Why work with a mortgage professional?

Why work with a mortgage agent?

In today’s market economy of low interest rates, rising house prices and increased bank competition, you owe it to yourself to consider working with a mortgage agent for your next home purchase. There are five questions that residential home buyers have asked about mortgage agents:

1) Who are mortgage agents?

2) How much money can I really save using a mortgage agent?

3) How do they get such good deals?

4) What will it cost me?

5) Why haven’t I heard of them before?

First of all, a mortgage agent is an independent business person whose role is to help you find the best mortgage rate for your home investment. The Agent works on your behalf and negotiates with 30 or more different lenders, in order to get you the best combination of low interest rate and payment terms. In Alberta a mortgage agent is licensed by the Provincial government and adheres to a Code of Best Practices to ensure that you (as the consumer) get the best mortgage for your needs. An Alberta mortgage agent is also accountable to the Real Estate Council of Alberta.

Look at a mortgage agent much like your travel consultant. Just as you would request a travel agency to help get the best fare from home city to wherever you are going, so too does a mortgage agent help you find the lender who will give you the best mortgage. As a Canadian, it may be hard to believe that there really are more than 30 quality lenders (beyond the few well known chartered banks) who are willing to compete for your mortgage business – often with much better rates and terms.

Although your local bank can often offer you an incentive of up to 1% off on

their ‘posted rate’ a good mortgage agent will regularly negotiate 1.25% to 1.35% and sometimes can get as much as 1.50% depending upon circumstances.

The main reason for such deep discounting is because the mortgage agent is not on the bank payroll, so the bank does not have to pay a salary, benefits, pension and other costs associated with retaining fulltime personnel. The reduction in cost is impressive and the savings are passed onto you, the consumer. In an actual sense, the mortgage agency industry is good for both the bank and the consumer’s financial bottom line.

Mortgage agents also have significant buying power because of the large volume of customers they work with, each year.

The fee for using the services of a mortgage agent is normally paid by the lender which you ultimately choose. There are cases however, when the consumer is charged a fee-for- service; this is usually in complicated mortgage situations or commercial and investment deals.

In the past 20 years, less than 15% of Canadian home buyers used the services of a mortgage agent. According to the Canadian Institute of Mortgage Brokers and Lenders, that figure rose to 25% in 2001 and is expected to reach 50% by 2005 and beyond.

In conclusion, regardless if you are looking for your first home or your 5th revenue

property, it pays to meet your local mortgage agent. See what they can do to help reduce your frustration when negotiating with banks and reduce your overall cost of borrowing.

Apply Now for your mortgage or contact MortgageQuote.ca for details at 1-866-948-7283.

What's on your title? Illegal mortgages? Undischarged mortgages?

What’s on your title? Barbarians in your house.

If you read periodicals or watch television, you may have seen the credit card company advertisement where a gang of barbarians rampage through the streets and end up asking you the question: “what’s in your wallet?”. The message is simple: if you don’t have their credit card, you are paying barbaric interest rates. So you better check your wallet and see what you have, before you become a victim of the barbarians.

The same idea holds true regarding your land titles certificate. Simply put: if you

don’t check your land titles certificate at least once a year, you may be unknowingly be a victim of barbarians in another way: unauthorized registrations, undischarged registrations, builders liens or charge-in clauses.

If you own real estate, you may be familiar with the land titles certificate. This certificate is a document which is maintained at the Land Titles Office under the authority and management of the Alberta Government. The purpose of the certificate is to let the public know who is the registered owner of a property. Additionally, the certificate lets the public know who else, other than the registered owner, has a legal interest in the property.

Other interested parties would include mortgage lenders who have lent money to the registered owners; community associations who have rules such as architectural controls which they want to enforce; and, municipalities and utility companies who have right-of-way or encroachment permissions.

In normal events, after you purchase your dream property, the land titles certificate will show that you and/or your spouse are the registered owners thereof. The certificate will also list the names of the lender who provided you with your mortgage. Down the road, if you borrower additional money, say from a second mortgage lender, their name too, would appear on your property’s land titles certificate, right below the name of your first mortgage lender.

If you were to sell your house, the buyers of your home would have their names replace your name and their mortgage lender’s replace your mortgage lenders.

