Son Of A Broker » Credit

Understand Your Credit Score

chris — Thu, 13 May 2010 16:17:51 +0000

If you are applying for a mortgage or any other type of credit, a lender will always want to see your credit score. Having a strong credit score is so important to a mortgage application. When I sit down with clients and it comes to checking credit, there is often a sense of uneasiness because people simply don’t understand what is contained in a credit report. Here is a little breakdown to help you understand what a credit bureau is.

In Canada there are two major credit reporting agencies, Equifax and TransUnion. It is their role to gather a financial history about you that includes information about your credit and bank accounts, public records that reveal bankruptcies or court judgments, and any debt that went to a collection agency.

This information is used to generate a score between 300 and 900 which lenders then use to determine whether or not to extend credit to you. The higher your score the lower your risk.

Its a good idea to check your credit score at least once a year to ensure that your information is correct because mistakes do happen and it can be difficult to have them corrected. You can visit Equifax.ca or TransUnion.ca to learn more. If you are thinking of applying for a mortgage in the next 12 months and you are concerned about your credit score give me a call to discuss and we can look at your credit together to determine how to improve your score.

Maximize the Benefits of Your Credit Card

chris — Thu, 06 May 2010 16:15:42 +0000

One of the keys to successfully qualifying for a mortgage or any other type of credit is learning how to use your credit card. Credit cards can be a very useful tool when used properly but unfortunately credit cards don’t come with instructions.

When I work with first time home buyers the most common blunder that I see is someone who got a credit card when they were in University or College went out on a shopping spree then remembered that they didn’t have any income to pay for it all and defaulted on the card. The sins of yesterday always have a way of coming back to haunt you and that little mistake 10 years ago can make it very difficult for you to get financing. Here are some simple tips on how to use your credit card to maximize its benefits:

Limit your number of cards. It’s easier to keep track of expenses, and reduces the chance of a missed payment.

Transfer credit card debt. It’s a good idea to always pay your credit cards in full each month. If you are carrying a balance, a personal line of credit offers a much better interest rate.

Don’t spend what you don’t have. Use the convenience of a credit card only knowing the money is in the bank.

Be diligent with payments. Never pay the minimum only. Your original purchase could end up costing you twice as much.

Avoid missed or late payments. You could incur additional fees and a black mark on your credit rating.

How To Qualify For a Variable Rate Mortgage

chris — Tue, 04 May 2010 19:40:52 +0000

On April 19th 2010 new mortgage rules came into effect which have made it a little bit more challenging to qualify for a variable rate mortgage. Traditionally lenders qualified your maximum mortgage amount based on their current 3 year fixed rate. However, today it is a little bit more complicated and this post will help you if you are considering financing with a variable rate mortgage.

The rate used to qualify your maximum mortgage amount now depends on whether your mortgage is high ratio or not. Generally speaking if the mortgage you require represents 80% (i.e. less than 20% down payment) or more of the value of your home, then your mortgage is high ratio. If your mortgage is high ratio, then the lender is required to use the new Bank of Canada Qualifying rate. This rate is set every Wednesday by the Bank of Canada (Look for series V121764).

If your mortgage represents less than 80% (i.e. more than 20% down payment) of the value of your home then the rate used to qualify is the traditional 3 year fixed rate offered by your lender.

So in practical terms what does this all mean and what is the significance to you?

Based on the rates at time of publishing this post the difference is huge. Consider the following scenario for illustration purposes. Assume that your household income is $50,000 per year and you carry no outside debt. If your mortgage is high ratio then the maximum variable rate mortgage you could qualify for would be $184,815 based on the new bank of Canada qualifying rate of 6.25%.

If your mortgage is conventional (or represents less than 80% of the value of your home) then the total mortgage amount you qualify for would be $248,835 based on today’s best 3 year of 3.84%.

That is a difference of $64,000! That means that you may have to sacrifice variable to move into the neighbourhood or home that you want. That means that when you renew your mortgage you may be limited to taking a fixed. That means that you maybe forced to purchase with 20% or more to get the interest rate that you want.

