All posts by That Mortgage Man

10 Surprising Facts About Mortgages

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

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

Expect 2017 to be a promising year for first-time home buyers

“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

Planning to grow legal pot? Check real estate rules first

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

Your credit and the mortgage world – Know your plastic!

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.

The Good
When you make a purchase with a credit card, you’re getting a quick loan from the company that issued it for the price of whatever you’ve bought.  They’re handy for expensive items because you don’t have to carry large amounts of cash around.  Also, when you pay off your credit card bill every month, you improve your credit rating which can help you get a higher limit and can make it easier to get a loan for a car or a house.
The Bad
All loans have to be paid back! The loan you get when you make a purchase on a credit card usually has to be paid back when you get your bill, once a month.  If you don’t have enough money to pay for everything you’ve bought using the card, things can get ugly (see below).
The Ugly
Credit Card companies usually charge very high interest rates when you don’t pay your bill in full every month.  That’s how they make a lot of their money: Ah the joys of living in a consumer society!
Debit Cards
Debit Cards are a lot like credit cards: they usually have a brand like VISA or MASTERCARD attached to them so they can be used wherever those cards are accepted.  The difference is that Debit Cards don’t give you a loan for what you buy.  When you charge something, the cost is instantly deducted from your bank account.
The Good
Like a credit card, a Debit Card keeps you from having to carry a lot of cash when you go shopping.  Because whatever you buy is instantly deducted from your bank account, there’s no danger of racking up high interest fees.
The Bad
Whatever you spend is gone from your bank account the moment you spend it.  Because it’s so easy to swipe your way through purchases, it’s important to keep an eye on how much money you have in your account.
The Ugly
It’s a little too easy to drain your bank account with a Debit Card if you go on a shopping spree.  And if you buy more than you have in your account, you can wind up owing your bank a lot of money in penalties called “overdraft fees.”
Prepaid Cards
Prepaid cards are an alternative that many people use when they either don’t want or can’t get a credit card or don’t have a bank account that can be linked to a debit card.  As long as they have the logo of a major credit card brand, they can be used almost anywhere.
The Good
Prepaid Cards are like gift certificates that can be used anywhere a credit card can.  There’s no danger of interest charges or overdraft fees because it’s not loan or connected to your bank account.
The Bad
Once you spend the amount attached to your prepaid card, the money is gone, so it’s important to keep track of how much you’ve spent.  While debit and credit cards are easy to cancel if they’re lost or stolen, prepaid cards are more difficult to protect.
The Ugly
Unlike credit cards, straight prepaid cards don’t help you build your credit history; they’re just cards you “load” with money but can use anywhere major credit cards are accepted. There are a few exceptions to this rule:  some “prepaid” cards will ask you for a security deposit.   However much money you can give the company will equal how much you can spend each month.  If you pay off your monthly bill from these cards on time and in full, they may improve your score, but you have to have enough money to cover both the deposit and your monthly spending.  If you’re not sure if your prepaid card will help your score, call the company that issues the card and ask.
Pheeewww, that was a mouthful  but do remember that little number (your credit score) is a very important part of your mortgage application when it comes time to house hunt! If you have any questions about your credit score, feel free to get in touch.

What is a mortgage refinance, in plain english.

How Does Refinancing Work

Refinancing works by giving a homeowner access to a new mortgage loan which replaces its existing one. The details of the new mortgage loan can be customized by the homeowner, include the new loan’s mortgage rate, loan length in years, and amount borrowed. Refinances can be used to reduce a homeowner’s monthly mortgage payment; to take cash out for home improvements; and, to cancel mortgage insurance premiums, among other uses.

What Is A Mortgage Refinance?

A mortgage is a loan used for real estate. They’re available via banks, credit unions, and online lenders. Hundreds of billions of dollars worth of mortgage loans are given each year.

But, mortgages aren’t one-size-fits-all. Mortgages can be customized.

For example, you can choose the number of years in your loan (i.e. term); you can choose the nature of your interest rate (i.e. fixed-rate or adjustable-rate); and, you can even choose what you pay in mortgage closing costs.

Your needs as a homeowner today, though, may be different from your needs tomorrow. In the future, you may not like mortgage terms you created for yourself.

Thankfully, there’s an option to change your mortgage loan terms. It’s known as a “refinance”.

To refinance your home means to replace your current mortgage loan with a new one. Refinances are common whether current mortgage rates are rising or falling; and you can get one from any lender you choose.

