Mortgage News

How using a professional mortgage broker can help a first time buyer

You have plenty of mortgage questions, how does a professional mortgage broker help?

The biggest challenge with first time home-buyers is that they have a multitude of questions and at the start a lot of those questions have to do with mortgage financing. As an Edmonton professional mortgage broker, we can can help. Among the first questions a first time home-buyer has are:

1. What size of mortgage do I qualify for? Try our maximum mortgage calculator.
2. How much will my monthly payments be? Try our mortgage calculator with down payments.
3. How much of a down payment will I need?
4. What are the other costs are part of buying a home? See Buying a Home in Canada.

Realtors and Mortgage Brokers Work Together

Many Realtors partner with a professional mortgage broker when they are dealing with a first time home buyers. They find it very effective to start the process off with the first time home buyer working with the Mortgage Broker who educates the client on what is involved in the financial side of buying a home and has completed the following steps with the client:

1. Review the client’s financial situation to determine how much of a mortgage the client qualifies for.
2. If the client has any credit challenges the broker works with the client to address these challenges, including a credit rebuilding program if necessary, so that the client can meet the lenders credit requirements.
3. Discuss with the client the many options for down payment ranging from zero down/flex down to gifted down payments and the Federal Government Home Buyers’ Plan (HBP) which allows first time home-buyers to access their RRSP savings for the down payment.
4. Discuss with the client the First Time Home-Buyer Tax Credit which can be used to offset some the costs associated with purchasing a home, such as legal fees, disbursements and land transfer taxes.
5. Have the client pre-approved with a lender so that when the client starts looking for homes with the Realtor they can make an offer confidently along with having a lower rate locked in if rates move up while they are looking.
6. Manage the mortgage file all the way to funding so that there are no hiccups or surprises that can interfere with the purchase closing on time.

Both the First Time Home-Buyers and the Realtors who use this process of partnering with a Mortgage Broker find that this a very beneficial process. If you are looking for a professional Mortgage Broker who not only has an established first time buyer program but who is also available to partner with you to do first time buyer seminars, please call or email us at Best Rate Mortgage Group.

One of the results of OSFI now overseeing CMHC will be that more borrowers will require an Alternative Lender as Banks tighten up.

The banks will have to sweeten the terms of the “covered” bonds they sell in the market. In the past these bonds, backed by a portfolio of mortgages, had a lot of appeal to investors due to the fact that those mortgages were guaranteed by CMHC and, ultimately, Canadian tax dollars.
With the plan to reduce banks access to portfolio insurance through CMHC for their conventional mortgages, banks are going to have to increase the yield for investors to buy these new bonds that will not contain mortgages backed by guarantees from CMHC. This is going to result in increased rates. Also with these changes there will be a shifting of greater responsibility for bad mortgages back to the banks that originated the mortgage. This will result in the bank tightening up their lending decision in an effort to reduce risk.
As the lending terms of the banks get tighter and banks get pickier on which borrowers they want to offer mortgages, the alternative lending market will gain momentum as more borrowers get pushed further out of the mainstream bank lending comfort zone. It’s currently estimated that banks are rejecting as much as 20 per cent of the mortgage applications they receive because they are no longer insurable by CMHC. This is only going to increase over time.
As an independent Mortgage Broker I deal with a large number of lenders besides the major banks. All of these lenders offer mortgage solutions that go beyond what the traditional banks can offer, and many of these solutions are at rates under 4%. Just because the bank says no to a deal does not mean that the clients cannot find a suitable mortgage at a very attractive rate. Please give me a call or email if you have a client that has been turned down by the bank….I am sure I can find them a mortgage solution whether they are BFS and need stated income or if they are first time home buyers with less than perfect credit. 

OSFI Changes put mortgage programs at risk

Recently the Office of the Superintendent of Financial Institutions (OSFI), Canada’s banking regulator, issued a draft of recommendations geared to clamp down on underwriting practices. After reviewing the 18 pages of changes suggested by OSFI the following three items jump out as changes that would have an immediate limiting effect on home buyers:
• “Cash Back” should not be considered part of the down payment.
• The use of more conservative debt ratio calculations including using the 5 year posted benchmark rate for qualifying uninsured mortgages with 1-4 year terms.
• A requirement for increased documentation and scrutiny for self-employed stated income borrowers and equity mortgages.
Fortunately, there is some time before these new rules come into effect and not all non-bank lenders will be affected by these rules and thus may not adjust their underwriting practices. However if you are working with First-Time buyers who require the “cash back” program for their down payment or BFS clients that require a stated income mortgage, it would not hurt to have them pre-approved soon.

OSFI said it is issuing the draft guideline to allow industry and other vested parties to provide input on best practices for mortgage lending. The guidelines do not affect the rules for insured mortgages, which are set by the government. “Although financial institution mortgage portfolios in Canada continue to perform well, a number of vulnerabilities in the financial system exist, including high household indebtedness,” said Mark Zelmer, Assistant Superintendent, Regulation Sector. “OSFI is acting in an effort to prevent these vulnerabilities from evolving into problems for the financial system.”
OSFI, the Bank of Canada and the Department of Finance, along with other Financial Institutions Supervisory Committee (FISC) partners, regularly consult with one another on issues pertaining to the financial system.
OSFI has invited the vested parties to make comments on the guidelines by May 1, 2012 prior to these guidelines being implemented. The talk on the street is that the big banks will not oppose these new guidelines which are aimed at making it harder for home buyers to qualify for a mortgage. One major bank has already voice its support by stating that the draft rules “will take the air out of the balloon a little bit,” said Tim Hockey, TD’s group head of Canadian banking. He was speaking at National Bank Financial’s financial-services conference in Montreal. “Hockey said he feels less anxious today than two weeks ago about the high consumer debt levels because of OSFI’s recent actions. He reiterated that even in the worst-case scenario, the bank would continue to make money.”

