on the information that you provide. This consultation will determine your needs and long-term goals, ensuring that your mortgage broker finds the best lending solution for you.
- Rate negotiation - A good mortgage broker, such as the Purcell Mortgage Team, will not simply pick a lender for you. Instead, they will negotiate with lenders until they have a solution that fits your needs. Lenders, when vying for your business, will often give a mortgage broker interest rate cuts and drop various fees and charges- benefits that are not usually available to you without one.
- The Approval Process - Once your broker has found the right loan product for you the broker will complete the necessary paper work and send it off to the lender. You may need to provide some documents/information, but the majority will be handled by your broker. Most lenders will get back with a pre-approval within a few days, with a formal approval taking up to two weeks (depending on the lender).
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage broker please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!
JoAnne Purcell, AMP