MAKE YOUR MORTGAGE WORK FOR YOU

Source: www.cmhc-schl.gc.ca

We can offer you several choices to help find you the mortgage that best matches your needs. Here are some of the most common mortgage options: 

Interest Rate Type

You will have to choose between “fixed” or “variable”.

A fixed rate will not change for the term of the mortgage. This type carries a slightly higher rate but provides the peace of mind associated with knowing that interest costs will remain the same.

With a variable rate, the interest rate you pay will fluctuate with the rate of the market.

Amortization Period

Amortization refers to the length of time you choose to pay off your mortgage. Usually, the longer the amortization, the smaller the monthly payments.

Payment Schedule

You have the option of repaying your mortgage every month, twice a month, every two weeks or every week. You can also choose to accelerate your payments. This usually means one extra monthly payment per year.

Mortgage Term

The term of a mortgage is the length of time for which options are chosen and agreed upon, such as the interest rate. When the term is up, you have the ability to renegotiate your mortgage at the interest rate of that time and choose the same or different options.

“Open” or “Closed” Mortgage

An open mortgage allows you to pay off your mortgage in part or in full at any time without any penalties.

Mortgage Brokers have access to multiple lenders, allowing you to get the best options and prices for your mortgage. They work independently, on your behalf, to search out the best lenders who understand and specialize in mortgage financing.

With a Mortgage Broker, you can be confident we won’t leave you alone to find a mortgage that’s right for you. We’re on your side every step of the way.

Steven Porter. Steven is a licensed Mortgage Agent with Mortgage Architects, a Certified Reverse Mortgage Specialist (CRMS); Seniors Real Estate Specialist (SRES) and Accredited Buyer Representative (ABR). He can be reached at 1-905-875-2582; steven.porter@mtgarc.ca or online at 1800Mortgages.ca

 

6 Easy Steps to Buy Your First Home

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Mortgage Architects	Steven Porter CRMS ABR SRES Broker Lic. No. M15001919 Mortgage Agent P 905-878-7213 C 905.875.2582 Brokerage #12728 14 Martin Street, Milton, ON, L9T 2P9
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Effective March 17, 2017…Higher CMHC premiums

CMHC is increasing their premiums on mortgage default Insurance for the 3rd time in 4 years. Here’s what it will look like.

Loan-to-Value Ratio Standard Premium (Current Standard Premium (Effective March 17, 2017)
Up to and including 65% 0.60% 0.60%
Up to and including 75% 0.75% 1.70%
Up to and including 80% 1.25% 2.40%
Up to and including 85% 1.80% 2.80%
Up to and including 90% 2.40% 3.10%
Up to and including 95% 3.60% 4.00%
90.01% to 95% – Non-Traditional Down Payment 3.85% 4.50%


Wondering why they need to increase the premiums? It’s not about trying to discourage homebuyers. It’s to “preserve the returns on capital”, according to Steven Mennill, SVP CMHC. Yup, the Crown corporation wants to focus on profit. (show me the money). At least they’re being honest about it. The overall amount of mortgages insured by CMHC has dropped in the past 4 years. Down from $576billion to around $512billion. So, it’s about maintaining profits while their book of business is shrinking.

Having said that, CMHC has lowered, increased and lowered their insurance premiums before. We can expect them to change and adjust again.

In case you are wondering why the overall volume is going down when house prices are going up, it’s because the Fed govt has changed the mortgage rules so that it becomes more difficult to qualify for a mortgage. Therefore, the amount of mortgages CMHC can insure is going down.

Now for some good news..

The overall cost to your mortgage is minimal. Oh yeah, one more thing…without CMHC, we would all be digging deeper into our pockets to come up with 20% or 25% down, like the old days. And while some may think that is how it should be, those days are long gone. First time homebuyers don’t have $100k, or $200k sitting around to buy a home. They need help.. And what’s wrong with helping our youth that are ambitious enough to want to own a home?

CMHC is a necessary evil.

By Steve Garganis

- Posted by Steven Porter, Mortgage Agent - Mortgage Architects
Steven can be reached through his website at www.1800Mortgages.ca

How to Secure the Best Financing Rates when Buying a Home

A new report has just been released which identifies a foolproof, 3-point plan which any home buyer can use to secure the best financing rates when they buy a home.

