Happy New Year & FAQ's

Welcome to 2011!

One of the best decisions an applicant can make is to seek out an experienced and knowledgeable broker-agent.  Finding someone who educates you and meets your needs is the key to a successful and beneficial mortgage.  Remember, the broker-agent should meet your needs. 

With this in mind, periodically I will blog frequently asked questions, in the hopes of aiding existing and future clientele.  Please take advantage of my blog, Facebook page, or e-mail address if you have any of your own questions you would like answered.

FAQ #1

Are all lenders the same?

Every financial institution—bank, mortgage company, or credit company have some common policies, but they absolutely do have different rules.  One common example is a specific bank that will do a commercial mortgage product but the applicant must occupy part of the property.  This, of course, is not always your intention.  Not all people are self employed and need a place to operate. You may simply want to buy a commercial property for business/investment reasons. 

FAQ #2

How do mortgage insurance premiums work?

You should be aware that Canadian banks are restricted from lending you more than 80% of the value/sale price of a property.  If you have 5%, 10%, 15%, etc. for downpayment, a lender must get your application approved by Canada Mortgage and Housing Corporation (CMHC), Genworth (GE) or Canada Guaranty.  In this case, your mortgage will be insured.  If you fail to make payments the insurer pays the lender the money owed and the insurer takes over ownership.  If you ever default on an insured mortgage, the insurer will not insure another purchase for 5 years.  The insurance premium is based on amount of downpayment.  The less put down, the higher the insurance premium.  Here is the standard charge for 25 year amortization:

                                                                5%          -              2.75%

                                                                10%        -              2.00%   

                                                                15%        -              1.75%   

                                                                80%        -              1.00%

 (If you use a 30 year amortization, add 0.2%, and if 35 year amortization, add an additional 0.2%).

 Using 25 year amortization and a sale price of $200,000.00 here is how your mortgage is calculated:

                Sale Price:                            $200,000.00       

                5% Down:                            $   10,000.00

                Difference:                            $190,000.00

                Ins. Premium (2.75%)            $    5,225.00

                Mortgage                             $195,225.00

This is a onetime charge on your property if you do nothing more with your mortgage.  If you refinance in the future and take a new amortization, there will be an insurance premium charge. (You will only be charged a new premium of the new money required during the refinance, if you keep the same amortization).   Use the above formula or my website calulator to do your own mortgage calculation or read more about insurance and links to specific insurance company websites here.

Comments

[rayjohn]

2011 looks like a bad dream for Dollar. But there must some good thing going to happen in USA.
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