If you were to keep your house and change your mortgage lender, then the old mortgage company’s name would be removed from title and your new mortgage companies name would appear.

In the last 90 days, I have had cases where clients find unauthorized or undischarged registrations on their land titles certificates. When this occurs, things become serious and may result in a lawsuit or worse.

An unauthorized registration is simply another way of saying mortgage or title fraud. 

There are thousands of examples of such fraud, however a basic description is when a fraudster finds a way to impersonate a legitimate property owner and then borrows money from a lender and never pays it back. Another example is when the fraudster steals the legitimate property owners identity then fraudulent transfers ownership to another person by way of sale.

There are cases when a house has been sold as a “rental property” on a “as-is basis” to ignorant buyers. So be suspicious if a vendor advertises: “Private sale… rental property…do not bother tenants” – it might be a real-life case of title fraud. Of course as buyer, if you use a Realtor, this problem should not arise.

An undischarged registration is a lot better, when compared to an unauthorized

registration but still very much a bad thing. In the case of an undischarged registration, you may have borrowed money say, $100,000.00 from one lender, when you first bought the house and some years later, you may have changed banks and applied for a new mortgage for let’s say $150,000.00.

Sometimes, the old lenders do not have their name removed from your land titles

certificate, so it appears that you owe one lender $100,000.00 and another lender

$150,000.00. Imagine waking up one day and finding out that your house which may be worth $200,000.00 has mortgages registered on title for over $250,000.00?

This happens more often than you may think. In fact, less than two months ago, one client applied for a refinance of their home. They bought their home in 1998 and the last time they borrowed money against the home was in 2004. After their new mortgage was approved, in May of 2009, all the paperwork went to the lawyer’s office for signing.

While at the lawyer’s office, it came to everyones attention that the bank who originally lent the money for the purchase of the house in 1998, did not have their name removed from the land titles document. This means that the borrower appeared to owe two different banks a combined mortgage amount which was double what the house was worth.

The moment the undischarged mortgage was identified, the new lender refused to lend money until the borrower resolved the matter of the undischarged mortgage.

To say the least, this was a major headache. After dealing with the shock of knowing that for the past 5 years, they were sleeping with an undischarged mortgage, the clients had to prove they were not fraudsters.

When the client’s approached the bank to get to the bottom of the problem, another series of problems followed. First, the old lender did not have files at the branch, so they could not verify that the borrower had ever borrowed money or not. Next, they bank would only speak with the husband who was later identified as the principal applicant – even though the original mortgage was in both husband and wife’s name. 

Finally, After 4 weeks of telephone tag, branch visits and senior management intervention, the clients were able to get the necessary proof that the mortgage from 1998 should have been discharged in 2004.

The cost to the borrowers was more than money. Yes, there were additional legal fees, however they also lost almost a month in time, so they could not do what they needed to do, when they originally needed the money. Imagine if they needed money for a wedding, a holiday or a family emergency. The delay caused by finding an undischarged mortgage could have been horrific.

Who was to blame? It is hard to say. The bank said they mailed out the discharge papers to the client. The client says they never received the papers because they were working with a lawyer at the time. The originally lawyer is now retired, so he had no comment on the matter. At the end of the day, the situation was resolved with patience, a positive outlook and the persistence to ask questions and stay on top of the matter.

In addition to the unauthorized registrations and undischarged registrations, there are other examples of land title certificate items that may negatively affect you, such as builder’s liens and charge-in clauses. If you would like more information on this subject, on a general basis, contact me. If you have specific questions, please speak to a lawyer. 

If you would like a current copy of your title, ask your lawyer or simply go to your

nearest Alberta Registry office and they will provide you with one. The cost is less than $20.00. Once you have your title, make sure you understand its contents and if there is anything which may give you cause for concern, contact a lawyer immediately.

Apply Now for your mortgage or contact MortgageQuote.ca for details at 1-866-948-7283.

Vacation Homes - yes you can! (Afford one)

You would like a nice vacation home for your family and your friends. Yes you can afford it. You must first plan your strategy to get one in your hands. How? Ask a mortgage professional. But, first ask them how many clients they have helped obtain vacation property for. You see, this is not an easy line of work and a person must be skilfull when obtaining a vacation home financing for you. Why? Because it is a big risk for banks since you will most likely not be renting it out in order to make money.

