THE MOST IMPORTANT QUESTION THIS SPRING

General Kristine Rosalin 28 Mar

Short Version:

The most important question a home-seller must ask their Broker or their banker this Spring:

‘Do I QUALIFY to port my mortgage?’

You must re-qualify to port your mortgage to a new property, and you must re-qualify under stringent new rules.

How stringent?

Long Version:

Let’s say you have impeccable credit, a $100,000 income, and bought a house with a basement suite last year – you may have a mortgage of ~ $675,000…which you qualified for in 2017.

In 2018, you new maximum mortgage amount is closer to ~$530,000.

And if rates were to move up another 0.50% you’d be capped at ~$490,000.

If rates were to move up a full percentage point ~$455,000

Either way, even with no further upward movement, the family in this example, were they to enter into a binding sale agreement without confirming their qualifications would not be able to re-enter the market at the same price point.

Key Point – Do not ask if your mortgage is ‘portable’ (99% are). Ask if you currently qualify to move your mortgage to a new property. This will require an actual application and full review.

Key Point – The federal government has created a dynamic in which qualifying rates have shifted radically, and more precisely the ground has shifted under tens of thousands of middle class Canadians feet. You have been protected from yourself, and you don’t even know it.

Key Point – Since Jan. 1, 2018, you’re subject to the new stress test. Even though you have impeccable credit, have never missed a payment, and even got a 3% raise last year – too bad.

Conclusion

Don’t list your home for sale without having something in writing from your current lender confirming that you QUALIFY to move your existing mortgage to a new property. If you have any questions, call me!

GETTING PRE-APPROVED FOR A MORTGAGE THIS SPRING

General Kristine Rosalin 27 Mar

 

Apparently, as per the weather experts, March has a lot of snowfall and surprisingly so does April!
Hearing this on the radio gives you a wave of emotions: holy cow, oh great, I wonder how many vacation days I have left and when can I take down my Christmas lights.
Good news, those same weather experts are predicting a hot summer and you know what that means! Buy your fan(s) now before they run out and check out a pool, size and budget appropriate, for the backyard. So glad we have a compressor to blow that thing up every year; three rings take a lot of breath!
Normally by April you are thinking about moving because you need a bigger home, you need to down size, or its time to leave the basement of your family home.
Those weekends where you have little to do so you opt to go out, get a coffee and go to show homes and see how they decorate because the DIY on TV is all reruns. While you are there, you start to picture yourself living there and then begin to wonder, “can I do this?” Do I want to want to do all the landscaping, do I need a developed basement now or later, where are the schools? Maybe should I think about an already established community with lots of schools, trees, or place that my cat and I can live.
Working with your Dominion Lending Centres Mortgage Professional, we will review your options, your affordability, possible extra costs that you may have missed and finally, get you pre-approved!

Prequalified or rate hold, what is the difference?
Your broker has asked you for supporting documentation that will confirm your income, you do indeed have a down payment, and your debt is not more than you can handle along with possible new housing costs. This is so they can start the application to ensure the numbers are good and we can begin.

  • Rate Hold – it is just that, a rate that lender is offering and, based on the application submitted to them, it shows the numbers are in alignment for them to hold a rate for you. This rate can be held anywhere from 90 – 120 days. Remember, they have reviewed the application submitted only and no other supporting documentation.
  • Prequalified – it is just that, the lender has reviewed the supporting paperwork along with the application and is in happy to provide you with a prequalified letter stating they not only are they holding the rate for 90 – 120 days, depending on which lender, but you have met their criteria for lending.

o Although once you present you offer they may still have a few more items they want to check:
▪ You still working? – you will need a current paystub
▪ You still working at the same place?
▪ You didn’t buy a new car, right? Ugh!
▪ You didn’t get new furniture and finance it with the store, right? Ugh!

Call me for DO’s and DON’Ts; this one single sheet of paper will make or break a deal!

Pre-qualified or rate hold, now you know the difference.

MAKING SMARTER DOWN PAYMENTS

General Kristine Rosalin 23 Mar

Mortgage Insurance Premiums. Many people know what they are- an extra cost to you the borrower. But not many people realize how they are calculated. Understanding the premium charges and how they are calculated will help lead you to making smarter down payments.

