Hiring an Mortgage Broker in a Down Market

Even though the housing market has recovered to a large extent from the economic slump, some people believe that paying a commission to a property agent or a mortgage broker is the last thing that they would do in a down market.  However, going about the sale business can be quite an arduous task in a down market and what most mortgage market experts would call “a not so good idea”.  People often think that employing real estate agents during the crisis would translate into additional spending. However, experts believe that when the market is witnessing a downtrend, the first thing that you need in order to sell your home is a professional real estate agent. You can also consult mortgage brokers in Newfoundland to find out what they have to say in this regard.

 

When you have been a long time resident of your home, you tend to see it from your own point of view and not from the perspective of a potential buyer. Also, you will not be able to know what is going on in the housing market until and unless you are house hunting yourself. Employing a real estate agent on the other hand will give you a clear idea of what needs to be fixed or upgraded before you put the property up for sale. The unbiased opinion of a real estate agent can help you to make your home suitable for purchase and at the same time be a top draw among prospective buyers.

 

Mortgage brokers in NL believe that agents who have a solid track record will actually succeed in selling your home for a greater amount and that too without taking much time. The additional amount that you get from the sale of a home can then be used to pay the commission of the agent.

 

As Newfoundland mortgage brokers will often tell you that sellers require an agent who will market their property well and at the same time has a solid track record in the business. People trying to sell their homes on their own could face a difficult time in trying to save the commission fee. As a novice, when it comes to a home selling transaction, you are not sure about the steps to achieve an error free transaction. You can even put yourself in legal trouble, especially when it comes to handling the paperwork for the transaction. So in order to sell your home even amid adverse market conditions, it is advisable to opt for expert real estate agents.

 

Mortgage Lender FAQs

People applying for Newfoundland mortgages are asked to verify their employment details, prove their income, and offer permission to get their tax return reviewed. However, often it’s seen that lenders ask questions that appear to be out of the context to borrowers. Things like accounting for every dollar in your account may seem like stretching things a bit. Lenders on their part are likely to keep a record of everything in order to assure underwriters that the borrower will pay the loan back.

Newfoundland mortgage

As a borrower, you should therefore be ready to face the following questions from Newfoundland mortgage lenders.

 

Employment history: Majority of the lenders stress on a two year history of employment and need to be provided with a contact where they can verify the information. Some lenders may also go ahead and ask for educational certificates to check the background.

 

Income: Usually a couple of recent pay stubs are necessary, but some of them might even want to see the tax returns, especially in case of individuals who are self employed. If there are discrepancies in the income statement, these may lead to additional questions. A decline in your compensation may also require you to answer more questions than otherwise needed.

 

Assets: Lenders might want to know more about your assets to make sure that you have not taken a loan to make the down payment.  If the borrower is taking help for the home purchase, then the gift letters need to be produced as evidence.

 

Debts: The borrower’s debts are indicated on the credit report and are calculated as part of the debt to income ratio. Ideally, borrowers should carefully review their credit history before applying for a mortgage as any debts which you think you have cleared may require proof or a disputed debt may need to be taken care of.

 

Credit history: Credit history constitutes an important part of the loan application. Lenders assess the loan application to check for any inconsistency.   If there are quite a few credit inquiries, then lenders may as well ask questions regarding other loans or credit cards.

 

Apart from the usual questions pertaining to a loan application, do not be surprised if the lender asks you about any pending lawsuits that you might have, ethnicity or divorce. In other words, every borrower should be prepared to answer a wide range of questions. In case you feel that the questions asked are out of bounds, then you are always free to switch over to a new lender. In fact, mortgage brokers in Newfoundland can give you a fair idea of the kind of questions to expect.

Mortgage Mistakes

At the time of the last recession, the U.S. economy collapsed owing to a problem with mortgage foreclosures. Borrowers throughout the nation faced difficulties while paying their mortgages. Also, around 8 out of 10 borrowers were found to be engaged in trying to get their mortgages refinanced.  One couldn’t help but notice that even high end homeowners did not find it easy and had to face trouble with foreclosures.  If you are about to buy a home and opt for a Newfoundland mortgage you need to know a bit about the background and know where the crisis began.

 

The root of all these problems can be traced to some of the mistakes that homeowners might have committed.

 

Adjustable rate mortgages may apparently seem to be the perfect solution to your mortgage woes with low interest rates for the initial years. These enable the borrower to purchase a bigger house than they usually qualify for and also provide lower mortgage payments. It is only after the initial 2-5 years that the interest applicable is reset per the current market rate. Though borrowers can take the equity out of the asset refinance to avail a lower interest rate when it is reset, it might not work in their favor.  At the time when housing prices drop, borrowers find it difficult to payback their loan and therefore find themselves in a position to pay twice or thrice the original amount. It is necessary to have a clear idea of such mortgages and seek advice from mortgage brokers in Newfoundland.

