What to Consider Before Buying a Vacation Home

Buying a vacation home

What to Consider Before Buying a Vacation Home

Are you excited about buying a vacation home for you and your family to enjoy? Having a vacation property is a great feeling, as it means when you are on vacation, you are at a literal home away from home. It also means you do not have to worry about finding a hotel and parking. When you have a vacation home, all of that is taken care of for you. However, before you buy a vacation home, there are some things that you will need to consider.

Can You Truly Afford the Home?

The idea of having a vacation home is fantastic, and it is often easy for people to get excited about owning a vacation property… before they are truly ready. The cost of the home is important, of course. However, even when you find what you think might be a great deal, you have to think about how it is going to affect your overall finances. Will you have the money to pay for your regular home, as well as your vacation home and all of your other responsibilities? Always take the time to be sure it is something you can afford and err on the side of caution.

How Often Will You Use the Home?

Before you buy a piece of property, you will also want to think about just how often you are going to be able to use it. Will you be able to use it for at least a few weeks out of the year? Perhaps you could also offer it up to some others in your family who are looking for a vacation spot. Simply put, you want to make sure that you are going to be getting enough use out of the place, which leads into the next element to consider.

Should You Rent It Out When You Aren’t There?

If you want to make the most out of the vacation home, even when you are not there, you might want to consider renting it out to other vacationers. This is a great option, as it means you are going to be making money on the rental, which you can use to pay off the mortgage sooner. Of course, if you are considering renting the home out, make sure that it is possible for that particular home to be used as a rental.
A vacation home

Where Should You Buy a Home?

You also need to think about where you are going to buy your vacation home. Think about where you like to vacation and be sure that you choose a spot that you are going to be able to enjoy for many years to come. In addition, if you are going to be using it as a rental property, too, you will want to make sure that it is a place that others are interested in vacationing, as well. Otherwise, it is not likely to get too much traction for you as a rental.

Consider Having a Caretaker for the House, or a Property Manager

If there are emergencies at the home, you will want to have someone in the area that can take care of the property for you. If you are renting the property out, then you are likely going to want to have a property manager who can take care of all of the little details for you.

Now that you have thought some of these other factors, are you still looking forward to buying a vacation home? If you can answer the above questions and you have a solid plan in place, then having a new vacation home could end up being quite a fantastic investment for you. Contact us at Mortgage Apply Online to get started when looking for your new vacation home!

Questions to Ask a Mortgage Broker

Are you looking to get a new loan for a home that you want to buy, or perhaps you want to refinance your property? Whenever you are in need of a mortgage broker, it is important to approach the loan carefully. After all, you want to be sure that you are working with a great broker, and that you are getting a good mortgage. This means you need to ask them certain questions. The following are important questions that you will want to have answered before you choose a mortgage broker in Edmonton.

What Types of Mortgages Are Available?

One of the first things that you need to ask the mortgage broker is the type of mortgages they have available. For example, do they offer FHA loans, fixed rate mortgages, adjustable rate mortgages, reverse mortgages, or some other types of mortgages? You will naturally want to have an idea of what type of mortgage you want and that will work best for you, and you need to make sure that the mortgage broker can provide you with that type of mortgage at favorable rates.

Why Should I Use a Broker and Not Just a Bank?

What is it about the mortgage broker that makes them stand out from the crowd, and why should you work with them rather than going right through a lender? A good mortgage broker is going to work to help you find the best rate from all of the lenders that are out there, so make sure that your broker is willing to put in the work so you can find the best mortgage.

What Is the Interest Rate Going to Be?

The interest rate is very important to know before you choose an Edmonton mortgage broker and your loan. The interest rate is based off a person’s credit. Loans that have a lower interest rate will mean that the monthly payments are lower. For those who are not getting the interest rates that they want, they can see if their broker can find other lenders. However, they may also want to take the time to clean up their credit, which is a surefire way to get offered better interest rates.

What Can the Broker Tell You About Themselves?