  • 5%- 9.99% down payment of a purchase price is a 4% premium
  • 10%- 14.99% down payment of a purchase price is a 3.10% premium
  • 15%- 19.99% down payment of a purchase price is a 2.8% premium

So, that means with a $300,000 purchase price and a $30,000 down payment (10%), you would have a 3.10% premium added to your mortgage, making your total mortgage amount $270,000 + $8,370 for $278,370 total. The $8,370 being 3.10% of your original $270,000 mortgage.

Now let’s say you have a down payment potential of $60,000 and have the income to afford a $350,000 purchase price but you found one for $325,000. Using your entire $60,000 down payment (18.46%), your new mortgage amount would be $272,420, where $7,420 of it represents the mortgage insurance premium.

But what if you change that $60,000 (18.46% down payment) to say $48,750 and have a down payment of exactly 15%? Well, your premium is still the exact same as it would be with an 18.46% down payment because your premium is still 2.8% of the mortgage amount. That means you will now save $11,250 (difference in down payments), while only paying $7,735 in premiums (an increase of $315).

I don’t know about you, but if someone told me I could put $11,250 less down and it would only change my insurance premium by $315, I am holding onto that money. You now have more cash for unexpected expenses, moving allowance, furniture, anything you want. You can even apply it to your first pre-payment against your mortgage and pay the interest down while taking time off your loan. Obviously if cash is not an issue, putting the full $60,000 would be better seeing as you are borrowing less and paying less interest. However, if cash is tight, why not hold onto it and pay that difference over the course of 25 years?

Call me for consultation when it comes to structuring your mortgage request. It is small little things like this that make all the difference.

NEED A COMMERCIAL MORTGAGE?

General Kristine Rosalin 22 Mar

If you’re an entrepreneur, business person or commercial investor then you probably have or need a commercial mortgage.

Where should you start?

Do you call your bank, or do you call a commercial mortgage broker?

I recommend you call your bank.

Yes, that’s right; I’m a commercial mortgage agent and I am telling you to start with your bank (unless you are already out of time).

Most business people have financial resources, a good credit rating and a relationship at a chartered bank or credit union.

Common sense says: start with a commercial account manager at your bank. Take your documents with you: financial statements, your mortgage request (written down), latest appraisal (if completed) and any lease agreements. Tell your account manager you want indicative rates and fees before moving forward with a mortgage application.

Spend thirty minutes in the manager’s office, no longer. Do this quickly; don’t waste time. After all, this is just one lender and you have no idea whether your bank is competitive or even if it wants to do the loan. Tell your banker you need an answer in two days. If the account manager cannot give you an indicative rate and fees in a short timeframe, you are speaking with someone who will ultimately cause you headaches down the road.

Once you have the bank’s rates and fees, it’s time to verify the information with a commercial mortgage broker who has access to multiple lenders. Now, you could call ten lenders yourself, but again, common sense says that would be a waste of time.

Call your friendly neighborhood Dominion Lending Centres commercial mortgage broker

Depending on who you call, the commercial mortgage broker will do one of three things:

• ask you to sign a representation agreement,

• give you a song and dance about the low rates they have achieved for clients, or

• tell you the truth.

Top commercial mortgage brokers cut to the truth.

Why? They are busy. They don’t waste time on deals they can’t close.

As a commercial mortgage broker, it makes no sense to sign a representation agreement until I know I can add value. Step one is simply to determine whether the mortgage is bankable. To do this, I need documents. Yes, top commercial mortgage brokers are like bankers. With the right information, transactions can be digested in 20 minutes and can be summarized in six pages or less.

Top commercial mortgage brokers say things like:

• Tell me about your deal in 5 minutes or less; nature of transaction, deal size, legal structure, cash flow, quality of financials and timeline.

• What documents can you send me? I’ll review them in 24 hours and call you back.

• Have you called your bank yet? What rate did they give you?

Tell your commercial broker the truth. If your bank offered 4.5% fixed for 5 years then say so. Why? Because no one wants to waste time. Your commercial mortgage broker doesn’t set the rates; the lenders do. Your commercial mortgage broker knows when a rate makes sense and whether lower rates are available. For example, if I can’t save you 25 basis points (that’s 0.25% per year), the reality is, by the time we pay to move the mortgage to another lender, you’re probably better off taking your bank’s initial offer.

