Tag Archives: new home mortgages

What is your credit worthiness?

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This week one of our lenders sent an email to remind us how they look at a mortgage application for a client. They call this the 5 C’s of Credit. I thought you might find it interesting.

“Remember it’s not how nice or good they are, but whether they qualify for the loan.
Character – Based on stability… Time at current job/residence.
Collateral – Marketability of real estate in case of default.
Capital – Funds invested in purchase or equity in home for refinance.
Also reflects your ability to save / net worth.
Credit – Evaluates your ability to maintain your obligations and determine how well you live within your means.
Capacity – Whether you have the means to support the debts. “

You will notice they did not say it is about how long you have had your finances with that institution or how well you get along with the bank personnel.

Sometimes clients tell me they are concerned that if they do not get their mortgage with their current financial institution the bank will not approve them for a loan in the future. This is simply not the case. If you have a stable job, pay your bills on time, manage your debt by living within your means and positive net worth, you will be able to get a loan at any of the many financial institutions in Canada.

Look out for your financial future. Make financial decisions that are in your best interest, not the banks!!

If you are not sure what is your credit worthiness and want a financial review, call me. I will sit down with you and one of our financial planner partners and together we develop your financial plan and mortgage plan.

Karen Boies Mortgage Planner
604-726-9550
Karen@mortgagecentrebc.com

“The content and opinions expressed are solely the expressions of the writer. They do not represent the views or opinions of Mortgage Centre Canada and The Mortgage Centre – City Wide. Neither Mortgage Centre Canada nor The Mortgage Centre – City Wide warrant the accuracy of what is presented.”

A Place Where Women Connect

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I am frequently entertained by the musing of @crunchycarpets on Twitter. We banter back and forth sharing a giggle and some intellectual property. Then one day she invited me to be interviewed for her website Wet Coast Women. I was excited about the opportunity to share my ideas about mortgages.

Honestly, I am passionate about helping women understand what it is they need to know about building a firm financial foundation and that includes knowing their way around securing mortgage financing.

Wet Coast Women was created by Kerry Sauriol of Crunchy Carpets ‘fame.’ The idea behind the site is simple..a place for all the women bloggers to mix, meet and promote their own sites and places of work and creativity.

Check out her site and read the article she posted after I answered her great questions.

Wet Coast Women

Happy Spring!

Karen Boies
Mortgage Planner
The Mortgage Centre-City Wide
604—726-9550
Karen@mortgagecentrebc.com

“The content and opinions expressed are solely the expressions of the writer. They do not represent the views or opinions of Mortgage Centre Canada and The Mortgage Centre – City Wide. Neither Mortgage Centre Canada nor The Mortgage Centre – City Wide warrant the accuracy of what is presented.”

10 Steps To Buying A Home

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Being prepared and knowing what to expect along the way will help the home buying process go more smoothly for you. Working with the right professionals, who educate and support you along the way, will help alleviate the stress of buying your new home.

1. Determine how much you can afford. Based on the combined family income, your down payment, existing debt, regular expenditures and other key financial information, I can help you determine how much you can afford to pay every month for your mortgage payment, within your budget. I will also help you determine the price range that can shop for. While you shop, I will hold a mortgage rate for you.

2. Team up with a real estate professional. Finding a real estate agent to help you search for your dream home is important to the home buying process. The best real estate agent will be a combination of a personal advisor, consultant and negotiator. This expert will show you the homes that match your criteria, guide you through the home buying process, and negotiate the best possible price for your home. Once you have an accepted offer I will work closely with your real estate agent to obtain the necessary paper work related to the property, for loan approval.

3. Make an offer. When you have found a place that you would like to call your own, your real estate agent will help draw up an Offer to Purchase to present to the seller. This legal document specifies the price, the closing date and any conditions.

4. Arrange the home inspection. Many buyers consider including a home inspection as one of the conditions on their Offer to Purchase. A professional inspection is a good way to uncover any major problems with the home. If the home does not pass the inspection, you can adjust or withdraw your conditional offer. A home inspection is not normally required by the lender for mortgage approval.

5. Get the mortgage approved. With a copy of the Offer to Purchase, MLS Listing, Property Disclosure statement and your financial information (proof of employment income and down payment) I will submit your application to the mortgage lender that we have selected. The lender will qualify your application and complete the valuation on the property you have purchased. Mortgage default insurance gives you the ability to buy a home with a down payment of less than 20% of the purchase price. It is added to the mortgage loan amount.

6. Retain a lawyer or notary. It is important to hire a lawyer or notary that specializes in real estate transactions. The solicitor will handle the legal transactions to transfer the title of the property from the seller to your name.

7. Get property insurance. You will need to purchase property insurance that protects your home against fire and other damages. Once you have a policy in place, you will forward a copy to your solicitor and your mortgage lender.

