FAQ

What does a mortgage broker do?

A mortgage broker acts as an intermediary between a lender and a borrower. In other words, they facilitate the transaction between you and your bank or mortgage lender.They take care of the legwork of searching for the best mortgage product and interest rate by utilizing their network of lenders and financial institutions.

 

Do mortgage brokers work for the bank or a financial lender? 

As an independent Mortgage Broker, we ultimately work for the borrower. We’re not employed by your mortgage lender, but we are responsible for ensuring both the lenders and the borrowers best interests are met.

 

What kind of clients do you work with? 

Here at the Mortgagegirl, we work with homebuyers from many walks of life. With many years of mortgage experience, we’ve helped many people including those with poor credit, or who are self-employed, or revenue property owners with large property portfolios.

 

What do you charge?

No fee is charged for most of our clients. More often than not, our fee is paid by the lenders we secure your mortgage through, not you. In rare cases, due to the type of financing we are asked to provide, it is necessary for us to charge a fee.This applies mostly to private mortgage financing.

 

What will I pay in closing costs?

Closing costs will vary depending on your situation. They may include appraisal fees, survey fees, your legal fees, and realtor commissions. We can help you determine about how much your closing costs will be. Give us a call! Or visit our BLOG for articles on closing costs.

 

Why is a mortgage insurance premium necessary?

If your down payment is less than 20% of the property value, you’re required to pay an insurance premium. For lenders, a down payment of this size is more of a risk, so the insurance premium is a guarantee for the lender in the event the borrower defaults on the loan.

 

Is mortgage life insurance necessary? 

No it is not necessary but is recommended to have some type of coverage since you’re taking on a large asset & debt. Discuss this with the Mortgagegirl for options & alternatives available.

 

What’s the difference between Fixed and Variable rates? 

Do you like to know month to month your mortgage cost?

Then a Fixed Rate Mortgage may be your best option as the interest rate is fixed for a specific amount of time. This period of time (the mortgage term) can range anywhere from 6 months to 10 years. Over the course of the mortgage, less of the payment counts toward interest and more toward the principal.

Do you have some flexibility in what your mortgage cost?

Then a Variable Rate Mortgage may be your best option, payments fluctuate with Prime Rate but it historically shows interest savings over it’s fixed counterpart.

Discuss with the differences between the two, and which option best suits you.

 

Why should I get pre-approved?

There are usually four main reasons to obtain a Pre-Approval before house hunting:

1. You’ll have a more accurate idea of how much you will qualify for.

2. You’ll be able to get up to a 120 day rate hold to protect you against rising interest rates.

3. It speeds up the process once you find a home to buy because you’ve already done most of the work.

4. Your realtor might not want to work with you unless you get a pre-approval in advance to make sure they’re not wasting their time.

Don’t be fooled! Pre-qualification is not the same as Pre-approval! Many banks will give you an idea of what you’re pre-qualified for, without actually giving you a rate hold or actually evaluating your circumstances in advance to be sure that you qualify. At Mortgagegirl we do very thorough Pre-approvals to make sure that you’re ready to go.

 

If I’m unable to confirm my income, could I still qualify? 

Unfortunately, you usually can’t as your lender wants to see evidence that you can repay the mortgage loan. However, there are some exceptions. For instance, if you are self-employed or have been a commissioned employee for at least 2 years, you can generally qualify for a mortgage loan. You’ll have to provide certain documentation, including articles of incorporation, a business license, and the most recent two years Notices of Assessment from CRA.

You may also be able to qualify based on equity loan if you have a large enough down payment and very good credit.

 

Why is an appraisal necessary? 

Every conventional mortgage that includes a minimum 20% down payment requires an appraisal because the mortgage is uninsured. The lender wants to see that your purchase price is in line with the property’s fair market value. Lenders want to see that you are purchasing a quality property and that they will be able to recuperate the full amount if you default on the loan. If you’re refinancing, the appraisal is used to determine the current value of your home.

 

What benefits do I receive for mortgage pre-payments? 