What is CMHC Mortgage Insurance Good For?

chris — Thu, 29 Apr 2010 20:22:54 +0000

I have observed recently that both first time home buyers and seasoned owners alike struggle to understand CMHC insurance. From a borrower’s perspective the insurance premium paid up front for the benefit of a mortgage lender seems heavy handed and unfair. However, without CMHC you wouldn’t be able to buy or refinance your homes unless you had 20%, or more for the down payment. Even if a lender would entertain financing, without insurance, a mortgage lender would make you pay for their exposed risk through much higher interest rates.

Let’s just review why and what mortgage insurance is?

In Canada, it’s because of CMHC that lenders are willing to lend to borrowers who buy without large down payments. In the not to distant past (CMHC history), Canadian homebuyers had to purchase with much larger down payments. This is still the reality in many other countries today where there is no insurance available. Home buyers need to purchase with a 25% to sometimes 50% down payment making home ownership difficult.

CMHC insurance is a one time premium that is added up front to your required mortgage amount (you do not have to pay for it out of pocket) and insures the lender if default occurs. Although it seems like real estate is a forever increasing asset this is not always true. Markets can turn very quickly, as we recently saw in the U.S.. After legal fees, real estate fees and market corrections a lender can easily lose money if there is not enough equity or down payment.

The insurance premium is determined by a table depending on how much downpayment you bring to the purchase. You can find the rates here.

5% down- 2.75% premium

10% down – 2.00% premium

15% down -1.75% premium

In addition, there’s a 0.2% premium that is added for each additional 5 years of amortization above the traditional 25 year amortization. You should also be aware that included in your closing costs there is PST at 8% on the insurance premium.

It does seem a little discouraging and frustrating to have to pay this premium on top of all the other fees that you incur as a homebuyer. However, it serves a very important purpose to keep the mortgage interest rate low and give you the opportunity to own a home with less than 20% down. The couple thousand dollars that gets added on top of the mortgage makes a difference of about $20 each monthly payment. In retrospect it is a small price to pay for the satisfaction and pride of owning your own home.

So, there’s a snapshot on the CMHC insurance. Of course, every situation is different and requires a full analysis. If you have any questions, please feel free to contact me. I’d be happy to hear from you.

Chris Molder – Toronto mortgage broker
416.461.0204
chris@tridacmortgages.com

Monday Mortgage Minute

chris — Tue, 17 Nov 2009 02:55:00 +0000

Toronto Mortgage Interest Rates as of Monday November the 16th.

1 year fixed – 2.75%

3 year fixed – 3.59%

5 year fixed – 4.19%

3 year variable – Prime-.10% (2.15% effective rate)

5 year variable – Prime-.10% (2.15% effective rate)

RATE SPECIALS

5 year fixed – 4.05% (closings before Dec 31st 2009)

5 year fixed – 3.99% (Credit union membership required)

3 year variable Prime-.25% (2.00% effective rate closing in 30 days)

DISCLAIMER: All rates are subject to change at any time without notice.

Click here to view the embedded video.

10 Reasons To Use A Toronto Mortgage Broker

chris — Sun, 15 Nov 2009 21:21:18 +0000

Everyday consumers are confronted with the choice of whether to use their local bank or a mortgage broker for their financing needs. It isn’t always clear what the benefits of using a mortgage broker like myself are, so below I have summarized what in my opinion are the top 10 reasons to use a mortgage broker.

#1- Get Independent Advice On Your Financial Options. As an independent mortgage broker in Toronto, I am not tied to any one lender or range of products. My goal is to help you successfully finance your home or property. I’ll start by getting to know you and your homeownership goals. I’ll make a recommendation, drawing from available mortgage products that match your needs, and together we will decide on what’s right for you.