8. Check the details. Once the lender approves the mortgage, I will provide you a letter to confirm the financing. If you are satisfied that all conditions have been met you can remove subjects on your offer and pay the applicable deposit to your Real Estate professional, which is held in trust. The deposit is part of your down payment. With the deal finalized and the financing in place, your solicitor will search the title and check whether there are any unpaid property taxes. Your solicitor will arrange for a survey to be completed, if necessary.

9. Complete the paperwork. A few days before the deal is set to complete, you will meet with your lawyer/notary to review, sign and get copies of all your documentation. At that time you will also provide the remainder of your down payment, pay legal fees, and any additional costs such as property transfer tax, and any prepaid utility expenses for which the seller should be reimbursed, that are due on closing.

10. Pick up the keys. On closing day, your solicitor and the seller’s lawyer will exchange documents and cheques. Your solicitor will register your new home in your name with land titles office. When these tasks are complete, you will get the deed and keys to your new home. You can arrange to move in on possession day!

If you are ready to get started on investing in your new home, call me today 604-726-9550 and let me start working to help you achieve that dream!!

Your Credit Score

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I had the pleasure of meeting with a young professional woman this week who was interested in seeing if she would qualify for a mortgage so she could invest in her own home. During our meeting she expressed concern about having her credit checked and the impact on her ability to get a loan. When I pulled her credit report she had a great credit history and excellent credit score of 801. So I thought an article about your credit score and how it is determined would be helpful for my readers.

Credit Score
Your credit score is a judgment about your financial health, at a specific point in time. It indicates the risk you represent for lenders, compared with other consumers.

There are many different ways to work out credit scores. The credit-reporting agencies Equifax and TransUnion use a scale from 300 to 900. High scores on this scale are good. The higher your score, the lower the risk for the lender. Lenders may also have their own ways of arriving at credit scores. In addition, lenders must decide on the lowest score you can have and still borrow money from them. They can also use your score to set the interest rate you will pay.

Which parts of a credit history are most important?
35% – Your Payment History
30% – Amounts You Owe
15% – Length of Your Credit History
10% – Types of Credit Used
10% – New Credit

Top 5 tips for improving your credit
1. Pay your bills on time. Pay your bill in advance of the due date, ensuring it reaches the creditor before the payment is due. Pay off debt, don’t move it around. Owing the same amounts, but having fewer open accounts, can lower your score if you max out the accounts involved.
2. Contact your creditors as soon as you know you will have a problem paying bills on time. Try to work out a payment arrangement and negotiate with them to keep at least a portion of the late notations off of your credit reports.
3. Reduce the number of active credit cards to 2 or 3 accounts. Revolving credit includes department store cards, grocery store cards and gas cards. Establish a minimum of 2-3 trades with good repayment history for 24 months
4. Keep account balances within 50% of the available credit limit – Keep your credit card balances low. High debt-to-credit-limit ratios drive your scores down.
5. Pay or satisfy all outstanding collections and judgements

It is advisable to avoid applying for credit and having your credit report checked unless you have a genuine need for credit. The risk to consumers with a lot of activity on their credit report over a short period of time is that a lender may interpret this as a sign that you are in financial difficulty or taking on more debt than you can manage.

Your credit score is important and you need to take action to make sure that you will be able to borrow money when you need it. If you currently have a low credit score don’t be discouraged. Take action. Start doing the things that will cause your credit score to improve. Be consistent and before you know it you will have better credit.

When you are ready to pursue home ownership, call me for your mortgage! I pull your credit report once and submit it to the lender. If there are some issues on the report that needs to be addressed, I can guide you through that process.

Enjoy the summer!
Karen Boies, Mortgage Specialist 604-726-9550

Guarantor or not?

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I recently had the opportunity to work with a client who really wanted to take the step to buy her own condo instead of paying off her landlord’s mortgage. She had completed the application process, then after checking her credit rating I found out she had previously declared bankruptcy.  

That prior bankruptcy adversely affects her ability to get a mortgage on her own today. She has a good explanation for the bankruptcy. She suffered a life threatening illness and did not have a job where she was paid disability benefits.  While she recovered from the illness, she did not have an income and could not pay her debts. At the time she was younger and did not understand the ongoing impact declaring bankruptcy would have on her ability to obtain mortgage financing.   Today, she is healthy and has an established good paying career/job and pays her credit card off each month and on time.

Because of her prior bankruptcy the mortgage lender requested a guarantor. Luckily her parents were more than happy to help out and they were great candidates to be guarantors.

I thought a quick blog on the role of guarantor would be helpful.

A guarantor is a person who promises the lender they will repay a debt if the principal borrower should default on the mortgage repayment commitment (fails to pay).  A guarantor will be requested by the lender, if the principal mortgage applicant is unable to qualify for financing on their own. Examples of when this could happen are insufficient employment history or a history of poor debt repayment.

The guarantor does become part of the mortgage application and approval process. They will have to disclose their assets, liabilities, income and a credit check is done.  Then the lender looks as the complete picture of the applicant and their guarantor.

Once the application is approved, the guarantor will have to sign the mortgage documents including the mortgage commitment, confirming their obligation to the lender that they will be responsible to pay this mortgage, should their daughter fail to do so.   

