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FAQ's
- How
much can I afford to pay for a home?
- Should
I have a home inspection and what is it?
- What
minimum down payment is needed to buy a home?
- What
is an insured mortgage?
- What
is a high-ratio mortgage?
- What
is a conventional mortgage?
- Why
use an HMG Mortgage Specialist?
- How
much will it cost to use an HMG Mortgage Specialist?
- Is
applying online secure?
- Does
paying my mortgage bi-weekly really save money or reduce
my amortization?
- Does
bankruptcy affect my ability to qualify for a mortgage?
- Will
child support and alimony affect my qualification?
- Can
I get a mortgage to purchase a home and make improvements?
- Can
I use gift funds as a down payment?
- What
is a pre-approved mortgage and how do I get one?
- Is
it necessary to wait for my mortgage to mature?
How much can I afford to pay for a home?
To determine 'affordability' your HMG Mortgage Specialist
will first need to know your Taxable Income along with
the amount of any debt outstanding and the monthly payments.
Assuming it is your principal residence you are purchasing,
they will then calculate 32% of your income for use toward a
mortgage payment, property taxes and heating costs. If applicable,
half of the estimated monthly condominium maintenance fees will
also be included in this calculation.
Second, your HMG Mortgage Specialist will calculate
40% of your Taxable Income and deduct all of your monthly debt
payments, including car loans, credit cards, lines of credit
payments. The lesser of the first or second calculation will
be used to help determine how much of your income may be used
towards housing related payments, including your mortgage payment.
These calculations are based on Lenders' usual guidelines.
In addition to considering what the ratios say you can afford,
make sure you calculate how much you think you can afford. If
the payment amount you are comfortable with is less than 32%
of your income you may want to settle for the lower amount rather
than stretch yourself financially. Make sure you don't leave
yourself house poor. Structure your payments so that you can
still afford simple luxuries.
To calculate how much of a mortgage you qualify for contact
an HMG Mortgage Specialist.
Call 604-783-6626 or click
here to locate an HMG Specialist.
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Should I have a home inspection and what is it?
A home inspection is a visual examination of the property to determine the overall
condition of the home. In the process, the inspector should be checking all major
components (roofs, ceilings, walls, floors, foundations, crawl spaces, attics,
retaining walls, etc.) and systems (electrical, heating, plumbing, drainage,
exterior weather proofing, etc.). The results of the inspection should be provided
to the purchaser in written form, in detail, generally within 24 hours of the
inspection.
A home inspection helps remove a number of unknowns and increases the likelihood
of a successful purchase.
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What minimum down payment is needed to buy a home?
A minimum down payment of 5% is required to purchase a home,
subject to certain maximum price restrictions. For instance,
in the Greater Vancouver Area the maximum purchase price with
5% down is $300,000. Any purchase price in excess of $300,000
requires a minimum of 10% as a down payment. In addition to
the down payment, you must also be able to show that you can
cover the applicable closing costs (i.e. legal fees and disbursements,
appraisal fees and a survey
certificate, where applicable).
Regardless of the amount of your down payment, at least 5% of
it must be from your own cash resources or a gift from a family
member. It cannot be borrowed.
Lenders will generally accept a gift from a family member as
an acceptable down payment provided a letter stating it is a
true gift, not a loan, is signed by the donor. Where the Mortgage
Loan Insurance is provided by Canada Mortgage and Housing Corporation
(CMHC), the gift money must be in the your
possession before the application is sent in to CMHC for approval.
Where the Mortgage Loan Insurance is provided by GE
Capital (GE), the gift money is not required to be in your
possession until the closing date.
Mortgages with less than 25% down must have Mortgage Loan Insurance
provided by either CMHC or GE.
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What is an insured mortgage?
Mortgage Loan Insurance is insurance provided by Canada Mortgage
and Housing Corporation (CMHC), a crown
corporation, and GE Capital Mortgage
Insurance Company, an approved private corporation. This insurance
is required by the Bank Act to insure lenders against default
on mortgages with a loan to value ratio greater than 75%. The
insurance premiums, ranging from .50% to 3.75%, are paid by
the borrower and can be added directly onto the mortgage amount.
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What is a high-ratio mortgage?
A High-Ratio mortgage is one where the amount to be borrowed
by way of a mortgage is greater than 75% of the purchase price,
or the appraised value, whichever is less. High-Ratio mortgages
generally require Mortgage Loan Insurance provided by either
Canada Mortgage and Housing Corporation
(CMHC) or GE Capital (GE), a private Insurer.