When you are considering an Edmonton mortgage broker, you will want to make sure that you are working with only those who have a good reputation and who are going to work hard for you. Make sure that you are working with only the best. Are they licensed? What programs do they offer, and what type of fees are they charging? How long have they been working as a mortgage professional? Additionally, you will want to see if you can get some references from the broker. This will let you get a better idea of whether the other customers were happy with the service they were given by the mortgage broker.

What Lenders Do You Work With?

In addition, you should speak with the mortgage brokers to learn more about the lenders that they tend to work with. This will give you a better idea of the types of options for loans that are going to be coming to you once the broker gets to work. Brokers that have good relationships with their lenders are important.

These are just some of the most important questions that you are going to want to ask a mortgage broker in Edmonton before you get your loan for a home. You likely have some other questions of your own that you want to ask.

When to Speak to a Mortgage Professional

home on snail

Are you getting ready to buy a home, or at least thinking about purchasing a property? If you are, then you know that at some point, you are going to need to speak with a mortgage professional. The big question for many is when they should start to consult the professional. The answer, in just about every case, is going to be that you should speak with them as early as possible in the process. There are some very good reasons for this, too.

Do Not Fall in Love With the Wrong House

One of the problems that many people have when they are looking for a house is that they find a property, or several properties, that they love. They have their heart set on getting those homes, and then they talk with the mortgage professional and find out that they are not able to qualify for a loan that is large enough to afford those properties. This leaves many to feel depressed about their homebuying journey.

Even before you start looking for a home, it is a good idea to speak with a mortgage professional. It means that you are not going to waste your time and energy on a property that you do not have a chance of affording.

The Mortgage Professionals Help You Prequalify

When you talk with the professionals, they will help you to determine just how much of a loan you are able to receive. You will have a prequalification amount that you can then use as a guideline when you are looking at properties. This will let you know just how much house you will be able to afford. It ensures you do not start looking at properties that simply are not going to work for your finances and saves you from some heartbreak.

There is another benefit to prequalifying. When you can tell the seller that you are prequalified for the home, it shows them that you are serious about getting into the property. They are going to be more willing to negotiate with you because they know you can get the loan that’s needed for the home. You will look better to the seller, which means that they might be more willing to work with you than a buyer who is not prequalified, even if the other buyer says that they will pay more.

One of the important things that you will want to remember when you are prequalifying for a loan is that just because you might be able to qualify for a large loan, it does not mean you have to spend that much. You only want to take out a loan that you are certain you can pay back, and that will not negatively affect your finances on a monthly basis.

Work With the Best Mortgage Professional

There are many companies offering help with mortgages today, but you need to make sure that you are working only with the professionals. Take the time to learn more about the company or individual you are considering working with. How long have they been working in the field and what type of experience are they offering? What types of services does the company provide? Learn more about their business and how they operate, as well as their reputation when you are choosing your mortgage professional.

The sooner you speak with a mortgage professional during the homebuying process the easier it will be to know what you can afford. Get in touch with the pros now so you can find the home of your dreams as soon as possible.

A Simple Guide to Understanding Why Mortgage Rates Go Up or Down

You have probably noticed that the mortgage rates are not static. They are going to go up and down, which can be difficult to follow and understand. There are many different factors that can affect the rates, and those who are considering getting a mortgage are going to want to have a better idea of what types of things can cause shifts in the mortgage rates.

Economic Growth and Economic Indicators

The economy is the biggest factor that tends to cause changes in the mortgage rates. Growth in the economy can cause the interest rates to rise or fall. These rates are then mirrored by the mortgage lenders to make sure that they are able to stay profitable. When the economy is doing well, it means that the level of interest rates in the country is typically going to rise. When this happens, it means that the mortgage rates are generally going to rise, as well. Conversely, when there is trouble in the economy, it means that the mortgage rates are going to drop, just like the interest rates.

One of the main economic indicators that is used to determine what will happen with the rates is federal funds rate. Some of the other indicators that are used when determining what will happen with the mortgage rates include the producer price index and the consumer price index.

