Residential Mortgages (part 2)
rs are sometimes faced with special needs when purchasing or refinancing their home. A second mortgage can sometimes help in these instances. A second mortgage is a registered lien on your property. This lien is in second place, behind the first mortgage. Because second mortgages are riskier, the interest rates are usually a minimum of 10-12%. A new second mortgage can be used to purchase a home or to refinance an existing home. If refinancing, the new second mortgage can be used for a variety of things:
§ Home renovations § Children’s education § Pay off existing debt § Emergency expenses § Business expenses in challenging times § Investments Home equity is the difference between the current appraised value of your home and the amount you have paid on the first mortgage. For example, if you have paid $85,000 on a residential mortgage of $300,000, you can borrow against the $85,000 already paid. Home equity loans are either second mortgages or refinanced first mortgages with taking cash out. Again, this cash out can be used for a variety of reasons, from consolidating outstanding debt to renovating your home to paying for your children’s education. Depending on your particular financial situation, you may be able to lower monthly payments on your outstanding debts. Instead of paying high interest rates on a personal loan or credit card, you can get a home equity loan at low mortgage rates and pay off these debts for less. Depending on your unique loan scenario, we may be able to offer the following terms for your second mortgage: § Insured Second mortgage up to 95% § High-ratio first residential mortgages up to 100% § Equity-based first and second mortgages up to 100% Through our vast network of lenders, we can increase the probability of approval of your home equity loan/second mortgage. Call us today to see how we can provide a solution to your unique residential mortgage loan scenario. Now, given the current the state of the capital markets its more important than ever to work with seasoned professionals. Lender guidelines and underwriting parameters are changing rapidly as banks try to protect themselves. Options for bad credit residential mortgage refinances, though still broad, are getting harder to determine and close. Just as important it is key to know not only which lenders are offering the lowest rate and fees but which are still actively funding bad credit residential mortgage loans. We know who these lenders are. Good experienced mortgage brokers have a track record for helping our customers manage their financial affairs responsibly, and assisting them in re-establishing their credit and stability.
Although many clients are capable and willing to take on the responsibility of a new residential mortgage, the criteria used by most, if not all, traditional financial lending institutions prevent them from obtaining their loan request, due to past bad credit. Over the past few years, it has become increasingly easier to obtain loans for clients with bad or less than perfect credit, via tried and trusted private lending companies. These are also called sub-prime residential mortgages and loans. These companies can often finance sub-prime or bad credit mortgages which conventional institutions cannot. Although lending criteria has tightened due to the sub prime mortgage melt down in the United States, the main thing these private lending companies wish to see, verifiably, is a clear method of repayment, and equity in the property, in a marketable location.
What’s really important is that, regardless of your past credit history, a good experienced mortgage broker is able, in the vast majority of cases, to place financing for bad, or less than perfect credit mortgages. They are also able to assist consumers with good credit to obtain the most competitive mortgage rates and terms, and offer a wide range of residential mortgage products to meet a variety of needs.
Whether you have a history of bad or less than perfect credit, you have filed for bankruptcy, consumer proposal, credit counseling, you are self-employed or without verifiable income, or you’ve accumulated an unmanageable amount of debt, a good experienced mortgage broker can almost always place your loan request for financing.
Because sub-prime or bad credit residential mortgage loans can often be a complicated process, it’s important you speak with the right people. The idea is to improve your credit score and get you back on track with manageable debt and payment schedules. Even if your initial goal is to consolidate debts, do home renovations, taking a much-needed holiday, or anything else, a sub-prime bad credit mortgage can actually help improve your credit score. Combined with timely payments, a sub-prime mortgage can put you in the right direction towards financial freedom.
By: Donna Elizabeth Lewczuk
With Low Mortgage Rates, Is it the Right Time to Buy a New House?
The title of the article in a recent edition of the Toronto Star grabbed my attention immediately: “It may be the right time to take the plunge” into the housing market.
Note the use of the word “may”, suggesting that it may be the right time, but, depending on your circumstances, it may not. What advice did this article (and other recent ones like it) offer to prospective home buyers?