 

At the time of the housing crisis, several companies were providing borrowers with no down payment loans.  Down payment not only raises the amount of equity in a property but also raised the amount due in the transaction. Borrowers who pay a significant sum as down payment are more likely to complete their mortgage payment since they do not want to lose the significant amount that they have already invested. Borrowers who do not invest a significant amount as down payment may end up just walking away. Consult mortgage brokers in NL to get a better insight into the feasibility of such financing.

mortgage brokers in NL

Liar loans had been extremely popular when the real estate boom happened. Mortgage lenders were eager to offer this type of a loan and borrowers most willing to accept these. These required less documentation or even none at times and no verification with the information provided including the borrower’s income, stated expenses and assets. Liar loans were so named so as borrowers inflated their income and some of them even turned out to be unemployed. Since borrowers taking such a loan fail to pay their mortgage payments regularly, they are more likely to face bankruptcy and foreclosure owing to non-payment.

 

 

Things First Time Homebuyers Need to Watch Out For

Purchasing a home for the first time is exciting and can even be stressful at times. There are several issues that need to be taken into account and often first time buyers fall prey to “newbie errors”, especially when it comes to mortgage and financing issues. If you are purchasing a property for the first time, then you can consult Newfoundland mortgage brokers to avoid the most commonly made mistakes. Avoiding such mistakes can even save a lot of money for first time buyers.

Mortgage Brokers

Though everyone dreams of having an ideal home, the first purchase can be far from what you can call your dream home. Before you opt for a Newfoundland mortgage, it is necessary that you are sure of the property that you wish to purchase and understand the price that you can afford to pay. You also have to spend a good deal of time evaluating the financing options that you have. Your debt ratio will play a crucial role in your mortgage application approval.

 

People often assume that short-sale and foreclosed properties are great deals. In fact, the real estate business may as well be compared to a flea market where the value of a property depends on what people are willing to pay. Some of the short sales and foreclosed properties may turn out to be good bargains but real estate investors know that there is nothing called freebies.  Some of the properties may even suffer from serious maintenance issues. Therefore, it is advisable not to take anything for granted. You can have discussions with mortgage brokers in Newfoundland to determine the aspects that you need to look into.

 

First time home buyers often underestimate the cost of home ownership. Staying at a rented accommodation does not come with additional charges associated with repair work and maintenance. But when you own a place, you need to pay every penny needed for its repair work. You can get an insight into these issues by talking to mortgage brokers in NL.

 

Omission of a contingency clause in a sales agreement is something that first time buyers are found to overlook. Sellers do not mind the omission but as a buyer you need to be extra careful about these issues, especially pertaining to mortgage contingency language and dates.  As a first time buyer, you therefore need to be additionally careful about each and every detail and if necessary take the help of experienced Newfoundland mortgage brokers.

Smith Maneuver

Homeowners in Canada do not get to enjoy the same mortgage interest deduction as their southern neighbors. However, Canadians do resort to the technique of the Smith Maneuver to convert a regular debt into a tax deductible one. It is a financial method that can restructure the biggest non-deductible debt of an individual to a deductible investment loan.  Apart from this, one receives increased annual tax refunds, gets lower number of mortgage years and also enjoys an increase in net worth through methods that have been reviewed by the CRA or the Canada Revenue Agency.  Newfoundland mortgage
brokers can provide you with all the necessary information  in this regard.

Newfoundland mortgage

The Smith Maneuver works in the following ways.

 

  • The borrower needs to find a re-advanceable mortgage first

 

  • This can be followed up by the sale of non-registered assets such as stocks that are held outside an RRSP.

 

  • The proceeds can then be used to pay the down payment on the mortgage

 

  • You can then pay the mortgage payments normally as one does.

 

  • Once the borrower starts paying off the principal, the amount can be re-borrowed into a LOC or a line of credit.

 

  • This re-borrowed amount can be then be invested for a higher rate of return that the amount paid as interest for the LOC.

 

  • Deduct the interest on the investment loan and then the tax savings could be used to pre-pay the mortgage till the time it is fully repaid.

Newfoundland mortgage

There are many benefits associated with the Smith Maneuver, which can be explained by mortgage brokers in Newfoundland. First up, your net worth will go up significantly, given that you carry on with the same annualized return on the investments. The tax refunds will eventually get bigger and bigger as the interest applicable on the investment loan is now tax deductible. Smith Maneuver helps to pay off your mortgage faster and convert the same into a tax deductible format. However, there are some risks involved in the same as well just like any other investment plan.  It does not lower your debt but simply converts it from a regular mortgage, which is not tax deductible in the country. It is necessary to get a readvanceable mortgage in order to use it as an investment loan.  In order to get more information on the same and the risks involved, one can contact Newfoundland mortgage experts.

