Friday 7 December 2012

End of the Year Mortgage Activity

Some people think that the Market is quiet and its time to leave financial matters until next year. I disagree. Mortgage shoppers can get get some great deals right now and superb service. Lenders are hungry right now and rates are very competitive.

So, if you need a pre approval for a purchase in the new year, do it now.
If you need to consolidate or early renew, do it now. Then you can relax and enjoy the rest of the Holiday Season knowing that you have taken care of your finances and got a great deal.

Tuesday 6 November 2012

Pre Approval

In a market that's as tight as Burlington with so few quality listings, buyers must take the time and steps to be properly pre approved for a mortgage. Why take a chance of losing the house you have searched so long for when the financing falls through.
A proper pre approval requires a bit of effort on the part of the applicant and the Lender/Broker.

Here is what my 25 plus years and thousands of completed mortgage transaction says.

I meet with every client in person and before the meeting, I ask the clients to organize some paperwork. My clients bring recent pay stubs and Notice of Assessments to give us an idea of the incomes we can use in the qualifying calculations. We also ask for proof of down payment  to get a good idea of how much you have and where it is coming from. Arriving with just a smile and your car keys doesn't give us enough valid information to feel comfortable.
We need to complete a mortgage application and go over all the details such as time on the job, and assets and liabilities. The client needs to be transparent and candid so we don't get tripped up later by surprises.
I do some calculations after determining the suitability and sustainability of the income. The maximum mortgage is calculated and the available down payment is added to come up with a rough idea of a purchase price range.
When I say suitable income I mean what the Lender would accept.  For example; income from a client who is 3 months on the job in a new field and on probation would not be acceptable at this time. Another example is someone on salary and commission. If I have a 2 year track record from the Notice of Assessments, I feel comfortable using the average of 2 years. Its all about finding these things out in advance and that's why I prefer the in person interview.
I discuss the amounts with the clients to confirm that we are in the right ball park and we will meet their expectation's.
Next, I complete the credit bureau. I look at the beacon score to see if the clients score is high enough for the type of mortgage they want. I also confirm that the debts listed in the bureau match the clients liabilities from the application.
Once all this has been done and I feel I have a true representation of the clients financial picture I can send the deal off to a preferred lender to get a pre approval. So here is where some Mortgage Brokers or bankers differ.  I want a pre approval certificate from a Lender so that they confirm my findings and commit to give a mortgage to my client pending their purchase of a acceptable property.
By doing this, my client gets a rate saved for 120 days and the comfort knowing that all of the heavy lifting is done and they simply need to find the house and send over the offer and listing to the lender.

Another way we make the experience Stress Free for our clients at the Burlington Mortgage Centre

Friday 2 November 2012

Quick Close 5 Year 2.99%

So there is a lot of conversation that 5 year mortgages are going for as low as 2.94% and 2.99%

Well thats true for some Lenders.  The thing that you need to know is that many of these offers are for what we call Quick Close deals.

Here is an example.  Lender A(Big Bank) will offer a rate of 2.99% for a 5 year mortgage as long as it meets the following Quick Close conditions.

The deal must close in 30 days and secondly it must be an insured mortgage.

Thats a lot of restriction. Most Real Estate transactions take as much as 45-90 to close and often the client has 20% down and doesnt need to insure.

I dont mean to say that you cant get 2.99% without restrictions however, the going rate at most Lenders for a 5 year mortgage is 3.09%. At 3.09% you are getting all the flexibilty, all the bells and whistles, a First Class Mortgage

Let your Mortgage Broker do the shopping for you and make sure they explain all the conditons.

Theres never been a more important time to have a Mortgage Broker relationship!

Bob

Wednesday 10 October 2012

The changing Mortgage landscape in Canada

At our big event held at the Burlington Performing Arts Centre, I described the changing Mortgage landscape in Canada and why there has never been a more important time to have a Mortgage Broker relationship.
In 2002 the ball got rolling with the Genworth ALT A self employment policy.  
In 2006 we got the ZERO down and in 2007, the 40 year amortization. These policies made home ownership possible for almost everyone. In 2008 the recession hit and the government pulled back the 40 year amortization to 35 years. By 2011 we had pulled back to 30 years and Lines of credit reduced  from 90% to 80%. In July of this year we lost the  30 year amortization and the Line of credit was reduced to 65%. Rules around self employed mortgages have been tightened up as well. And sadly the ZERO down is gone.
CMHC now reports to OFSI and they are conducting an audit into the underwriting practises of all the banks. In the meantime, prices have risen over 40% and 15% more Canadians are self employed. How are you going to do your business with all of these restrictions?
The answer is simple. You need a relationship with a mortgage broker. Brokers have access to Lenders other than banks. Lenders that are not confined by these changes and who think outside of the box. Brokers have the experience and the access to these options to get the deals done. We are more than just the best rate. There has never been a more important time to have a Realtor/Broker relationship with Bob Beach.

Tuesday 2 October 2012

Short term vs Long Term

Every few months this debate comes up.  Should our clients take short term at a lower rate
or lock into a 5 or 10 year term.

Today we have a 1 year rate at 2.64% and 2 years as low as 2.69%

Conversely the 5 year is priced between 2.99% and 3.09%. (Forget the 10 year term at 4.49%)

The difference in payments on a  $275,000. mortgage at the 2 year rate of 2.69% and at 5 years 2.99%  is only $42. a month.
Also clients with less than 20% down must qualify at the Canadian qualifying rate of 5.24%. Most of these folks wouldn`t qualify.

You need to ask yourself 2 things. What will rates be in 2 years and can I afford to take a major jump in payments.
I believe that rates will be significantly higher 2-3 years from now. My forecast is in the 4.5% to 5% range. Renewing clients will really be penalized at those rates

My advice is to take the 5 year term at the lowest rate I`ve seen in  over 25 years. 

Thats my 2 cents.
Bob                

Tuesday 28 August 2012

The Mortgage market has changed, are you and your clients prepared?


Please join The Burlington Mortgage Centre-Bob Beach and Associates 
for a seminar entitled
 “The Mortgage Market has changed, are you and your clients prepared?"
Friday, September 7th, at the Burlington Performing Arts Centre
from 8:30am-12:00pm

Bob Beach will be the MC for the event and Bernice Flegg of Genworth will be presenting  a program worth 3 RECO Credits to Realtors.

There will be a breakfast will be served during registration from 8:30 to 9:00.

 There will be informational material handed out during meeting.

Our Realtor friends can invite another Realtor to join in.
RSVP through email Bob at 
beach.b@mortgagecentre.com 
or calling 905-333-6843.

Thanks so much and we hope you can make it!
-The Burlington Mortgage Centre
Bob Beach and Associates