When you're looking to buy a home, the first thing most home buyers do is start the process of house hunting. However, experience proves that this is one of the last steps you should be taking if you want to get the most home for the least amount of money. In fact, shopping for the best financing should start long before you start shopping for a home.

The experience of thousands of area home buyers has been summarized in a new report entitled "Best Financing: A 3-Point Plan". This report outlines 3 critical steps you must take to obtain the absolute best financing rates when you buy a home. It tells you where you should go, what questions you should ask, and how to manage the process to your personal advantage.

To receive a FREE copy of this special report, follow the link below:
 
Your BEST Financing Rates start here.

Steven Porter. Steven is a licensed Mortgage Agent with Mortgage Architects and a retired licensed, real estate broker with 30 years experience in residential real estate. He can be reached at 1-905-875-2582; steven.porter@mtgarc.ca or online at 1800Mortgages.ca

Purchase Plus Improvements Program

I'd like to share a program that has become very popular with many first time home buyers who want the features that come with a new home at the price and benefits of a resale home. The program is called Purchase Plus Improvements.  Here's just a couple of great examples for use of this program:

1) By including $30,000 for upgrades in your mortgage on a $400,000 home purchase gain a kitchen and bathroom that could have only been purchased if you spent $500,000 on a home.

2) By including $40,000 in your mortgage by adding a rental suite, turn a home into an additional source of income.

Overall, if you are looking for a product that offers a greater financing choice for you and your family by building a new home or undertaking a small or large scale improvement to an existing home and increasing the value of the property, this is the product for you!

Some of the features of the Purchase Plus Improvements Program include:

• Availability for new home construction, purchases or refinance with improvements.
• Loan-to-Value (LTV) ratios for purchase transactions: up to 95% for 1–2 unit and 90% for 3-4 unit owner-occupied properties based on as-improved value.
• LTV ratio for refinance transactions: up to 80% for 1-4 unit owner- occupied properties.
• Mortgage loan insurance premium refunds for homeowners who make energy–savings renovations to an existing home.
• For more detailed information get in touch with Steven Porter, Mortgage Agent with Mortgage Architects to explain the technical aspects of this program and fit it to your needs.

Take the first step to creating your own dream home and talk with your mortgage broker. 

Visit http://www.stevenporter.ca/solutions/ShoppingAids and download my easy Mortgage Checklist to begin your home search. Or email me, I'm always available to answer your questions. 

Steven Porter, CRMS ABR SRES CNE is a licensed Mortgage Agent with the Mortgage Architects. Steven is also a licensed, non-selling real estate broker, Accredited Buyer Representative and Seniors Real Estate Specialist with 30 years residential, commercial and investment  real estate experience. Steven works with together with Realtors across the west GTA in a noncompeting capacity, assisting customers and clients achieve financial independence through home ownership. Steven can be reached at 1-905-875-2582 or EMail at steven.porter@mtgarc.ca

Prequalified or Pre-Approved for a Mortgage? The Shocking Facts

The first words of advice you'll hear when beginning your search as a homebuyer are "get prequalified or pre-approved  for a mortgage." The misleading fact about these two terms is that they are not interchangeable. 

When I actively practiced real estate brokerage, many times the terms Prequalify and Pre-Approval were brought up in the same breath by many lenders and so-called real estate industry experts. That meant they were the same thing to many real estate agents who in-turn advised their clients accordingly. 

After leaving real estate sales and entering a career in mortgage lending with one of the major banks, I LEARNED A SHOCKING TRUTH. Although Banks typically tell consumers and Realtors that they do mortgage Pre-Approvals, the fact of the matter is THEY DO NOT! At the very most, the bank will prequalify a potential borrower (depending who you're face to face with) and provide a rate hold certificate. Unfortunately, it's not worth more than the paper it's printed on. 

What does that certificate mean to you, the homebuyer? "Absolutely nothing." Buying a house armed with your new certificate and falsely thinking to yourself you have the mortgage in your back pocket is truly nothing short of betting on a craps shoot. 

