There are a few good reasons why a pre-approval is an excellent first step when looking for a home.
1. Know your financial limits. Buying a home requires both your head and your heart. You might qualify for more money than you should be spending. For example, if you have high daycare costs, then it is prudent not to buy the maximum loan amount that you qualify for. By getting your per-approval done BEFORE falling in love with a home, you will more likely stay within your budget.
2. Going through the process of a pre-approval begins your education process. You don't want to be overwhelmed by buying a home. If you approach the financial side of things first, you are breaking the process into manageable pieces. Mortgage options can be complex and you want to consider your options without the emotions that happen after looking at homes.
3. A pre-approval might help you get your financial house in order. For example, the process might reveal a mistake on your credit report. You are better off dealing with that upfront. You might also be trying to decide between paying off a car loan versus putting the money towards the down payment. By going through the pre-approval process the better choice will become clear.
4. Nobody likes paper work - well except Revenue Canada! In the pre-approval process you will be required to get your papers in order. Often the most onerous set of papers includes proof of the source of down payment. It is best to get this sorted beforehand and avoid stress later on.
5. The pre-approval sets up the relationship with the mortgage broker, realtor and possibly the lawyer/notary. To ensure a smooth home buying process you want to have your team assembled and working together on your behalf. The truth is that most realtors won't go to the next step until you have a pre-approval anyway.
6. A pre-approval holds an interest rate for you. If rates go up, you are still safe with the lower rate. If rates go down, then you can get the lower rate. You can only win with a pre-approval.
Thursday 27 October 2016
Friday 21 October 2016
5 Rules to a Successful Refinance for Debt Consolidation
Life happens and sometimes debt is unavoidable. And at other times we make mistakes and place ourselves in debt - with regret. Regardless of how you got into debt, the important thing is to not ignore the problem. Managing your situation is very important.
A few rules to follow:
1. When you can't cover all of your expenses, prioritize your mortgage payments if possible. It will matter when you try to refinance later on.
2. Pay the minimum payments on your credit card if you can, even if you can't pay the full balance.
2. If your debts are piling up due to a marital break down, protect yourself by creating separate accounts if possible. For example, sharing a line of credit could lead to trouble. Contact your lender to change the terms of a line of credit.
4. If you have equity in your home, speak with a mortgage broker about a refinance sooner rather than later. You can choose to not refinance, but know your options first. If you wait until things get really bad before asking for help, you may find yourself facing a mortgage rate well about competitive interest rates. Sadly I see this too often.
5. Knowledge is power. Be aware that there are a variety of options in a debt consolidation plan if you have equity in your home. I have seen people who have fallen into the trap of believing that there is only one mortgage product available to them. This can result in them getting into an unnecessarily expensive or restrictive product. And a mortgage broker is the person with access to the different options from different types of lenders. 2nd mortgage? Total refinance? CHIP Mortgage? Private Mortgage? You might be surprised on which option is best for you.
Real client story:
For a few reasons, the best way to consolidate debt for a recent client was to get a second mortgage. I consulted with a variety of lenders. Second mortgage are more expensive than first mortgages. Rates ranged from 8.5% to 14%. My client was relieved to have me shop around for him to ensure the lowest rate possible.
A few rules to follow:
1. When you can't cover all of your expenses, prioritize your mortgage payments if possible. It will matter when you try to refinance later on.
2. Pay the minimum payments on your credit card if you can, even if you can't pay the full balance.
2. If your debts are piling up due to a marital break down, protect yourself by creating separate accounts if possible. For example, sharing a line of credit could lead to trouble. Contact your lender to change the terms of a line of credit.
4. If you have equity in your home, speak with a mortgage broker about a refinance sooner rather than later. You can choose to not refinance, but know your options first. If you wait until things get really bad before asking for help, you may find yourself facing a mortgage rate well about competitive interest rates. Sadly I see this too often.
5. Knowledge is power. Be aware that there are a variety of options in a debt consolidation plan if you have equity in your home. I have seen people who have fallen into the trap of believing that there is only one mortgage product available to them. This can result in them getting into an unnecessarily expensive or restrictive product. And a mortgage broker is the person with access to the different options from different types of lenders. 2nd mortgage? Total refinance? CHIP Mortgage? Private Mortgage? You might be surprised on which option is best for you.
Real client story:
For a few reasons, the best way to consolidate debt for a recent client was to get a second mortgage. I consulted with a variety of lenders. Second mortgage are more expensive than first mortgages. Rates ranged from 8.5% to 14%. My client was relieved to have me shop around for him to ensure the lowest rate possible.
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