Tuesday, March 5, 2013 Home Financing - Mortgage ChecklistMortgage Checklist
QualifyingLenders take 3 things into account to qualify you for a mortgage:
Click on: Rate Hub and watch the video's explaining Credit Score, Down Payment, and Debt Service Ratios
Pre-ApprovalWhen you decide to buy a new home, your first stop should be your friendly neighbourhood bank or mortgage broker to get Pre-Approved for your mortgage. The bank or Mortgage Broker will tell you:
The Pre-Approval approves you for the loan. It doesn’t approve the property you want to buy. When you have negotiated an offer for your new home, the bank will probably need to do an assessment to make sure that the property qualifies for the loan amount. This is one of the reasons that you need to include a ‘Subject To Financing’ clause in every contract for purchase and sale.
The Mortgage approval process can take between 7 and 10 business days to complete. Being Pre-Approved removes the worry that you won’t qualify for the loan and allows you to make offers with a shorter ‘Subject To Financing’ time frame which makes your offer stronger in the eyes of the seller.
A lot of people worry about going to a lender to ask for money because they don’t know what to bring or what questions they will be expected to answer. Here is a checklist that should help you to make the Mortgage application as quick and painless as possible. Income VerificationSalaried Or Hourly
Self Employed Or Contract
Questions You Will Be Asked
When You Currently Own A Home
When You Have Made An Offer
Mortgage Pre-Approval LinksCMHC Homebuying Step by Step - Takes you through the entire Home Buying process. Step 2 has calculators so you can do it yourself before you go to the bank Let me know if you don't have a Morgage specialist and I'll give you a list of some of the best mortgage people in Vancouver.
Follow Me On: Thursday, September 20, 2012 Mortgage Prepayment PenaltyMortgage Prepayment Penalty
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You generally have to pay a penalty for paying your mortgage off early although sometimes you can get the financial institution to waive the fee if you re-finance with them.
The amounts of the fees vary by province and may change at any time without prior notice. Hypothetical Mortgage Example
What does it mean to you?When your selling your home, you need to take into account your mortgage prepayment amount, when your calculating how much money you will have for your new home.
The cheapest mortgage to get into, might not be the cheapest mortgage to get out of.
Follow Me On: Thursday, July 5, 2012 What do Vancouver's June Real Estate stats mean?
Thursday, June 21, 2012 What Do Today's Mortgage Changes Mean To You?Categories:Mortgage,Real Estate Big Mortgage Changes In Canada!
So... What Does It Mean To You?If you have a 30 year mortgage today, and 40% of mortgages were 30 year mortgages last year, then you will be paying more when you refinance. Call your bank well before the refinancing to make sure their are no surprises.
You will be paying more per month for 5 less years by going from 30 to 25 years.
You will qualify for less mortgage because your monthly mortgage payment is used in the GDSR / TDSR ratio's and your monthly payment will go up.
If you have a pre-qualification in place you will need to contact your bank to see what your new maximum mortgage will be under the new GDR and TDR ratios, unless you are closing before June 9th, 2012. If you are selling a home that new home buyers will be interested in, then you have lost a percentage of potential buyers who no longer qualify for the mortgage based on the new rules. Maximum amortization 25 years instead of 30The basic rule of thumb is you will pay $50.00 per month per $100,000.00 of mortgage, but you will be paid off 5 years sooner.
In dollars (Truncated) based on 4% per year, monthly payments, compounded semi-annually Refinancing limit 80% instead of 85%If you use a Line of Credit it will now be capped at 80% instead of 85% loan to value.
Maximum qualifying Gross Debt Ratio (GDSR) is 39%Definition: Gross Debt Service Ratio (GDSR) The GDS looks at your proposed new housing costs (mortgage payments, taxes, heating costs, and 50% of condominium fees, if applicable). Generally speaking, this amount should be no more than 32% of your gross monthly income. For example, if your gross monthly income is $4,000, you should not be spending more than $1,280 in monthly housing expenses. Source: TD Bank – Know what you can afford Gross Debt Service Ratio = (Total Mortgage Payments + Taxes + Heat + 1/2 Condo Fees) * 100 / Annual Gross income GDS does not currently apply to qualified borrowers with credit scores over 680.
Click here and fill in your information to find out what your GDS Ratio is. Maximum qualifying Total Debt Ratio (TDSR) 44%Total Debt Service ratio (TDSR) The TDS ratio measures your total debt obligations (including housing costs, loans, car payments, and credit card bills). Generally speaking, your TDS ratio should be no more than 40% of your gross monthly income. Source: TD Bank – Know what you can afford
Total Debt Service Ratio = (Total Mortgage Payments + Debts Payment + Taxes and Credits) / Annual Gross income Fill it in your data here to find out what your GDS Ratio is. Where can I find more information?Links to additional information and commentary: How much can you afford: Mortgage Affordability Calculator Department of Finances – Frequently Asked Questions CBC News: Ottawa caps CMHC mortgages at 25 years CBC News: Mortgage rules to be tightened further by Ottawa CTV News: Flaherty reduces mortgage terms from 30 to 25 years HARPER GOVERNMENT TAKES FURTHER ACTION TO STRENGTHEN CANADA’S HOUSING MARKET FInancial Post: You still don’t need a lot of cash to buy a house, unless you’re rich
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