Supply

The policies in the government can cause fluctuations in the mortgage rates. If there are a large number of loans in a short period, the number of mortgage-backed securities can become higher than the demand. It can cause the interest rates to rise, and they are going to need to come down again to keep buyers interested.

The Federal Reserve is responsible for controlling interest rates and keeping inflation in check. They do this by adjusting the supply of money that is in the economy. If the economic growth, discussed earlier, creates too much inflation, there is a risk that the purchasing power is going to drop. To prevent this from happening, the Federal Reserve purchases Treasury Bonds. The added money from this influx can help to lower the interest rates.

Changes in the Real Estate Industry

You will find that the mortgage rates can be affected by happenings in the real estate industry, as well. When the demand for mortgage borrowing increases, based on an influx of new homes on the market, it can cause the mortgage rates to rise. When there is a weaker demand for new mortgages, it will typically cause the rates to fall.

The above include some of the largest factors that will affect the mortgage rates as they rise and fall. As you can see, there are many factors that can play a part in the mortgage rates. The lenders pay close attention to these factors, and this is something that you should pay attention to as a homebuyer, as well. It can become complicated to understand all of the ins and outs and just why the rates rose or dropped but having at least a basic understanding of the various things that can affect the rates will be helpful.

Naturally, when you are looking for a mortgage, you will want to make sure that you check the rates. If they are currently too high, it might be in your best interest to continue saving for a while and then get your loan when the rates drop a bit. You can – and should – speak with a mortgage professional to learn more about getting a mortgage.

Mortgage Insurance: What It Is and How It Works

Mortgage Insurance

Mortgage Insurance: What It Is and How It Works

For the vast majority of people, buying a home means getting a mortgage. Most of us don’t have pockets deep enough to pay cash for a home outright. That means working with a lender. By definition, lenders take risks in loaning money to consumers. There’s always the risk that you might make some payments late, or default on the loan completely. In order to offset that risk, lenders require mortgage insurance in many instances. What is mortgage insurance and how does it work?

What Is Mortgage Insurance?

Really, the name says it all. Mortgage insurance is protection against you defaulting on the loan. It limits the risk that the lender is taking in loaning you the money for your home. In addition to mitigating the lender’s risk, mortgage insurance in Edmonton can also help you by allowing you to qualify for loan amounts that you would otherwise not be considered for.

Who Requires Mortgage Insurance?

It’s important to note that mortgage insurance isn’t needed by everyone applying for a home loan. It’s generally only required for those who cannot make a down payment of at least 20% of the home’s value. So, if you want to avoid adding extra costs to your monthly mortgage payment, the best course of action is to come up with a larger down payment, even if this means putting off buying that home for a few months, or even a year. The more you can put down, the less risk to the lender, and the less need there is for supplemental insurance. However, there are some mortgage types where insurance is required no matter what, including USDA loans and FHA loans.

Does Mortgage Insurance Increase Your Costs?

In a word, yes, mortgage insurance in Edmonton will increase the costs of your home loan. This is because the monthly insurance payment will be bundled in with your home loan payment.

Insurers

Who Is the Insurer?

Your insurance payments will go to different places depending on where your home loan comes from. If you have a conventional home loan, then you’ll work with a private mortgage insurer, and your payments will go directly to them. However, if you obtain an FHA mortgage loan, then your insurance payments will go to the FHA. Note that FHA loans, while available with very low down payment requirements, carry a mandate that you have mortgage insurance, and you’ll have to pay both monthly costs and an upfront cost that’s added to your closing costs.

If you’re considering a VA loan, there is no mandatory mortgage insurance, but you will have an upfront cost associated with the VA’s guarantee of your loan. This can be factored into your monthly payments if you want, but it will increase your overall costs over time.

Does Mortgage Insurance Protect You?

To put it bluntly, no, mortgage insurance does not protect you. It does not benefit you, the consumer, in any way other than increasing your buying power. It is all about hedging the lender’s bet and reducing their risk. For you, the only outcome is qualifying for a home loan with less than 20% down, and an increase in your loan costs.

