Mortgages Canada

House is a big investment. Biggest one for you. Mortgage gets you the house, so be wise. Mortgage payment is going to be constant, monthly commitment. You want it smooth, predictable and fair. This is why it’s important to shop and compare. Imagine new shoes? You wouldn’t dream buying first ones you saw. So why it’s different with mortgages? Shop around, or pass it to Canada Mortgages. We have 50+ lenders to look at, so we’ll find one that fits you.

What’s Mortgage Underwriting? What are the Factors that Affect Pre-Approval Process? During mortgage underwriting lenders look at your credit history, debt-to-income ratio, home price and down payment. The end result is “yes” or “no” on a mortgage application. There are few more factors you should know about mortgage approval. Read to find out more.

Do you have poor credit? Banks generally decline people with poor credit. This is because banks are portfolio holders. For the most part, they do not sell their mortgages on financial markets. If you have poor credit, you can still get a mortgage, from smaller lenders. They generally do not advertise and rely on brokerage network. Canada Mortgages can get you a mortgage if you have poor credit.

Mortgage industry experienced some bad practices. Number of criminals scammed people out of their money. One of the common tricks is posing as repair people, willing to do repairs on property if you sing up for a loan. That loan turns out to be a mortgage, with high interest rate, designed to drive people into foreclosure. Watch out.

Looking to consolidate debt? Canada mortgages offers debt consolidation services via all in one mortgage. All in one mortgage, works like other debt consolidation mortgages. It takes all your debt such as credit cards, car loans, mortgages, home equity loans and combines it one fixed payment. This way your pay less in over interest and have more money each month.

How to Avoid Prepayment Penalty? Number of mortgage lenders charge prepayment penalty for paying off your mortgage balance earlier and for the privilege of refinancing. The only way to avoid it is to make sure you do not sign up for one in the first place. How to spot mortgage prepayment penalty in a contract and more…

What is cash out refinance? Cash out refinance is an alternative to Home Equity loan. When the owner of a house has lived on the property for long enough for the value to go up, he can refinance with a bigger mortgage, where accumulated equity will be free to spend.

What is a LIBOR Rate? LIBOR stands for London Interbank Offered Rate, which is set by London Central Bank. It is the best interest rate offered by banks to their best customers, such as other banks and corporations. LIBOR also affects adjustable rate mortgages, since when LIBOR adjusts, so do variable rate mortgages.

How to get money for mortgage down payment? Registered Retirement Savings Plan allows Canadians to withdraw up to $20.000 for down payment from the RRSP fund. To qualify for the program participants must have rented or owned property within past five years. You must pay back the amount within 15 years, 1/15th each year.

RRSP is a fund registered with Canada Revenue Agency, for retirement savings. All additions to the RRSP are tax deductible. You can put investments such as stocks, bonds, mutuals and regular money. If you pay 25% in taxes, for every $100 you put into the fund you will save $25 in taxes. This is done to promote the plan by Canadian government, as it’s also a good source for getting mortgage down payment.

What is private mortgage insurance? Mortgage insurance is mandatory insurance that all borrowers with less then 25% down payment must have. It is provided by Canada Mortgage and Housing Corporation(CMHC). After paying back at least 20% of the loan amount, you take the insurance off. After you pay back 23% of the mortgage, lenders are required by law to take it off.

What is Appraisal? Appraisal is an audit of a property. When you state the price of a house, lenders want to verify that you are telling the truth. There’s been a number of false claims in the past and lenders want to protect themselves. You will need to hire an independent appraisal company, as most lenders will not give you a mortgage without appraisal.

What’s a Balloon Mortgage?  Mortgage that has regular monthly payments, but does not get paid in full by the end of a term. At the end of a term, balloon mortgage requires a large lump sum to cover the unpaid balance. Balloon mortgages aren’t very popular, but if you want smaller payments and have a cash at hand and need to devote income to something else, balloon mortgage may be an option.

What’s a Biweekly mortgage? Bi-weekly mortgage is a mortgage for which you pay every two weeks. Since there are 52 weeks in year, you end up paying 13 month per, which shortens mortgage life. With biweekly mortgage you pay half payments every two weeks. If you’re looking to shorten mortgage life, biweekly might be for you.

Mortgage Pre-Approval Tips. Things to keep in mind when applying for a mortgage:

- What is the duration of pre-approval process?

- Will interest rates be locked?

- Will the lender provide written commitment upon approval?

- Will there be any penalties if you decide to pay more per month or have extra cash to invest?

