Get CASH to break your fixed rate mortgage

If you are wondering about the recent drop in variable mortgages, there might be a great solution for you available.   Now, you can get some cash on closing day to help you cover some of the mortgage penalty you may be facing, if you break your fixed mortgage prematurely.

Here is what you can expect to receive on a cash back, if your mortgage balance is $300,000:

Mortgage Amount	$300,000.00
Mortgage Rate	120 day closing	Cashback on closing day
2.20	0.72%	$2,160.00
2.15	0.60%	$1,800.00
2.10	0.48%	$1,440.00
2.05	0.36%	$1,080.00
2.00	0.24%	$720.00
1.95	0.12%	$360.00
1.90	3.80%	$0.00
Illustration above is based on a $300,000 mortgage balance.
Mortgage rate listed here is effective on June 11, 2010
Note that mortgage rates are subject to change without notice This blog post was submitted by Elizabeth Blair on June 11, 2010.  Elizabeth is a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario.  Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area. You can contact Elizabeth directly by phone at (905) 510-5785 by email at eblair@mortgageedge.ca or you visit her websites at: http://www.missmortgage.ca http://www.burlington-mortgage.ca http://www.oakville-mortgage.com http://www.streetsville-mortgage.ca Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca Lic # M08005880 / Brokerage Lic # 10680 Head office is located at:  15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.

What is a Covenantor or Guarantor on a mortgage?

Here is a description of the covenantor and guarantor position, as it relates to a mortgage application.

The key difference between a “covenantor and a guarantor” are:

Covenantor:   is on property title, and is also on the mortgage application.

Guarantor:    is NOT on property title, but is on the mortgage application.

Both of the above (depending on what position is chosen) would be on the mortgage application.  Covenantor or Guarantor are added onto the application and would have to disclose all the same information just as the primary applicant(s) would, for example:

1. legal names

2. address

3. disclosure of all assets owned, mortgage, value of home, etc.

4. disclosure of all debts held

5. credit report must be retrieved

6. employment history

7. employment income

From the mortgage lender’s perspective, the covenantor or guarantor position, actually helps to give some “strength” to the application, however, the covenantor or guarantor’s income is not used to actually “Qualify” the primary mortgage applicants.

It is important for the covenantor or a guarantor to understand that if the primary borrower(s) should ever default on the mortgage, the covenantor or the guarantor would be financially responsible to pay the mortgage payment(s) to avoid issues which would arise from non-payment of a mortgage obligation.   It is also important to note that the covenantor or guarantor’s financial status is assessed to determine whether they could feasibly be able to carry the mortgage application, in the event that the primary applicant(s) could not continue making the mortgage payments.

This article was written by Elizabeth Blair on June 11, 2010.  Elizabeth is a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario.  Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or you visit her websites at:

http://www.missmortgage.ca

http://www.burlington-mortgage.ca

http://www.oakville-mortgage.com

http://www.streetsville-mortgage.ca

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca

Lic # M08005880 / Brokerage Lic # 10680

Head office is located at:  15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.

Fed up with telemarketing calls!

Fed up with telemarketing calls so I finally did it…….. I picked up the phone and called the CRTC to make a complaint about an unsolicited telemarketing fax I received last night on my fax machine. A telecom company decided to fax me one of their marketing ads which annoyed me.

A few years ago, the CRTC (Canadian Radio Television and Telecommunications Commission) set up the “National Do-not-call Registry” in Canada which is an online tool where individuals can register their telephone numbers on this registry. This tool became available after Canadian Government passed Bill C-37 and it became law empowering CRTC to issue fines on those who violated the do-not-call rules. I remember when I first heard about this tool, I pounced on the opportunity immediately to register my numbers.

