Just doing a little follow from a previous blog ( http://gitersos.blogspot.com/2010_10_01_archive.html ) in regards to how collateral mortgages are not the best as another scenario came up again today.
Clients bought a town home for $320k last year. I did not do this mortgage. They went to their Credit Union. I received their Land Title Form B today and saw that this CU registered a value of $700,000. That's right 2.5 times more than what they bought the place for.
Now the CU or bank will tell you it's a good thing as you can pull money out later on without having to go through a lawyer. Well the blog post from previous is one example of why it's not a good thing. I know you may think this will never happen to you, however, you NEVER know. It's best to avoid the situation up front.
The other reason why I don't like them is that the only way out of a collateral mortgage is buy doing a full reregistration of your title, meaning lawyer costs of up to $750-800. If your mortgage is up for renewal your ‘free agency’ is no longer, as you can not do a straight transfer to a new lender without paying new legals. (straight transfer on renewals the new lender will pick up the small cost) Meaning your current lender may not be inclined to give you the best deal as they know you’re stuck and would not want to pay the new lawyers. Their hands are deeper in your pocket!
--------------
Support brokers. We're needed in this industry to let the consumers know what's out there and how the banks are trying to find ways to get more out of you. With out us and broker only lenders we would ALL still be paying posted rates. We're competition to the big banks.
Monday, March 28, 2011
Tuesday, March 15, 2011
Credit scores
Here's a break down of how credit is calcculated
35% is based on your payment history -
Do you have a record of late credit card payments, delinquencies or bankruptcies? The more late payments on record and the more recent they have been, the more negatively they will affect your score.
30% is based on the amounts you owe -
This not only includes how much you owe but how much of your available credit you have used. If you consistently use 75-80% or more of your available credit (for example, keep your credit cards at or near the maximum), your score will be lower than if you are using a small percentage of the credit available to you.
15% is based on the length of your credit history -
How long you have had accounts and credit, factor into your credit score. Credit cards that you have held for a long time give you a higher score than new credit cards.
10% is based on how much new credit you have requested -
If you have requested a lot of new credit in a relatively short period of time, you are considered to be a higher risk than someone who has applied for less credit.
10% is based on the types of credit you use -
This includes mortgages, loans, and credit cards. If more of your debt is high interest credit cards, you may be considered a higher risk than someone whose biggest debt is their mortgage.
35% is based on your payment history -
Do you have a record of late credit card payments, delinquencies or bankruptcies? The more late payments on record and the more recent they have been, the more negatively they will affect your score.
30% is based on the amounts you owe -
This not only includes how much you owe but how much of your available credit you have used. If you consistently use 75-80% or more of your available credit (for example, keep your credit cards at or near the maximum), your score will be lower than if you are using a small percentage of the credit available to you.
15% is based on the length of your credit history -
How long you have had accounts and credit, factor into your credit score. Credit cards that you have held for a long time give you a higher score than new credit cards.
10% is based on how much new credit you have requested -
If you have requested a lot of new credit in a relatively short period of time, you are considered to be a higher risk than someone who has applied for less credit.
10% is based on the types of credit you use -
This includes mortgages, loans, and credit cards. If more of your debt is high interest credit cards, you may be considered a higher risk than someone whose biggest debt is their mortgage.
Friday, March 4, 2011
I'm getting tired..
I'm getting tired of all these articles in the news lately saying we need to change the mortgage rules and make it harder to qualify etc.
This is absolute nonsense. Why does the government not want people to have an appreciating asset, yet they don't seem to come down on credit card companies, or banks that are giving out lines of credits.
Just the other day I was sitting at home and a guy from my local CIBC called. 'Hi Christos this is so and so from the Langley CIBC, I'm calling today to let you know that you're approved for a LOC and an increase in your credit card'
I started to laugh a little and said 'with consumers across Canada being upwards to 150% in debt to their household income, you're calling people trying to get more money out to them. Thanks but no thanks I don't need anything.' He in turn laughed back and said 'are you sure you don't want it, maybe for a rainy day or something.'
What I'm trying to say is that we do NOT need more stringent mortgage rules. They're tough as it is already. The market has been strong here in CDN and with the insurance, CMHC Genworth and Canada Guaranty, lenders are protected on higher risk files. (CMHC being the most commonly used and it's a crown corp. go figure! This is for a whole other discussion!)
CDN needs to come down harder on the unsecured debt and the credit card companies. These are where the issues lie. I've had, in the last year, a few people come to me saying I need a refinance, I've racked up credit card debt and they don't seem to stop giving me more. How much debt was there? Over $100k!