The guarantor should obtain “independent legal advice” from a lawyer who is not part of the real estate transaction so they know what their responsibilities are should the primary debtor default on the mortgage repayment.  The lender (creditor) has no rights against the guarantor until the primary debtor defaults on the mortgage payments. Should the primary applicant miss one payment, the lender could enforce the guarantee and take action to have them pay the mortgage payments.

My client has sufficient income to support the mortgage on her own. Once she demonstrates at least 12 months of paying the mortgage payments on time and keeps her credit history in excellent condition, the lender will review the file and consider removing the guarantor.

I am happy to be the one to help you through the home buying and mortgage planning process.  When you or someone you care about, is buying a home, call me 604-726-9550! I want to help and make this a positive experience for all my clients.

If you have any mortgage related questions, please call me or email me at Karen@mortgagecentrebc.com

Karen Boies Mortgage Planner

Radio Real Estate Show June 3 2010

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Hi, I had the pleasure of appearing on Radio Real Estate Show, AM650 Saturday morning from 10-11:00am, this is what I had to say……

Good Morning Tom, Good Morning Sheri,

The Minister of Finance recently announced changes to high-ratio government guaranteed mortgages. I am talking about a mortgage where you are putting less than 20% down and the rate used to qualify you for a VRM.

This week I worked with a client who has been impacted by these changes.  She had full intentions of securing a variable rate product for her first ever mortgage. She had done her research and was confident in her financial decision.  The only problem she went out and committed to a new car lease before buying the home.

Prior to April 19, the lender would have used their 3 year rate to qualify her and she would have qualified for the variable rate product.  With the higher qualifying rate, today it is 5.99%, she no longer qualifies for a variable rate mortgage.  She has been approved for a  5 year fixed rate  mortgage of 4.39% which is a great rate, that’s  2.49% higher than the VR.

If you are thinking about buying a home, do not go out and buy or lease a car! It could cost you more than you had planned!   Call me first,  let’s develop your mortgage plan !

This is Karen Boies for Radio Real Estate

I am a mobile mortgage planner in Greater Vancouver. I am honored to work with you to help you understand the home financing process! I want to help you make financial decisions that you are comfortable with and that save you money in the long run. If you have any mortgage related questions, please call me at 604-726-9550 or email me at Karen@mortgagecentrebc.com

09.mortgage centre-karen boies jun 5

What happens to my deposit? When do we get the keys?

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Last night I met with a wonderful young couple who are in the process of buying their first home. I am arranging their mortgage financing for them.

The wife is already seeing herself living in their new home, enjoying the convenience of in suite laundry, hardwood floors for her baby to crawl on and additional living space. Her husband is still thinking about the contract details, asking me many great questions about the next steps in the home buying process.

They have an accepted offer and we are going through the process of getting all the documents in order to meet the lenders conditions for financing approval.  They have already prepared the 5% deposit cheque to be given to their Realtor “In Trust” when the subjects are removed.  He wanted to know if he gets that money back? If not where does it go and when do they pay the rest of the down payment? When do they get the keys to their new home?

I explained that once the lender is satisfied  they have the employment income to support the mortgage loan, the proof they have the down payment from their own savings and approval is provided by CMHC for the default loan insurance, I will give them a letter to confirm they can remove the “subjects” for financing. At that point if they are satisfied with the other conditions they identified (home inspection) they will sign a contract addendum to remove the subjects.  Once they remove the subjects they are bound by the contract and they will be buying that home.  They will provide the deposit of 5% of the purchase price, to their Realtor. This will be deducted from the total down payment they agreed to provide. (Purchase price less down payment equals mortgage amount)

Approximately one week before the sale is to complete they will meet with their solicitor.  They will pay the balance of the down payment (subtracting 5% deposit they already paid) and the remaining closing costs, such as property tax adjustment and the legal fees. Once this part of the transaction is completed, the lender (in this case a Credit Union) will forward the money they have borrowed (the mortgage amount) to their solicitor, who will in turn pay for the property they have purchased on the “closing/completion date.”  The following day they will meet with their Realtor to receive the keys to their new home.

My client’s questions last night reminded me to break down the steps.  Now that they have found their home and they are going through this in real time,  it is important to break the steps down for the home buyer so this is  a positive experience, as stress free as possible (considering they are making their biggest financial purchase of their young lives)!

We talked about this process when we first met two months ago.  I left them with a Home Buyers Information Kit and an information sheet on the Costs of a Residential Purchase.   We communicated via email and on the phone several times before they found the home they wanted to buy. 

This was a great reminder for me about knowing my client, understanding their need to know.   

 I am happy to be the one to help you through the home buying and mortgage planning process.  When you or someone you care about, is buying a home, call me 604-726-9550! I want to help and make this a positive experience for all my clients.

Enjoy your spring days and nights.

Karen Boies   Mortgage Planner

Boies.k@mortgagecentre.com