MORTGAGES VANCOUVER  
Tips, Advice, and Explanations from a Vancouver Mortgage Broker  

Posts Tagged ‘Mortgage Broker’

Should We Worry About a US-Style Housing Meltdown?

Wednesday, December 5th, 2012

This is an article by Benjamin Tal, one of CIBC’s top economists who answers this question. I found it to be a great write up that expresses the differences between the US and Canadian housing economies.

“House prices in Canada will probably fall in the coming year or two, but any comparison  of the American market of 2006 reflects a deep misunderstanding of the credit landscapes of the pre-crash environment in the US and today’s Canadian market.

The Canadian housing market has more distinguishing attributes that separate it from the pre-crash US market. Yes, the debt-to-income ratio in Canada just broke the American record set in 2006, but comparing the three years heading into the US crash to the past three years in Canada reveals that the debt-to-income ratio in Canada has been rising at half the speed seen in the pre-crash US market. Even more important than the amount of debt is its quality. The distribution of the credit score in Canada has not changed dramatically in the past four years. That is very different than the experience seen in the US in the four years heading into the recession.

In the US an astonishing one-third of mortgages taken out in 2005 and 2006 were in negative equity position, and more than half had less than 5% equity. In Canada, the negative equity position is nil, and only 15-20% of new originations have an equity position of less than 15%.

In a final analysis, not all is well in the Canadian housing market. Home prices are overshooting their fundamentals, mainly in large cities such as Toronto and Vancouver. The recent slowing in sales activity will probably be followed by price adjustments in many cities across the country. But the Canada of today is very different than a pre-recession US. Therefore, when it comes to jitters regarding a US-type meltdown here at home, the only thing we have to fear is fear itself.”

Bank of Montreal BMO 2.99% Rate Special – Explained by Vancouver Mortgage Broker Rowan Smith

Monday, March 19th, 2012

Transcript of Video Blog:

Hi everybody. It’s Rowan Smith with the Mortgage Centre. I want to address Bank Montreal’s 2.99 percent offer that’s on the market and to explain some of the restrictions that people need to be aware of, some of the fine print. First off, yes, it’s one of the lowest rates historically ever offered, but it comes with some restrictions such as you can only have a 25 year amortization. Now, many people don’t think that this is a problem because they think I only want a 25 year amortization anyway and across a lot of Canada that is still absolutely the practice. Read the rest of this entry »

Line of Credit At Renewal – As Explained by Vancouver Mortgage Broker Rowan Smith

Thursday, October 13th, 2011

Transcript of Video Blog:

Hi, everybody. It’s Rowan Smith from the Mortgage Center. I want to talk today specifically about lines of credit. More importantly I want to talk about lines of credit that you want to keep but you maybe want to renegotiate maybe the mortgage in front of it. This is something that comes up from time to time. Read the rest of this entry »

35 and 40 Year Mortgages – Recent Updates

Friday, September 30th, 2011

In this video, I look at who is still offering 35 or 40 year amortizations and explain some recent changes in the market place.

Video Transcript:

Hi, everybody. It’s Rowan Smith from the Mortgage Center. It’s been a while since my last post and I wanted to provide an update on a couple of things that I get constant questions about in our market place.

Back in April when the changes the government handed down took effect it got rid of what most people thought would be all of the 35 and 40 year amortizations. So the question is, is a 35 or 40 year amortization still available? Short answer, yes. Now, the longer answer is a little more complicated… Read the rest of this entry »

Why Pre Approval Rates are Different than “Live Deal” Rates

Friday, March 18th, 2011

Transcript of Video Blog:
Hi everyone, Rowan Smith with the Mortgage Centre. I want to talk a little bit just about our current interest rates and why people will get a different rate on pre-approval than what they get it they have a live deal.

A lot of lenders have started doing things which are called quick closes within 30 days or a deal is only available for a live deal and you actually have to have a contract in place. So for example, some of my lenders are offering 4.14 as a current rate on a 5-year for a pre-approval. So that rate is guaranteed. Read the rest of this entry »

Down Payment Rules and Guidelines

Wednesday, January 5th, 2011

Transcript of Video Blog:

Hi everybody, it’s Rowan Smith with the Mortgage Centre. I want to talk today about down payment confirmation. I get a lot of questions about this. People concerned with why we’re asking for so much detail, why we’re asking for so much paperwork, so I’m going to address that today.

Read the rest of this entry »

High Fees on Bank Mortgages? Talk to Me!

Tuesday, September 14th, 2010

Transcript of Video Blog:

Hi, everybody. It’s Rowan Smith from the Mortgage Centre. I want to talk today about rates and fees. I heard something that was very disturbing to me again. I heard a broker that was charging a very large fee to arrange a mortgage for a borrower through a bank. Now I’m going to explain how our industry works, and perhaps to the dismay of some agents out there.

We are compensated when we sell a mortgage by the bank. Now this is assuming that this is a bank mortgage. If this is a private mortgage or something arranged through a mortgage investment corporation or subprime lender, we may not be getting paid anything. In those cases, you will pay a fee.

