Common Questions About Mortgages
Why use a mortgage broker?
When you visit your bank for a mortgage, they are only able to talk to you about their products and their rates. The person you deal with is a bank employee and their duty is the do the best job they can for their employer, earning them the most money. Mortgage broker will protect you from bait and switch tactics, unscrupulous lenders who will demand a larger down payment at the last minute and will ensure you close on time, protecting your deposit money. We aren’t just talking about the difference in being approved or denied, or a few extra dollars a month, but your ability to buy or retain your home and tens or even hundreds of thousands of dollars.
What happens if I am not satisfied with a mortgage offer?
Do not accept it. You have no obligation to accept any of the offers that are made to you by Mortgage Architects or any of our affiliated lenders.
I just got a renewal notice, what should I do?
Most lenders send out their mortgage renewal notices offering existing clients their posted interest rates. The rate you are being offered is usually not the best one. Always investigate the possibility of a lower interest rate with the lender or another lender. Or contact your local a Mortgage Architect's Mortgage Broker. Otherwise, you may end up paying a much higher interest rate on your renewing mortgage than you need to.
Should I wait for my mortgage to mature before renewing?
Lenders will often guarantee an interest rate to you as much as 90 days before your mortgage matures. Moreover, as long as you are not increasing your mortgage, they will cover the costs of transferring your mortgage too. This means a rate promised well in advance of your maturity date, thus eliminating any worries of higher rates. In addition, if rates drop before the actual maturity rate, the new lender will usually adjust your interest rate lower as well.
What is the difference between Term and Amortization?
The "term" of the mortgage should not be confused with the "amortization". The amortization of the mortgage refers to the entire length of time that it will take for the mortgage to be paid and the house to be "free and clear". The term is the period for which your current payment obligations are valid. In other words, you may choose a five-year term and a 25-year amortization. This would mean that your interest rate, your payments, and your pre-payment options would be the same for the next five years. At the end of these five years, you would re-negotiate the term, and the amortization would now be 20 years.
Do I need to be pre-approved before I start shopping?
Most real estate professionals will want to ensure you have a pre-approved mortgage in place before they take you out looking for a home. This is to ensure that they are showing you property within your affordable price range.
What is a pre-approved mortgage?
A pre-approved mortgage provides an interest rate guarantee from a lender for a specified period of time (usually 60 to 90 days) and for a set amount of money. The pre-approval is calculated based on information provided by you and is generally subject to certain conditions being met before the mortgage is finalized. Conditions would usually be things like 'written employment and income confirmation' and 'downpayment from your own resources', for example. A pre-approved mortgage is one of the first steps a homebuyer should take before beginning the buying process.
What is mortgage loan insurance?
Mortgage loan insurance is insurance provided by Canada Mortgage and Housing Corporation (CMHC), a crown corporation, and Genworth, an approved private corporation. This insurance is required by law to insure lenders against default on mortgages with a loan to value ratio greater than 80%. The insurance premiums, ranging from .50% and up depending upon your downpayment & amortization, are paid by the borrower and can be added directly onto the mortgage amount. This is not the same as mortgage life insurance.
Closed or Open - How Do You Choose?
Fixed rate mortgages can be "closed" or "open" and each has its benefits.
Open mortgages allow you to pre-pay some, or all, or your outstanding mortgage obligation at any time, without penalty. Generally, open mortgages have a six-month, and a one-year term option, however they tend to have higher interest rates than closed mortgages of the same term length.
Closed mortgages are offered in terms ranging from six months to ten years. Most offer more stringent pre-payment options subject to various pre-set regulations. For most people, such pre-payment options can be vital to reducing the amortization of one's mortgage and deciding between a closed or open mortgage deserves careful consideration.
How long will it take to get my mortgage approved?
Most mortgages approved within 48 hours of application for qualified borrowers but in some cases, mortgage approvals can be granted in as little as two hours. Unqualified applicants usually take longer as there is more work involved in shopping the mortgage around to various lenders.
Can I Get a Mortgage With a Bankruptcy?
This can be summed up in one word – Yes, it is possible. Please call to discuss all your options!
How does a mortgage broker get paid?
With most institutional lenders, mortgage brokers receive a finder's fee from the lender, which is how they are able to provide their service at no charge to qualified borrowers.
How can I get the lowest mortgage rate?
I deal with over 30 different mortgage lenders and receives mortgage rate updates daily. I’m a volume Mortgage Agent and have access to the lowest mortgage rate you qualify for. My lenders will compete for your business!
I have bad credit. Can I still get a mortgage?
Just because you have had some credit issues in the past doesn't mean you can't get a mortgage, as there are still options open to you.
Can I buy a home with no money down?
Yes. It is possible to buy a home with no down payment. Cash back mortgages - essentially 100% financing - are a niche product for buyers who have a full-time job and excellent credit but are not able to save a down payment.
Can I use my RRSP for a down payment?
Yes. The Home Buyers’ Plan (HBP) is a program from the Government of Canada that allows first time home buyers to withdraw up to $25,000 from their RRSP towards the down payment for their first home, tax free. You have up to 15 years to repay the amount you withdrew starting the second year after you made the withdrawal. Each year, you must pay a minimum of 1/15 of the withdrawn amount. Any RRSP contributions made less than 90 days before the withdrawal date cannot be used towards the HBP.
Fixed, Variable - Which Works for You?
Choosing the right kind of mortgage depends on a number of variables, including economic outlook, the housing market and interest rates. First it's important to understand your options: What is a fixed-rate mortgage? The interest rate on a fixed-rate mortgage is locked in for a predetermined time depending on the term of your mortgage - usually three to five years, but it can be six months to 25 years. Fixed-rate mortgages offer the security of knowing what you will be paying for the term selected. They're often considered a safe bet for those who don't want to worry about fluctuating rates.
What is a variable-rate mortgage? A mortgage in which payments are tied to the bank or lender's prime rates, which can fluctuate several times a year. If interest rates go down, more of your payment goes towards reducing the principal; if rates go up, a larger portion of your monthly payment goes towards covering the interest.
Still have a questions? Call me, I can help!