Based on OSFI asking for comments from the vested parties by May 1st we should have at least a couple of months until these guidelines become the rules and we find it harder to have first time home buyers and BFS stated income clients qualify for a mortgage to make their home purchase. If you are working with clients who will need the stated income or cash back products, they should make an offer and have their mortgage approved sooner than later.

How a Professional Feature Sheet Can Help You Sell Your Home Quickly

Realtors have long known that when Buyers are choosing from several homes there is one selling tool that is indispensable – The Feature Sheet. The Feature Sheet not only contains photos of the home to jog the Buyer’s memory after being out all day looking at houses, but it also allows Buyers to compare homes with the Feature Sheets side by side as they go through their buyer deliberations.

Some key points when creating a Feature Sheet:

– Pictures are worth a thousand words: Include not only the standard pictures of the front of the house but also include pictures of your favourite parts of the house…sun room, cozy family room, fireplace or the deck you enjoy in the summer.

– Print your Feature Sheets in color: This is well worth the extra cost. A color picture can help convey the warmth or special feeling of a home.

– Make the Feature Sheet look professional: Your Feature Sheet should be on par with the Feature Sheets used by Realtors. People who are shopping for homes will look at both homes listed by owners, and homes listed on MLS by Realtors. When clients are comparing homes viewed you do not want them to overlook your property because the feature sheet is sub par.

– Choose your words and the use of exclamation points carefully: Now that we are in the information age people in general have moved away from responding to “sales hype” to responding to information. In your text look to move away from using “Gorgeous Pool!!” to describing the pool and use a description such as “custom designed heated pool with imported tile and computerized controls”.

– Write the feature sheet to appeal to the widest audience of buyers: Avoid using terms such as Starter Home, Executive Home, Home for Growing Family, etc. By describing your home as a Starter Home you ignore the Retiree who wants to live in the neighbourhood, the Empty Nester who is looking to down size or the small family that wants to live in the area due to the schools, parks, closer to work, etc.

-Include Mortgage Financing options in your Feature Sheet: Since very few home buyers have the cash in the bank to buy your home without a mortgage, providing mortgage financing options is as important as letting the buyers know the price of the home. By providing the mortgage financing options on your feature sheet potential buyers can more easily assess if they can afford to purchase your house. The price tag of $500k may at first glance not seem affordable but if the buyer can quickly see on the Feature Sheet that the monthly payments are only going to increase their budget by $300/month they may be able to easier justify the higher priced home.

I would be happy to work out the mortgage financing options for you to use on your Feature Sheet, or if you like just send me an email to denise@thebestrate.ca with the information about your home and the pictures you would like to use and I will send you a Feature Sheet that you can just print and display. 

3 Ways Mortgage Brokers Can Help You Sell Your Home

Almost all purchasers in today’s market require a mortgage to complete the purchase of a home. For years Realtors have been utilizing the services of Mortgage Brokers to help them be more successful in selling houses. Mortgage Brokers have access to a wide number of lenders, a greater number of products and lower rates and can therefore help turn more lookers into buyers by offering more options and lower rates than most banks.

As someone who is selling their home by owner in this tight credit market, having access to a professional Mortgage Broker to help potential buyers arrange a mortgage that best fits their unique requirements at the lowest rate, could help you be more successful in selling your home quickly. The following are some of the ways a professional Mortgage Broker can help you be more successful in selling your house:

1. Down payment

There are a number of solutions to assist buyers with the down payment, including cash back mortgages, gifted down payment, borrowed down payment, vendor take back and some government programs. Working with a Mortgage Broker they can offer solutions to potential buyers of your house if they are not able to buy your house at this time due to a down payment issue.

2. Interest Rate %

Many times a Mortgage Broker can provide a client with a better mortgage rate than they are able to get on their own by going to their bank. By helping potential buyers of your house find a lower rate they may be able to afford more house with lower payments.

3. Provide a mortgage for clients who do not fit with the Bank

Some potential home buyers may have trouble getting approved due to being self employed with income that is hard to verify, being a first time home buyer with limited credit and/or down payment or being a purchaser who is new to Canada. With having access to many different lenders who offer special products for these types of clients I can provide purchasers with mortgages they could not get through their banks and in many cases at a better rate than they thought possible. This allows you as a home seller to draw on more potential buyers for your house.

As an independent mortgage broker with over 20 years of experience I am able to find my clients the Best Mortgage Options based on their unique needs and circumstances. Best Rate Mortgage Corp. has one of the largest databases of lenders including major banks, credit unions, trust companies and insurance companies. Best Rate also has access to private lenders who specialize in more challenging situations. I am please to offer my services to help potential buyers secure a mortgage so they can proceed with the purchase of your house quickly and hassle free. There is no cost to you for my services and I am more than happy to answer any mortgage questions you and/or or potential buyers may have.


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