Posts Tagged Mortgage Advice
Why you would Never want Box Stores selling Mortgages
Posted by Top Home Loans in Mortgage Advice on July 28, 2010
Chain stores like McDonalds, Wal-Mart, and other blue chip retail stores would love to give you more selection; they may even want to offer you financial services; however, if they began to offer these services, then this could cause a huge decline in quality over quantity.
Big box retailers are committed to please shareholders, and they are willing to reduce mortgage rates to be competitive; however, when they would reduce the rates, they would also be reducing their return on investment. In order for this to be profitable, they would need to mcdonaldize the way things get done in terms of employees. The goal would be to deskill the mortgage professional to several minor tasks that low wage earners could manage to do with very little skill.
Your mortgage would no longer be a financial relationship that you build with an individual; instead, your mortgage will be processed as an assembly line. It will go from one member to the next. The service will operate as a checkout counter where you wait in line for your turn, process your transaction, and they would move on to the next client.
In turn, consumers would depend on achieving the lowest mortgage interest rate instead of receiving the best advice on what they should do with their mortgage. Advice is critical for paying off your mortgage as quickly as possible. It is expected that a strong mortgage can shave off as much as 10 years off of your amortization. If you aren’t receiving this great service, then it may end up costing you tens or hundreds of thousands of dollars.
The lowest mortgage interest rate looks like a good deal on paper, but if you want to save the most money, then you need to look for a strong professional mortgage broker to take care of your finances. A strong mortgage will save you money on rates, but they will also save you money other ways you may not know is possible.
A person can’t learn about mortgages quickly; however, it takes lifetime to learn all the intricacies.
Would you use a big box mortgage company? Do you prefer brokers or banks? Leave your response in the comments below.
Save your Mortgage from the Bank. Simply Mortgages can Help!
Welcome back!
First Time Home Buyers
Posted by Top Home Loans in Mortgage Advice on October 12, 2008
Having a consistently growing mortgage market, it allows for almost everyone with a job to be able to find a house to live in. In most situations, home ownership is far greater than renting because it will allow you to build equity with every payment. Also, your investment will grow at an exponential rate because the bank will lend you money to leverage your investment.
Mortgage profitability
By reading reports about the consistent growth of house values in Canada, it is easy to see that it is rare for house prices to depreciate in value. Usually, home prices will rise from 3% to 10% annually. When was the last time your rent made you any money? This means that if you are paying interest only, then you will stull make money because your house will up in value. Mortgage payments are comparable to rent payments in most cases. For a 1 bedroom condo in Toronto the price can range from 800 to 1400 a month, and the mortgage payments are in the exact same range. Even if you are paying less for rent then you would if you purchased your own house, then you would still be losing money because the house will likely have appreciated.
Who should buy?
anyone who is considering paying rent payments should be looking into buying. Even if you are a college or university student, you and your parents should be actively looking into short term home ownership and determine if it will be more profitable to buy a property over paying expensive residence fees. Also, it will teach your child responsibility of maintaining there own property. If your child is working a part-time job to pay for school, then you can even generate some of the mortgage payment from them. If you have a full-time job, even if you have little to no savings, then you can still get a mortgage. Even though CMHC has removed 0% down on mortgages, you can still get a lender to pay your down payment for you; however, the interest rate will be a bit higher.
Down Payment and Closing Costs
On most new purchases, you will have to come up with at least 5% of the purchase price to cover the down payment of the property. A down payment is the banks way of verifying that you are serious about home ownership; however, most financial institutions offer programs that allow the buyer to avoid the down payment. The down payment is not the only fee that the buyer will encounter. The buyer will also need to worry about closing costs. These costs include legal fees, land transfer tax, property tax, inspections, appraisals, moving expenses, and all the other costs that come with buying a house. These costs are generally 1.5% of the purchase price and the bank will require that you are able to come up with this money from your own savings before they will approve your mortgage. It is important to plan for even more than the 1.5% of the purchase price just in case other fees come up.
Mortgage Insurance
When purchasing a new house, if you are putting down less than 20%, then the bank will have to apply mortgage insurance to your property. This form of mortgage insurance is used to insure the bank, so if you default on your mortgage, then the bank will not be liable. It is possible for the bank to request you get mortgage insurance even if you are putting more than 20% of the purchase price down on the property. Also, if you are new to Canada or you are self employed, then you could see your premium being much higher, and it would not be unlikely for the premium to be around 6%. It is required, by law, for certain mortgages to have mortgage insurance and the buyer must pay the insurance; however, the insurance can be added to the balance of the mortgage.
Investments, Grants, Loans, and Other Benefits for First Time Home buyers
In many contries, regions, and jurisdictions, governments have setup special promotions involving grants, loans, and other benefits for first time home buyers; however, it does take a bit of searching and a bit of luck. It is similar to if you visit a store, if you know a product will be on sale in the near future, then you won’t buy it, and you will wait to get the lower price shortly. It is like that in the mortgage industry; however, the sale is what existing special promotions are being offered by the government. For example, a first time home buyer was offered a grant for the down payment of a first home purchase as long as they live in the community for a minimum of five years. This is excellent because even if you move, then you are getting a tax free loan until the date that you move, and you are building up equity in the property.
The offers are frequently available; however, you must make sure that you search government pages on a regular basis. Also, phoning your government representatives and asking about these types of promotions is a good idea before house shopping.
For first time home buyers, it is easy to just jump into buying a home without thinking of the benefits or reviewing all the options; however, by taking a bit of time before beginning your home search and reviewing all the details, then you could save yourself a lot of money and a lot of hassle. Make sure that you know what you are getting into before you start the process, for the best advice is the advice you search for, not what you are given.