The mortgage industry has undoubtedly changed since the housing crash a few years ago. It used to be so simple to qualify for a mortgage — provide your basic information, sign a few papers, and move along!

Unfortunately, getting a simple, fixed rate mortgage these days through the secondary market isn’t always easy-breezy. There are many factors the lenders look at, and all of your most personal financial information must be reviewed in order for the lender to make a credit decision.

Some of the things the underwriters are looking for may surprise you, so here are 10 surprising facts about mortgages in today’s market.

1. Underwriters Don’t Care About Your Assets

While underwriters do want to see that you have enough money to cover your down payment, they typically don’t care how much money you have in the bank.

There’s a spot on a mortgage application for you to list your cars and other assets, but it really doesn’t matter to an underwriter because those things aren’t collateral for the mortgage.

The thing that matters the most is your income. What I mean by that is this: let’s say you have one million dollars in the bank, but you only make $10 an hour. You want to finance a $300,000 home. Even if you have enough money in the bank to cover the loan, you aren’t going to get that mortgage if you don’t qualify for it on your income. Your debt-to-income ratio is of the utmost importance.

2. Having No Credit Score Can Hurt You

You would think that learning to pay all of your bills in cash, saving up to buy your cars in cash, and not having a credit card and its corresponding debt would be a good thing when you are applying for a mortgage, but that’s not exactly true.

If you don’t have a credit score because you’ve always been good with your money and never utilized credit, then it will be much harder for you to get a mortgage than it would be for a person who has 5 credit cards, 2 car loans, and 7 student loans with a higher debt ratio.

Banks want to see documentation that you pay your bills on time and that you can handle having credit. This information comes to them in the form of a credit report, so if you don’t have a credit score, then you have to come up with different ways to prove to the lender that you pay your bills. This can make it tougher to get a mortgage.

There are very few loan programs that exist that allow you to use what’s called “alternate credit” to prove your creditworthiness. If you do qualify for one of those programs, you must find 3 different companies you use that are willing to vouch for your creditworthiness. Examples include your utility company (if they are in your name), your cell phone company, or your car insurance company.

3. Self-Employed Borrowers Are the Hardest to Qualify

Self-employed business owners are typically the hardest borrowers to get loans for because many business owners write off so much of their income, it looks like they’re bringing home nothing.

Clearly that isn’t always the case, but it’s the only thing the underwriters can use to prove income on a self-employed borrower, and they won’t overlook something as important as tax returns.

I once had a borrower come in who needed to borrow a substantial amount of money for his house. He supplied his tax returns because he was self-employed, and although I knew for a fact he made good money, he only showed $12,000 in income for the previous year. Well, I’m sorry Mr. Borrower, but there’s not much I can do for you there!

You have to prove your true income to Uncle Sam and pay your taxes if you want to prove to a lender that you can afford the home you want to finance.

4. Your Debt Ratio Isn’t Based on How Much Money You Bring Home

Your debt-to-income ratio (DTI) is actually based on gross income, not net income. That means your income is based off of the total amount on your pay stubs and W2s prior to taxes and retirement deductions being taken out.

If your debt ratio is higher than you’re comfortable with, it’s even higher when you compare it to what your debt ratio would be with your take home pay. (That’s also why it’s important to decide how much of a mortgage payment you’re comfortable with. Don’t just go with what the bank tells you you can borrow.)

For more surprising mortgage facts, click here…… story via  everythingfinanceblog.com

If you have any questions never hesitate to get in touch.

“We’re putting taxpayers first when it comes to housing”

If you’re planning on buying your first home in 2017, there’s reason to be optimistic.

New provincial government incentives, a forecasted balanced market and continued strong housing starts make 2017 a good time for B.C. residents to purchase their first home.

The first thing that should help first-time home buyers is the new B.C. Home Partnership program that kicks in on January 16th.

This new initiative will contribute up to $37,500, or up to 5% of the purchase price, towards a B.C. resident’s first home through a 25-year mortgage loan that’s interest and payment-free for the first five years.

First-time home buyers can also save up to $7,500 when purchasing a home through the First Time Home Buyers Program, which exempts them from paying the property transfer tax.

It’s also possible to save up to $13,000 in property tax when purchasing a newly constructed home through the Newly Built Homes Exemption.

It’s also expected to be a good year for housing starts, with the Canadian Mortgage and Housing Corporation is forecasting between 32,000 and 34,300 housing starts in B.C. in 2017. That includes over 10,000 single-detached homes.

“We’re working with communities to ensure we have safe, comfortable and affordable housing for as many British Columbians as possible,” said Coleman.

Meanwhile, the B.C. Real Estate Association predicts that market conditions will trend toward greater balance in the face of moderating demand in 2017.

Finally, a newly implemented 15% tax on foreign ownership and a 3% luxury tax on homes worth over $2 million should only help B.C. residents when purchasing their first home.

Questions? Lets chat.

Story via ~ Kelowna Now

If Canada follows the path of most U.S. states that have legalized marijuana, we’ll be allowed to grow a moderate number of plants at home.

Another potentially delicate problem is selling your house.

As the seller, how much do you have to disclose about the marijuana plants that you whisked out of sight for the open house? Different provinces have different rules.

The Real Estate Council of British Columbia recommends that selling agents encourage their clients to disclose in writing that a property has been used to grow pot, even if the grow was one of the legal and quite small ones that medical marijuana users are allowed.

“While marijuana for medical purposes may be grown legally with the necessary licence, the possibility remains that its growth could result in a property defect,” spokesperson Marilee Peters wrote in an email.

“If a property has been used for activities such as a marijuana grow-op and the property has not been properly restored, a material latent defect may exist in the form of toxic hazards that cannot be discovered on a reasonable examination of the property.”

READ: Why home marijuana cultivation will be a headache for regulators

What might a legal home grow look like?

Colorado allows residents to grow up to six marijuana plants each, of which half can be flowering at any given time. There is no state-level restriction on the total number of plants. Unless local bylaws ban it (some do), a household of four adults can legally grow two dozen marijuana plants.

And those plants can be huge. Home growers in states like Oregon and Colorado have been known to grow enormous plants to maximize production within the rules.

So, depending on what Canada’s rules turn out to be, Canadians could be able to run a fairly serious home grow op while also staying completely on the right side of the law.

Continue reading here ~ story via Global News

Plastic is fantastic, especially this time of year!  But it’s important to know how to use it, when to use it, and what you can do to avoid becoming a victim of plastic-itis, otherwise known as debt, interest charges, and overdrafts. Which can harm you if your mortgage shopping.

Credit Cards 

Credit cards are the oldest kind of plastic and still the most popular.  They’re issued by both banks and credit card companies and most have limits on how much you can spend based on things like your age and credit score.