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Frequently Asked Questions - Mortgages

What is a Mortgage Broker and why should I use one?
A Mortgage Associate acts independently of banks and lenders, providing their services to individuals who seek not only professional expertise, but also the benefit of multiple product offerings. Because a mortgage associate is not employed by one bank or lender, they have the ability to find mortgage products from a variety of different lending sources. In addition to arranging your mortgage a mortgage associate will facilitate your experience by providing guidance on all aspects of the mortgage process.

How is a Mortgage Broker/Associate compensated?
In most circumstances the lender will pay an associate a finder's fee for bringing the mortgage to them and for handling the application and paper work etc. In some situations where a client needs extra care and attention due to credit, a past bankruptcy, or the property or title creates difficulty the mortgage associate may charge an additional fee.

What is a pre-approval?
Being pre-approved means that your information has been reviewed and submitted to a lender who pre-approves you based on that information. The other nice thing about pre-approvals is that many of the lenders will hold your interest rate from 90-120 days which means if rates go up; you still receive the lower rate. Most Realtors require that you have a pre-approval in place prior to entering into a service agreement.

What is a down payment?
A down payment is the difference between you purchase price and mortgage amount. It is the amount of money that you put into the home; the rest of the purchase price comes via a mortgage. In most situations your deposits on you purchase will go towards your down payment on the home. After possession your down payment becomes equity in your home.

How much down payment do I need?
Depending on your situation this will differ. Such things as income, property type or use will help determine down payment amounts; however, it is important to know that some lenders will offer up to 100% financing, which means buyers do not have to come up with a down payment.

What documentation will be needed during my application?
Each situation is different, but you can be sure that some of the following will be required: employment letter, pay stub, proof of down payment (where is it coming from), appraisal, purchase agreement etc. When it gets to this point we will help you out with this.

What if I am self employed?
Being self employed isn't a crime, although it sometimes feels that way. We work with lenders offering programs and products specifically for self employed individuals whether they are proprietors or incorporated. For example, stated income, or NIQ (no income qualifier products) have helped many business for self applicants obtain mortgages.

How do I access the equity in my home?
The most common ways of doing this are by adding a HELOC (home equity line of credit) or refinancing your home to access the equity in your home ETO (equity take out). Many lenders are offering products that take advantage of both methods, allowing clients to place a new favorable mortgage on their home for the money they need access to today, along with a line of credit portion to ensure future borrowing potential. When doing what is referred to as an Equity Take Out, the mortgage amount is increased and the difference between the new mortgage amount and the old mortgage amount becomes the money that you take out of your home. Many people use this money to consolidate other debts, invest, or simply to use at their leisure.

Do you provide mortgages for revenue properties?
Yes we do! There are a number of options for investors seeking revenue properties these days. Even for self employed individuals seeking Revenue properties there are unique products available. I.E. Stated Income Rental Programs or Interest Only Mortgages. We will even arrange mortgages on multi-unit properties of 6 units or more.

Can you find me a mortgage on a vacation or secondary home?
Of course! In fact there have been a number of improvements develop for secondary home mortgages. This might include a home that you use in the summer, or even a downtown condo that stay at during the week instead of driving in from your acreage. You may no longer require a 25% down payment.

Do you offer Commercial Mortgages?
Yes we have the ability to arrange commercial mortgages up to $40,000,000. These include multi-family condo buildings, raw land, construction draw loans, and even operating loans for small businesses. Generally we specialize in helping commercial clients who aren't a fit for the major banks.

Can you find a mortgage for acreages?
Absolutely! As a general rule the majority of lenders doing this will only lend on the value of the home, plus 5 acres, however, in the right situation they may lend on house plus 10 acres.

I'm not happy with my current mortgage, what are my options?
The starting point is to arrange a meeting with a mortgage broker to discuss your concerns and see if there are better options out there for you. It might be beneficial to refinance your mortgage and go with a new lender. This can make sense if rates are lower today than when you obtained your original mortgage, or if you have improved your credit and can now qualify for a better interest rate!

General Mortgage Clarification: What is?

OPEN Mortgage- A true open mortgage allows a borrower to pay out their mortgage in any amount without notice or penalty. Be careful, some lenders say OPEN, but will charge you a fee for paying your mortgage out in full. Ask us about the STEP mortgage which also combines a HELOC to use at your discretion.

CLOSED Mortgage- Mortgages stipulates that you have agreed to make payments for a specified term I.E. 5 years. If you want to pay out your mortgage the lender will penalize you for breaking your commitment by charging you a payout penalty (3-6 month interest, or Interest rate differential…usually the higher of the two). The extreme of the closed mortgage are those that will only allow you out with a bonified sale. In this situation you will not be able to refinance your mortgage during the agreed to term.

Term- The agreed length of time that you and the lender agree to follow the terms and conditions of your mortgage. You might say that it is the actual length of time for which mortgage money is loaned. When the term is up you must either renew your mortgage at current rates, or find a new one. The term is usually shorter than the amortization.

Amortization- The process of paying off your mortgage in regular payments (interest and principal) over a certain period of time. 25 years is quite normal. This basically means that if you paid the same payment for 25 years you would owe $0 at the end of the 25 years.

How long can I amortize my mortgage? Currently up to 40 years.

High Ratio Mortgage- When the loan to value is 80% or greater. This means the borrower has less than a 20% down payment. A high ratio mortgage requires either CMHC or GENWORTH mortgage default insurance, or a lender that has the ability to self insure.

Conventional- When the loan to value is 80% or less. This means the purchaser has a down payment equal to 20% or more of the value of the home.

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