Here's a quote I found and it's completely true: "Regulators need to wake up & see that unsecured debt is the issue. I have clients that barely qualified for their mortgage, but the bank had no problem whatsoever in giving them an unsecured line of credit for $50,000 after their purchase closed."
I've had my rant for today!!
This is absolute nonsense. Why does the government not want people to have an appreciating asset, yet they don't seem to come down on credit card companies, or banks that are giving out lines of credits.
Just the other day I was sitting at home and a guy from my local CIBC called. 'Hi Christos this is so and so from the Langley CIBC, I'm calling today to let you know that you're approved for a LOC and an increase in your credit card'
I started to laugh a little and said 'with consumers across Canada being upwards to 150% in debt to their household income, you're calling people trying to get more money out to them. Thanks but no thanks I don't need anything.' He in turn laughed back and said 'are you sure you don't want it, maybe for a rainy day or something.'
What I'm trying to say is that we do NOT need more stringent mortgage rules. They're tough as it is already. The market has been strong here in CDN and with the insurance, CMHC Genworth and Canada Guaranty, lenders are protected on higher risk files. (CMHC being the most commonly used and it's a crown corp. go figure! This is for a whole other discussion!)
CDN needs to come down harder on the unsecured debt and the credit card companies. These are where the issues lie. I've had, in the last year, a few people come to me saying I need a refinance, I've racked up credit card debt and they don't seem to stop giving me more. How much debt was there? Over $100k!
Here's a quote I found and it's completely true: "Regulators need to wake up & see that unsecured debt is the issue. I have clients that barely qualified for their mortgage, but the bank had no problem whatsoever in giving them an unsecured line of credit for $50,000 after their purchase closed."
I've had my rant for today!!
Tuesday, March 1, 2011
On title and not on the mortgage?
As this came up again today and is putting an extra damper on all parties involved, I thought I'd write a little blog about it.
When you're purchasing a home and you're married, have a common law, or a partner that you'd like to put on title remember one thing. They can not just go on title at the time of completion.
You can not be on the asset (the home) and not be on the liability (the mortgage). The opposite is allowed. This would be called a guarantor or co-signor.
You also want to make sure that you're mortgage approval and purchase contract is written up with the other persons name on it. This can cause big problems when you're about to complete as I'm experiencing today. All the documents need to be rewritten and there needs to be an addendum drawn up for the sellers to sign. They may not always be willing, which I've experienced.
Moral of the story, be up front right from the start and be certain of whom will go on title so no major hiccups happen later on.
When you're purchasing a home and you're married, have a common law, or a partner that you'd like to put on title remember one thing. They can not just go on title at the time of completion.
You can not be on the asset (the home) and not be on the liability (the mortgage). The opposite is allowed. This would be called a guarantor or co-signor.
You also want to make sure that you're mortgage approval and purchase contract is written up with the other persons name on it. This can cause big problems when you're about to complete as I'm experiencing today. All the documents need to be rewritten and there needs to be an addendum drawn up for the sellers to sign. They may not always be willing, which I've experienced.
Moral of the story, be up front right from the start and be certain of whom will go on title so no major hiccups happen later on.
Tuesday, February 15, 2011
Benchmark rate at 5.44%
If you want a 1 to 4 year fixed term or a variable you're qualifying at 5.44% as of yesterday morning.
This is a high rate and does put a variable, my favourite product, out of touch for some people.
If you want a 5 year fixed or higher i.e 7 or 10 year, then you qualify on the contract rate. Which today is in around the high 3's to low 4's. Big difference from the 5.44%
If you are going conventional, putting 20% or more as a down payment, the non bank lenders will allow you to still qualify for the 1-4 and variable at their discounted 3 year rate. Which is mid to low 3's today.
This with the new changes to 30 year amortization, could definitely put some people out of the market.
I'm only sure better times are ahead. Once confidence is back, a little more lax on lending policies will follow.
This is a high rate and does put a variable, my favourite product, out of touch for some people.
If you want a 5 year fixed or higher i.e 7 or 10 year, then you qualify on the contract rate. Which today is in around the high 3's to low 4's. Big difference from the 5.44%
If you are going conventional, putting 20% or more as a down payment, the non bank lenders will allow you to still qualify for the 1-4 and variable at their discounted 3 year rate. Which is mid to low 3's today.
This with the new changes to 30 year amortization, could definitely put some people out of the market.
I'm only sure better times are ahead. Once confidence is back, a little more lax on lending policies will follow.