It possible however, so contact mortgagequote.ca and let us help you get your vacation home. 1-866-948-7283.

Or Apply Now for your mortgage.

The Accredited Mortgage Professional - what is it?

The Accredited Mortgage Professional (AMP): A higher standard of excellence

The Canadian mortgage industry is undergoing a dramatic change that will benefit both consumers and real estate industry professionals alike: the introduction of a national designation for mortgage professionals.

Launched early 2004, the Accredited Mortgage Professional (AMP) is the standard of excellence guiding the mortgage industry. The AMP was developed by the Canadian Institute of Mortgage Brokers and Lenders (CIMBL) as part of an ongoing commitment to increase the level of professionalism in Canada’s mortgage industry.

The AMP designation is unique because it sets a single national proficiency standard for Canada’s mortgage professionals. To earn a designation, a person must have a combination of education and real world mortgage business experience.

Why work with an AMP?

When your mortgage agent has earned his or her AMP designation, it demonstrates a personal commitment to the mortgage industry.

You can be sure that your agent is proficient and understands the mortgage process, since they would have met the high standards of education and training that is required. Additionally, your AMP is committed to constant improvement because they invest time each year towards continuing education in the mortgage industry.

What are the standards for qualification?

A typical mortgage agent can become licensed within a matter of months, after taking the basic mortgage agents course. To earn an AMP designation however, your advisor would not only have completed the basic course, they must satisfy these five components: Education, Work Experience, Ethics, Continuing Education and Membership.

Specifically, in order to be accredited, your AMP would have at least two years experience in the mortgage industry as a broker, lender or insurer.  Furthermore, they would have completed CIMBL’s Ethical Practice in the Mortgage Industry seminar and agree to commit at least 10 hours per year towards mandatory professional development/continuing education courses.

Finally, the mortgage agent would have to be a member in good standing of CIMBL and abide by its formal Code of Ethics.

The introduction of an AMP designation is the dawn of a new day for the Canadian mortgage industry. Both consumers and real estate industry professionals will benefit from this national standard, which raises the bar of performance, credibility and accountability, to a higher level. 

When working with an AMP, you will have comfort in knowing that the person helping you is passionate about their work, committed to their industry and fully accountable you.

Next time you speak with a mortgage agent, ask them if they are accredited, you’ll be glad you did.

Apply Now for your mortgage or contact MortgageQuote.ca for details at 1-866-948-7283.

Pre Approved Mortgages - are they reliable?

Each of you have probably heard this mortgage disaster story. It starts off with someone looking for a home and visiting a lender in order to be pre-approved for a mortgage. After a few questions, the lender says, “Congratulations, you Qualify! Go ahead, find a house for no more than “x” dollars and we will guarantee your rate for 90 days”. Everything seems fine for our new home buyers until they find their dream home, put in an offer (which becomes accepted) and go back to the bank in order to finish the paperwork.

After all the job letters, paystubs, downpayment verification is presented, the lender comes back and says, “oh, I am sorry, you no longer qualify, we can not get you approved”.

What happened? How could this happen? What do you do so this does not happen to you?…

In the example, our buyers learned the difference between Pre-Qualifying and Pre-Approval.

Pre Qualify - can you even afford to go shopping?:

The lender finds out where you work, how much you make and what your expenses are. Based upon that information they calculate the maximum amount of financing you would qualify for. This is a simple procedure and you are not asked to provide documents such as job letters, paystubs, tax returns, etc.

To be pre-qualified does not mean that you are ready to go to the lawyers office because the lenders have not taken into consideration all of the other factors that affect you. For example, there is no credit check or formal income and  downpayment verification.

Lenders often provide you with a pre-qualification simply to let you know what you can afford. If you are really serious about purchasing a new home, then you should be asking for a Pre-Approval.

Pre-Approval - what the bank thinks of you:

In a pre-approval, your lender determines if you have the ability to qualify for a mortgage and "underwrites" your request.  For example, you will be required to show your letter of employment, your recent paystub, your T4’s or Notice of Assessments. You may also have to provide almost as detailed as that required for a proper mortgage approval.

