24
apr
0

Pre-approvals – not worth the paper they are written on!

Posted by Mortgage News!, Mortgage Tips, Real Goods, Tips for Homeowners, Understand MortgagesNo Comments

Why do pre-approvals have such a bad rep? Realtors will often ask their clients if they are pre-approved, in order to ensure that they are not wasting their time showing the client properties for which the clients cannot qualify or cannot afford. But what, in fact, is a client getting, when they are pre-approved?

We at the Welch & Co Team, believe that pre-approvals are not worth the paper they are written on….

Here are some of the many reasons why we feel this way:

1) most pre-approvals are automated, which means that no underwriter is viewing the application: few and far between are the applications that are “vanilla” anymore, meaning employment as full time permanent salaried positions, with high end credit scores. All applications should be reviewed and underwritten in order for any pre-approval to be value.

2) if the application is for a purchase with < 20% down payment, the deal needs to be underwritten by both the lender and the insurer: even underwritten pre-approvals are not sent to the insurer for review.

3) pre-approvals do not taken into consideration the property, and a key part of the underwriting process includes the review of the property

4) most banks do not review documentation prior to issuing a pre-approval, which often leads to incorrect amounts in terms of capacity for the client (i.e. client says they make $50k per annum but are paid hourly – this means that a 2 year average has to be factored in and the 2 year average is in actuality $44k – hence their capacity to purchase would decrease substantially).

5) approximately 95% of pre-approvals do not reflect the lowest or best interest rate in the market place – rates can go up or down. Furthermore, not all lenders offer pre-approvals, and as such the client’s application may not even end up with the same lender with whom they were pre-approved!

6) not all of a client’s needs or goals are factored in when a pre-approval is issued.

What do we recommend INSTEAD of a pre-approval? At the Welch & Co Team, you will get full underwriting up front, of your application and documentation. If there are any issues that might affect your financing, you will know about them as well as the reason that they might be an issue. Each and every file gets our individual attention and is underwritten in order to ensure that there are no surprises! This is is also why we need all of your paperwork BEFORE we send in your application! Call us at 613-546-2989 to book your appointment today. We are ….More than a dotted line….

12
jul
0

Fixed vs. Variable

Posted by Mortgage News!, Real Goods, Understand MortgagesNo Comments

The Bank of Canada has increased the overnight rate by a quarter point, as of yesterday’s meeting.

 

What does this mean to you if you have a variable rate mortgage?

 

It means that the Bank of Canada Prime rate, which most lenders adopt as their Prime rate, has increased from 3.45% to 3.70%. With 5 year terms offering anywhere from Prime -.75 % (currently 2.95%) to Prime minus 1.00% (currently 2.70%) this still represents a far wiser option than the fixed rate mortgages for a 5 year term. This video is fantastic in explaining the risks/ benefits of taking a variable rate versus a fixed rate mortgage.

 

If you have a variable rate mortgage, or are considering one: YOU SHOULD WATCH THIS!

 

Image retrieved from Yahoo Canada.

10
may
0

Bank of Canada Qualifying Rate Increasing!

Posted by Mortgage News!, Mortgage Tips, Rates Page, Real Goods, Understand MortgagesNo Comments

Lenders normally have until Monday, following announcements made by the Bank of Canada on a Wednesday, in order to implement the changes. The announcement for an increased Bank of Canada Qualifying rate was made yesterday – an increase from 5.14% to 5.34%.

 

This applies to all borrowers that have less than a 20% down payment for their home purchase…

 

Call us at 613-546-2989 should you have any questions at all!!!!

 

https://www.thestar.com/business/2018/05/09/bank-of-canada-raises-mortgage-qualifying-rate-following-increase-in-big-six-banks-fixed-rates.html

25
jan
0

Borrowed Down Payment? Yes we can!

Posted by Mortgage Tips, Real Goods, Understand MortgagesNo Comments

Borrowed Down Payment Program

Did you know that it is still possible to borrow your down payment for your mortgage?!

Many folks think that this product is no longer available, however it is indeed! It is often misconstrued with another product: the 100% Financing Product, which is no longer available.

The key to the Borrowed Down Payment Product is that the lender must include the funds that were borrowed as a liability, as part of your application.

                                                                      For instance:

You borrow $12,500.00 towards your purchase of a $250,000.00

home purchase. The loan amount of $12,500.00 must be part of the

liabilities on your application: if revolving credit then you must input

a repayment amount of 3% of the $12,500 therefore $375 per month.

 

 

Although details vary from one lender to another, it may well be worth your while to inquire with the Welch & Co Team about this product! The most important items in order to qualify for this product are to have good credit, and to have room to add the additional debt to your list of existing debts!

Key Features of the Product:

Property related

  • 5-10% of the purchase price can be borrowed.
  • High ratio insurance premium is slightly higher at 4.5%.
  • >$75,000 <$500,000 purchase price
  • 1-2 unit homes maximum.

Purchaser related

  • No previous bankruptcies or consumer proposals.
  • Credit profile strong (>650 minimum).
  • Must have minimum two active trades for minimum two years.
  • Source of borrowed funds can be personal loans, lines of credit, credit cards, gifts from non-immediate family members.
  • Non-residing co-borrowers okay but no guarantors permitted.
  • Ratios of income to debt same as normal.
  • Borrower must be able to show that they have the ability to cover at a minimum the closing costs (1.5% of the purchase price)

 

 

Call us today to see if you might qualify for the Borrowed Down Payment Product at 613-546-2989!

4
dec
0

How will the upcoming mortgages changes affect you?