#2- No Cost To You. There is no charge for my service on a typical residential mortgage. So how do I get compensated? Like many other professional services, as a mortgage broker I am paid a finder’s fee when I introduce a creditworthy, dependable customer to a financial institution. These fees are quite standard and nearly industrywide so that the focus remains on you, the customer. There is no personal gain for me if you choose one lender over another.

#3- Save Time With One-Stop Shopping. It could take weeks for you to organize all the appointments necessary to get to know the products and options differentiating the competing lenders in the market – and I know you’d rather spend your time house hunting! I work directly with dozens of lenders, and can quickly narrow down a list of those that suit you best. Together we can review the shortlist to make mortgage shopping fast, easy and convenient.

#4- Get Expert Advice. When it comes to mortgages, rates and the housing market I’ll speak to you in your language. I can explain to you the various mortgage terms and conditions so you can confidently choose which mortgage suit you best. As a mortgage broker I have successfully completed all 14 educational requirements of the ministry of finance.

#5- A Long Lasting Professional Relationship. The successful completion of your mortgage transaction does not mean the end of my commitment to you. Just as you use a professional like a dentist, doctor, financial adviser for your on going personal well being, I am part of your team to ensure that you continuously get the mortgage support and advice you need.

#6- More Choice Mean More Competitive Rates. I have access to a network of major lenders in Canada, so the options I can present to you are extensive. In addition to the Big 5 banks you are already familiar with, I also know what’s being offered by Credit Unions, trust companies, and other non-traditional sources.

#7- Ensure That You’re Getting The Best Rates and Terms. Even if you’ve already been pre-approved for a mortgage by your bank or another financial institution, it doesn’t mean that you have to stop shopping! With so many lenders in the market let me explore what other options are available for you which may suit your needs.

#8- Get Access To Special Deals and Add-Ons. Financial institutions are always competing for your business, which is why they often offer incentive to attract creditworthy customers. These can include retail points programs, discounts on appliances, shopping club and more.

#9- Things Move Quickly. In mortgages, a lot of attention needs to paid to details. Every ‘t’ needs to crossed and ‘i’ dotted. My eyes have reviewed 100s of mortgage documents and I know where the pitfalls lie and what to look out for. I will make sure that your mortgage transaction takes place on time and to your satisfaction.

#10- We Negotiate On Your Behalf. People often get intimidated or bullied by their bank and don’t feel comfortable negotiating with them. As a mortgage broker I negotiate mortgages each and every day on behalf of my clients. You can count on my market knowledge to secure competitive rates and terms that benefit you.

First National Fianancial

chris — Thu, 12 Nov 2009 19:40:15 +0000

When you think of Canadian mortgage lenders most people probably can only come up with the “big 5″ banks that we are all familiar with. Very few people realize that there is a whole range of home grown competitive and progressive mortgage lenders available to them. The market is larger than you think and you are limiting yourself if you think banks with “brick & mortar” locations are the best way to go to secure your mortgage.

Take First National Financial for instance.

First National is a Canadian national mortgage lender that specializes in both residential and commercial mortgages. They are a lender with a solid reputation in the industry who offer competitive rates and excellent customer service. One of the strongest aspects of First National Financial is their use of technology to effectively communicate to their clients and mortgage broker/ business partners. This allows for excellent communication each step of the way from start to finish and you can ensure that your mortgage will be dealt with effectively, efficiently and no details will be overlooked.

If you are interested in placing your mortgage with First National Financial or discovering the advantage of a mortgage broker who is passionate about his business, please visit my business website http://www.Tridacmortgages.com.

Christopher Molder -Son of a Broker

5 Things You Should Know About Your Mortgage – Episode #11

chris — Tue, 10 Nov 2009 19:08:40 +0000

Click here to view the embedded video.

Line of Credit vs. Mortgage – Episode #10

chris — Tue, 10 Nov 2009 19:06:22 +0000

Click here to view the embedded video.

95% Mortgage Financing and The Canadian Mortgage Market- Episode #1

chris — Tue, 27 Oct 2009 18:23:50 +0000

Click here to view the embedded video.