Once listed on the registry, a telemarketer should not contact you to solicit your business or money. Now there are some exceptions on those who can call you and these are charities, newspapers, political parties seeking your support, or a business where you already have had recent consumer transactions. Once you register your telephone number, it takes 31-days, after you register your telephone number, and after the 31-day period, telemarketing companies, other than those listed above, cannot call your number and if they do, they can face fines if you register a valid complaint. Note that the registration of your telephone number is only valid for three years, so after three years, you should call the National do not call registry to re-register your phone number.

To register your number on the registry in Canada, go to this website:

https://www.lnnte-dncl.gc.ca/index-eng

So the process was easy. I called 1-866-580-3625 begin_of_the_skype_highlighting              1-866-580-3625      end_of_the_skype_highlighting begin_of_the_skype_highlighting 1-866-580-3625 begin_of_the_skype_highlighting              1-866-580-3625      end_of_the_skype_highlighting end_of_the_skype_highlighting and spoke to a very helpful lady, who asked me a few questions:

1) what number did the telemarketer call me at?

2) what is the name of the business, and the phone number of the business that called me?

3) what was the date that the telemarketer contacted me?

And, to top it all off….I received a faxed document – perfect printed “evidence” !!!

She then gave me a unique ID code number, which I was to write across the fax transmission I received, and then she asked me to fax that document I received to this number: 1-888-362-5329 begin_of_the_skype_highlighting              1-888-362-5329      end_of_the_skype_highlighting begin_of_the_skype_highlighting 1-888-362-5329 begin_of_the_skype_highlighting              1-888-362-5329      end_of_the_skype_highlighting end_of_the_skype_highlighting. She then advised me that any future calls or faxes I received from telemarketers, must be called in and registered separately as they assign a unique ID code to each call or fax……….. Easy!

We have family, in the United States, and we were told that the Federal Communications Commission (FCC) Do Not Call Registry, has hefty penalties for telemarketers who do not comply. I found a good example of that — AT&T was fined $780,000 for failing to comply with the Do Not Call Registry. Wow, $780,000!!!……don’t mess with the US or at least don’t mess with the US FCC!! Here is a link to the article – I’m not sure if the fine was ever collected, but I hope it was.

http://www.allbusiness.com/legal/consumer-law-telemarketing-regulation-do-not/10221784-1.html

Somehow the CRTC in Canada is just a little weak in the area of imposing penalties to telemarketers who call those who have registered their numbers with the do-not-call list. Canadian companies, who still wish to bother us with their telemarketing calls, have found ways to get around the rules by outsourcing their telemarketing calls to overseas companies…..now that I have followed through on the complaint process, I will be sure to ask some questions to find out who the Canadian company is and what their local number is, so that I can follow through with a formal complaint.

The CRTC in Canada has, what I would consider, “wimpy” penalties especially since consumers need assurance that offending companies really do get the message and avoid calling those who do not wish to be called.   For example, in Canada, if found guilty, an individual can be fined $1,500 whereas a corporation can be fined up to $15,000 for each violation.   It seems the number of fines issued is also very minimal relative to the actual number of reported telemarketers in violation – see this link:

http://www.crtc.gc.ca/eng/dncl/status-etape.htm

Sorry fellow sales friends, but I’m going to have to tell you that its not the way we should be getting business anymore.  Too many people are just simply fed up with telemarketing calls.

© 2010 This blog was written by Elizabeth Blair at Mortgage Edge on March 23, 2010. Elizabeth Blair services mortgage clients primarily in Mississauga and all over the Greater Toronto area You can contact Elizabeth directly by phone at (905) 510-5785 begin_of_the_skype_highlighting              (905) 510-5785      end_of_the_skype_highlighting begin_of_the_skype_highlighting (905) 510-5785 begin_of_the_skype_highlighting              (905) 510-5785      end_of_the_skype_highlighting end_of_the_skype_highlighting by email at eblair@mortgageedge.ca or you visit her website at:

http://www.missmortgage.ca

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca Lic # M08005880 / Brokerage Lic # 10680. Head Office: Park Place Corporate Centre, 15 Wertheim Court, Suite 210, Richmond Hill, ON, L4B 3H7, Canada.

