Our @DLCCanadaInc Chief Economist @DrSherryCooper is right: July's GDP figures dispel recession fears.
Month: September 2015
Want to know THE TRUTH about the cash back mortgage? @DLCCanadaInc’s Kris @GrastyMortgage lays it out:
IS A CHIP MORTGAGE RIGHT FOR YOU? Written by Anne Martin
Are you or someone you know above the age of 55 and having trouble making ends meet? Are funds needed to cover the costs associated with an illness, disability or life event? Perhaps it’s time for a home repair or renovation, such as a kitchen or bathroom. Pay for the kids education? Do you have a mortgage and can’t afford the payments anymore?
Perhaps the funds are just not available and you don’t have enough income to qualify for a mortgage but you have lots of equity in your home, or it might even be paid off.
Here’s where the CHIP program, also known as a “Reverse Mortgage”, becomes the solution. Yes, I’ve seen the commercials on TV and have heard the myths and negative “energy” around it. However, let’s first discuss what this mortgage can do.
- Borrow up to 50% of the value of the home and make NO PAYMENTS as long as you live in the home. The interest payments are added to the mortgage loan amount and are only due when you vacate.
- The amount that you are eligible to borrow is determined by your age and the location of your home, therefore, the younger you are the less you can borrow, eliminating the risk of eroding all your equity over time.
- You maintain full ownership of the home.
- Your only obligation is to keep the home in good condition, keep the property taxes and home insurance up to date.
- You will never owe more than the value of the home.
- You do not need to qualify for the loan.
- 99% of the time, equity is realized upon sale.
There are many myths out there about reverse mortgages, here are some –
1. The most common myth is that you will lose all your equity in your home. Untrue! You will be provided with a schedule showing you how the equity in your home is expected to grow over time using 3 possible growth scenarios. Figures that are used are conservative, therefore, you could realize even more equity when the home is sold by yourself or your estate.
The amount of remaining equity depends on how old you were when you obtained the mortgage and how long you’ve had the loan when you leave the home. Plus, the value of the home at the end of the loan.
2. If I die, my spouse will be left with a big mortgage to pay off. This is not true as the loan is not due until you or your spouse leave the home.
3. It is costly to set up this mortgage. Set up fees include a property appraisal, legal and admin fees; usually a few thousand dollars or less. The mortgage can be used to pay the fees. This is not much different than a high risk mortgage. Remember NO payments!
It’s important to understand that there is a growing senior population and people are living longer. Employment pensions are disappearing, government pension payments are small. CHIP offers an affordable solution for seniors who want to spend their retirement in a comfortable, stress-free way.
For more info, contact your Dominion Lending Centres mortgage specialist, we have the details and will only consider this option for you when it is in your best interest.
Collateral Versus Standard Charge Mortgages – Dominion Lending Centres http://ow.ly/SlJ9E
SO, WHAT DOES THAT MEAN?! MORTGAGE TERMS EXPLAINED
What does all that technical mumbo jumbo mean? Here are some common mortgage related terms.
Getting a mortgage can be a daunting task. There is so much to know and understand including some pretty confusing language. Borrowers are often confused by terminology like the difference between amortization and term.
And by the way,
The period of time you are under contract with a specific lender at the interest rate that they are providing for that time period
A term used to describe the period of time over which the entire mortgage is to be paid assuming regular payments. Usually 25 or 30 years.
Here are some other mortgage related definitions.
An independent assessment of the property by a qualified individual.
A mortgage that cannot be repaid or prepaid, renegotiated or refinanced prior to maturity, unless stated in the agreed upon terms.
Costs that are in addition to the purchase price of a property and which must be paid on the closing date. Examples include legal fees, land transfer taxes, and disbursements.
The date on which the mortgage closes either in the case of a refinance or new purchase.
Debt service ratio
The percentage of the borrower’s income used for monthly payments of principal, interest, taxes, heating costs, condo fees (if applicable) and debts. GDS is gross debt service – how much you spend on Principal, Interest, Taxes and Heating. TDS is total debt service – GDS plus all other debt payment obligations.
A homeowner is ‘in default’ when he or she breaks the terms of a mortgage agreement, usually by not making required mortgage payments or by not making payments on time.
The money that you pay up-front for a house. Down payments typically range from 5%-20% of the total value of the home, but can be anything above 5%, if you qualify.
Early Discharge Penalty
A penalty you may pay your lending institution for breaking the mortgage contract early. This is usually 3 months interest or the Interest Rate Differential (IRD), whichever is larger. See below for IRD.
The difference between the market value of a property and the amount owed on the property. This difference is the amount a homeowner actually owns outright.
Home Equity Line of Credit
A loan that is secured against your house, like your mortgage, but you obtain a maximum amount that you may borrow but only borrow in the amounts that are needed. You only make payments, minimum is interest only, on what you have borrowed at any given time.
High ratio mortgage
A mortgage where the borrower is contributing less than 20% of the value of the property as the down payment. The borrower may have to pay a mortgage default insurance premium such as CMHC insurance, usually tacked onto the mortgage amount.
Interest Rate Differential
A way lenders calculate the penalty for discharging a mortgage before the end of a closed mortgage contract.
The difference between the interest that the financial institution will make if you continued your mortgage to the end of the contract and what they will make by loaning it to someone else at the current interest rate.
Land transfer tax
A tax that is levied (in some provinces) on any property that changes hands.
Lump sum payment
An extra payment that you make to reduce the amount of your mortgage, usually as stipulated in your mortgage contract.
A loan that you take out using property as the collateral.
A company or individual that finds mortgage financing for individuals and companies whether for purchase, refinance, lender switches, etc. A broker does not actually lend money but seeks out a lender and arranges the mortgage terms.
Mortgage default insurance
Required if you are contributing between 5% and 20% of the value of the property as the down payment or to satisfy lender requirements, when necessary.
Mortgagee is the lender; mortgagor is the borrower.
Mortgage life insurance
This form of insurance pays the outstanding balance of your mortgage in full if you die or become disabled. This is different from home or property insurance, which insures your home and its contents.
Mortgage interest rate
The percentage of interest that you pay on top of the principal amount of the loan.
A mortgage which you can pay off, renew or refinance at any time. The interest rate for an open mortgage is usually higher than a closed mortgage rate.
Transferring an existing mortgage from one home to a new home when you move. This is known as a “portable” mortgage.
Usually renegotiating the terms of your mortgage, often increasing the amount of your current mortgage, usually at a new interest rate. The term of the new mortgage is usually equal to or greater than the term remaining on your current mortgage. Often the existing mortgage is paid out and a new one is established with a different lender.
Variable rate mortgage
A mortgage with an interest rate that changes with prime rate, usually expressed as an amount plus or minus prime rate.
Qualifying Purchase Price – Why Mortgage Agents May Now Be Giving Clients Two Price Points via @DLCCanadaInc
Excellent insights from @DLCCanadaInc’s Chief Economist @DrSherryCooper on today’s @bankofcanada announcement: https://dominionlending.ca/news/no-surprises-from-the-bank-of-canada/
Very important Message!
Learn more about #BullyingEndsHere, @TadMilmine and why @DLCCanadaInc became the National Founding sponsor: https://dominionlending.ca/news/bullying-ends-here/
It is important that we verify the existance of your down payment and its source when processing a mortgage application. Many people wonder why? Repeat buyers will remember a time when they didn’t have to.
Read this article for more details on how that has changed.
Verifying Your Down Payment – What You Need To Know via @DLCCanadaInc
How To Pay Off Debt Faster
25 Secret Tips Your Banker Doesn’t Want You To Know – Dominion Lending Centres http://ow.ly/RNNHW