Q: Why I need a mortgage profession, why can’t I just go to my bank or credit union?
A: Because a Complete Mortgage Services’ professional negotiates with a multitude of lenders on your behalf saving you time and money. In addition, a Complete Mortgage Services’ professional has access to all the best mortgage rates and specials – not just the rates of one lender. In an ever changing lending environment, a Complete Mortgage Services’ professional has access to current product information of an extensive network of financial institutions – not just one. Our customers’ satisfaction is guaranteed!
2. Q: Can I really utilize the expertise and assistance of a mortgage professional at no cost to me?
A: Yes, our mortgage specialists are paid by the lender – there is no cost to you! It is only in a very rare situation that a client may be asked to pay a fee. This of course, would be discussed and agreed to at the being of the mortgage process.
Q:How do I qualify for a mortgage?
A: Qualifying for a mortgage is very similar to 5 links in a chain – known as the 5 C’s of credit.
The first “C” is for Character: Character is the general impression the client makes on a potential lender regarding their “intent to repay” their mortgage loan. Lenders will consider the length of time the client has been with their current employer, the length of time at their current residence as well as the length of time the client’s credit file has been open with the credit bureau. Breaks in employment history and moving around a lot require a reasonable explanation in order for the lender to make a prudent lending decision.
The second “C” is for Collateral: Collateral is the security the client can provide the lender; this generally means the property. If for some reason the client cannot repay the mortgage loan, the lender wants to know that the property the mortgage was taken out for is solid, marketable real estate.
The third “C” is for Capital: Capital is the money the client personally has invested in the property, otherwise known as the down payment. The more of their own money they can invest in a down payment, the more likely it is that the client will do all they can to maintain the required payment obligations.
The fourth “C” is for Credit: Credit is the evaluation of the client’s habits in performing credit obligations. The information about their credit history is stored at the “credit bureau” and indicates how well the client paid their bills over the last six years. All major credit cards, auto loans, leases, etc., are reported to the credit bureau. A lender will evaluate the client’s ability to maintain their obligations and try to determine how well they live within their means.
The fifth “C” is for Capacity: Capacity to repay the loan is probably the most critical of the five factors. The lender will want to know exactly how the client intends to repay the loan and will consider the client’s income as it relates to the affordability of the loan that they are applying for.
Remember, the five “C’s” are like five links in a chain – if the application is weak in one of these areas – then the other four must be strong enough to make up for the weaker link. A good rule of thumb to remember is that if a mortgage makes sense – it can be done!
Q: What is the mortgage process?
A: The first step is called pre-qualification. This is the process in which your mortgage specialist will ask you about your employment, income, and your current debt responsibilities.
-Employees:: Letter from employer on company letterhead with the client’s name, base salary or hourly rate, normal hours worked per week, position and length of employment and a recent pay stub.
-Commission sales: 3-years personal tax returns; 3-years Notice of Assessments (NOA’s) from CCRA; Income confirmation
-Self-employed: 3-years personal tax returns; 3-years Notice of Assessments (NOA’s) from CCRA; 3-years business financial statements; 3-years business tax returns; Social insurance number(s); 3-years residence; 3-years employment; Banking information; Assets – things you own; Liabilities – money you owe; Credit history – specifically any past credit issues.
Q: What lenders will be the source of the mortgage money?
A: Chartered banks, Loan corporations, Trust companies, Credit unions, Finance companies, Pension funds, Life insurance companies, or Private individuals.
Q: What about the down payment?
A: Your down payment can come from your own resources, such as savings, Canada Savings Bonds, RRSP’s, or other investments. Your down payment can also be a gift from an immediate relative. If your down payment is to be gifted to you the lender must verify the money is a genuine gift; and the funds must be deposited to your account at least 15 days prior to your mortgage completing.
There are also non-traditional down payment options such as lender cash back incentives, personal loans, lines of credit, or credit cards to name a few. Speak with a Complete Mortgage Services professional to help you understand all your options. Home ownership may be closer than you think!
Q: What are the different types of mortgages?
A: There are 6 different mortgage types: First mortgage – Second mortgage – Open mortgage – Closed mortgage – Variable or adjustable rate mortgage – Mortgages for recreational & investment properties.
Q: What are my mortgage repayment options?
A: You can choose to repay your mortgage weekly, bi-weekly or monthly. To pay off your mortgage faster and save you money you can choose an accelerated weekly or bi-weekly frequency.
An accelerated bi-weekly mortgage payment is when your monthly mortgage payment is divided by two and the amount is withdrawn from your bank account every two weeks. With an accelerated bi-weekly mortgage payment, you still make 26 payments per year but the payment amount is slightly more than a regular bi-weekly mortgage payment.
Q: What closing costs?
A: Closing costs are all the cost associated with completing your purchase. These cost include, but are not limited to, a home inspection, an appraisal, legal fees, and property transfer tax. As a general rule a lender will want to that you have 1.5% of the purchase price set aside to cover these expenses.
What is Property Transfer Tax and do I have to pay it?
A: Property transfer tax is charged by the Provincial Government and is collected by your lawyer at closing.
Each Province varies as to the amount but it is usually a percentage of the purchase price. For example in British Columbia, property transfer tax is calculated as follows, 1% of the first $200,000 and 2% of the balance.
You are exempt from paying PTT in British Columbia if you have never owned a home anywhere in the world and the purchase price is less than $475,000.