Changes to Insured Stated Income programs

Borrowing Guidelines for Insured Stated Income Programs in Canada are about to change

The borrowing guidelines for insured Stated Income Programs are about to undergo some major changes and these changes will be implemented effective April 9, 2010.

The changes are being announced by CMHC (also known as Canada Mortgage and Housing Corporation).    CMHC’s changes, as well as those announced by Finance Minister Jim Flaherty effective on April 19, 2010 are all attempts to help cool off the heated housing market which is now being driven by record-low interest rates.   More importantly, these new measures are required to protect borrowers from taking on more debt than they can afford especially as interest rate hikes are imminent.  While Canada still allows Stated Income programs here, they are becoming very rare in the U.S.  The massive number of defaults and foreclosures reported by the U.S. after the 2008 credit crisis were attributed mostly to Stated Income programs that were used to place under-qualified borrowers into mortgage loans that they could not afford.

While Canadian lenders continue to use the Stated Income programs here, customized for commissioned and self-employed borrowers, CMHC will now be scrutinizing those same applications using tighter underwriting criteria making the CMHC Self-Employed mortgage insurance program a little harder to access.

What exactly does Stated Income mean?

Stated Income means exactly that.   When a mortgage application is created, for a self-employed or commissioned applicant, and the entire income amount is not verifiable in traditional documents, for example a Notice of Assessment, the applicant may apply under the Stated Income program to allow an income adjustment to help qualify them for a home purchase or re-finance.   A real example might look something like this:

Mr.Thomas works as a Systems Analyst in Toronto.  He is purchasing a house based on his earnings alone as his wife is currently not working.  He earns $77,000 gross annually and his employment status is considered self-employed as he works as an independent contractor and bills the company directly for his time.  He is not on payroll.  He has worked in various departments for this same government organization, as a Systems Analyst, for the last two years.   To buy the home they want, this couple would need an income of $85,000 to qualify for the purchase.   On a traditional mortgage application, the couple would be declined and would not be able to purchase the home.   However, by utilizing the Stated Income program, the couple can qualify to buy this home with a 5% down payment and the income placed on the application would be “stated” on the application at a higher amount.  The couple has no other savings or funds available to them.  The income to qualify the applicants, would be entered at the amount of $85,000 instead of his actual income of $77,000, in order to qualify the buyers.

Here is an outline of the changes that will be implemented on any applications called Stated Income applications which pass through CMHC as an “insured” mortgage AFTER April 9, 2010 and how these changes would affect the particular applicants described above:

1.   Downpayment:  those who are purchasing a home, and who have applications classified as a Stated Income application, will be required to put down 10% rather than the 5% minimum required today.

Mr.Thomas and his wife, after April 9, 2010 must have a down payment equal to 10% of the purchase price, along with enough funds to cover closing costs.

2.  Tenure:   those who have been working in the same business for greater than three years, would not be eligible for the Stated Income program and therefore those in this category would have to provide proof of their income, for example, a Notice of Assessment.

Because Mr.Thomas had only been working as a Systems Analyst for the past two years in total, they could still apply under the Stated Income program and be eligible.   Had Mr.Thomas been working three years and 6 months, as a Systems Analyst, they could not qualify for the home they wanted.

3.  Documents:    documents will be requested and viewed by the lender to help determine the length of self-employed which are not always requested today.   The documents a lender may ask for:    a business license, proof of GST registration, articles of incorporation (if incorporated).

4.  Commission:     those who are collecting commission would no longer be eligible for the Self-Employed program.

Mr.Thomas is not paid on a commission basis, therefore, after April 9, 2010, he could still utilize the Stated Income program.

5.  Limits:   a re-finance will be limited to 85% loan-to-value instead of the current limit of 90% used today.

If Mr.Thomas decides to re-finance his home, in the coming years, while he is within the insured status range and assuming self-employed income is still their primary income, they will only be able to re-finance up to 85% of the value of their property.