You’re not limited to working with your current mortgage lender.

Some of the reasons homeowners refinance include a desire to get a lower mortgage rate; to pay their home off more quickly; or, to use their home equity for paying credit cards or funding home improvement.

Refinances typically close more quickly than a purchase mortgage loan and can require far less paperwork.

If you have more questions about this article (or anything else) NEVER hesitate to get in touch, I’m happy to help.

In hot real estate markets, realtors are going to make you an offer — whether you want it or not

Kelowna! Our housing market has officially heated up… has begun, the controversial realtor practice of contacting homeowners in the hopes they MAY want to sell.  Now homeowners are left with a choice they may have not even been considering, love it or list it?

My daughter and son in law received a letter recently (from a local realtor we will not disclose) They live in Dilworth, have an income suite and are 10 mins from downtown. They have no intentions of selling, but real estate in Kelowna is heating up and realtors are making sure they have enough properties to show eager house hunters. And lets face it, sale prices are enticing even the most comfortable home owners.

There is nothing illegal about realtors directly approaching you to sell your home privately, but that doesn’t mean all homeowners appreciate the attention. Lets face it our local market is strong  and real estate agents dealing with clients trying to break into the market, the number of unsolicited offers is probably going to just keep growing in hot markets like Toronto and Vancouver.

Many eager house hunters are simply not willing to sit around and wait for product to come to them. While unsolicited offers may pay off for buyers, the real problem, as a seller, is it’s incumbent on you to determine fair market value for you property. The agent making the offer is just not on your side.

Risks aside, there are some advantages to selling directly and bypassing the MLS, which usually requires posting pictures of the inside and outside of your house online and open houses. On the financial front, agents soliciting business usually promise a break on commission too.

Whether this option come knocking or not, potential sellers be wary that this probably isn’t the safest strategy. Sellers really need to do their homework before agreeing to a private transaction — don’t get tricked into a quick timeline and don’t feel shy about requesting a large deposit of as much as 15-20 per cent.

As always, if you have any questions, especially if offers start knocking, never hesitate to get in touch, with me, a realtor, or a lawyer. For most of us the purchase and sale of a home is the biggest and most emotional transaction we will ever make. Everyone searching and selling needs to feel protected, happy and in control 🙂

Ground breaking mortgage changes coming!

We are 5 days away for yet another change to our mortgage market.

As of the 17th, it’s getting harder to get the amount of money you may want for your mortgage.  Mortgage rules regarding qualification are right around the corner.  Rumor has it that 1 in 5 people will be affected.

Here’s how the rules work: 

For those wanting a short term fixed rate (1 – 4 years) or a variable rate or a line of credit mortgage, you qualify at the Canadian benchmark rate which is currently 4.64%.  You didn’t pay 4.64%, you just qualified at that rate.  The thinking is that if you qualify at this higher rate and the interest rate increases, you should still be able to afford the payment because you’ve qualified for less money.

If you took a 5 year fixed rate (or longer), you qualify at the contract rate; a conservative rate would be 2.49%.  Because you’re qualifying at this rate, you qualify for more money.

We typically think of high ratio insurance for those putting down less than 20% of the home’s value but in fact most lenders buy insurance for all their mortgages; even for conventional mortgages, but the consumer may not be aware of it because the lenders pay for it.

As of Oct 17th, the Canadian benchmark rate will be used for all mortgage qualifications that are backed by either high ratio insurance or low ratio (bulk pooled) insurance . Here are 3 examples of how it will affect clients.

All based on having little ancillary debt, so using 39% of gross income for your mortgage payment, property taxes and heat

Household income $50,000 gross. Old qualification amount =  $299,900

New qualification amount = $239,100

Household income $75,000 gross. Old qualification amount =  $466,500

New qualification amount = $372,000

        House income $100,000 gross. Old qualification amount =  $663,000

New qualification amount = $528,600

In the first example, you will qualify for $60,800 less.  In the second example you will qualify for $94,600 less and in the third example you will qualify for $134,400 less.

While lenders try to make sense of the rules, many are not lending for rental properties, nor doing stated income deals at this time.

New changes can create a little confusion, if you have any questions, never hesitate to give me call. I’m always ready to help.

Expect tougher mortgage rules by November

Here we are again, more changes to the mortgage industry are heading our way, and soon.

