What You Need To Know Wednesday -Prepayment Privileges – What They Are and What They are Important

There are many things within a mortgage that give you different options in how you are able to payout your mortgage and one of those is the Prepayment Privilege. When you take a fixed term in your mortgage you are set with a payment based on the amount of your mortgage, the interest rate and the amortization time set. Further to that most lenders will allow you to payout over and above the required principal and interest payment without incurring a payout penalty. Those amounts will be based on a certain percentage of the mortgage amount which is usually in the 15%-20% range depending on the lender and…

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The Difference Between A Pre-Approval, APre Qualification and A Commitment – Why It Matters!!!

Wondering whether you need a “mortgage commitment letter”?  Certain terms in the mortgage industry sound alike but are completely different.  For instance, pre-qualification, pre-approval, and mortgage commitment all sound similar.  But these three terms- which describe three different types of letters you can get from a lender- mean three different things. Lenders usually provide one of the three and at different times in the mortgage approval process. Pre-Qualification Letter:   This is the loosest OK from a lender, indication that they may possibly grant you a mortgage. It may come in the form of a letter or a verbal agreement.  The lender most likely talked to you about your income,…

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Who Is A First Time Homebuyer!!!

This is a question I get all the time so thought it a good idea to explain.  The term “First Time HomeBuyer” actually does not exist anymore in purchasing a property.  It used to be a few years back that in order to go as low as 5% down payment on a home you could not have owned a property for the past 5 years and the property you are buying had to be your principal residence.  That is no longer the case. The new rules are only that you must be going to live in the property as your home.  You can own as many other properties…

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Porting A Mortgage – Is It A Good Idea

There are so many terms that you hear in the mortgage process and some of those are not ones that necessarily come up when you sign your mortgage commitment or even when you sign legal documents. At Advance Mortgage however, we feel it is important for you to know what type of mortgage you are getting and what it allows for throughout the length  of your mortgage term. A port in simple terms means taking the mortgage from one security to another.  This is very important because if you are taking a fixed term mortgage product you are signing a contract that says you are locked into this…

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Why Do Lenders Ask For so Much Paper for Approvals?

This is a question we get all the time and I have to say we even ask that ourselves.  Why so much paper is needed for mortgage approvals now? The answer is, there are more than one answers to that question so we will list the ones that make the most sense. Fraud – mortgage fraud including identity theft, documentation hampering, untruths all contribute for the need to supply proof that what you say and do is what you said and did.  Lenders have no other way of knowing unless they see the proof and for now and the foreseeable future this is the way things are going…

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Why Do Lenders Require You Have A Credit Rating

As a Mortgage Broker for many, many years this is a question I get a lot.  In an environment that consistently reports we as Canadians are way too far in debt compared to the income we make this question has it’s justification for sure.  And the main reason is that lenders require we have debt to get debt, makes no sense right?  I do agree to a degree so let me try to explain. The general rule of thumb is lenders want to see you have a minimum of two creditor debts over a two year time frame.  Add to that they want your credit card to have…

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Mortgage Rule Changes

Mortgage rule changes and increasing interest rates—surprisingly—weren’t the top motivators for prospective homebuyers in 2017, according to a new survey from the Canada Mortgage and Housing Corporation (CMHC). Instead, the 2018 Prospective Home Buyers Survey found that improved accessibility (i.e., fewer physical obstacles and barriers) and investment opportunity were the main driving factors to purchase a home. The results were divided into three segments of buyers: first-time buyers, previous owners (who had previously owned a home but do not currently) and current owners. For first-time buyers and previous owners, the desire to stop renting was ranked as one of the top three motivators to buy a home by…

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