"Dealing With Mortgages Will Give Most People A Huge Headache..."
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The easiest way to avoid headaches and determine what your options are is to get a pre-approved mortgage. This will go a long way in determining the best course of action that you should take to be able to purchase your home. Pre-approvals also help to give you negotiating power when trying to get the best mortgage deal available.
Before I apply for a pre-approved mortgage, I'd like to learn more...
There are many different things to know and undersatnd about mortgages. The best advice is to contact a Mortgage Broker or your a Bank. Throughout this page there is a great deal of information on mortgages, prequalification...
What do I need to know about down payments?
5% down payment program highlights
·Minimum down payment of 5% of the purchase price or appraised value, whichever is less
·Down payment must be from customer’s own resources or an outright financial gift from immediate relatives
·If the minimum equity requirement is being met by way of a financial gift, the funds must be in the possession of the borrower 15 days prior to closing date
·Borrowers are also required to demonstrate at time of application the ability
to cover a closing cost equal to at least 1 5% of the purchase price.
·Maximum GDSR < 32% (Principal + Interest + Property Taxes + Heating Costs + 1/2 of Condo Fee must not exceed 32% of Gross Income)
·Maximum TDSR < 40% (Principal + Interest + Property Taxes + Heating Costs + 1/2 of Condo Fee + Monthly Obligations including Credit Cards & Loans must not exceed 40% of Gross Income).
·Minimum loan term for CMHC is 6 months with loan qualification based on the current 5-year rate.
·GEMI currently has no minimum term requirement
·The mortgage loan insurance premium is 3.25% of the mortgage amount (Premium can be added to the mortgage or paid separately).
·Credit history must be in good standing
If you have any questions please have my approved Mortgage Brokers answer any of your questions. Just click on the link below and you will be directed to their website.
www.elitemortgageteam.ca
Can I use my RRSP's to help me buy a house?
RRSP Program — The Home Buyers’ Plan
The Home Buyers Plan (HBP’) is a federally instituted government program designed to assist 'qualified' buyers in the purchase of a home. Until 1999 the program was available only once and you had to buy or build the qualifying home for yourself, however, the rules have changed. In order to qualify you have to complete Form T1036, which is available at your tax services office.
Home Buyers’ Plan (HBP)
The HBP is a program that allows you to withdraw up to $20,000 from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself. Starting in 1999, you can withdraw funds from your RRSPs under the HBP for someone else under certain conditions as outlined below.
Who can participate In the HBP? And how many times? You can participate in the HBP more than once in your lifetime if:
.Your HBP balance for your previous participation is fully repaid at the — beginning of the year you want your participation in the HBP to occur; and you met all the other HBP conditions that apply to your situation.
·You are considered a first time home buyer if, at anytime during the period be withdrawn beginning January 1st of the fourth year before the withdrawal and ending 31 days before the withdrawal, you or your spouse did not own a home that you occupied as your principle place of residence. If you are disabled you may be able to participate in the Home Buyers’ Plan to buy or build a more accessible home.
You may also be able to participate in the HBP for someone else if:
• You acquire a home under the HBP for a related disabled person, that is more accessible to or better suited to the needs of that person; or
• You withdraw funds from your RRSP under the HBP and provide those funds to a related disabled person to acquire a home that is more accessible to or better suited to the needs of that person.
How does it work? — No penalties
There are no negative effects from removing funds from the RRSP in short, individuals are able to withdraw monies from their fund without penalty:
• No tax is owed on the monies withdrawn
• No interest is paid on the monies while it is outside of your RRSP. There is no monitoring of the monies while outside your Plan.
If you have any questions please have my approved Mortgage Brokers answer any of your questions. Just click on the link below and you will be directed to their website.
www.elitemortgageteam.ca
How many different mortgages can I choose from?
First mortgage:
Mortgage given first priority at the registry office. Usually the only financing required. Gives borrowers the best rate of interest.
Second mortgage:
A higher interest rate loan that provides borrowers with additional financing if the first mortgage does not meet their total financial requirements.
Fully open mortgage:
With this type of mortgage, the entire principal or any part of it can be prepaid to the lender at any time, without having to pay any penalty or bonus interest to the lender.