Home buyers may feel the pinch as banks comply to stricter rules, but what will change and when…

How it will impact the Canadian home buyer?

As a federal regulator, OSFI’s requirement will impact banks and lenders across Canada. This means buyers in all markets will feel the impact of these changes, not just home buyers in hot markets, such as Toronto and Vancouver.

Banks and mortgage lenders will pass down the extra costs of these stricter regulations to the end user. This is done by either increasing mortgage rates or implementing tougher lending requirements for those applying for a mortgage.

For the average Canadian home buyer, then, this could mean that as early as November, it will either be:
harder to get a mortgage
mortgage rates will start to rise (even slightly)
or you won’t qualify for as large a mortgage as you would’ve prior to these new rules.

When will tougher rules take affect?

This announcement of the proposed new mortgage guidelines comes after more than six months of private consultations between OSFI and the banking sector. Now the public and other stakeholders have until October 18 to submit comments before any of these new guidelines take effect. Then the implementation of new mortgage rules will be phased in—some lenders, with a fiscal year-end of October 31, will need to enforce these stricter mortgage rules starting November 1, 2016, while lenders with a fiscal year-end of December 31, will enforce the new rules as of January 1, 2017.

But don’t expect changes in the mortgage or residential real estate market to stop here. This week, it was mentioned that additional measures may be needed to manage the risks associated with the “highly charged” Vancouver and Toronto housing markets.

Unfortunately hot markets cause change, if your contemplating buying, refinancing or renewing lets rock, I’m here to help answer any questions & help you into the best mortgage for YOUR needs 🙂

Mortgage Brokers vs. Bankers

It is a mortgage tale as old as time… and one of the biggest choices that mortgage shoppers face when getting into the market is where to go….. broker or bank?

It can be a tough choice, many of us have been with our banks for years and it just seems easier to meet with the specialist there. Our parents went to the banks, your friend got a “great rate” at the bank and well, it just seems like the traditional thing to do.

Word is on the street that our society is taking a turn back towards “traditional” ways but before you make an appointment at your nearest financial institution, here are the top 5 reasons why mortgage brokers are just plain GREAT!

We offer mortgage plans that a banker does not have access to: Part of being an independent mortgage broker is that I am able to “shop around”! Banks only have typically about 3 products to offer, I can take your application to over 50 lenders and without a doubt find you the best rate and plan to suit YOUR needs.

We don’t turn our noses up at those with bad credit:  Mortgage brokers have flexibility and can often find a lender who will work with you.  Unfortunately, bankers have to adhere to their bank policies often placing restrictions on available options.

Flexible hours: Not a 8-5 person? No worries, I’m not either!! Now granted, if you call at 3 am you might have to give me a minute to fire up the Keurig but other than that, meeting outside regular business hours or at a location of your choice is not a problem!

Worried that you’re self employed? Don’t worry so am I: Banks can often times remind me of the government, there is not a lot of room for “grey area” black and white or nothing… If you are receiving your income from a non-conventional source ex: self employment, long term disability, alimony etc.  than have no fear. Brokers love the “grey area” in fact, we thrive in it. We keep ourselves up to date on the rules and the trends of the lending industry, knowledge is power and we will deliver your application to a lender who will happy to work with you!

We work for YOU: We offer a unbiased, free service to clients that helps them properly asses and understand the mortgage process. We love what we do and we like saving you money. We get down in the trenches, negotiate, shop around and provide options!

If I haven’t convinced you, feel free to give me call and get ready to be surprised.

Kelowna MortgageDave ~ Kelowna mortgage broker 🙂

Summer lovin, happened so fast! How you can make it last.

Summer is officially in its final countdown, stores are geared up for “back to school” and I even dare to say I saw a Christmas decorations being added to the isles at Costco (insert eye roll)!

If you are one of the lucky ones, you have manged to take some time and get away and enjoy some fun in the sun. Whether you call it a cottage, a cabin or a camp, when the temperature begins to rise, the dreams of sitting on the dock at a place of your own start this time of year….. If your wondering how to make your dream a reality this post is for you.

Well…. lets talk truths, if you don’t have the cash on hand to buy one outright, you’ll have to borrow the money, (enter me) I can help with that, and while the basic process of applying for and qualifying for a mortgage are the same, lenders will look at many more variables when assessing a property before lending money to buy a cottage.

As always, if you have questions never hesitate to get in touch. I’m here to help you turn that summer real estate lovin into more than just a one night stand 🙂