Pre-payment typically allows you the following privileges:

  1. Ability to increase your monthly payment (usually by 15-20%). Keep in mind that you can usually decrease your payments back the original amount. Make sure you double check with your lender before you make any payment changes.
  2. You are allowed to pay a lump sum percentage (usually 15-20%) of your principal per year. Some lenders allow you to pay a lump sum only once per year, others allow multiple lump sum payments throughout the year.
  3. You may be able to double your mortgage payment for a month or a number of months. Remember that you are not allowed to exceed the percentage that you’re permitted to pay down annually. This is a less common pre-payment privilege, read your mortgage commitment carefully to see what is available to you.

 

What’s better; a short-term or long-term mortgage?

Mortgage term lengths can range in length from 6 months to 10 years. While a short-term mortgage will usually have a lower interest rate, you’re rate might go up when you renew at the end of your term. A long-term mortgage will typically have a higher rate, but you won’t have to renew for a longer period of time. The option you choose depends on your situation. If interest rates are low, it may be wise to choose a longer term, where a shorter term might be a better choice if interest rates are currently high, so you might be able to renew at a lower rate.

 

Does paying bi-weekly actually save me money or shorten my amortization time? 

It does! With a monthly mortgage, you’ll make 12 regular mortgage payments annually. When you pay bi-weekly, you’ll make 26 half-payments, amounting to 13 regular mortgage payments annually.

That might not sound like much, but it adds up. A bi-weekly payment schedule could make you mortgage-free years sooner, saving you thousands in interest payments to boot!

 

What is required for my down payment to be confirmed? 

This will depend on the source of your down payment.

  • From sale of your current home: You’ll need a final Contract of Sale and a current mortgage statement, or a lawyers statement of adjustments if the sale happened over 90 days ago
  • From a savings account: You’ll need 90 days (3 months) of bank statements, including your name and account number
  • From gifted funds from a family member: You’ll need a copy of the gift letter and proof of its deposit in your account (you’ll need a bank statement including your name and account number which states your balance).
  • From Investments: You’ll need 90 days (3 months) of investment statements, including your name and account number.

There are alternatives available, and document requirements vary per lender. Talk to the Mortgagegirl about what documents you could be asked to provide.

 

What minimum down payment do I need?

You can provide as little as 5% of the total price of the home if you have good credit. Even if you have bruised credit, we have a network of lenders that are willing to provide financing, talk to us about the specifics.

 

How long does it take to complete the Mortgage transaction?

It most often depends on how quickly you provide us with the documentation required to complete the loan. The faster we receive documents, the faster we can get everything taken care of to the point that your lawyer can be instructed and you can sign all the final documents at the lawyer’s office.Two weeks is generally the absolute minimum amount of time we would like to have to process everything and get all mortgage conditions satisfied for you, but we have done a private mortgage in as little as one day!

 

Can I transfer my mortgage if I buy another home?

Depending on your mortgage lender, yes. Most lenders are now offering options that allow you to take your mortgage with you to the new property. Typically you will not be assessed additional fees if the possession period between your old and new home is 60 days or less. Some exceptions apply to that time limit.

 

What is mortgage assumption?

Mortgage Assumption is usually when the buyer “assumes” the mortgage from the seller along with the current terms and details of the present financing on the home. In other words, you are taking responsibility for the mortgage payments. Because of the potential risk, we do not recommend this method. Additionally, lenders are recognizing the additional risk in mortgage assumptions and are working to make it more difficult for people to assume mortgages for which they do not qualify.

 

What’s the difference between a Co-signer and a Guarantor?

A guarantor is someone who guarantees that payments will be made on a mortgage. They go on the mortgage of the property, but not on the property title. A co-signer goes on both the title and mortgage of the property. In both cases, they can apply to be removed from the title and/or mortgage at a later point if the owners become able to qualify on their own.

 

Why do I need a lawyer?

You need a lawyer because final mortgage documents are legally binding. Also, lawyers are the individuals who take care of things such as land title transfers. They are also authorized to hold money in trust, and distribute funds to the appropriate places (such as to your previous mortgage lender when paying out an existing mortgage, or to the sellers of the home you are purchasing).

 

If you have any questions that we did not answer, please do not hesitate to contact Jackie the Mortgagegirl at 780.433.8412 or info@mortgagegirl.ca.