Pre-Approval

This can be the most important part of the entire mortgage process. Opposed to what most Bank do, which we refer to as a “Rate Guarantee”, we complete a FIRM PRE-APPROVAL. What’s the difference? Although the rate hold or guarantee is very important, especially in an upward rate environment, it is more important to collect, review and approve your information up front, before you purchase a home. We like to have a complete file, which includes:

·Signed application
·Credit report
·Income confirmation
·Downpayment confirmation

Once we have all of this information, the only item left is the Offer to Purchase. Therefore, on the stressful/busy/exciting day when you buy a home, you will not have any financing concerns because we completed a FIRM PRE-APPROVAL before hand. You will also be issued a

PRE-APPROVAL CERTIFICATE which your realtor will like to have in his possession at the bargaining table.

To us, it just makes sense to do this pre-work well ahead of the buying process. Lastly, this allows you to review, in detail, a mortgage commitment letter and ask lots of questions. An informed client always makes better decisions.

We have listed below the mortgage insurance table which outlines the insurance fees which are charged to borrowers who do not have the entire 20% down payment saved when they purchase their home. These fees can be paid up front or added to the mortgage amount, the latter of the two being the most common.

CMHC/GE/AIG Mortgage Insurance Premiums and Tables

Homeowner mortgage loan insurance premiums vary according to the loan-to-value ratio.

Effective February 17, 2006

Since CMHC began to insure Canadians, they have developed a number of new and progressive programs which when used properly, are very advantages to the consumer.

Before we list and explain the top four CMHC programs, we should quickly mention that mortgage insurance and mortgage “life” insurance are completely different products. Mortgage insurance is in place to protect the bank in case a consumer defaults on their mortgage payment. Mortgage life insurance is purchased by a consumer who wants to insure his/her life. Often referred to as creditors insurance, if you purchase mortgage life insurance and then die while the policy is in force, your entire mortgage would be paid in full. More information on this topic is provided below.

Four CMHC programs that could be helpful to you and your circumstances.

· Home Buyers Plan
· Refinance to 90% of Homes Value
· Purchase Plus Improvements
· 100% Financing

  Self Employed

Home Buyers Plan:

The Home Buyers Plan has enabled many Canadians to buy a home much faster, but there are still many questions about this plan. We receive many questions on the weekly Show “Hot Property” about this program. Call our office for more information.
Home Buyers can withdraw up to $20,000.00 from their RRSP’S account under this plan. There are many rules for this plan - here are a few:

The funds must be in the RRSP for a minimum of 90 days
The funds can be used for things such as furniture, moving expenses and legal cost. In other

    words, not just for the down payment.
You can replenish your RRSP over a 15-year time period or sooner, if you wish.
You can add the amount ($20,000 / 15 = $1,333) to your income each year and be taxed on

    it and not replenish your RRSP.
You can use the program again after you have repaid the RRSP money and five years have

    elapsed
Both Spouses are eligible to withdraw up to $20,000 at the same time.
Be Careful, if you marry someone who has used the plan and you move into their home, you

    are no longer eligible to use the program. One family, one principle residence.

Refinance to 90% of your Home's Value

With the significant appreciation in the house prices over the past five years, many consumers have taken advantage of the refinance program offered through CMHC. No one likes to refinance their home to pay out credit card debt, car loans or line of credit, but sometimes it makes sense to review this option in more detail. Here is a quick checklist:

1. 1. Are you tired of making four or five different payments each month?

2. 2. Do you find yourself making minimum payments each month?

3. 3. Are the other creditors charging interest rates which are higher then today’s mortgage rates?

Purchase plus Improvements

This is likely CMHC’s most under appreciated program, having just completed two mortgages under this plan, it appears that this program is also a secret with many of the Banks. Let me explain…. According to CMHC, there is no limit on how much money you borrow under this program. The concept is simple. You decide to buy a house but the home needs work (new kitchen or furnace, for example). You are required to provide the lender with a quotation for the improvements. The 95% of the amount of the quotation will be added to the amount of the mortgage.

· You are required to pay a slightly higher premium (.5%)
· The improvement funds will be sent to your lawyer “In Trust” on closing and will not be

      released until the work is completed and inspected
· Do not expect your Bank to understand this product.
· Your Bank may limit the Purchase Plus improvement amount to 10% of the Purchase

      Price.

This is a great program but a little tricky to understand. The CMHC information is difficult to comprehend. Although we have a few lenders who participate in this program, it has not been widely accepted by the Banking system.

100% Financing on Purchases
 

This is a relatively new program and a great way for people to get into a new home when they don't have the minimum 5% downpayment saved. How it works is that the lender will approve a 100% mortgage based on their posted 5 year rate as long as credit is perfect. It should be noted though that the credit qualifications are high for this program due to the extra risk factors. However, if your credit is perfect and income is good - you can take advantage this program.

Flex Down Program

C.M.H.C. announced a new program which allows consumers to borrow their entire 5% downpayment, effectively allowing a consumer to borrow the entire value of the home. There are a few restrictions on where the money can be borrowed from, but basically very few banks and Mortgage companies have embraced this program. Even fewer consumers have acknowledged its existence. A client pays a slightly higher Insurance Premium but gets full advantage of our discounted rates.

For further clarification on this and any other C.M.H.C. program, please contact us toll free at

1-877-999-2852.

Mortgage Life Insurance

It is important to ensure that you have House Insurance and Life Insurance when you buy a home. For most people, this is the single biggest asset they own so it makes sense to protect your wealth. We are not in the business of selling life insurance; we are experts in the field of Mortgage Finance. However, we offer a competitive mortgage life & dissability insurance plan to make sure our clients understand the risks involved with not being covered. It is important to note that you are not required to take Creditor Insurance for a Mortgage. Some Banks suggest this so be careful.

Benefits:

• Relatively inexpensive – group rates

• Very easy to set-up

• Peace of mind coverage for your family

Credit Reporting

For $20, Equifax Canada online will give you access to your personal credit report. It is imperative that people review this information every 12-18 months to insure that the information is accurate. Our consultants are trained to review this information with you in detail when you apply for a mortgage.

Most Banks have now embraced a credit scoring system. Referred to as a FICO score or a BEACON score. Most “A” lenders require a score in the 620 or above range. We routinely find mortgages for clients who have lower scores and we can also assist clients in increasing their score over a period of time.

Credit scoring is based upon many different variables. These variable include:

· The number of credit lines that you operate
· Your payment behavior and pattern
· Credit card and line of credit balance – are you at your upper limits?
· Amount of outstanding current debt
· Any collections? Small Judgments?

We cannot overemphasize the importance of knowing and understanding your credit history.