Mortgage

Mortgage Lender

Choosing the Right Mortgage Lender

Finding a Mortgage Lender 

When it comes time to shop for a mortgage lender it can seem daunting and stressful. However, there are multiple companies that are able to help you through the process and interest rates options. The whole process can sometimes feel really overwhelming and that’s why a mortgage lender or specialist can help you make the right decisions. 

There are three different type of mortgage lenders in Canada. The first one is the “Lender A,” which are the traditional lenders, banks and credit unions. Typically this lender is for those who have good credit scores and a steady income. 

Next is the “B Lender,” they’re able to offer a lower barrier for the borrower. The borrower may not have qualified through the bank or credit union. Finally there’s the “Private Lender,” which is for borrowers who have lower qualifications than the A and B lenders. 

“While banks and other major financial institutions are considered to be A lenders, monoline lenders also fall under this category. Unlike banks who offer multiple services like credit cards, investments and bank accounts, monoline lenders specialize primarily in mortgage loans.”

It’s best to start by looking for a mortgage broker, as we mentioned above, they can offer you recommendations on what type of mortgage is right for you. You can then compare all the options and go with the one that suits your life and income situation. This is also possible to do online, you can compare interest rates and terms. 

What to Ask Your Mortgage Broker & Lender 

It’s important to understand the interest rates and terms with your lender. This way there aren’t any surprises. Some questions you should consider asking are about your payments, property taxes and mortgage options. 

This is because each mortgage lender will have their own policies, your broker will be able help you understand their guidelines and terms. Then they’ll be able to help you determine which lender will suite your needs best. 

It might also be helpful to ask your broker what lenders they think would be best for you. It’s also a good idea to ask your broker the difference between a bank and moonline lenders. This will help you figure out payment privileges, which is usually the biggest difference. 

“Borrowers may also want to ask about extra payments on your mortgage and how many you’re entitled to per year, the mortgage renewal process, and if your lender allows property taxes to be collected with your mortgage.”

Another good question to ask would be about any penalties if you choose to pay out your mortgage early. This could impact the length of your mortgage term and the interest rate. Its important to know the interest rate penalties.  

Choosing the Right Lender 

There’s a lot involved when you’re choosing the right lender. It can be more than just about rates and terms. It’s important to make sure they have good customer service and can communicate well. 

With any service or company, you want to make sure that you’re treated well and that issue, of there are any, are resolved. It’s “important for lenders to have a good online customer portal. This is where clients can make payments, gather mortgage statements, and get other detailed information.” 

Contacting Lori VanDinther and Team 

If you need advice about mortgage lenders or brokers, we can help. If you have any questions about the current real estate market my team and I are here to answer them for you. 

We love connecting with our clients, our goal is to help you find the home of your dreams in Burlington, Ontario and surrounding areas. Please contact me either by email at info@loriv.com, or by phone at 905-632-2199. 

How Mortgages Work

How Mortgages Work

Mortgages and the Down payment 

Have you been wondering how mortgages work? When it comes to buying a home we all have to think about how we’ll finance it. It’s a major purchase and one that is life changing, you’re becoming a homeowner, it’s exciting. First we should review how mortgages work. 

There’s a lot that goes in to purchasing a home, you need to do a mortgage stress test. This test will determine what sort of mortgage you qualify for, we’ll discuss more of that later. We want to make sure that you also understand the two different types of mortgages as well, open and closed. We’ll start by discussing the down payment. 

The Down payment 

The down payment is just one part of the whole sale process, it’s a way of letting the mortgage lenders know that you, the buyer, are able to handle the financial sound. It also let’s the lender know that you’re able to make the monthly payments. It’s important for you to start saving for the downpayment well in advance of making an offer on a home. 

When it comes to the first step that you’ll take in this process, after saving, will be to find a mortgage lender. What is a mortgage lender? They’re a bank or an organization that is willing to lend you the money you need to purchase your new home. 

In Canada, there are a few lenders to choose from, for example, The Royal Bank of Canada, Scotia Bank, etc. In order to be able to get a loan you need to be eligible, this is determined by completing the pre-approval process. In this stage it’ll involve the mortgage stress test. We actually covered this in a previous blog. We’ll do a quick review of that here. 

The Mortgage Stress Test  

What is the mortgage stress test? To get more details please also check out a previous blog. To answer this question, in short, the stress test is designed to determine and see whether you qualify for a mortgage. Most lenders will require you to supply government ID, proof of address, employment information, employment history, credit history, credit score, and that you have an account with a Canadian bank. 

The stress test will allow the lender to determine a budget and how much you’ll be able to afford. Which is very important when it comes to what price range you can look at when house hunting. It’s also important to know so that you can budget for each month, making sure that you can make your mortgage payments, along with other payments that go in to having a home. There are two types of mortgages and this test will also help determine which one might be best for you. 

What are Open and Closed Mortgages?