First, you should look to economic indicators to determine whether it is the right time to purchase a new home. Recent news has been good. According to Statistics Canada, the economy grew in June, 2009. The 0.1% increase was the first since July of 2008. News stories from across the country have talked about a robust real estate market, and even a return to bidding wars over highly desirable homes. Car sales are also up. And through it all, interest rates have remained low.
While all of these signs are positive, home buyers should still exercise caution, according to one expert quoted in the Star article. Margot Bai – author of the book Spend Smarter, Save Bigger – recommends that people be conservative. Her advice is summarized below:
Aim for at least a 10% down payment, but try for 20% if possible. Anything less than 10% means you’ll have to fork over thousands for mortgage insurance.
Do not rely on low mortgage rates to buy a home that is, in reality, out of your price range. When interest rates go up – and they will go up eventually – you could find it difficult to make payments.
If you are looking to move into a bigger home, make sure your job is secure. If you have any doubts, stay where you are and build equity in your existing home.
Speaking of equity, Bai also recommends that you accelerate your mortgage payments and keep the amortization period as short as you can manage – 15 years if possible. This will allow you to pay off more of the principal faster, and save you tons of money in interest over the course of the mortgage.
Of course, anyone with experience in the home buying game will tell you that getting your finances in place is an essential first step. A pre-approved mortgage will tell you what you can afford, and the quoted rates are valid for 120 days.
If you are ready to “take the plunge”, do some research before you even start looking. Select a few neighborhoods with prices you can afford and evaluate each one carefully. Consider things like proximity to work, commuting time and the amenities available in the area. Perhaps it is better to look for a smaller house closer to work than it is to move to a larger house that will require a frustrating hour-long drive to work. Or maybe you want to be close to shopping so you spend less time in the car running errands.
Once you have decided on a location, be sure to take an honest look at any homes you are considering. Make sure they are right for you now, and right for the future. Try to view the home multiple times so you can really get a feel for whether it will suit your needs. Then, and only then, should you put in an offer.
By: James Barry
Low Mortgage Rates Are Good News for Resale and New Home Market
Mortgage rates are at historic lows and are predicted to stay low for some time to come. The end result is good news for the real estate market, in both resale and new homes. Recent reports outline just how good the news has been:
The Canada Mortgage and Housing Corporation (CMHC) is predicting that new home construction will increase in the latter half of 2009 and into 2010. They are expecting housing starts to reach 141,900 units in 2009 and improve to about 150,000 in 2010. These numbers are still far off the mark of 200,000 or more that the market has reached every year since 2002, but they are a clear sign that the new home market is regaining strength. Most experts predict that we are not likely to see housing starts in the 200,000 range again, since there is less demand. As the market stabilizes, 170,000 starts per year will probably become the new norm. Even the luxury market is bouncing back. The Globe & Mail recently reported on the Vancouver market, noting that in the spring of 2009 houses sold in the city for $10 million and $9 million. Victoria saw two sales in the $6 to $7 million range. Canada’s most expensive residential real estate deal of 2009 (at the time of writing) occurred just outside of Calgary, as the Falkridge Centre sold for $13.1 million. Another sale in the city of Calgary netted former Calgary Flames goalie Mike Vernon $10.3 million. Not to be outdone, the city of Toronto posted its strongest performance ever in the luxury market in May, 2009, with 273 high-end homes sold. Low mortgage rates are the reason for the huge 18% increase in resale homes sales, year over year from July, 2008 to July, 2009. Major lenders announced another cut to mortgage rates in early September, 2009. Rate cuts will help maintain strong home sales in all sectors of the market, from small condos to the luxury homes discussed in the previous point. Along with low mortgage rates, low inventories of resale homes have helped boost home prices and are, in part, responsible for the uptick in housing starts.
There is also good news for sellers, if not necessarily for buyers, at least in the Toronto market. There is some serious competition for housing, which has marked a return to bidding wars over resale homes.
If you are looking to enter the market, whether you are a first-time buyer or a current owner seeking to upgrade to a bigger home, be sure to get off on the right foot. Securing your financing is an essential first step. When you know how much you can afford, you can tailor your search for a new home accordingly. A meeting with a mortgage professional can help you analyze your current income and expenses so you can determine exactly how much you can spend.
By: James Barry