Top commercial mortgage brokers understand this, and they will be truthful with you.

“Hey, if you have 4.5% fixed in this market for that building, in that area; take it, don’t hesitate; it’s a good deal.” I say this to entrepreneurs who call. It serves no one to enter an agreement that won’t add value. In fact, its our fiduciary duty to tell you.

Some entrepreneurs say they already have good rate (even when they don’t). “Oh, my bank offered me between 4.6 and 5.2%.” The thinking being, if they imply they have 4.6%, then the broker will work even harder to get a lower rate.

Beep. Wrong.

Brokers don’t set the rates; lenders do. This just muddies the water. If the broker thinks you already have a good rate (and best-in-market is 4.5%, only 10 basis points less), then the broker will move on right away.

About Commercial Mortgage Brokers

All a commercial mortgage broker wants, is serve you; and that means delivering the best rates and terms. There is no financial incentive for a broker to hold back information or low rates. Similarly, holding back your bank’s interest rate just wastes everyone’s time, including yours.

As a commercial mortgage broker, if I think I can help you, I’ll tell you right away. I’ll review the deal quickly, determine if its bankable and touch base with a few lenders. If lenders express interest, I’ll call you to discuss what they told me.

Transparency and open communication are the keys to saving time and to getting the most from your commercial mortgage broker.

If you are getting a runaround and want the straight scoop, call me.

4 SIGNS YOU’RE READY FOR HOMEOWNERSHIP

General Kristine Rosalin 1 Mar

While most people know the main things they need to buy a home, such as stable employment and enough money for a down payment, there are a few other factors that may help you realize you’re ready, perhaps even earlier than you thought!

As a mortgage agent, it is my job to ensure that each one of my clients is getting the best service I can provide. Part of this means educating as much as possible when it comes to buying a home, which is why I’ve put together a list of 4 signs that may tell you that you are ready to become a homeowner.

You should have more funds available than the minimum of a down payment
This one may seem obvious, but it’s something that people may not realize until they actually think about it. It’s very difficult to afford a home if you only have enough money for a down payment and then find yourself scrambling for day-to-day living after that.

If you have enough money saved up (more than the minimum needed for a down payment), you may be ready to start house-hunting.

Your credit score is good
This might seem obvious at first glance, however, if you don’t have a good credit score, chances increase that you could be declined altogether or stuck with a higher interest rate and thus end up paying higher mortgage payments. If you have a less-than-optimal credit score, working with a mortgage professional can help you get on the right track in the shortest time possible. Sometimes a few subtle changes can bump a credit score from “meh” to “yahoo” in a few short months.

Breaking the bank isn’t in your future plans
Do you plan on buying two new vehicles in the next two years? Are you thinking of starting a family? Are you considering going back to school?

Although you may think you can afford to purchase a home right now, it’s extremely important to think about one, two, and five years down the road. If you know that you aren’t planning on incurring big expenses that you need to factor into your budget anytime soon, then that’s something that may help you decide to buy a home.

You are disciplined
It’s easy to say, “it’s a home, I’m going to have it for a long time so I may as well go all-in!”. While that would be nice, that’s rarely the case!

You must have a limit that you’re willing to spend. Sitting down with a mortgage broker or real estate agent and analyzing your finances is crucial. It’s important that you know costs associated with buying a home and what the maximum amount is that you can afford without experiencing financial struggles. IMPORTANT: This is not the amount that you are told is your max!

This is the amount that you calculate as your max based on your current monthly budget and savings plan. It’s quite frequent where I have clients tell me that their max budget is, say, $1200 and then when I run the numbers they could actually be approved for much more. Low and behold suddenly these guys are looking at homes that are hundreds of dollars a month higher than their initial perceived budget. It is up to you (with my help or pleading, when necessary) to reel things back in and make sure that you aren’t getting into something that affects the long-term livelihood of a well thought out budget or savings plan.

Conclusion

These are just four signs that you may be ready to purchase a home. If you’re seriously considering buying or selling, talking, I can help put you on the right path to a successful real estate transaction.