It is good for you to do a pre-approval because:

• you know that your bank has "got your back" in the event you actually find a house that you can afford to buy, (unlike the buyers in our example).

• the only thing left after a pre-approval is getting the lenders approval of the property, usually determined by an appraisal.  

Limit Search - how much you can afford:

Limit Search lets you know how much you can afford to spend on a house.

This is not a pre-approval nor is it a "warm and fuzzy" guarantee you will even get a mortgage. It only tells you what is the most you can spend on a house. For example, if you can afford a house but you have bad credit, then most likely you won't be approved for the mortgage. In all case, it is best to get a Limit Search and Pre-Approval at the same time.

Apply Now for your mortgage or contact MortgageQuote.ca for details at 1-866-948-7283. 

Own a home or rent a home? Which is best for you?

Click here to read the article.

Apply Now for your mortgage or contact MortgageQuote.ca for details at 1-866-948-7283.

Mortgage Myths and Misconceptions - the straight goods

There are several myths and misconceptions regarding mortgages that may have an impact on you. Seven of the more common myths and misconceptions are:

1) if you are self employed, you require complete income verification before you can get a mortgage.

False: self employed persons do qualify for mortgages even if formal income verification is not available. Although some lenders will demand up to three years of corporate financial statements and personal tax returns; other lenders will be satisfied with a Notice of Assessment for the most recent tax year. If you need greater flexibility, another group of lenders will base their decision on your self declared, not reported income.

2) if you let someone assume your hi-ratio or conventional mortgage, you are

responsible for the mortgage payments, no matter what.

False: Canada Mortgage and Housing Corporation (CMHC) has an exemption from the provincial legislation which could make you responsible for ongoing payments, if another person assumes your hi-ratio mortgage and subsequently defaults on their mortgage payments. In fact, CMHC has adopted a policy that if an assumption takes place and the mortgage payments are kept current for 12 consecutive months, you would no longer be liable in the event of a default after 12 months. In addition, there are other options available to you.

For example, GE Capital allows any Canadian to purchase a home with as little as 5% down and if another person assumes your GE insured mortgage, you will not be responsible for any payments. Additionally, you are also not responsible for mortgage payments if a person assumes your conventional (more than 25% down payment) mortgage.

3) If you went bankrupt you no longer qualify for a new mortgage, for up to seven

years.

False: Some banks will let you re-borrow as early as one year from the date of discharge; so long as you have re-established your credit history for at least 12 months by way of a car loan, major credit or personal loan. Furthermore, high ratio insurers such as CMHC or GE will often approve a person for as little as 5% down, providing that two years have passed from the date of discharge and you have re-established credit.

4) If your income is too low to qualify for the traditional 32/40 gds/tds threshold,

you cannot get a mortgage.

False: Certain lenders in the market will approve you for a larger mortgage than others. It is often the smaller banks or trust companies who tend to be more flexible than the major, chartered banks. The reason why certain lenders are so flexible and others are not, is very simple: not every lender has the same risk tolerance and guidelines.

5) You must have at least 25% down to purchase a home.

False: There are lenders in the Canadian market who will finance your home purchase with less down payment. In order to qualify for this type of flexibility you must have excellent credit history, reasonable income and the home may not be a revenue property. Although you may pay a slightly higher interest rate because you do not have a down payment, you do get on the road to home ownership much faster.

6) If you are not a Canadian citizen or landed immigrant, you do not qualify for a

mortgage.

False: One lender in particular is willing to lend to a new Canadian providing that they have been in the country for at least 6 months, have clean banking history (ie: no NSF cheques), are gainfully employed and have at least 13.5% down payment. This is a big change considering that, most lenders historically demanded that new immigrants put down at least 25% to 35%.

7) If you have a non-conforming basement suite (often called a mother-in-law suite), you cannot use that income to help qualify for your mortgage.

False: Although major chartered banks may disqualify such income from your mortgage applications, there are a number of lenders who would contribute 100% of the extra income towards helping you qualify for a mortgage.

Apply Now for your mortgage or contact MortgageQuote.ca for details at 1-866-948-7283.