Posts filed under ‘mortgage advice’
Posted: October 23, 2009 Categories: mortgage advice No Comments
There seems to be a lot of conflicting information regarding home loans and mortgages. In particular, you have probably heard that lenders are requiring more money down than ever, and that you shouldn’t even consider purchasing a home unless you have 20 percent to put down on the home.
What’s fact and what’s fiction?
Although the myth that you must have more than 20 percent down is not exactly true, it does shed light on the changes that the mortgage industry has made since the decline of the credit sector and subsequently of the housing market.
The fact of the matter is that lenders are pickier than ever regarding to whom they will extend a mortgage. With a record number of homes going into foreclosure, and literally millions of Americans behind on their mortgage payments, lenders must do what they can to ensure that an individual will be able to repay a mortgage loan; and a down payment is often a good indicator of that.
The amount that you will need to come to the table with in order to secure a mortgage will depend on the lender. Most homebuyers today are required to put at least five percent down, while others may need to put as much as 20 percent down to secure a home loan.
Very expensive homes or homes bought in areas that are burdened by an overabundance of foreclosures may even require more than 20 percent down.
Q: Can I still get a home loan with no money down?
A: Given today’s economy and lending market, do not expect to snag a home loan with no money down. The only exception currently offered is the cash back mortgage (also goes by other names depending on the lender), but in this case the lender still requires the minimum 5% down payment, the difference is that they provide the down payment. Even better is they do not require it to be paid back, they simply provide the down payment. But don’t get too excited just yet, they do have very strict guidelines on these offers , so if you have a beacon score less than 680 you probably won’t get approved. Also don’t expect the best rates out there either, you will be looking at bank posted rates, which are typically 1-2% higher than the best rates offered by lenders.
Q: What is the minimum I can pay for a down payment?
A: With regards to conventional loans, for single-family homes, you may be able to secure a mortgage for as little as five percent down. The neighborhood must be flourishing and the property must meet the exacting standards of the lender, but it can be done. However, it is important to point out that you must have a great credit score, adequate income and assets and an acceptable debt-to-income ratio, as well.
Q: Will I need more money down if I buy in an area that is currently dealing with a high foreclosure rate?
A: Probably. Many lenders keep a close eye on areas that they feel are declining, and will often ask for an additional five percent down if you want to purchase a home in one of these areas. In other words, if you are using a lender that typically requires five percent down, they may require 10 percent down if you want to purchase a home in area with a high foreclosure rate.
Q: What about condos?
A: Lenders typically require a larger down payment for a condo, but this is not necessary. As long as you have good credit you can land yourself a condo in downtown Calgary for 5% down, or if you have excellent credit you may be able to qualify for a cash back mortgage as described above. Just keep in mind that to get the best rates in Calgary Mortgages, and the Calgary Condo market you will be expected to have excellent credit.
Your best course of action is to simply talk to a lender and get a loan pre-approval before you begin looking at homes so that you can become educated regarding the lender’s down payment requirements.
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!
Posted: October 19, 2009 Categories: calgary mortgage broker, mortgage advice No Comments
Your home will likely be the largest purchase you ever make, thus it requires that you take the time to find the best loan program and the best mortgage lender to handle your home loan.
Finding the best mortgage lender is a lot like any other industry. You must ask plenty of questions and perform due diligence, ensuring that you can make an educated, well-informed decision regarding your mortgage loan.
For many home buyers, particularly first-time homebuyers, the process of finding the perfect mortgage lender can be quite daunting; even overwhelming. It pays to take your time and research all of your options so that you can be rest assured that you made the right decision.
To ensure that your mortgage loan needs are best served, follow these simple tips:
- Find the best rates. Mortgage rates are published in the daily newspaper, so you can make this resource a first stop. You can also view current mortgage rates through a variety of websites, including ours. There is simply no better way to stay abreast of all changes in the lending industry than to read the latest news, either through the newspaper or Internet.
- After you locate a lender who offers a good mortgage rate, look further into the associated fees of the loan, such as application fees, origination fees and appraisal fees. Many lenders may offer low interest rates, but once you get done paying all of the related fees you are in over your head for thousands of dollars.
- Once you have chosen a few lenders who fit the bill when it comes to mortgage rates and related fees, make sure they are a trusted lender with a solid reputation. This is not the time to find subpar lenders who may or may not have a good history of lending.
- Ask friends, family members and neighbors for mortgage lender referrals. Often times, the best way to find a great lender is through the referral of a trusted individual. Although this should certainly not be the only way in which to find a mortgage lender, it can help narrow down your search.
- Make an appointment to meet with several lenders. Now is the time to ask plenty of questions regarding their loan products and your financing needs. If the lender is inpatient with you or is difficult when it comes to answering all of your questions and addressing all of your concerns then it is best to move on.
- Ask the mortgage lender professional which loan products are best for you. A good mortgage lender will take the time to thoroughly research your loan needs so that you won’t get stuck in a loan that’s simply not suitable for your situation or budget.
- Take a first-time homebuyer course. Many first-time homebuyers choose to take a first-time homebuyer course through a local real estate company. A course in home buying should also cover the home loan process, and is often a great place to ask questions and gather information so that you can make the best decision regarding your choice of home loans. Alternatively, download our new homebuyers guide!
Or let us do your homework for you. Calgary Mortgage Brokers and Calgary Mortgage Associates do the due-diligence for you. Mortgage specialists go through the above process everyday and don’t charge the client a dime to for their effort, so call contact the Purcell Mortgage Team and let us take the guess work out finding the lender that is best 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: 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: 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 14, 2009 Categories: calgary mortgage broker, mortgage advice No 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