Open mortgage, with a predetermined penalty or notice:
All or part of the principal can be prepaid at any time by paying a penalty or giving a set amount of written notice. The amount of the penalty or the notice period would have been predetermined at the time the mortgage was arranged.
Partially open mortgage, with no penalty or notice on that open portion:
This type of mortgage is partially open, but not fully open. The mortgage contract permits a limited, fixed percentage to be returned to the lender each year (up to 10%, 15% or even 20% depending on the lender), in addition to the regular payment without any penalty being paid or notice being given. There may also be some restrictions as to when during the year this prepayment can be made. The balance of the mortgage (80%-90%) is closed and can only be prepaid if the lender allows - and then on the lenders terms!
Partially open mortgage, with a predetermined penalty or notice on that open portion:
As above, this mortgage is partially open, but not fully open.
The mortgage contract would allow for a fixed percentage of principal to be prepaid, but subject to a predetermined penalty (i.e. 3 months interest) or with a pre-established amount of written notice. The lender may also have some restrictions as to when the prepayment can be made during the year. The balance of the mortgage is closed and does not allow for automatic early prepayment of the loan.
Fully closed mortgage:
These types of mortgages have no pre-payment privileges at all. All mortgages fall into this category unless the repayment privileges appear right in the mortgage documents. All mortgages are fully open at maturity.
Convertible mortgage:
For those playing the rate game, you get the low rate typically associated with the short term, but the freedom to lock in at anytime for longer, If you think rates are headed up. To win, however, you’ve got to be an assiduous rate-watcher. These mortgages are usually offered with a 3-month, 6-month or 12-month term.
Variable rate mortgage:
A loan whose interest rate is changed monthly or more frequently to keep it in line with the general interest rate trends. Lenders often set the rate based on their prime-lending rate. While the loan rate changes, the payment may stay level each month. In that case, the amounts going to pay interest and principal each month are adjusted to reflect the rate. VRMs are handy mortgages when rates are falling because those rate breaks get passed along quickly as rates are adjusted. Again, with this type of mortgage, you’ve got to watch the rates. If you fail to act quickly when rates begin to rise, you may also miss the chance to switch to a fixed-term mortgage. Increases in interest rates could create problem, If your VRM monthly payment doesn’t include any cushion for rate hikes. In that case the lender may require you to increase your payment to prevent a “deficit interest” situation.
Hybrid (mutant) mortgages:
Lenders have different product names for their own mortgages to try to make them sound unique or for marketing purposes, gimmicks designed to get customers in the door, but all mortgages fall into one of the above categories. Variations between and within each category help distinguish different lender packages. Be absolutely certain the prepayment privileges are in writing, and appear right in the mortgage documents. Being told the lenders policy’ includes one of the prepayment features is not good enough.
Protect yourself! After confirming all the details and analyzing the situation, most people still opt for an ordinary fixed rate mortgage. Don’t be fooled by all the bells and whistles!
What do I need to know before I can be pre-qualified for a mortgage?
Information required to be pre-qualified for a mortgage:
Ask your employer to prepare a letter on company letterhead outlining your name, base salary or hourly rate, normal hours worked per week, position and length of service. A recent pay stub and a copy of your T4 from last year may also be required.
If commission sales, three years personal tax returns together with the Notice of Assessments from Revenue Canada.
If self employed, three years personal tax returns together with the Notice of Assessments from Revenue Canada, three years business financial statements, and three years business tax returns (if applicable).
Social Insurance Numbers
At least 3 years history of residence and employment.
Know your banking information (financial institutions name, address, and type of accounts, account numbers).
Know your assets (what you own) and their value. i.e. cash amounts, stocks, bonds, RRSPs, car.
Know your liabilities (what you owe). I.e. car loan, credit card balances, child or spousal support payments.
Please let us know about any past credit problems you may have had. Write down a list of questions you would ike to have answered.Be off and running with a pre-qualification behind you. Ensure that you can get the home of your dreams
If you have any questions please have my approved Mortgage Brokers answer any of your questions. Just click on the link below and you will be directed to their website.
www.elitemortgageteam.ca
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