Posted by Real GoodsNo Comments

You may have heard about the upcoming mortgage rule changes taking effect January 1st, but do you know how these may affect you?

 

The Office of the Superintendent of Financial Institutions (OSFI) issued some new guideline changes for the mortgage industry. The changes will go into effect on January 1, 2018, and will require mortgage applicants who need a mortgage representing less than 80% of it’s current market value (i.e. if home is worth $100,000, then your mortgage is < $ 80,000) to qualify at the Bank of Canada’s five-year benchmark rate (presently 4.99% subject to change) or the lender’s five year fixed term mortgage interest rate +2%, whichever is greater.

 

Here’s an example of the impact the new qualifying rate will have on the maximum mortgage proceeds and home purchase price. Amounts are based upon a combined Canadian family income of $75,000, 5-year closed term mortgage at a fixed> rate of 3.39%, 25-year amortization, $100,000 available for down payment and $700 in other monthly debt obligations:

 

Up to December 31, 2017After January 1, 2018
5 Year fixed Rate3.39%3.39%
Qualifying rate3.39%5.39%
Maximum Mortgage Amount$400,000$325,000
Down Payment$100,000$100,000
Maximum Home Purchase Price$500,000$425,000

 

As you can see, these changes will affect the household that wants to purchase a new home, but they also will apply to anyone that applies for the refinancing of their home as well, for debt consolidation or any other reason!

 

In addition to this, we envision that changes will occur with regard to the tactics that lenders use for their mortgage renewals as well… Although the new rules stipulate that if you renew with your current lender, these new rules will not be applied to you, we surmise that they will most definitely affect you.

 

Think of it this way: currently, the Welch & Co Team offers all of our clients free reviews of their renewal offer with their current lender. This is in order to ensure that your current lender is actually offering you a competitive rate in the market place. Lenders are well aware that complacency and busy schedules mean that most households will simply sign the renewal offer from their existing lender. Let’s face it: this is the easiest route!

 

Right now, if your offer is not competitive, the Welch & Co Team can seek another lender with a more competitive product that offers the right fit for you and your needs. This helps to ensure that lenders make an attempt to remain competitive on rate – keeping them honest!

 

However, after January 1, 2018, knowing that their existing mortgage holders will now face these tougher rules if they want to go elsewhere at maturity, we surmise that the renewal offers will no longer be offered at competitive rates! Knowing that the easiest route for clients is to just sign their renewal offer from their existing lender without seeking better options. The incentive to offer competitive rates is dramatically reduced…The Welch & Co Team wants to ensure you are renewing to the best possible product to suit your financial needs.

 

So what can you do about it?

 

The one thing that you should NOT do, is simply sign your existing renewal offer in fear of not being able to qualify elsewhere! Remember that we are here to assist you and guide you through these mortgage changes, and we have a vast number of lenders from whom we can choose in order to ensure that you are getting what is best for YOU!

 

Take the time, give the Welch & Co Team a call, let’s talk, and see how we can help!:)

3
jan
0
Holiday Debt Recovery

How to Recover from Holiday Debt

Posted by Real GoodsNo Comments

Hands up if you spent more than you wanted to this past holiday. From gifts to entertaining to travel, it’s easy to get swept up in the holiday spirit and dole out more cash than you first intended to. Now the credit card bills have started to arrive and you may be wondering where the extra money will come from? Often called the Holiday Hangover, lingering debt from this most wonderful time of the year can be a major financial burden all year long. Here are tips to get rid of it fast.

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14
dec
0

8 Christmas Eve Traditions

Posted by Real GoodsNo Comments

I was talking to a friend of mine this morning whose children are grown and out on their own. My question had to do with whether or not to keep doing one of our annual holiday traditions when it seemed my kids were being pulled to participate in other things, in other directions. “Do not stop your Christmas Eve traditions,” she said. “Traditions are so important; you’ll see it more as time goes by. And once you stop them, it’s very difficult to start them again.”

Every family celebrates special holidays in their own way. Christmas Eve is no exception with families incorporating a wide variety of traditions from the sacred to the sentimental. Here are a few of our favorites. Maybe they’ll inspire you to start a new tradition this year with the ones you love!

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26
sep
0

30 Smart Tips to Get Your Home Ready for Fall

Posted by Health & Your Home..., Real GoodsNo Comments

Cooler temperatures and pretty soon falling leaves serve as a reminder that the fall season is fast approaching. As the seasons change, so do our activities and home needs. Even though summer is not quite over yet, it’s a good time to do some seasonal maintenance to keep your home running smoothly. The weather can change quickly, especially if you live in a colder climate and you don’t want to be caught unprepared. A bit of attention now will save costly repairs and aggravation later.

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20
jul
0
Purchase your dream home with Purchase PLUS Improvements

Create Your Dream Home with Purchase PLUS Improvements

Posted by Real GoodsNo Comments

Have you ever fallen in love with a home, but just absolutely cannot stand the carpet in the living room? The kitchen cabinets are too outdated? The furnace or shingles need replacing immediately?

 

Rather than dismissing that particular property, consider utilizing the purchase plus improvement product! Allowing you to end your house hunt, and work towards making your dream home a reality.

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13
jul
0

New to Canada (Part 2) – Things You Should Consider

Posted by Real Goods, UncategorizedNo Comments

While the prospect of purchasing a home for the first time in Canada is an exciting and important step, many newcomers choose to rent for the first several months to a year (or longer) after their arrival.

Before deciding whether to rent or buy, it’s important that you know what you can afford, weigh the options available and take the time to make the right decisions that will ensure a successful future in Canada. Do your research and consider the following:

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