Pre-approvals are often the first step you take when you are seriously looking to buy a home. 

Pre-approval: a lender has committed to loan you money, subject to conditions, such as a property valuation.

This should not be mistaken with a rate-hold, whereby a lender is simply holding a rate and has not reviewed your documents.

Even though your mortgage broker has done your credit checks and reviewed your income—this is only a review of your application, NOT the property.

Therefore, when making an offer, you should still include a “subject to financing” clause in your offer, because the broker/lender does not know anything about the property, and issues may arise that can preclude you from buying that particular property.  With a subject to financing, the buyer can walk away from the accepted offer if they cannot get satisfactory financing.

If you have to offer without a subject, talk to your mortgage broker and closely review the situation to ensure you understand the risks of that situation. Having been pre-approved does not mean that you can/should offer subject-free.

Why Get Pre-Approved?

• You will know exactly what you can afford, narrowing down your search and saving you time and effort.
• You will have a better idea of what your monthly payments would be, allowing you to budget accordingly.
• Real estate agents and sellers will know you are a serious buyer, ensuring you will be given the serious consideration you deserve.
• A mortgage broker can get you a pre-approval at no cost to you, and you will be under no obligation to accept the mortgage!

Pre-Approval Process

With a mortgage broker, the pre-approval process is straightforward.  You will be asked to fill out one application, which the mortgage broker can use when approaching different lenders.  A mortgage broker will discuss your financing strategy, needs, mortgage amount, down payment, deposit requirements, etc.

Your mortgage broker will also discuss the various mortgage options available to you, such as rate types, payment options, etc., and discuss which options best suit your needs.  At this time, it would also be good to review your strategy when it comes to subjects.

A mortgage broker will also be able, with your consent, to do one credit check for your application.

When you use a mortgage broker to obtain your pre-approval, you are not only ensuring you find the best mortgage for your circumstances, you are saving yourself time, effort, and uncertainty.  You will only need to fill out one application and have one credit check done, unlike if you approached different lenders on your own.

Best of all, using a mortgage broker to get you your pre-approval will not cost you anything, nor will you be under any obligation to take the mortgage. 

When your offer has been accepted, your mortgage broker may advise you that it’s better to go with a different lender than your pre-approval.  This could be because of the rate, timing, etc. Also, further documentation may be required once the lender receives the accepted offer.

Call me today to discuss how I can get you the pre-approval that best suits your situation and bring you closer to achieving your dream of home ownership!

You’ve done it!  Your hard work, saving, and relentless home-searching has finally paid off and you’ve found your first home purchase! Congratulations! 

The next step is to find the mortgage that best suits your circumstances.  For many first time home buyers, the mortgage application and approval process can be stressful and intimidating.  In today’s market, lenders are being particularly careful about what they require from applicants in order to secure a mortgage at a competitive rate.  

As your mortgage broker, it is my job to walk you through the entire process, from when you start looking for your home, to providing advice after your mortgage has closed.  I am with you every step of the way, to make sure that your home owning dreams become a reality.

In my five part First Time Home Buyers Series, I will walk you through the mortgage application process, including the documentation you will need to provide to secure your mortgage approval.

Part One: The Pre-Approval
This first post will go over pre-approvals and the importance of “subject to financing” clauses.

Part Two: How Much of a Mortgage Can You Afford?
Here I will discuss how lenders calculate qualifying ratios, and what other fees and debts should be included in your calculation of how much of a mortgage you can afford.

Part Three: Income
I will discuss what you will need to provide for proof of income, and the situations where lenders may require more documentation or information.

Part Four: Down Payment
This post will provide an overview of the questions the lender will need answered about your down payment, as well as stipulations lenders may have on where the money is coming from.

Part Five: First Time Homebuyer Grants and Credits
In this last post I will provide a brief overview of first time homebuyer grants and credits that may be available to you.

When buying a strata property, most of the time your offer will include a subject that the seller must provide various strata documents to the buyer by a certain date.

As part of your mortgage approval, the lender will ask for the Form B, which cannot be more than 30 days old, and possibly other strata documentation as well.

The Form B: discloses information about the strata corporation and lot.  An owner, purchaser or person authorized by the owner or purchaser may request a Form B.  This confirms what the current situation is of the strata and if there are any special assessments outstanding, special levies, and how much is in the contingency reserve fund.  This information is important to the lender as it gives them an indication as to the condition of the property.

Lenders may also ask for additional documents, which may include:

1. 1. A depreciation report.
2. 2. The last strata meeting minutes.
3. 3. The last AGM minutes.  
4. 4. If there was a special assessment, they may ask for details on that.
5. 5. If there was an engineer’s report commissioned, they may ask for details on that.