It is important to mention that these program changes only affect those mortgages that are “insured” by the lender therefore, those mortgages that are not insured, could be reviewed differently from lender to lender and each lender would specify their underwriting criteria on a case-by-case basis.

© 2010 This article was written by Elizabeth Blair at Mortgage Edge on March 11, 2010. Elizabeth Blair services mortgage clients primarily in Mississauga and all over the Greater Toronto area

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or you visit her website at:    http://www.missmortgage.ca

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca

Lic # M08005880 / Brokerage Lic # 10680.  Head Office: Park Place Corporate Centre, 15 Wertheim Court, Suite 210, Richmond Hill, ON, L4B 3H7, Canada.

Value of Home Improvements

You may be thinking about those spring-time projects that you will need to tackle this year, like landscaping the garden, rebuilding a patio or fence, changing older windows and doors, a new roof, or even remodeling your basement, kitchen or bathroom.  If you tune in to some recent popular TV programs like “Extreme Makeover – Home Edition”, you will surely catch the home makeover bug.    If you live in a freehold house, you should be spending an average of 1% of your home value annually, on maintenance, just to keep it in good repair and to prevent it from declining in value, according to “Home Buying for Dummies” by Eric Tyson and Ray Brown.

Renovating a home, may also be an important consideration for you in 2010, if you are thinking of listing your home for sale.  Remember that the right renovations can help you to maximize the resale value of your home.    The renovation payback statistics were extracted directly from the Appraisal Institute of Canada’s website and the data is current as of January 2010:

To see the table, please click on the link:

renovations table

You can check your renovation investment plans using the Appraisal Institute of Canada’s on-line tool.   The name of this tool is RENOVA and it is an excellent resource for homeowners.   You may visit the site by going to this website:

http://component.aicanada.ca/e/resourcecenter_renova_all.cfm

Remember that the referenced website link is only a guide, and you should always carefully consider that proper appraisal values and returns can be provided by an accredited appraiser holding a CRA or AACI designation.  It is also important to mention that an appraiser will also assess other factors, about the home to complete accurate appraisal results, for example, the neighborhood, recent real estate activity, lot, location, etc.

Canada AM has been running an informative real estate market series that commenced on January 25, 2010.  Featured on Tuesday’s program was Mr. Ed Saxe of Edjline Appraisal Services.  Mr. Saxe is a certified Canadian Residential Appraiser as well as the President of the Ontario Association of the Appraisal Institute of Canada.    Mr. Saxe discusses that the number one investment returns come from kitchen and bathroom renovations, however, as a homeowner, he advises that discretion is required when spending.   Mr. Saxe advises homeowners to carefully consider just how much they are spending and where they are spending.   For example, he mentions that you would not be wise to spend $50,000 on a kitchen renovation if you are living in a home that is only worth $200,000.  A home renovation should be relative to the market and the neighborhood in which you live.   You can view the current live video clip at the following link:

http://watch.ctv.ca/news/top-picks/added-value/#clip259603

This blog was written by Elizabeth Blair of Mortgage Edge.

Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or you visit her website at:    http://www.missmortgage.ca

Lic # M08005880 / Brokerage Lic # 10680

What is a “closed” or “open” mortgage?

When you are shopping for a mortgage, you may hear the terms, CLOSED or OPEN mortgage.    Let me explain the difference between these two options so you can determine which one is better for you.

OPEN MORTGAGE An “open” mortgage means that the mortgagor (the borrower) can pay the mortgage off, fully, at any time, without a mortgage penalty.   A fully open mortgage is suitable for the following types of borrowers:

a) a property investor buys a property and has intention of selling it in a very short timeframe;

b) a borrower sets up this mortgage because they are expecting a large sum of money (for example, an inheritance or a work bonus) and will use that money to pay off the full mortgage loan amount;

c) a borrower who might be required to move on notice (perhaps due to a work relocation requirement) and would need to pay the mortgage off in full when the house sells.

d) you receive regular large bonus amounts, as an employee of your company, and you wish to apply these amounts to your mortgage anytime without the restrictions that might come on a lender’s regular pre-payment terms.

e)  or perhaps you do not want to be locked into any term, for your mortgage loan.

