FAQ

A fixed rate means the interest rate is set and pre-determined. This will not be affected regardless of any economic conditions. On the other hand, a variable rate can be changed by the lender whenever he feels that the economic conditions have changed.

If you are looking for stable monthly payments and do not want to be dealing with the uncertainty, it is advisable to go for a fixed rate mortgage. But if you have sufficient financial cushion to absorb any increase in your monthly payments, and if you feel that interest rates are likely to go lower in the near future, then an adjustable-rate mortgage might be a better option for you.

Mortgage amortization period is the time it takes to pay off a mortgage, with interest. It could be 5 to 30 years. It will typically be a 25 yr. amortization period for a new mortgage. A Mortgage term is how long you commit to your mortgage rate, details, and conditions with a lender. When a term ends, you pay off the mortgage or renew it for another term if your lender agrees. Terms range from 1 to 10 years, but 4- to 5-year terms are most common.

Mortgages are loans. Typically to purchase estate or turn your home equity into cash for another purpose such as financing home renovations. You will need approval to get this loan and will need to repay the loan according to specific terms that include interest rate, payment amount and timeline. Your lender registers a charge on your property so that should the loan not be repaid; the lender can take possession of your property and sell it to collect any money you owe them.

Have you wondered what the difference is between using a Mortgage Broker/Lender vs a Bank?  There are quite a few key differences.  For example, the broker works for you, the bank does not. The right mortgage is a critical factor determining long-term savings. The value of a professional mortgage broker comes from having someone who objectively works for you and is not limited to mortgage product offerings from one source: like a bank.  A broker can advise you on choosing the right mortgage option while considering interest rate, payment privileges, payment penalties, long term savings and much more.An experienced mortgage broker can help you find the right lender for your needs quickly, and with minimum effort from your side.

Although these FAQ would have given you some idea about taking a mortgage, you should try to understand all these concepts in detail to make a sound decision. Take help of a mortgage broker or your financial adviser before you finalize a deal.

• IDENTIFICATION: a copy of your photo ID, such your Driver’s License, Passport, or another form of government issued photo ID.
• EMPLOYMENT VERIFICATION:  Current employment details such as a job letter – this letter should provide employment details such as your position, start date and wages along with supporting documents such as paystubs and T4 slips for the past 2 years if salaried or hourly.
• If you are SELF EMPLOYED, then you would need the last 2 years tax returns and Notice of Assessments along with business registration or articles of incorporation.
• CONFIRMATION OF DOWN PAYMENT: Account statements from your bank and investment accounts are needed to verify the existence of your down payment.  Loans officers usually require up to three months’ worth of bank account statements.   Large sums of money that are transferred to the accounts need documentation to prove where the money came from.  Personal gifts typically require a letter from the person gifting the money verifying the money is a gift.  
• DEBT HISTORY: Details of all current credit cards, loans, lines of credits, auto loans or auto leases (principle outstanding, payments and frequency of payments and interest rates
• Recent statements for any existing mortgages or home equity lines of credit

If you have a closed mortgage, you can either transfer or break your mortgage. If you choose to break it with a closed mortgage, you may have to pay a prepayment charge and penalties. There may also be a charge if you transfer your mortgage to another lender before the end of your term.

If you have an open mortgage you can pay off your mortgage entirely without penalty. Another option is to port your mortgage, meaning to transfer it to another property that you are buying. With this option, you can simply leave your mortgage the way it is or, if you need to increase the amount on the existing mortgage, you can also speak to a mortgage professional about home refinancing. This can give you additional money if the home you are moving to is greater in value than the one, you are leaving.

A bank appraisal can easily be defined as an unbiased professional opinion of a homes value conducted by a third-party appraiser. Lenders order them to ensure that the home is worth what you are paying for it, within reason. If the appraisal does come in low, then lenders will only lend on the appraised value and not the full purchase price. Anytime a buyer is obtaining a mortgage to purchase a home, the lender is going to require a bank appraisal be completed.  A bank appraisal also is required when a homeowner decides to refinance.

Many home buyers believe that a pre-qualification is the same as a pre-approval, not true. A PRE-QUALIFICATION is an estimation of how much a buyer can borrow, typically without verifying the information.  If a buyer is not truthful or makes a mistake when giving the information this can lead to problems in the future when the mortgage is verified by an underwriter.

A mortgage PRE-APPROVAL is what is needed and what every home buyer should obtain PRIOR to looking at homes.  A mortgage pre-approval is a written commitment for a buyer from a mortgage lender to determine the price range to purchase a home for.  Documents are needed to obtain a mortgage pre-approval, typically T4s, pay stubs, and bank statements. Pre-Approvals are recommended to help buyers beat out the competition in a strong sellers’ market and to ensure the seller can have peace of mind when submitting an offer that the mortgage will be approved.