"So what is the difference between a Prequalification and a proper mortgage Pre-Approval?" First, it depends on whose doing a prequalification for you. My experience with the bank was if you've got a down payment, a job and a pulse you're prequalified. Here's you guaranteed rate certificate. "What are your really getting?" The bank's current mortgage rate for the next "X" number of days, subject to: "read the fine print below", income and employment verification, down payment confirmation, credit history, etc. etc. Remember banks work for the banks. So, if you come back a month later with your Agreement of Purchase and Sale in hand (by the way this is only when most banks will run the numbers for you) and you don't qualify, you don't get the mortgage. "Next".

Admittedly, very few lenders provide mortgage Pre-Approvals. The process actually involves the lenders underwriter going through the same motions as if you had actually bought a home and applied for a mortgage. Income and employment are confirmed, downpayment, credit history and debt service ratios reviewed, etc. If everything meets the lender's approval. Then, essentially the lender ear-marks the mortgage funds for the prospective borrower to be advanced upon the purchase and closing of a home. With this type of mortgage Pre-Approval, the borrower is pretty much assured he is going to get a mortgage usually subject an appraisal. There is a cost to lenders preforming a mortgage pre-approval. The lender absorbs these costs on the expectation of receiving the future business. However, like many things, due to abuse lenders limit the use of this service typically to preferred brokers. 

There is a common misconception among homebuyers and real estate salespeople that once you're pre-approved for a mortgage, you don't need a "Condition of Mortgage Financing Approval" in your Offer to Purchase. A Pre-Approval does not guarantee you're going to get a mortgage, especially if you've only been prequalified without the benefit of supporting information. There are many variables the lender needs to consider approving you for a mortgage after you've made an offer. Things like the house itself, location, appraised value, etc. 

Congratulations! You were in a multiple offer on a property and you won the bidding. You only paid $10,000. over asking and that's still in the range you were Pre-Approved for. SURPRISE! The appraiser estimates the property is valued $10,000. under what you offered and the lender will only lend against the appraised value. So unless you've got the extra money under you mattress, you're not going to be able to close the deal. My advice to you is include a condition in your offer to purchase subject to you obtaining a mortgage. 

"How long do I need for a condition of finance in my offer?" Good question. This period can vary and is reflective of how well you've completed your mortgage shopping due diligence prior to shopping for a home. For example, the time typically allotted for satisfying a condition of financing approval in an offer is 5 banking days. As a homebuyer, if you have not met with a mortgage planner before to making an offer on a home, that means the broker and the lender only have five days in which to obtain all your necessary supporting documents from you including employment letters, pay statements, tax documents, contracts, appraisal, etc. If you happen to be self-employed the list is even larger and five days may not be enough time to obtain and review everything. Not to mention, if you didn't do your proper due diligence and  your financing is not approved, the seller and the sellers agent won't be impressed and will most likely loose confidence in your real estate agent for not ensuring you did your homework. Compare this scenario if you had gone the Pre-Approval route. You would have already submitted all your documents to the lender through your mortgage broker. Therefore the lenders conditions of mortgage approval would typically be limited to the review of the Agreement of Purchase and Sale, an appraisal of the property if required and approval by the mortgage insurer if it is an insured mortgage. The turn-around for approval in this case could be as quick as 24 hours.

The take-away here is "Buyer Beware". Do your due diligence and plan your home purchase. Start first by sitting with a licensed mortgage broker/agent. They work for you. Ask about the benefits of a proper Mortgage Pre-Approval. At the very least, provide all the necessary documents to your Broker/Agent and have him properly prequalify you. Ask him whether or not you need to include and condition of financing approval in an offer to purchase a home. Ask Why or Why Not? 

Armed with your Pre-Approval Certificate or at least, the confidence of being properly prequalified for a mortgage, find a good real estate agent that actively works in the area you wish to buy in. Better still, if you don't know a good Realtor, ask your mortgage broker/agent for a recommendation. Mortgage Brokers/Agents regularly work together with Realtors and are more than happy to refer you to two or three good Realtors they have successfully done business with in the past.