Friday, February 4, 2011
A rate hike seems imminent
Looks like the days of under 4% five years are going away soon. The bond yields keep creeping up which means the banks need to keep their margins in tact to keep profits up.
This can be a good thing for some and a not so good thing for others.
The reason it can be a good thing for some with a fixed rate is, if you're looking to make a change in respect to your mortgage, i.e refinance or move, then you can look at getting yourself booked with a rate right now for 120 days, wait for rates to go up, and then order a discharge statement at the lawyers and there you go, you've just decreased your penalty and received the lower pre rate increase interest rate!
The bad news is, if you're wanting to get in the market in the Spring, you'll have a possible harder time obtaining the home you want. Due to higher rates and the cut from a 35 year amortization to a 30 year amortization.
Best thing is to get a rate hold now for 120 days. Even if you're not 100% certain you'll be ready in that time frame.
Call me today!
This can be a good thing for some and a not so good thing for others.
The reason it can be a good thing for some with a fixed rate is, if you're looking to make a change in respect to your mortgage, i.e refinance or move, then you can look at getting yourself booked with a rate right now for 120 days, wait for rates to go up, and then order a discharge statement at the lawyers and there you go, you've just decreased your penalty and received the lower pre rate increase interest rate!
The bad news is, if you're wanting to get in the market in the Spring, you'll have a possible harder time obtaining the home you want. Due to higher rates and the cut from a 35 year amortization to a 30 year amortization.
Best thing is to get a rate hold now for 120 days. Even if you're not 100% certain you'll be ready in that time frame.
Call me today!
Pension Incomes
Just some interesting info. on the amounts paid out for pensions.
Maximum Income Security Benefits Effective January 1, 2011
CANADA PENSION PLAN (JANUARY - DECEMBER 2011)
Retirement Pension (at age 65) $960.00
Disability Pension $1,153.37
Death Benefit (maximum lump sum) $2,500.00
Survivor's Pension (under age 65) $529.09
Survivor's Pension (age 65 and over) $576.00
Children of Deceased or Disabled Contributor $218.50
Combined Pensions
Survivor\Retirement (retired at age 65) $960.00
Survivor\Disability $1,153.37
Yearly Maximum Pensionable Earnings (YMPE) for year 2011 $48,300.00
OLD AGE SECURITY PROGRAM (JANUARY – MARCH 2011)
Basic Old Age Security pension $524.23
Guaranteed Income Supplement (GIS)
Single $661.69
Spouse of non-pensioner (does not receive OAS) $661.69
Spouse of pensioner (receives an OAS pension) $436.95
Spouse of Allowance recipient $436.95
Spouse's Allowance (SPA)
Regular $961.18
Widowed $1,065.45
OAS 15% clawback commences with an income above $67,688. The full OAS pension is eliminated when a pensioner's net income is $109,607 or above.
The Spouse's Allowance stops being paid at $29,376, while the GIS stops being paid at $38,112.
Further information can be found on the Service Canada website at the attached link:
http://www.servicecanada.gc.ca/eng/isp/statistics/rates/pdf/janmar11.pdf
Maximum Income Security Benefits Effective January 1, 2011
CANADA PENSION PLAN (JANUARY - DECEMBER 2011)
Retirement Pension (at age 65) $960.00
Disability Pension $1,153.37
Death Benefit (maximum lump sum) $2,500.00
Survivor's Pension (under age 65) $529.09
Survivor's Pension (age 65 and over) $576.00
Children of Deceased or Disabled Contributor $218.50
Combined Pensions
Survivor\Retirement (retired at age 65) $960.00
Survivor\Disability $1,153.37
Yearly Maximum Pensionable Earnings (YMPE) for year 2011 $48,300.00
OLD AGE SECURITY PROGRAM (JANUARY – MARCH 2011)
Basic Old Age Security pension $524.23
Guaranteed Income Supplement (GIS)
Single $661.69
Spouse of non-pensioner (does not receive OAS) $661.69
Spouse of pensioner (receives an OAS pension) $436.95
Spouse of Allowance recipient $436.95
Spouse's Allowance (SPA)
Regular $961.18
Widowed $1,065.45
OAS 15% clawback commences with an income above $67,688. The full OAS pension is eliminated when a pensioner's net income is $109,607 or above.
The Spouse's Allowance stops being paid at $29,376, while the GIS stops being paid at $38,112.
Further information can be found on the Service Canada website at the attached link:
http://www.servicecanada.gc.ca/eng/isp/statistics/rates/pdf/janmar11.pdf
Subscribe to:
Posts (Atom)