Lenders vary on what they require so best to work with your realtor on providing these documents and ensuring they are available. Don’t leave this to the last minute – a rush order for strata documents can increase from the standard fee (approximately $35 – $50) to over $150 if the request is urgent!

As a buyer, you should be sure to give yourself enough time to go through the strata documents and disclosure statement, to make sure you understand what is included in your strata fees.  The documentation should provide a detailed description of what your fees cover, and should also include a budget.  While strata fees will vary depending on the building and property, they should cover maintenance of common property, insurance for common areas, landscaping of the grounds, and building amenities.

Remember, the strata fees will be on top of any mortgage and other payments you will have to make!

Strata fees and other costs make determining how much of a mortgage you can afford challenging.  A mortgage broker can crunch the numbers and help you find out how much of a mortgage you can afford, and will take into consideration your strata fees and other costs so you don’t have any surprises.

Call me today to talk about how I can help you find the perfect mortgage for your situation today!

In today’s fast-paced Vancouver real estate market, your best offence is a good mortgage broker.

Mortgage brokers have access to multiple lenders, so if one lender does not seem to be working out on your file, they can quickly send your file to another lender.  And quickly is the key word here.

To be a successful purchaser in today’s market, being quick is key.  And having great connections with lenders, lawyers/notaries and appraisers will ensure the process goes as smoothly as possible.

Your mortgage broker is a problem-solver.  All they do are mortgages, ALL DAY, EVERY DAY.  So if an issue arises on your file, whether it’s income, property, timing—they are equipped to help you find the best solution.

Call me today to discuss how I can find the best mortgage package for your situation!

You have bought a property, your financing has been approved and you now have a month before you close on your purchase! Congratulations!    

While most of the hard work may be done, you are not out of the woods just yet. Your mortgage broker may have found you the perfect mortgage, but there are many ways you can sabotage your mortgage approval, even after you have been approved.

If you don’t want to kill your mortgage match made in heaven, avoid these common pitfalls:

1. Take on new debt.
You’re excited about your new home and you have taken on a new mortgage that’s lower than what you initially thought.  You think you can afford that new car after all.   WAIT….don’t take on new debt before your mortgage closes.  A new car loan payment can adversely affect your approval.   Talk to your mortgage broker first before taking on a new loan.

2. Take a new job or quit your old one. 
Your mortgage was approved based on the income you provided to your broker.  If your income situation changes before closing, the lender has the right to cancel your application if they feel the new job does not support the income situation they require.

 3. Leave town. 
The two weeks prior to your closing date are crucial for your solicitor and they will be contacting you for further information.  Generally, the solicitor will not have your final payment figure until a couple days before closing, so being available and flexible at that time will ensure the closing process goes smoothly.

 4. Change your purchase contract without consulting your mortgage broker, especially the dates! 
The broker has advised the lender of your closing date and your file will be processed accordingly. If you want to make any changes to your dates, you must speak to your broker first.  Same goes with changing the price or any other condition that can affect your mortgage approval. Bottom line: talk to your broker before making any changes.

 5. Stop paying your existing mortgage, if you have one, or any other credit cards/loans, etc.
Let’s say you have arranged a refinance/consolidation for your existing mortgage and/or other debt.   This does not mean you stop paying your existing debt.  Stopping these payments can mean a huge drop in your credit score, which you don’t want to happen before you close on your new mortgage.  So keep paying your bills, mortgage, etc, right up until your closing date.

 6. Spend your down payment or closing cost money! 
Remember, you will need to come up with your closing costs and any other down payment that is still owed.  So even though that trip looks tempting, don’t spend your funds that you have put aside for closing.  Your mortgage broker can solve most financial issues but they can’t print money!

Bottom Line: When in doubt, ask your mortgage broker.

Call me today to find out how I can get the best mortgage for you!

While a hot housing market and a rise in home values may be a boon to those looking to sell, those not looking to sell their homes may also benefit.

An increase in your home’s value may allow you to reach the minimum 20% home equity, thus making you eligible to refinance your home. 

What is Refinancing?

You are eligible to refinance when you have reached a minimum of 20% equity on your property.  Equity is the difference between the amount owed on the home and its current market value. 

Equity = Amount Owed on the Home – Value of the Home. 

Many homebuyers can only put down 5% or 10% on their purchase and may wait years to reach 20% equity.  However, given the steep rise in home values recently, many homeowners are now reaching 20% much faster.

Refinancing is the process in which a new loan is obtained, often with different terms than the original loan.  

Refinancing is not the same as getting a second mortgage.  A second mortgage is in addition to your first mortgage, and does not replace it like refinancing.  

What are the Advantages of Refinancing?

You can use the equity in your home to consolidate your debt.  Moving your debt from unsecured to secured against your home can be beneficial to your credit score.