When Is Mortgage Insurance No Longer Needed?

The way mortgage insurance plays out over the life of a loan varies depending on the type of mortgage. FHA loans must maintain insurance for the duration of the loan. However, private mortgage insurance is cancelled once you pay your home loan down below 80% of the total loan value. So, you can count on your costs dropping at some point, as long as you stay in the home long enough.

As you can see, mortgage insurance in Edmonton is important to understand, and it will have a significant impact on your homeownership experience. Learn more from Dominion Lending in Edmonton at 780-466-9898.

Understanding How Your Credit Score Affects Your Mortgage Rate

Charts To Understand Credit Score

Credit and Homeownership: Understanding How Your Credit Score Affects Your Mortgage Rate

While your credit score might not determine your value as a contributing member of society, it does have a major impact on your life and how you are able to live it. If you’re contemplating making the leap into homeownership, for instance, your credit score will have a great deal to do with the interest rate you’re given on the home loan. In turn, that will affect the overall cost of your home loan. How does your credit score affect your mortgage rate, though?

The Higher the Better

Your credit score is a numerical summation of the amount of risk you pose to a lender. The higher the number, the lower your risk level. The lower the number, the riskier you are. If you’re in the mid to low span of the credit score range, you’ll find that lenders really don’t want to take a chance on you.

If you’re in the upper-mid to high credit range, lenders are happier to see you walk through their doors. However, you’ll find that it’s not just about whether or not you can get a loan in the first place, but about how much you’re going to pay for the privilege of taking out that loan.

What Mortgage Rates Really Mean

The mortgage rate is another term for interest rate. It’s what you’re going to be charged for taking out the loan. You never repay just the amount the home costs – you always pay the lender for allowing you to borrow money. That’s the lender’s profit, and the greater the risk you pose, the more profit the lender wants to make to offset the chance that you’ll default before the loan is paid off and they’re left holding the bag.

Generally, the closer to 750, 800 or 850 (the max FICO score) you have, the better the mortgage rate you will be offered. However, understand that the individual lender is responsible for determining what score a borrower must have in order to be offered the best interest rate on their mortgage. Still, realize that a change of just a few points can make a significant difference in what you pay per month, and what you pay over the life of the loan. The difference between a mortgage rate of 5% and one at 8% is hundreds of dollars per month, and your credit score is the key to that rate.

Is Higher Always Better?

A higher credit score is always better. Well, at least until you get to a certain point. Up to about 700, your mortgage rate will decrease as the numbers increase. Even a modest jump of just 25 points can move you from a higher mortgage rate to a much lower one. However, once you pass the 700-point mark, you need to start considering other things to change your mortgage rate. These can include things like the type of loan you obtain, or your annual income amount.

How Do You Change Your Credit Score?

While your credit score will dictate what mortgage rates you’re offered, there’s good news for those with less than stellar financial histories. You can improve your score. It will take time and effort, though. Start by disputing any items on your credit history that aren’t yours, and then work on paying off outstanding debt and high credit card limits. With time and perseverance, you can boost your score.

However, remember that there’s little point in shooting for the highest score possible. Generally, a score of 700 – 750 is considered excellent, and even those with scores slightly under 700 can receive good mortgage rates.

What Information Do You Need for a Loan Application?

Information for Loan Application

What Information Do You Need for a Loan Application?

Buying a new house or property in Edmonton is an exciting adventure, but one part of the process that can be stressful is applying for the loan. Not being sure that you can afford the property will put a damper on things until your loan application is processed. In order to have the best chance of getting your loan approved, it’s best to be very thorough in your loan application. Knowing what documents and information to bring with you to complete a loan application is a great way to get the ball rolling and find out fast if you’ve got the loan.

In general, the loan approval process doesn’t take that long once the lender has everything they need from you. They’ll have to verify the information, determine whether your financial status is on par with their requirements for a loan, and determine whether your financial situation is likely to change based on a few key factors. Here’s what you’ll need to bring for a loan application.