The Mortgage Loan Insurance premium is paid to CMHC or GE and
protects the Lender in the event the mortgage is not repaid
and the bank has to take back the property. The benefit to the
borrower is that it allows them to purchase a home with less
than 25% down payment. The insurance premium is paid by the
borrower and can be added directly onto the mortgage.
Mortgage Loan Insurance premiums range from .50% to 3.75% of
the mortgage amount and are calculated based on the overall
loan to value. For instance, borrowers with a 5% down payment,
a loan to value of 95%, would pay a premium of 3.75% while those
with a 20% down payment, a loan to value of 80%, would pay an
insurance premium of 1.25%.
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What is a conventional mortgage?
A conventional mortgage is usually one where the down payment
is equal to 25% or more of the purchase price(or appraised value
if lower), a loan to value of or less than 75%, and does not
normally require Mortgage Loan Insurance.
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Why should I use an HMG Mortgage Specialist?
HMG has a stellar
reputation in the industry and our Rest
Easy Philosophy
is our guarantee of excellent service to you.
HMG
Mortgage Specialists are able to negotiate
on your behalf, structuring your mortgage to meet the criteria
of the lenders, and therefore getting a mortgage solution
that works for you. Remember an HMG
Mortgage Specialist
works for you!
Financial Institutions
can only offer their own products to the public through
their sales force. As a result, they are not able to provide
unbiased advice or selection since by doing so they risk
losing your mortgage to a company whose product may provide
more value to you. HMG Mortgage
Specialists on the other hand, offer a
wide variety of mortgage products and services as they
deal with many lenders, not just one. Because of this they
are able to search for product from a variety of lenders,
including banks, trust companies, insurance companies,
credit unions and private lenders, for the one that offers
the best product, rate and terms for your particular needs.
Thus, they can be totally objective in their recommendations
to you.
Institutional lenders in order to gain market share from Mortgage Brokerage companies
and individual brokers, pay a finder's fee for referred business. Due to the
volume of business generated by HMG and
the excellent reputation of its Mortgage Consultants, fees are paid by the lender
and HMG Mortgage Specialists receive
fast approvals in order to gain their business. This allows the HMG
Mortgage Specialist to shop among the various financial institutions
and private lenders for the mortgage rate and product that best suits the needs
of the client and, in lmost all cases, at no cost to you the client.
When you deal directly with a Financial Institution and your mortgage is declined,
for whatever reason, you must begin the application process all over again with
another Lender. When you deal with an HMG Mortgage
Specialist the application can quickly be redirected to another
Lender, or several other lenders, for consideration.
For more information on how HMG can
help you, contact an HMG Mortgage Specialist today!
Call 604-783-6626.
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How much does it cost to use an HMG Mortgage Specialist?
The vast majority of mortgage clients do not pay a fee for the
services of an HMG Mortgage Specialist.
To gain a larger market share, the majority of financial institutions
pay a finder's fee to Mortgage Consultants and at the same time
offer them their best discounted rates and fast approvals in
order to gain their business. This allows the Mortgage Consultant
to shop among the various financial institutions for the mortgage
rate and product that best suits the needs of the client and,
in almost all cases, at no cost to the client.
In situations where traditional lenders will not approve a mortgage
because of poor credit, and where the application must be placed
with a private or non-traditional lender, a brokerage fee may
be charged to the client. This cost must always be disclosed
to the client up front and must be authorized in writing by
the client before it can be charged.
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Is Applying Online secure?
Very. Your private personal and financial information
is not sent anywhere without your express permission. Our
Apply Online form is sent directly to our email box. And
all information you provide on line is encrypted for the greatest
possible security.
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Does paying my mortgage bi-weekly really save money or
reduce my amortization?
Payment frequency is not the major factor in reducing the amortization period
of your mortgage. Principal reduction is! But what about
all the talk of bi-weekly payments taking five years off your amortization period.
Although you will save some interest making your payment bi-weekly, ultimately
it is the fact that your total payments each year are higher that results in
the significant reduction in amortization. For instance, when a client chooses
a bi-weekly payment of $500 over a monthly payment of $1000, in fact they are
choosing to pay an extra $1000 annually. In most cases a bi-weekly payment is
simply a monthly payment divided by two. That means that instead of paying $12,000
in monthly payments, you are now paying $13,000 in bi-weekly payments. That extra
$1000 is what ultimately cuts the years off your mortgage.