Visit http://www.stevenporter.ca/solutions/ShoppingAids and download my easy Mortgage Checklist to begin your home search. Or email me, I'm always available to answer your questions. 

Steven Porter, CRMS ABR SRES CNE is a licensed Mortgage Agent with the Mortgage Architects. Steven is also a licensed, non-selling real estate broker, Accredited Buyer Representative and Seniors Real Estate Specialist with 30 years residential, commercial and investment  real estate experience. Steven works with together with Realtors across the west GTA in a noncompeting capacity, assisting customers and clients achieve financial independence through home ownership. Steven can be reached at 1-905-875-2582 or EMail at steven.porter@mtgarc.ca

Broker miffed by rate shopping advice

A recent article on a wide-reaching personal finance magazine plugged the benefits of rate shopping; but did it ignore some important pieces of the mortgage puzzle?
“Want to save more than $53,000 on the purchase of a home? Then be prepared to comparison shop for the best mortgage rates and terms,” a recent MoneySense article reads. “According to a new RateHub_ca survey, consumers that shopped around for the best rates saved $53,089 (based on a $500,000 mortgage, amortized over 25 years)—the difference between a lender’s posted mortgage rate and the discount rate, over a five-year term.”
According to the article, clients who shop around save an average of 2.23% by using the popular rate site, which amounts to over $50,000 for a $500,000 mortgage.
And while brokers acknowledge rate shopping helps homebuyers save on rate; it could cost them in the long-run. Something the MoneySense article fails to mention.
“I think people tend to focus on rate because it’s one of the few things they understand when it comes to getting a mortgage,” Mike Maguire, a broker with Mortgage Wise Financial told MortgageBrokerNews.ca. “Rate is not the be-all and end-all; terms matter as well.”
Those terms could include hefty penalties that cost clients thousands, Maguire said.
“What will really save clients money is finding someone who will take the time to meet with you and understand your wants and needs,” Maguire said. “My opinion is clients should deal with someone who has their best interest at heart.”
That opinion is echoed by Alyssa Richard, founder of the aforementioned RatebHub_ca.
“Online doesn’t replace the need to speak to financial experts,” she told the Ottawa Citizen, “but it does empower you.”
That message is sometimes lost, however, in the mortgage information overload from personal finance sources that often seem to focus solely on rate. 

by Justin DaRosa - Mortgage Broker News

10 Biggest Mistakes Novice Investors Make

10 Biggest Mistakes Novice Investors Make

Real estate has become the tech stock of the 2000s, the darling investment that everyone seems to think will be his ticket to easy wealth. And why shouldn't investors be snapping up cute little cottages? After all, mortgage rates are low and the housing market is hot. How hard could it be? Slap on a new coat of paint, put some flowers in pots by the front door, put a "For Rent" sign in the yard, and start counting the cash.

 

In 2004, the National Association of Realtors reported that nearly a fourth of all the houses sold in went to investors; about 80 percent of investment properties were existing single family houses. If you're looking for rental income -- and most investors are, according to the NAR -- buying a single-family house may be the first mistake. All it takes is for a property to sit vacant for a couple of months -- or a tenant to run out on the lease -- to put a new real estate investor in a financial bind. Far better to buy multifamily units, such as duplexes. That way, you can live on one side and have the rent from the other side pay your mortgage. Or, rent out both sides and give yourself some breathing room in case one tenant moves in the middle of the night without paying his rent. A first-time investor should look at (multifamily units of up to) four units to limit their risk.

If you're still convinced that investing in rental real estate is the road to riches, at least go into the proposition with your eyes, as well as your wallet, open. Here are 10 common mistakes made by new real estate investors:

1. Falling in love with the property. Stop thinking like a homeowner and start thinking like a business owner.  Get emotional about the deal, not the house. 
2. Not performing your due diligence.This is more than just an inspection of the property, although that's essential. (Can you say, "deferred maintenance costs"?) It's also a thorough investigation of your area's current rental market. What are the vacancy rates and average rents for comparable units? What's the average age of the rental housing stock? How is the neighbourhood zoned? What are the government regulations about rental properties? Has the Municipality approved new rental complexes nearby?
3. Forgetting the rule of home improvements.It will always take three times the money and twice as long as you estimate to get a unit ready to rent. Or is that twice the money and three times longer? Either way, you need to build that extra cost into your expenses. 
4. Thinking you'll get those low mortgage rates you see on the Internet. Those are for owner-occupied homes. Investment property is considered a riskier loan and you'll pay more in interest rates. The credit qualifications also will be higher. You don't need perfect credit, but if your credit is in the dumps, you won't get the loan. 
5. Not pre-screening tenants. New landlords can get very excited about prospective tenants who show up, take one look at the place, hand them a cash deposit, and want to move in that weekend. Don't do it. When selecting renters make them fill out an application, and check their credit, employment and rental history before you take a dime from them. It's a much more expensive -- and potentially nasty -- headache to evict a bad tenant than to have a unit sit vacant for a couple of months. 
6. Breaking your own rules. Landlords establish policies for good reasons. When they start ignoring those policies, they're headed for trouble. No pets means no pets. Don't ever let someone move in without a security deposit, and don't ignore collecting late fees. (where permitted by law) 
7. Investing long-distance. Unless your rental property is in a spot you love to visit regularly, such as a lake or the beach, keep your rentals very close to home. Otherwise, you'll eat up your profits by driving back and forth to manage the property or by paying someone to make repairs, etc. for you. 
8. Paying too much for the property. If you're embarrassed to make a low-ball offer to a seller, don't invest in real estate.. Rental property owners generally work off a multiple of 100. That means that if you pay $100,000 for a unit, you need to collect $1,000 a month in rent to pay all the bills and have a decent profit margin. If you've done your homework, you'll know what your rental market will bear. 
9. Not studying the competition. Why does the guy across the street fill his units the same day someone moves out and yours sits vacant for months? He might not be very picky about whom he rents to, but he also might have lower prices, have washers and dryers in his units, pay for lawn maintenance and trash pick-up, or have his building on a wireless network. 
10. Being under insured. Insurance on rental property goes beyond insuring the building against fire or a flood. You need to look at your own coverage for liability. If there's a loose railing and a tenant's child falls off a balcony or there is a burglary and a tenant says it's because you wouldn't install security alarms, you're likely to get sued. 

 Real estate investing can be lucrative by following successful strategies and tactics of other successful investors. These 10 tips are by no means exhaustive but are a good starting point for a novice investor.

Posted by Steven Porter, Real Estate Broker & Mortgage Advisor.
 

Six Things to Know About Real Estate Deposits

When you make an offer on a house you have to put down a deposit. Here are some things to keep in mind.

When must a deposit be paid?

In Ontario, the standard real estate contract gives the buyer two choices; you can pay the deposit immediately when you make an offer, or you can agree to pay it within twenty four hours after the seller accepts it. Most buyers prefer the second option. If you are in a bidding war, you will be encouraged to come up with the deposit immediately, to show good faith to the seller.

Can the buyer get out of a deal by refusing to pay the deposit?

No. Once the deal is accepted, you can’t change your mind. If you do, the seller can sell the property again and if he gets less money than you were going to pay the seller can sue you for the difference, plus legal fees.

What happens if the deposit is paid late?

The seller has the right to cancel the deal. This is because all time limits matter in a real estate contract and if you are late, even by a few minutes, the seller can try and cancel. I have seen this happen many times, especially when the seller knows that there is another buyer out there who will pay more money. If you need more time to come up with your deposit, say so in your offer.

How much should a buyer pay as a deposit?

This is a tough question, and will largely depend on where your home is located. In Toronto, deposits are now usually up to 5 per cent of the sale price. In Brampton, it is closer to 2 per cent. In some areas of Ontario, deposits can be as little as a few hundred dollars.

Why does the deposit go to the seller’s real estate agent and not the seller?

If the seller goes bankrupt or disappears with the deposit, the buyer is not protected. When the deposit is held by the real estate brokerage, it is in trust and is also protected by insurance so even if the brokerage goes bankrupt, the buyer can get their money back.

If the buyer is unhappy with their home inspection, can the seller refuse to return the deposit?