Personal Information

First, you need to bring all your personal information. This includes government-issued identification, your Social Security number, and all your contact information such as your phone number and address. These basic facts start the process by letting the lender verify your identity and get in touch with you. This information is also used to check your credit score so that the lender can get an idea of how creditworthy you are.

Financial Information

The next information you’ll need is anything relating to your finances. These pieces of information let the lender see that you can afford the loan. This includes proof of employment, recent pay stubs, recent tax returns, copies of recent bank account and credit account summaries, and proof of any assets you may have, such as a 401(k). This information is probably the most important for determining if you can afford the loan amount you are asking for.

Requested Documents

Depending on the circumstances and what type of loan you are applying for, the lender may ask for specific documents as well. For example, they may ask for information on the property you intend to buy, or information about your business history if you’re buying a property for commercial purposes. Be sure to bring along anything that the mortgage company asks for, and ask them if they need any additional materials if they don’t volunteer that information when you pick up the application.

Completed Application

Finally, you’ll need to bring the completed mortgage application with all these documents. You can often download or complete applications online, and then email, mail, or bring in the extra documents afterwards. In many cases, the lender will help you fill out the application form at your initial meeting, so you may not need to fill this out yourself. In any case, be sure that the application is on file with the rest of your documents to get the process moving.

Do You Need Anything Else?

If you’ve gathered up all the documents listed above, then you should have everything you need to apply for a mortgage. Be sure to ask your lender if they require any additional special documents, and bring any paperwork that you have exchanged with anyone involved in the sale of the property, such as the homeowners, the realtor, or the lender.

If you want to learn more about how you can save with the right mortgage lender, contact us at Dominion Lending by calling our Edmonton office at 780-466-9898, or chat with us online to get instant answers to all your questions.

How to Get Pre-Approved

How To Get A Mortgage Pre-Approval

How to Get Pre-Approved for a Mortgage in Edmonton

There are many paths to homeownership, and for most homeowners in Edmonton, luck and circumstance play a big part in finally landing that dream home. But did you know that there are ways that you can make it more likely that you’ll seal the deal when the time comes? One of the best ways to ensure that you are shopping for a home that you’ll be able to buy is to get pre-approved for a mortgage.

What Does Pre-Approved Mean?

When you shop for a home in Edmonton, there are two main paths that people take for financing: they find a home they love, and they approach the bank or lender to find out if they’ll be able to get a loan for the asking price of the home. Or, they start by asking a lender how much they’ll be qualified to borrow based on their finances, and then they shop for a home within that budget.

The second scenario is called getting pre-approved, and it’s a great way to ensure that you don’t fall in love with a house that you won’t be able to afford. It also gives you a good idea of what price range you should be shopping for if you don’t know where to start. Here’s how to get pre-approved for a mortgage.

First Step: Know Your Credit Score

The best first step for getting pre-approved for a mortgage is to know your credit score. Find out if there is anything on your credit report that may stop you from getting pre-approved – you may find that it is smarter for you to take care of some things on your report first before the lender checks your score.

Next: Gather What You Need

In order to get pre-approved for a mortgage, you’ll need to go through the standard application process. That means you’ll need to bring all the following with you:

  • Personal Identification Information: You’ll need a government-issued ID, a Social Security number, and your address and contact information. This allows the lender to verify your identity and check your credit.
  • Your Income and Employment Information: You’ll need to bring paystubs or other proof of employment, tax paperwork from previous years, and any information about secondary income, such as information on retirement benefits, rent you receive from a second property, child support, or a side business, for example.
  • Information on Assets: If you own any assets that may make the lender more likely to lend to you, such as other properties, saving accounts, stocks, and so on, be sure to bring that information with you as well.

Finally, be sure to ask the lender if there is anything special they require. For most pre-approval processes, the information listed above is all you need, along with your completed mortgage application forms.

How Long Does It Take?