Give us a call
and we would be happy to go through the numbers with you
personally. For more information on how HMG can
help you, contact an HMG
Mortgage Specialist today!
Call 604-783-6626.
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Does bankruptcy affect my ability to qualify for a mortgage?
Depending on the circumstances surrounding your bankruptcy,
generally some lenders would consider providing mortgage financing.
If you are a previously discharged bankrupt the best way to
determine whether or not you qualify at this time is to discuss
your situation with an HMG Mortgage
Specialist. HMG
has many lenders to approach based on your circumstances. For
more information on how HMG
can help you, contact an HMG Mortgage
Specialist today! Call 604-783-6626.
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How will child support and alimony affect my mortgage qualification?
Where Child Support and Alimony are paid by you to another person,
generally the amount paid out is deducted from your total income
before determining the size of mortgage you will qualify for.
Where Child Support and Alimony are received by you from another
person, generally the amount paid may be added to your total
income before determining the size of mortgage you will qualify
for, provided proof of regular receipt is available for a period
of time determined by the lender.
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Can I get a mortgage to purchase a home and make improvements?
Subject to qualification, yes. In fact, even purchasers with
5% down may qualify to buy a home and make improvements to it.
For high-ratio financing, both Canada Mortgage and Housing Corporation
and GE Capital, insured mortgages
are available to cover the purchase price of a home as well
as an amount to pay for immediate major renovations or improvements
that the purchaser may wish to make to the property. This option
eliminates the need to finance the renovations or improvements
separately. Some conditions apply.
Where the improvements are cosmetic, the Mortgage Loan Insurance
Premium is unchanged from the standard schedule. Where the improvements
are deemed to be structural, the Mortgage Loan Insurance Premium
is increased by .50% over the standard schedule. For information
on Mortgage Loan Insurance Premiums see High-Ratio
Home Mortgage Financing.
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Can I use gift funds as a down payment?
Most lenders will accept down payment funds that are a gift
from family as an acceptable down payment. A gift letter signed
by the donor is usually required to confirm that the funds are
a true gift and not a loan. Where the mortgage requires Mortgage
Loan Insurance, Canada Mortgage and Housing Corporation requires
the gift money to be in the purchaser's possession before the
application is sent in to them for approval. Where Mortgage
Loan Insurance is provided by GE Capital
this is not a requirement. See 'What is Mortgage
Loan Insurance?' for further information.
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What is a pre-approved mortgage and how do I get one?
A Pre-approved Mortgage provides an interest rate guarantee
from a lender for a specified period of time (usually 60 to
90 days) and for a set amount of money. The pre-approval is
calculated based on information provided by you and is generally
subject to certain conditions being met before the mortgage
is finalized. Conditions would usually be things like 'written
employment and income confirmation' and 'down payment from your
own resources', for example.
The easiest way to get a Mortgage Pre-approval is by calling
your HMG Mortgage Specialist.
You will be asked some questions to determine your financial
situation and then your HMG Mortgage
Specialist will calculate the size of mortgage
you qualify for, using this information. With your authorization,
they will then proceed with arranging a Pre-approved Mortgage
for you if you are planning to buy property in the near future.
Most successful Real Estate Professionals will want to ensure
you have a Pre-approved Mortgage in place before they take you
out looking for a home. This is to ensure that they are showing
you property within your affordable price range.
In summary, a Pre-approved Mortgage is one of the first steps
a Home Buyer should take before beginning the buying process.
Contact an HMG
Mortgage Specialist for further information.
Call 604-783-6626.
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Is it necessary to wait for my mortgage to mature?
No, have an HMG Mortgage Specialist
begin shopping around for an interest rate at least 90 days
before your mortgage matures. Lenders will often guarantee an
interest rate to you as much as 90 days before your mortgage
matures. And, as long as you are not increasing your mortgage,
they will cover the costs of transferring your mortgage too.
This means a rate promised well in advance of your maturity
date, thus eliminating any worries of higher rates. And if rates
drop before the actual maturity rate, the new lender will usually
adjust your interest rate lower as well.
Most lenders send out their mortgage renewal notices offering
existing clients their posted interest rates. The rate you are
being offered is usually not the best one. Always ask an HMG
Mortgage Specialist to investigate the possibility
of a lower interest rate with the lender or another lender.
If you don't you may end up paying a much higher interest rate
on your renewing mortgage than you need to.
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