Category Archives: Mortgage

Major Changes to Mortgage Insurance for Second Home Buyers

Canada Mortgage and Housing Corp. has declared that they will be tightening up the types of mortgage insurance it will offer. The Crown corporation said Friday that it is going to stop offering mortgage insurance on second homes. It will also stop offering mortgage insurance to self-employed people whose income cannot be validated through traditional means.

These changes affecting those who buy second homes also means that if they currently have an insured mortgage; they will not be eligible to act as a co-borrower on another insured mortgage.The CMHC says that its second home program and its self-employed-without-third-party-income-validation programs account for less than 3 per cent of its insurance business volumes in terms of the numbers of mortgages insured. A recent press release stated:

“Given the limited use of these products, their discontinuation is not expected to have a material impact on the housing market.”

The Crown Corporation has been offering insurance on second homes since 2005. This has enabled people to buy more than one home with a smaller down payment than they would otherwise need. It has been offering insurance to self-employed people without strong income validation since 2007. CMHC will cease offering both products as of May 30.The CMHC also noted that

“self-employed Canadians can still qualify for CMHC insured financing through CMHC homeowner products with a validation of their income using traditional methods.”

Those might include a notice of assessment, audited financial statements, or unaudited financial statements prepared by an independent third party.

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Tips for Getting Pre-Approved for a Mortgage

Mortgage Pre-AppovalUnless you have a wad of cash just sitting around, chances are you’re going to need to borrow money from a lender to buy a house in Burlington. Getting a mortgage pre-approval is usually the first step and is very beneficial because it shines light on how much you can afford, ensuring that you’re not getting into a financial nightmare that you’re not prepared for. Mortgage is a huge and financial responsibility and you want to take out as much uncertainty as you can. Most real estate agents and sellers want you to have mortgage pre-approval letter before they start working with you. essential

With that being said, here is the essential list of things to know about the mortgage pre-approval.

1. Shop around for mortgage.
When starting the mortgage pre-approval process you want to talk to a few different mortgage lenders first. Even tough the deals might be relatively the same you can always fine tune. This allows you to know how much money you have to work with, helps a lot when looking for the house.

2. Get your financial state in order.
You can request and obtain a free credit report from TransUnion or Equifax credit agency which will show your credit standing and for a fee you can get a rating too. This is what lenders will see before you apply for mortgage pre-approval. You want to take care of your outstanding debts and loans and make sure you are looking good. Close down any unused debt and make sure the information is all in order and the best it can be. This will give you better rates and larger amount.

3. You don’t have to settle for one lender.
Just because you get your mortgage pre-approval done with one lender doesn’t mean that you should at the end go with them because the rate used when calculating the mortgage amount is not necessarily going to stay. At the actual time when you find the house and sign purchase contract that’s when the loan type and rate will be determined. If not satisfying look elsewhere.

4. Prepare your financial documents.
Your lender will tell you exactly what you need to bring with you when going for a mortgage pre-approval but to be prepared include: T4 slips for last 2 years, Tax returns for last 2 years, Bank statements for last few months, Recent pay stubs or other proof of income and Proof of investment income, if any.

5. Stay on top of it.
You usually have 90 days to house hunt after you get your mortgage pre-approval letter showing the amount. Sellers want to be sure the buyers financial situation is still in order and hasn’t changed drastically. If it did, notify your lender so your pre-approval is adjusted too.

When you’re ready to look for a house in Burlington, remember to call Lori VanDinther, Burlington realtor. Being a long time resident of Burlington and working in the real estate industry for over 20 year, Lori has all the necessary skills and experience to representing your best interests and help you make all the right moves!