Note that, the mortgage rates, for fully OPEN mortgages are higher than those given for  “closed” mortgages.   For example, effective today November 24, 2009, a fully open variable mortgage rate, is available at Prime Rate Plus 0.80% = 3.05%

CLOSED MORTGAGE A closed mortgage means that the mortgagor (the borrower) is given a contract “term”.     If the borrower breaks the mortgage, before that contract term is up (known as the renewal date), the borrower must pay the mortgagee (lender) a full three months of interest penalty to get out of the contract (or IRD penalty).    Variable mortgage contract terms are available for 3 year terms and 5 year terms, right now.   A closed variable, 5 year term, mortgage rate is priced right now at between Prime Rate Minus 0.10% = 2.15% up to Prime Rate Plus 0.10% = 2.25%.   A closed variable, 3 year term, mortgage rate is priced at Prime Rate Minus 0.25% = 2.00%.

So you can see that there are specific reasons why a borrower would choose a closed mortgage over an open mortgage.

This post was written by Elizabeth Blair on November 24, 2009, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario.  Elizabeth services mortgage clients all over the Greater Toronto Area.

You can contact Elizabeth by phone:  (905) 510-5785

Or email:    eblair@mortgageedge.ca

Visit her website at:     http://www.missmortgage.ca

Elizabeth Blair is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca

Lic # M08005880 / Brokerage Lic # 10680

Head office is located at:     15 Wertheim Court, Suite 210, Richmond Hill, Ontario, L4B 3H7

What is a bridge loan?

Sometimes when you buy a home, the closing date for the home you are selling does not match the closing date of the house you are buying.   Some of the typical reasons for a difference in closing dates might be:   you want to get some renovations completed on the home being purchased before moving into it or perhaps you could not get the seller to give you the closing date that you really wanted.  So if the closing date of the home you are buying is before the closing date of the home you have sold, you will need a bridge loan.

Let’s use a real example so you can understand how a bridge loan amount is derived:

Price of the home being purchased:     $450,000

Less:     Amount being mortgaged:    $360,000

Less:     Deposit you give to the Realtor:   $10,000

Equals:     $80,000   Bridge Loan amount

The bridge loan amount is really your total down payment, less your deposit because the lender is advancing the rest of the mortgage money on the closing date for the home you are purchasing.

Using the above example, and some real dates, here is how the interest cost is calculated, for this particular bridge loan amount:

Client is buying a new house – closing date = April 30, 2009

Current home is not closing until = June 25, 2009

Clients need a Bridge Loan to cover them for 56 days until current house sells.  Bridge Loan amount required is $80,000.   Lender’s interest rate = *prime rate (2.25%) plus 4%.

Bridge loan  $80,000   X   0.0625 (interest) =  $5,000

$5,000  divided by   365 days =   $13.6986 (per diem cost)

$13.6986   X   56 days =  $767.12

For a Bridge Loan advance that is greater than a certain amount, and is greater than 45 days, the lender will sometimes ask that the bridge loan be secured by way of a collateral mortgage on the property being sold.   If a collateral mortgage is required, lawyers will often charge extra to do this (estimated at $500 and up).  Some lenders will also charge a bridge loan “set-up fee”, and some lenders do not.   Remember also that a property sale must be firm before a lender will arrange a bridge loan for the borrower(s).  And finally, lenders will not advance more than 90% of the value of the property being sold.

This article was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario.   Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.

You can contact Elizabeth directly by phone at (905) 510-5785

by email at eblair@mortgageedge.ca

or you visit her website at: http://www.missmortgage.ca

Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca Lic # M08005880 Brokerage Lic # 10680 Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.