But if you’re looking at an institution that is charging cut rates, like rock bottom rates, has the names like TD, CIBC, Scottish bank if you’re seeing those names on the mortgage commitment, and the broker’s charging you a fee, they are also going to be getting paid on the back end by the lender.

Now why am I telling you this? Because I’m tired of seeing it. I’m tired of seeing borrowers in perfectly good situations paying these extra fees to pad the wallets of these guys who are making way too much money doing no more work than I do.

I don’t charge fees on any bank mortgages. That’s a promise to anybody that’s listening. If you get a mortgage through me, there will never be a fee to deal with a specific tier one bank. I would never be charging those fees.

The lender may charge a fee if I’m doing a bankruptcy discharge, or there may be individual fees associated with applications and stuff, but that has nothing to do with the brokerage fee. I as the broker will never charge my clients a fee if I’m putting them with a bank.

Now there are a lot of extenuating circumstances: commercial mortgages, private mortgages, all that type of stuff where there might indeed be fees. I’ll very upfront and tell you when that’s going to apply. I’m not going to spring it on you at the closing date.

You’re going to know long in advance, as soon as you get an approval, if a fee is going to apply. You’re probably going to know it before that, because I’m going to tell you if that’s the situation.
Again, if you’re dealing with a bank, there shouldn’t be any fees, and for you brokers out there that are changing fees on bank deals, I’m here to eat your lunch.

For the Mortgage Centre, I’m Rowan Smith.

Top 5 Things NOT To Do After Writing An Offer

Thursday, July 22nd, 2010

Transcript of Video Blog:

Hi everybody, it’s Rowan Smith with The Mortgage Centre. I’m going to do a little top five list. These are top five things not to do once you’ve written an offer.

OK, so number one. Do not write an offer and leave on vacation. Now there’s a couple of catches to this, OK?

You can do it. But during the subject removal period I’m going to need you here. Your Realtor is going to need you here to sign things, review documents.

So don’t write an offer and expect to be able to leave town during the subject removal period. Especially do not be gone during the closing period.

Because you have to be here to sign in front of a lawyer, especially if you’re buying property in British Columbia. So you’ve got to be here.

Now if you’ve got two months from the time you write an offer to the time your completion is, feel free to be out of town for part of that time.

I mean everyone’s got work and business obligations. And they may want to take a vacation. That’s fine. But just keep those vacations coordinated with the home buying process. It’s a big item. So vacations are a very important thing.

Number four. Do not transfer your dollars around for your down payments. People will often be in an effort to be helpful to me, they will transfer dollars from their ING account into their CIBC checking. From that TD savings into their CIBC checking. From their RSP into their checking.

The problem is, then I get a copy of that checking account statement, and it looks like you got a whole bunch of money just flew into the account.

So what I end up having to do is document every large deposit on there. That means I have to get the ING, the TD account, the RSP account, and the CIBC checking account. I’ve got to get it all to track where every dollar is. It’s a lot easier to just leave the funds where they are.

And once we’ve got the down payment accepted by the lender, then you can move them around.

Number three is, do not buy lots of new things, especially on credit. And I’m referring to people that will gloat and they’ll get excited about buying their home. And so they’ll go to The Brick and they’ll buy a whole bunch of furniture on a “do not pay plan.”

And then they’ll go to Best Buy and they’ll buy appliances and all this type of thing. Do not do that.

Wait until you’re in the home. If you incur additional debt before the closing date and the bank finds out about it, they can pull that approval. Because you may not qualify even though you can afford, you may not qualify for that new debt in addition to the debts you already had.

Now this is even if those debts are going to be paid out prior to the completion with the sale of an old home. Just check with me first. Be very careful about buying new items.

Number two. And this is the most common one that I see of buying new items, is do not buy a new vehicle. Those vehicles, especially vehicle leases, have massive payments, or can have massive payments. And it can throw the debt servicing and your ability to qualify for the mortgage. Again, completely out of line.

So before you go do that, get your mortgage completely finalized. Have the approval ready. Have it instructed to the lawyer’s office, and then you can start shopping for a new vehicle. I still don’t recommend buying it until after you’ve purchased the new place, just to avoid any challenges.

And lastly, the number one that I consistently get that blows me away is, do not quit your job. From the time you write that offer until the time you move in you have to be prepared to stay in your line of work.

Now things happen. Sometime companies sell off divisions. You get transferred. Other times you may just get fired. That’s life.

But the reality is that you also will have a lot of choice in these cases many times. And there’s no need to quit your job right during that period of time.

So from the time you write that offer to the time you complete, stay on your job. Stay the course. What you do after you’re in the property is up to you. And life takes many changes and it’s unpredictable.

So there is no way that anybody can fault you if you lose your job two months down the road. Or you quit and transfer into a new role to get a pay increase or whatnot.

So there it is. The top five things not to do when you’re buying a home.

For The Mortgage Centre, I’m Rowan Smith.