Refinancing can also reduce your interest rate on other debts, which can reduce your overall monthly payments, potentially saving you hundreds of dollars a year and improving your cash flow.

Tip: Take the monthly savings in payments and apply at least half of it to increasing your mortgage payment.  You will reduce your interest rate on other debts, improve your cash flow AND pay your mortgage off faster.

You can also consider refinancing to pay for large purchases, such as cars, renovations, or university tuition.

What are the Risks?

While refinancing may be an appealing option, it is critical that homeowners pay close attention to the risks involved.

If you choose to refinance, you may be subjected to a penalty fee by the lender.  It is important to calculate whether the benefits of refinancing are worth the costs that may be incurred. 

What’s Best for You?

Every situation is different, and requires careful calculations of the costs and benefits.  A good mortgage broker can clarify what options are available to you, and help you determine if refinancing your home is the right option for you.

Call me today to discuss your refinancing options!

Buying a property and securing a mortgage can be daunting tasks, especially in today’s hot Vancouver market.  When you apply for a mortgage, lenders will assess your credit risk based on a number of credit factors, known as the “5 C’s” of credit:

• Collateral. This is the property you are hoping to purchase.  If there are issues with the property, such as former grow-ops, older wiring systems, size, presence of asbestos, presence of an oil tank, water repair issues, etc., that could have an effect on whether you are approved for a mortgage, and at which rate.   

• Capital. One of the first questions lenders will ask is how are you coming up with the down payment.  Assets, such as savings and investments may be considered.  RRSPs can also be used, up to $25,000 per person if you have not owned a residence in the last 5 years.  Lenders also like to see that you have a rainy day fund to fall back on if something changes with your expenses or job situation. 

• Credit History. What is your history of repayment?  Lenders will examine your established record of managing credit and making payments over time in determining whether to lend to you and at what rate.

• Capacity. Are you able to pay for your mortgage?  Lenders will look at your income and employment history to determine your ability to repay your new mortgage and outstanding debt.  Lenders will want to see proof of income, which will vary depending on whether you are salaried, self-employed, or paid hourly.  You can expect to provide a job letter and a paystub as a minimum.  Previous years’ income tax returns and Notice of Assessments may also be required.

• Character used to be an important factor, but is now the least important factor for lenders in today’s market.

While the 5 Cs give a basic understanding to factors determining whether a lender will grant you a mortgage and at what rate, securing the best mortgage requires extensive knowledge of what each lender is looking for in a mortgage applicant.  Each lender has different ways to evaluate potential customers, and a good mortgage broker will know exactly what lenders are expecting in order to give you the best mortgage package possible.

When looking at your mortgage options, you will be faced with the decision on whether to choose a fixed or variable rate mortgage.  As a mortgage broker, it is my job to help you determine which option is better for your situation. 

However, there are compelling reasons as to why a variable mortgage rate may be best for you, outlined by my colleague, Teresa Martin Grier:

1. 1. It’s usually a cheaper interest rate;
2. 2. It’s always a better monthly P+I repayment distribution;
3. 3. More flexible contract terms, and cheaper to get out of if you need to;
4. 4. Banks are NOT going to increase your VRM payment severely. 

While a flexible rate is appealing, it is always best to speak with a mortgage broker which rate type will best suit your specific mortgage needs. 

Call me today to discuss your options!

You can read Teresa Martin Grier’s full article here

Many young Canadians hoping to buy a home are discovering that their home ownership dreams may be out of reach.  Naturally, parents may want to make their children’s home ownership dream a reality by co-signing or guaranteeing their children’s mortgage.  However, there are some important factors parents should consider before they agree to co-sign their child’s loan:

1. 1. The parents’ situation.  While parents may want to be generous with their children, it may not fit their situation.  Parents should ensure that their willingness to help their children won’t impede their own financial goals.
2. 2. The child’s circumstances.  It is important that parents understand why their child doesn’t qualify for a mortgage on their own.  Does the child have the income to carry the mortgage, as well as home upkeep, and any other financial obligations that come with home ownership? Is their credit an issue? 

If parents co-sign a loan, they are on title to the property, sharing legal responsibility if something goes wrong.  This means that they are fully liable for the mortgage debt if their child defaults, risking their own credit ratings and borrowing ability in the future. 

Fortunately, co-signing or guaranteeing a loan are not the only options available to parents.  Parents may also choose to “gift” funds, which may put in the qualifying ratios more in-line if that’s the issue.  Gift funds may also be used to top up a down payment to 20%, allowing them to avoid paying for mortgage default insurance.  

The best thing you can do is seek professional guidance, and ensure that all parties are protected.  This is an important decision for both parents and their children, one that cannot be taken lightly by either party.

A mortgage broker will be able to go over your individual financial situation, and help you decide the best solution for your circumstances. 

Call me today to find out which options are best for you!