The pre-approval process can take as little as an hour, and as long as a few weeks. It depends largely on how complex your financial life is. If you have a straightforward stream of income and a good credit score, it’s likely that you’ll be pre-approved very quickly. If your income is very diverse or your credit score isn’t perfect, it may take longer for the lender to make a decision. However, for the most part, you’ll find out soon whether or not you’ve been pre-approved, and for how much.

With this information, you can start shopping for a home that will suit how much you know you’ll be able to afford. That makes it much easier to find the right home for your family. Learn more from Dominion Lending in Edmonton at 780-466-9898.

New Mortgage Rule Changes Explained

As many of you have seen on the media, OSFI has implemented new mortgage rule changes starting January 1, 2018. Now, non-insured mortgage consumers (buyers with a 20% or greater down payment) must qualify at the “a stress test rate” which is the higher of the Bank of Canada Rate (currently 5.14%) OR the rate from the lender plus 2%.

What effect will this have on the average consumer?

The biggest impact will be on the amount in which the homebuyer will be able to qualify for. Previously, the homebuyer qualified at the rate offered by the lender with no stress test for non-insured buyers. This new change applies to all terms, fixed and variable rates. The stress test for non-insured mortgages applies to both fix rate and variable rate mortgages.

We saw a similar rule change in October of 2016 for those consumers putting down less than 20% for their home purchase.  These “insured” consumers must qualify for a mortgage at the Bank of Canada rate (currently 5.14%).

What about the news of interest rates rising?

 

Although the above mentioned rule changes don’t quite have a direct effect on interest rates, the strength of the Canadian economy does.

 

The Bank of Canada (BoC) has 8 meetings every year where they discuss how well the economy is doing. If the Canadian economy is doing better than expected, there will be an increase to the “overnight lending rate”, which is essentially the rate of interest at which banks lend money to one another. When the BoC raises the overnight rate, it becomes more expensive for banks to borrow money, and they raise their respective prime rates to cover the added costs. Conversely when the BoC lowers the overnight rate, banks usually lower their prime rates by the same amount. Each bank sets its own prime rate, but most of the banks follow the BoC prime rate. The increase/decrease in the “overnight lending rate” is done to combat rapid inflation and vice versa.

The scheduled for the meetings is below;

Wednesday, January 17
Wednesday, March 7
Wednesday, April 18
Wednesday, May 30
Wednesday, July 11
Wednesday, September 5
Wednesday, October 24
Wednesday, December 5

The results of the January 17th meeting were that the BoC decided to raise the “overnight lending rate” to 1.25% from 1%. This triggered the BoC prime to go up from 3.2% to 3.45 Because of all these changes the Qualifying rate, or the “stress test” rate also increase from 4.99% to 5.14%.

Now more than ever, it’s a great time to contact a licensed mortgage professional to discuss your options. We will help you navigate through all of the rules changes, and help you get into the home of your dreams.

-Sunny Vig

Jan 25, 2018

Getting A Mortgage With Bad Credit

Credit Challenges

 

In today’s economic climate of tighter credit requirements and increased unemployment rates taking their toll on some Canadians, there’s no doubt that many people may not fit into the traditional banks’ financing boxes as easily as they may have just a couple years ago.

Your best solution is to consult one of our Mortgage Specialists to determine whether your situation can be quickly repaired or if you face a longer road to credit recovery. Either way, there are solutions to every problem. Just because you have bruised credit, doesn’t mean you can’t unlock your home ownership potential.

Mortgage professionals who are experts in credit repair can help credit challenged clients improve their situations via a number of routes. If the situation is beyond the expertise of a mortgage professional, we can help you get in touch with other professionals, including credit counselors and bankruptcy trustees.

If you have some equity built up in your home and still have a manageable credit score, for instance, you can often refinance your mortgage and use that money to pay off high-interest credit card debt. By clearing up this debt, you are freeing up more cash flow each month.

We can can also offer you some top tips towards a quick credit score recovery – The Mortgage Force Team is here to help!