Raoul Carriere |  |  |
Raoul Carriere | | |
     
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Mortgage FAQS What is a mortgage consultant? Very much like an independent insurance broker, I act as a middle person between you and the lender. I search the marketplace for the best mortgage at the best rate. With good credit, there is no charge to you for my services. Why use a mortgage consultant? Today, just about anybody can get 1% off a typical five-year mortgage from a mortgage broker like me. Five years ago about 60% to 65% of consumers were not asking for a discount on their mortgage rate but home buyers have become a more sophisticated lot since then. Common customer queries for a mortgage at a bank or trust company only results in their limited choices at non-negotiated rates. I, on the other hand, negotiate on a regular basis with over 60 different financial institutions, giving you hundreds of choices and better rates. Since I am in daily contact with lenders, I am in position to know where the best rates are available. Besides rates, why use a mortgage consultant? Unlike some financial institutions that make you feel as though they are doing you a favour, I know that it is you who grants a mortgage on your property to the lender. I do my utmost to maintain an informal, relaxed discussion while we obtain the information necessary to begin the process of finding you the best mortgage available. In other words, I make your experience stressless. What does compounding do and why should I ask my lending institution if their mortgage is calculated monthly or semi annually? Some lending institutions will offer to match the great mortgage interest rate that you have found. When they only match the interest rate everything looks equal. The next question you should ask is, "how are you compounding"? Why? Some institutions will switch from compounded semi annually to compounded monthly in order to match the rate. Does it make a difference? The difference may seem small but over a lengthy mortgage term it can cost you extra money and lengthened payment time. For example, a mortgage of $150,000 compounded semi annually at a rate of 5.4% amortized over 25 years has a monthly payment of $906.87. The same 5.4% compound monthly increases your payment to $912.19. This payment translates into a semi annual rate of more than 5.46%. In dollar value this would cost you $5.32 more per month, $63.84 per year and over a five year mortgage $319.20 plus extra interest on this money. This extra cost can add months to your mortgage. A mortgage broker is there to make certain that you get the best mortgage rate for your circumstances. Mortgage brokers work for their clients and are impartial when it comes to finding the best calculated rate offered by a financial institution. The services of a mortgage broker will inevitably leave more money in your pocket. What information is required for a mortgage application? The lender requires enough information about you to determine whether or not you are able to repay the mortgage loan. You must provide the following:
What types of mortgages do you arrange? I am happy to arrange all of your mortgage needs such as:
What is the advantage of a pre-approved mortgage? When mortgage interest rates are uncertain, it's very important to get a pre-approved mortgage before you start house hunting. The purpose of a pre-approval is to confirm in writing, the maximum amount of money on which you can rely for mortgage purposes. After going through your financial information, the lender will pre-approve you for a specific mortgage amount for a period of time. If the mortgage interest rate drops before the lender advances the funds for a mortgage, you are given the lower rate. If the rates rise, you are given the rate at the time you had the mortgage pre-approved. A pre-approval also allows you to narrow the search for a home to the exact amount of mortgage you can expect to have. How frequently should I make my mortgage payments? Monthly is a common choice but you can also pay weekly or bi-weekly. For example, a $100,000 mortgage with an 6.5 percent interest rate requires monthly payments of $669.82 over 25 years. However, if you changed your payment schedule to once every every week, you would pay weekly payments of $167.46 and you would pay off your mortgage in 20.75 years instead of 25 years and save $20,146.94 in interest. If you changed your payment schedule to once every two weeks, you would pay $334.91 each two weeks and you would pay off your mortgage in the same 20.75 years instead of 25 years and save $19,908.32 in interest. I can show you the difference in payment schedules for your mortgage and you decide which one works best for you. What is Central Mortgage and Housing Corporation Insurance? A conventional mortgage requires a down payment of at least 25 percent of the lending value. If the down payment is less than 25 percent, CMHC insurance is required. This insurance only benefits you in that you may qualify for a lower down payment. The insurance is protection for the bank. Should you default the bank will be paid by CMHC for the amount that you are in default in excess of their 75% mortgage and CMHC will file suit against you for the money they have had to pay to the bank. You are charged a premium which increases in 5 percent increments over the 75 percent of the conventional mortgage such as if you need 80 percent, 85 percent, or up to 95 percent. When would you need Central Mortgage and Housing Corporation Insurance? If you do not have the minimum 25 percent downpayment Central Morgage and Housing Corporation requires you to put down, or if repairs on the new home are required this frees up some of the downpayment for that purpose. If willing to pay the price, all buyers qualify. Up to 95 percent of lending value is available. Maximum purchase in lower mainland for the 95 percent is $250,000 and is somewhat lower elsewhere in the province. Premium can be included in the mortgage. This must be your primary residence. The down payment can be a family gift but besides a down payment of 5 percent you must have 1.5 percent available for completion funding. What is property purchase tax exemption for first time home buyers? This tax exemption is only available to applicants who are Canadian citizens, residing in British Columbia for at least the last 12 months,and who have not previously owned an interest in a principal residence. A down payment of 30% can not be exceeded or the exemption is lost. The maximum purchase price in the lower mainland British Columbia is $275,000 and in the rest of British Columbia it is $225,000. The newly purchased home must be your primary residence for at least one year and the mortgage term must be more than one year. Should the property be sold before one full year is completed, the tax exemption becomes void and becomes immediately payable. If only one of a couple qualifies, a 50% exemption is possible. 11 - 15243 - 91st Avenue Surrey, British Columbia, Canada V3R 8P8 Telephone: (604) 581-6633 Fax: (604) 581-6655 Cell: (604) 644-7379 E-mail: raoul@mortgages4bc.com This web site designed & maintained by The Dogwood Mall  |