 

 

 

Are you Caught in the Midst of Lender Overlays?

It so happens that even after you have carefully taken care of all the necessary requirements such as down payment, credit score and debt-to-income ratio, your loan application gets rejected.  This is due to lender overlays or stricter requirements. Lender overlays can be defined as the rules of a particular bank or a mortgage lender, which are at times much stricter than what government bodies outline for different mortgage products. In order to know more about such lender overlays, you can contact mortgage brokers in Newfoundland.

Newfoundland Mortgage Brokers

Lender overlays are often in the form of rigid documentation requirements. These include the submission of additional paperwork for the purpose of FHA Streamline refinance, other than what the FHA requires itself.  In the absence of such paperwork, the application might as well be rejected.  Such overlays can also affect refinances.

 

While government entities do outline borrower criteria, they are not the ones who issue mortgages. Lenders have to protect their financial interests and therefore may choose to make their lending criteria stricter if they believe that the existing ones are not strong enough. Also, they need to reduce the risk involved in buying back a mortgage that they have sold. After the housing crisis, a number of lenders were forced into these buybacks or repurchases, thus causing them a lot of trouble. Lenders thus became much more cautious about issuing mortgages. Mortgage brokers in NL can provide you with detailed information about lending overlays.

Newfoundland Mortgage Brokers

Do you find yourself in a situation where you have met the guidelines set by the government entities and still fall short of the additional requirements of individual mortgage lenders and banks? How do you know if the lender has imposed overlays? It is said that lenders do not go about advertising such impositions or the lack of it. In fact, in order to know whether there are any such overlays involved in the issuance of mortgages, you will have to talk with them in detail and find out whether the products comply with your needs.  In fact, it can get a bit difficult for the borrower to find out whether any such conditions are applicable. Borrowers can start through referrals. If the lender does not approve their loan application after reviewing it thoroughly, then they can refer another lender who can. This way a borrower will not have to bear the trouble of meeting each and every lender they know and get their loan application reviewed. Newfoundland mortgage brokers can be of help in this regard.

 

 

How to Fight Mortgage Fraud: Some Interesting Points

For people who are constantly looking for mortgage loans to buy their dream homes, mortgage fraud often becomes a hindrance. Predatory mortgage lenders always make the most of naïve customers and dupe them with high interest rates, higher monthly payments, and in various other ways. The Canada Mortgage and Housing Corporation are adopting various measures to tackle this ever-increasing menace. As laid down by Equifax, a leading credit reporting agency, the number of mortgage frauds in Canada has gone up by a whopping 50% over the recent past.

What are the different types of mortgage frauds? Mortgage fraud

The different types of mortgage frauds that typically take place are as follows:

1) Mortgage frauds to promote other illegal activities (cultivating marijuana, money laundering, and undercover drug labs)

2) Mortgage frauds for profit (appraisal fraud, illegitimate flipping of properties, air loans, foreclosure scams, title fraud)

How to fight mortgage fraud: Some interesting pointsMortgage fraud

If you don’t wish to become a victim of this fraud, follow the steps given below:

  • Don’t misrepresent yourself while applying for a loan. If you do, you will be subjected to rigorous punishment and penalties.
  • Don’t sign anywhere on the legal paperwork without going through them exhaustively. Make sure that you are clear about everything you have read.
  • Always seek professional guidance from an attorney or lawyer who is well known.
  • Don’t overstate your income, tenure of service, or job status.
  • Don’t provide your personal financial information to anyone if you don‘t feel you are dealing with a dependable company. They can contact you over the telephone, send you an email, or send someone to talk to you directly. If possible, ask in which manner they are going to use your provided details.mortgage fraud
  • Always work with licensed lenders and certified professionals. You will find many mortgage brokers in NL who are qualified in this business.
  • Don’t accept any offer of making quick money in real estate business.
  • Talk to the local titles office to gather details about the background of a property you are taking into consideration to buy.

If you at anytime feel that you have fallen prey to a scam lender, you should immediately inform the anti-fraud center in Canada or talk to the police authorities in your neighborhood.

Ideas for Selecting Variable to Fixed Mortgage Rate

As we all know, mortgages are available in two broad categories; variable and fixed rate mortgages. You might be caught in a quandary to choose between a variable rate or fixed rate mortgage. Now, there are certain nuances with respect to these two types of mortgages that you need to be familiar with. Statistics show that borrowers maintain a preference to fixed rate mortgages than variable rate loans. Given below are few interesting ideas that will help you choose the right form of mortgage for your needs.Mortgage rate

Choosing variable rate mortgages   

In case of a variable rate loan, the interest rate remains static for a certain period. After that, it starts to vary in accordance to the interest rate prevailing in the market, also termed as the prime rate. Therefore, the amount that you have to pay every month will also change when there is volatility with the prime rate and the interest component of that amount also becomes variable.