Did you know that there are two types of mortgages? In Canada, when it comes to how mortgages work, all mortgages are either open or closed. Each one has different terms, and these terms will determine what’s allowed and what’s not. The terms also decide how often payments can be made and how much can be paid off. You can prepare choosing what type of mortgage you want, you’ll need to review you finical situation to do this. 

Closed mortgages have lower interest rates, however, they have more payment penalties. The penalties will be outlined in the montage details and will state how much money can be paid for each payment. You can lowed the monthly payment in exchange for a longer amortization period. 

Open mortgages have payment privileges at a higher interest rate. In this case your monthly payments don’t have a limit to what the specific amount can be. You can make lump sum payments if you choose. With an open montage you’re able to pay it off faster in many cases. 

When you’re deciding what mortgage is best for you, you’ll need to ask yourself a few questions. Some of the questions you might want to ask yourself are; what is your financial situation, can you pay your mortgage off early, when do you plan on selling, do you plan on selling before the mortgage term is up, what mortgage rate will you be able to afford. These are just a few important questions you need to try and answer. The next step will be actually applying for a mortgage. 

Applying for a Mortgage 

Now you’re ready to apply for a mortgage loan, but how do you do that? When applying for a mortgage it can be pretty straight forward, and the current market is flexible. Because the market is flexible it means that it’s easier for homeowners, and new homeowners, to get a loan that will suit their needs. You’ll apply for your mortgage through the financial institution of your choice, we listed a few above. They’ll walk you through the process in greater detail.

If you want lower rates and more freedom with loans, you’ll need to compete the qualifying criteria and also prove that you are able to make the monthly payments, the stress test will help determine this. Then when you’re ready you can begin to look for the house of your dreams, this is the really fun part. I can’t want to help you along in this journey. 

Contact Lori VanDinther and Team 

Taking the step to look for your new home can be a big one for some, and I want to make sure that you have a wonderful experience. Myself and my team work hard to make sure that our clients are happy and in love with their new home. 

You can contact me either by phone to email and I will be happy to answer any questions about how mortgages work, and any others you might have. If you’ve been wondering what your home is worth, you can use my What’s My Home Worth calculator. I’m looking forward to working with you soon! 

Skyline of the financial district

Rate Hikes Are Not The Answer

According to the Polls

In a recent joint Nanos and Bloomberg poll, that took place in May, it was revealed that Canadian’s would welcome rate hikes if it means that it could help cool the housing market. According to the poll, 49% of respondents would support or somewhat support the Bank of Canada to increase the interest rate. This is because they believe that a rate hike would help relieve the very hot housing market. However, in order to soften the activity in the housing market, but this could also torpedo the economy. 

The President of Mortgage Architects, Dustan Woodhouse was interviewed about this potential rate hikes and stated, “who in their right mind would want interest rates to rise? Anyone who’s thinking they want interest rates to rise to slow home prices doesn’t understand how mortgage approval rules work because all mortgage approvals were written to 4.79%, now 5.25%, so what the actual interest rates are don’t actually mean anything as far as home prices have gone, because nobody is qualifying for any extra money over and above what they would if the actual interest rates were 4.79%, and 5.25% (as of June 1),”

Material Slowdown 

When you slow down the amount of money people have to purchase homes, you then need to rise the interest rates to 7.5-8.5%, says Woodhouse. This would cause housing prices to more than just slow down, the entire economy would in fact, grind to a halt. As Woodhouse puts it, “that would be like trying to kill a mosquito with a nuclear bomb.”

Woodhouse also believes that there’s a fundamental misunderstanding of how interest rate policy works. According to Dr. Sherry Cooper, “the problem is that interest rate policy is a blunt instrument and it leads to all sorts of unintended consequences. If you were to raise rates too much, you’d dampen the whole economy, which makes no sense given all the problems we still have in terms of jobs and getting the economy restarted. The Bank of Canada will never do it for that reason. It will raise rates when it thinks the economy is growing rapidly and is close to full employment.”

Rate Hikes to Rise in 2022

It’s been reported that interest rates are expected to rise by 2022, one year earlier than perviously warned by the Bank of Canada. This is because the economy seems to be healthier than everyone had thought it would be during the COVID-19 pandemic. 

The Bank of Canada also recently sated that it’s anticipating a return to full capacity a month sooner than expected. However, while other things are remaining constant, Dr. Cooper says, “it would reduce buying power. The question is would it lead to a decline in home prices? It would take quite a tightening in monetary policy for that to happen, and tightening is unlikely. Even the housing market isn’t one market nationwide; it’s many, many different markets, so we could see home prices reverse in one area or one sector without seeing it happen in another. To see the overall average home price decline, which means it would have to be a widespread phenomenon outside of both Toronto and Vancouver, it’s not that it can’t happen but it’s unlikely.”

Contacting Lori VanDinther and Team 

Please contact Lori VanDinther and her team today if you’re interested in buying or selling your home. If you’re interested in learning what your home is worth, try our free home evaluation.