28 Mar

Consumer Debt vs Mortgage Debt

General

Posted by: Lynn Nequest

Consumer Debt vs Mortgage DebtDuring a recent trip to our nation’s Capital with folks from Dominion Lending Centres and other mortgage groups, an Ottawa insider made an interesting comment: “We don’t care about consumer debt, because we don’t guarantee it.”

This comment was made in an effort to justify recent increased restrictions placed on borrowers taking out insured mortgages (i.e. backed by CMHC, Genworth, or Canada Guaranty – effectively the federal government) due to increasing concerns in Ottawa around the optics of “taxpayer backed” mortgages.

This use of such hot button language would be laughable if taxpayers understood a few key things about CMHC in particular:

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14 Mar

Home Financing Solutions – Purchase Plus Improvements

General

Posted by: Lynn Nequest

Home Financing Solutions – Purchase Plus ImprovementsAre you on the hunt for a new home but can’t find exactly what you are looking for? You’re not alone. House hunters experience this scenario every day. With real estate prices increasing you may not be able to buy your dream home the first go-round.

Think about buying a fixer-upper. There are many potential properties that you can put your own personal stamp on. Why not renovate something?

There is a mortgage product called Purchase Plus Improvements (PPI). With the PPI the lender is able to provide additional financing to improve the subject property. This type of mortgage is available to assist buyers with making simple upgrades, not conduct a major renovation where structural modifications are made. Simple renovations include paint, flooring, windows, hot-water tank, new furnace, kitchen updates, bathroom updates, new roof,  basement finishing, and more.

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13 Mar

How Your Credit Score Affects Your Purchase Price

General

Posted by: Lynn Nequest

How Your Credit Score Affects Your Purchase PriceYour Credit Score that the lenders use, not to be mistaken by the Credit Risk Score you see when you check your own credit, is one aspect of determining your borrowing power. The better your score, the length of established credit and your payment history the better when it comes to mortgage financing.

Let’s assume that all parts of an application are equal (available down payment, income, monthly liability payments etc.) except for the Credit Score. Established credit in this case would be any credit report that has at least 2 accounts reporting with a limit of $2,000 for 2 Years.

Comparing the credit profiles of Jane and John both who make a gross annual income of $50,000 the following would apply:

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6 Mar

Inside and Outside the Box Mortgages in Today’s Market

General

Posted by: Lynn Nequest

Inside and Outside the Box Mortgages in Today's MarketAs we truck along in 2017, Mortgage Brokers and Lenders are adjusting to the new risk based mortgage rate pricing that came into play after the Finance Minister changed Government backed mortgage default insurance regulations in late 2016.

Lenders often choose to pay for mortgage default insurance on mortgages where the borrower was not required to pay it themselves. This method protects a lenders book of business against credit loss, helps them package more secured mortgages together to sell to investors and reduces the amount of capital they are required to maintain. This method in the mortgage industry is called back-end insuring.

The changes have limited the mortgage profiles that lenders are allowed to insure using Government backed insurers. Essentially the Government is intentionally passing on the risk to Lenders by implementing stricter insurance qualifying guidelines and limiting mortgages that can be insured to what they consider lower risk “inside the box” mortgages.

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