5 Steps in Arranging Financing – A How To Guide

Wednesday, May 26th, 2010

In this video I cover the 5 major steps in arranging financing on your home. Enjoy!

Transcription of Video:

Hi, everybody. It’s Rowan Smith at the Mortgage Centre. I’m going to cover today the five simple steps that you’re going to go through when you’re purchasing a home. There are many, many steps, and each of these steps has a sub step. But I think it’s important just to explain what you should be doing first. Now before you go looking at homes, before you go taking a Realtor and having them spend time driving you around, first you need to be pre approved. That’s number one.

During that pre approval process, what I’m going to do is work to get you the best rate held I can. I’m also going to let you know what documentation and paperwork you’re going to require in order to actually get a final approval.

A pre approval is just that, it’s a pre approval. You can’t rely 100 percent that that mortgage will be there. All that it really is doing is holding your rate, and the bank is saying if your financing documents show what you tell us, then you’re approved and we’ve got the rate sitting here for you. Step one, pre approval.

Step two is find a good Realtor. Now if you’re looking around, and you don’t know a Realtor in your area, usually I can point you in the direction of someone if you’re in the Vancouver/Greater Vancouver area.

However, I caution you against what we call DNA Realtors, which is a Realtor you’re dealing with just because of a blood relation. You’re going to want to get somebody that knows the market. Number two, get a good Realtor.

Number three, you want to start looking at homes at this point. Now you can start touring around. If you’re looking at condos or you’re looking at properties that you would call as unique properties, you’re
going to want to bounce them off the person that gave you that pre approval.

Many banks don’t finance certain types of property. Some banks aren’t doing rentals right now. Other properties aren’t doing rental condominiums. It depends on who your bank is and who you’re dealing with. Your mortgage broker can help you in that matter.

Step four, write an offer. Once you’ve got that offer accepted, that’s when the real process begins. That’s where I have to sit down with you now and provide all that documentation.

Hopefully, you’ve given it to me. I’ll have asked for it up front so I can review it ahead of time. But I’ll ask you for all that paperwork which we submit to the lender.

During that time, they’re going to give you an approval. Once you’ve got that approval, then you can remove your subjects. Your subjects are the “if” clauses in your contract, that your offer is, say, $400,000 subject if you get financing.

So those are the steps; find a good mortgage broker, find a Realtor, start looking at homes, write an offer, and remove subjects. Those are the five big things where the stress, and the time crunch, and the pressure is going to be more extreme.

Now after that period of time, there’s usually a period of waiting until you close at the lawyer’s office, but that comes much, much later.

If you have any questions or you want to know more about the process for your unique situation, please give me a call. It’s Rowan Smith from the Mortgage Centre.

Mortgage Line of Credit – When Can You Get One?

Wednesday, May 12th, 2010

Have you ever wondered if you can get a line of credit secured with your home? Maybe you wondered if you can get a line of credit along with your mortgage?

There are several specific criteria that need to be met in order for you to get a line of credit. The most important criteria is EQUITY.

Watch this video blog for more info and and a more in depth explanation.

Transcription of Video Blog:

Hey everybody, Rowan Smith with The Mortgage Centre. I want to talk today about lines of credit. More specifically, mortgage lines of credit. A lot of times people will come to me and they’ll want to get a line of credit, along with their financing for their purchase, for renovations and whatnot.

Now, generally, if it’s going to be a mortgage, you’re going to have to have 20% down payment or 20% equity in the property before you can start getting a line of credit. Because CMHC, who governs less than 20 percent down purchases, doesn’t not allow an interest only product at this time; they do, but no lenders really support it.

So you’ve got to have 20 percent down if you want to start getting the ability to have a line of credit. Now what I mean by that is if you have 20% down and you pay it down so that you now have 30% equity in the property, you could borrow that 30% to 20%, that 10%, you could get that in the form of a line of credit assuming that your income and credit qualify for it.

So, if you’ve just bought something with five percent down and want renovation funds, a line credit with the mortgage is not part of the option. What you can do is get an unsecured line of credit through your financial institution you bank with. They can supply that to you, you can use that. Now you will not get mortgage rates on that line of credit, but it’s really the only option.

Alternatively, there’s a Purchase Plus Improvements Program if you want money for renovations. I’ve covered it in detail in the prior blogs, please do a search and you can watch it. It’s a good three or four minutes and it explains how the Purchase Plus Improvements Program works, or Refinance Plus Improvements.

If you’re applying for a line of credit increase – maybe you already own your property, you’ve got a substantial equity position at home and you simply want to increase that line of credit, come and talk to me. There’s many institutions which we can stick a line of credit behind any other mortgage.

So if you’ve a RB Royal Bank first mortgage, we can stick a line of credit behind that and get you mortgage rates on that line of credit. You don’t have to go to your bank if that’s the case. It’s only the unsecured lines of credit which you need to speak with your bank about.

If you’d like any clarification on this or need a line of credit, please give me a call. It’s Rowan Smith from The Mortgage Centre.