Interesting Updates for Mortgages & Eye Openers to Qualification ....

Ok so being that it is Wednesday and the sun if out and shining - knock on wood we will get to over 15 degrees today ... I figured now was a good time to share some interesting information, its a bit of a read but worth it I think to finish it to the end. First & foremost what I am finding from most of my lenders is a change with small numbers being used to qualify the mortgage that make large differences in qualification: here are some examples:

1) Heat Caculation: it is now done based on $0.75/per sq foot of property. That means if you have a 1500 sq/ft property x $0.75 = $1125/12 months = $94.75 to use in the heat caculation. This does change ratios sometimes; considering we could just use $50-85 prior, unless of course it was Servus Credit Union then we use $200 (which is actually more accurate anyhow)

2) New Builds Property Tax Caculation: the Insurers/Lenders are going to use 1% of the purchase price when Caculating property taxes... this being said I know of one or two lenders currently that are using this model. Unless we can prove what the exact taxes are, the 1% will be used. Of course for existing houses, the property taxes can be proven via mls or solicitor

3)  For Unsecured Debt Caculations: it may start not to matter what the actual payment is via paper confirmation or the credit bureau (actually this is already in effect with a lot of lenders - and only changed on exception basis: which is not often).... this at first read does not sound to bad, but indeed it can change your qualifying ratios dramatically! What is coming into standard play is the use of a 3% Caculation when figuring out payments. So if you have for example a Credit Card with a $25,000 limit and a $21,000 balance and reporting payment is $221/month, what will be used is 3% of the $21,000 which is $630/month payment! And some lenders will do 3% of the available balance: which means the max of the card, so 3% of $25,000 which is a payment of $750! See how they can change the qualifications for you on a mortgage?

4) Secured Debt Caculations: I am even hearing in this department, that they will be using a 1.75% Cacluation for this - regardless of what actual payment it (obviously taking the higher number between the two).

We all know of course that the 25 year amortization is in full swing, reduced allotments for qualifying ratios, bye bye Zero Down and also the changes with Business for Self vs Commission Clients Income qualification... all these things do make it harder to qualify for a mortgage...However lets be positive! It is sunny out after all! And really a HUGE PLUS is RATES are STELLAR! Also if you keep in mind some simple things it will help you qualify:

1) keep your balances below 50% of the limit on your cards and Lines of Credit
2) make your payments on time
3) do not go out and get too much credit & if you get collections pay them right away. Fighting with the Creditor to see "who is right".. will hurt your credit score in the long run.
4) save your 5% min down payment (see SIX Creative Ways to Come Up With Your Down Payment)
plus your 1.5% of the purchase price for closing costs. Now on a side note here; 1.5% for closing costs in AB is quite a lot ($300,000 purchase is $3000 closing costs), however, if you can save it... after your possession you will still have money in the bank! A novel concept, but not a lot of people practice it. There are lots of costs associated with a house, that go beyond purchasing it... keep that in mind... as well as keep in mind some lenders do not make exceptions on the Closing Costs 1.5% required
6) Try not to buy the "most" house/condo/townhome/apartment.... you can afford (maxing your ratios).. keep it within reason. Talk about rates, and what if they rise? What will that mean in 5 years for your payments? Or on a Variable that you want, what happens when Prime Rises? Are you a risk taker or more conservative? Do you have a long term plan? ... and many more questions...

Make sure you have people working with you that can help you navigate around all these things and keep you informed. Finding a Licensed Mortgage Agent & Real Estate Agent are good first steps! I heard the other day a banker telling my client to not deal with a "1.800. Bobs Mortgages" and had a good laugh. I came from working in a bank before I started as a Mortgage Agent and know the pressures they face as "bankers". My largest thing is simplified in this statement "Jack of all Trades. Master of Nothing" Who do you want to handle your mortgage? The person that lives and breaths only mortgages daily or the person that also handles opening/closing accounts, RRSP/Mutuals, Credit Cards etc etc....  I also know that in our society "Commission Employees" gets a bad rap. However think of it this way, as a Mortgage Agent, I am 100% Commission Based Income, but I do not get paid until your mortgage closes. I have a vested interest in making sure you have a great mortgage product, are happy and informed. I am most times sending in your documents at 11pm at night so that the lender has them 1st thing in the am, for a speedy turn around or taking your call at 11pm because you have a question that is bothering you and you cant sleep until it is answered (just as two examples) ... the banker is salaried, when he/she goes home (4pm lets say), he/she is not thinking about your mortgage or if you will get the house your heart is set on, or where they are in your process. Another great note, is usually I can deal with that same bank for you! So you get to have your cake & eat it too! My job, and why I love it so much, is I am in the trenches with you, navigating the plethera of different products/services/rates/documents etc etc... trying to get you the best mortgage you qualify for and really working so you get your Home. My day is 24/7, 365 days a year! :) I Love my Job! I am sure I am just as excited as my clients when they get their keys to their new house every single time! I am not a 1.800.Bobs Mortgage  ... I am your Licensed Mortgage Agent :) Now how cool is that! :)   (que music)  

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