Traditionally, it has been witnessed that variable rates are cheaper than fixed rates in the end, provided that the market rates are stable and the economy is in a good condition. In contrary, if the prime rate is hiked considerably, then the variable rates would become too costly. So, there is an element of uncertainty involved. The rates can go up or down without prior notice. Picking this type of a mortgage is a good idea if you don’t intend to live in your house for a long time since you have a plan to shift or sell it prior to the preliminary mortgage rate adjustment taking place. Borrowers can make the most of declining rates when they don’t have to refinance. You can pick from both open and closed variable rate products.mortgage rate

Choosing fixed rate mortgages

Under this arrangement, the rate of interest and monthly payment remain static for the entire tenure of the loan. This is the reason they are named as ‘fixed rate’ housing loans. The most significant advantage of these loans is that you don’t have to worry about the fluctuation of the prime rate. This is particularly convenient for you to set up a rational budget and steady your financial life. However, it has been noticed that the fixed rates are normally costlier than variable rates in the long run in spite of features like rate and payment security. The options under this category are open fixed, closed fixed, and convertible fixed. Another advantage is that it is protected from the ill-effects of inflation. These loans are specifically helpful for first-time home buyers.

You can always consult with any of the mortgage brokers in NL to find out which mortgage option is suitable for you.

 

 

Getting the Best Mortgage Rate in Canada: How can you accomplish it?

When you are in the endeavor of finding a good mortgage loan for purchasing your dream home, it is not unusual that you want it against the most affordable interest rate. Since the mortgage market is a competitive market, it is not impossible to get a very cheap rate for your loan. However, you should also keep in mind that the cheapest rate will not get you the best possible loan. Therefore, you should not have any ambiguity regarding your needs and wants with regards to a mortgage loan. You have to ascertain the features that you wish to see in your loan. Given below are few proven techniques for getting the best mortgage rate in Canada.Getting the Best Mortgage Rate in Canada

Do your homework well and fetch your credit report

No matter if you are a first-time home buyer or refinancer, this step is absolutely essential for you. Try to collect your credit report six months prior to applying for a mortgage as a minimum. This helps you identify any serious mistakes that have to be rectified in order to ensure that your credit score gets to a better position. Free credit reports are available and your good score will help you attain an affordable rate. If your credit score is satisfactory, you can definitely negotiate with your lender to lower your rate. They will be ready to do so if they see that you have a faultless payment history with your creditors. A slight difference of a percentage can help you save thousands of dollars in the long run.

Use a mortgage broker

Historically, it has been witnessed that brokers have the unique ability to find outstanding rates for mortgages. In this regard, it is always better to work with a reputable broker. You can pick from a host of mortgage brokers in NL who can help you get a variety of quotes from different sites. When you compare between many quotes, there is high probability that you will find a quote which is manageable for your budget. There are mortgage experts who are employed by different banks. You can also talk to one of them.

Always keep in mind that mortgage investment is the biggest investment in your life. Therefore, you should analyze your options and compare rates in line with that.

The Process of Mortgage Closing

After you have managed to get the right mortgage deal for you, it is imperative that you should be aware of the details of the closing process. On the day of the closure of the mortgage, it is necessary that both the parties sign all the documents to seal the deal and ensure the ownership of the property.  It is in fact the last opportunity for the buyer to examine the contents of the deal in detail and then sign on the dotted lines.  You can discuss everything in detail with your Newfoundland mortgage lender prior to the closure of the deal and ensure that the paperwork is complete and accurate.mortgage closure

 

The documents would include details pertaining to the home buying process, contract, estimates, insurance and proof of title, inspection reports, mortgage insurance and home appraisal reports. These home sale contracts entitle you to a thorough inspection of the property, 24 hours before the close of the deal. This implies that the seller vacates the property in time and leaves it in the condition that is specified in the contract.

 

If there are any major problems, you can ask the lender to delay the closing. Newfoundland mortgage brokers can help you to determine potential problems in a deal, if any.

 

At the time of the closing you need to sign the agreement that outlines the terms and conditions of the mortgage and transfers the ownership rights. The home buyer also needs to pay the closing costs and escrow items.  Borrowers need to pay the numerous fees that are connected to obtaining a mortgage and even transfer property ownership. The amount is either combined with the principal balance or included in the high interest rates. Mortgage brokers in NL can help you with the various steps involved in the closure of the mortgage deal.