This happens more than you think. A deposit cannot be released unless both the buyer and seller agree. If a seller believes the buyer did not act in good faith in trying to satisfy their condition, whether it is a home inspection, financing or a condominium status certificate review, they can refuse to release the deposit. This means it stays in the broker’s trust account until a judge decides who gets it, which can take years. As a precaution, buyers should consider making two deposits in their offer, a small one of say one per cent when the offer is accepted, and a second larger deposit once the condition is satisfied.

Understand the rules about deposits before you sign any real estate contract. It is expensive to change your mind later

By:  Mark Weisleder - Toronto lawyer, author, course developer and public speaker for the real estate industry. 

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First-Time Home Buyer? You Need to Understand These Lending Definitions

Purchasing a home is a life-changing investment. A big decision like buying a first home, combined with confusion about the process, can lead to a detrimental financial mistake. Take the time to understand some of the key lending industry jargon.

Mortgage Loan Underwriting: The underwriting process is used by lenders to determine the amount of risk a mortgage would be. Before approving a loan, an underwriter will evaluate your credit score and history, credit score of a spouse or partner in the purchase, bank accounts, employment history, current income, and current and projected debts and assets.

Loan Points: A point is equal to one percent of the amount borrowed, or principal, of your mortgage. Lenders charge points in both fixed-rate and variable-rate mortgages in order to increase the returns to the lender on the mortgage and to cover loan closing costs. Points are usually collected at closing and may be paid by the borrower, lender or or may be split between them. There are two types:

• Discount Points are paid to reduce the interest rate on a loan and are normally paid at closing.
• Origination Points are paid at closing. On a conventional loan, a loan that is not insured against mortgage default, the loan origination fee is the number of points a borrower pays to typically to a mortgage broker for arranging a mortgage.

Assumable mortgage: A home mortgage that allows the buyer to take over the seller’s mortgage. The buyer makes mortgage payments and complies with other terms of the original seller’s existing loan.

Balloon mortgage:A mortgage that is not fully paid off over the term of the loan, leaving a balance at the end. The borrower must either pay off the remaining mortgage or refinance the loan.

PITI: Abbreviation for the major expenses that make up a mortgage payment: principal, interest, property taxes and homeowners’ insurance.

Prepayment penalty: A charge imposed on a borrower who pays off a mortgage loan before its due date. Lenders impose prepayment penalties to encourage borrowers to hold a debt, and keep paying interest on it for the whole term of the mortgage.

Title report: The written examination of a real estate title search, including a property description, names of titleholders and how the title is held (joint tenancy, for example), mortgages and other charges, and liens. A title report is needed before a lender will agree to finance the purchase of the property. The report is typically prepared by a Lawyer.

Contingency: A provision in a contract stating which terms of the contract will be altered or voided if a specific event occurs before the closing of the property. For example, a contingency in your home purchase contract might state that, if the buyer does not approve the inspection report of the physical condition of the property, the buyer does not have to complete the purchase, or an included contingency that the buyer be allowed a certain number of days to obtain his financing or to sell his house.

Mortgage Default insurance: Insurance that reimburses a mortgage lender if the buyer (borrower) defaults on the loan and the foreclosure sale price is less than the amount owed to the lender (the mortgage plus the costs of the sale). A home buyer who makes less than a 20 percent down payment will most likely have to purchase mortgage default insurance if dealing with a bank or first tier lender.

Closing costs: Closing costs are fees, charged by your lawyer, lenders, government and third parties, related to the purchase of the home. An estimated one and a half to five percent of the purchase price of the home. You will usually pay closing costs at the time you close on a mortgage. The cost can include a loan origination fee, processing fees, discount points, appraisal fee, title insurance and legal fees, Land Transfer Tax, and HST/GST

Deposit (Earnest) money: This is in the form of a deposit and tells the seller that you’re committed to your offer. Once the seller accepts your offer, the deposit money will go towards your down payment and closing costs.

Take this glossary with you to your lender meeting and you will feel much more comfortable throughout the home buying process.

 How to Secure the Best Financing Rates and Terms When Buying a Home. Best Financing, A Three-Point Plan