When applying for a mortgage, apart from interest rate charges, there will be a number of service related fees, government taxes and commissions. A number of unethical mortgage brokers take advantage of people and overcharge them with fees which go into their pockets. To make sure this doesn’t happen to you, ask you mortgage company the following questions:

- Will commissions be a part of the mortgage?

- How much will be total closing costs? Can you explain all of them?

- Do the appraisal fees and credit report charges need to be paid at time of approval?

- If the rate goes down, are there any extra charges?

- Can the mortgage be converted to another type of a loan without extra fees? If not, how much will it cost?

- Can I pay more every month if I have extra cash and want to reduce the principal without any penalties?

Consider your financial status, long term and short terms goals, then make the decision based on it. The final call is yours.

Many borrowers do not have a down payment, so their challenge is in qualifying for a Canadian mortgage with good credit and income. Borrowers who have money for mortgage down payment always find it difficult choosing how much money they should put down.

The more you put down on a mortgage the less you will pay in the interest over time. You also have the option of buying down points (interest rates), which can save you money on mortgage interest, if you are planning on having a mortgage for more than 5 years.

What is an escrow account? It is the account that holds your insurance payments and taxes for two months in advance. Escrow account ensures that taxes and mortgage insurance is paid on time. Most lenders require escrow account as way to protect themselves from losses in case borrower doesn’t pay taxes on his own.

How not to choose your mortgage. There is plenty of information on the internet about mortgages and how to make the right choice, but most don’t like talking about what not to do. Borrowers tend to make their mortgage decisions based on monthly payment offered to them. This is #1 thing you should avoid as a borrower… Read More

What Drives Mortgage Interest Rates? Supply and Demand. It is the supply of money and demand for it. Inflation is at the core of mortgage interest rates. When inflation is high lenders are lees keen to lending. Who wants a mortgage which will cost less down the road? Demand is high, so must be the supply. If inflation is too high thou, lenders raise mortgage rates to compensate.

Should you buy a home with a mortgage? Qualifying yourself to buy is easier than most think. Look at internet classifieds and find out average prices for the home you want. Use mortgage calculator to calculate how much you can afford, add $100-$200 to the amount calculated and you will figure you monthly mortgage budget.

Know Your Adjustable Rate Mortgage(ARM) Resets.

“Reset” refers to the first adjustment in interest rates after introductory rate. When you get ARM, it is usually locked for 3/1 or 5/1 terms. 3/1 means it is locked for 3 first years with introductory rate, then rates adjust every year(same with 5/1 but for 5 years). Once the introductory period passes, you will experience rise in interest rates. For example your rate was 4%, which was given at a discount, below the market price. 3 years down the road, will go up. If the current rates are 6%, expect interest rates adjustments to be around 6.5%. After that interest rates will follow market markup and either go up and down. To know when your ARM resets, check the contract as it should state the terms. Prepare to allocate additional finances, since the increase will require more money every month. After that, interest rates will float according to market.

Prepare for interest rate changes ARM and Fixed Rate - lower you monthly bills.

ARM(Variable)

Once the rates go up, expect ARM payments to rise $40 – $70. This is the short term price for lesser ARM rates. Adjustable rate mortgages do save money in the long run, however be ready for unexpected. Monitor markets constantly, as the inflation plays major part in interest rates. If you see rates climbing or they already did, it is wise to stash some funds on the side, to ease the transition. You can also prepay 45 days prior to changes. Lenders will take into account additional funds and offer lower rates for the upcoming term.

Fixed Rate (FR)

FR customers enjoy the cushion of stable payments, but there isn’t a way to lower monthly dues other than refinancing or getting rid of private mortgage insurance(PMI). If you’ve paid 20% of the balance, get rid of the PMI, as it will save you somewhere close to $100 on monthly mortgage bills. To get rid of PMI contact your lender and state you’ve got to the 20% mark and want it off.

Should you get mortgage for a townhouse or a condo? In condos and townhouses you share ownership of common areas such as walls, facilities etc, while with townhouses you might own a backyard or a parking. Getting a mortgage in Canada will not usually impact the choice, so you can select to your own liking.

When getting a loan from a Canadian mortgage provider for a condominium, lenders are going to look at a number of factors: occupancy level (50% + is preferable), construction level, management, complex insurance policies, operating budged, outstanding loans on the condominium complex, percentage of renter and owner occupied condos, structural integrity.

Are you self employed? You cannot disclose your income? Low Documentation mortgages are designed for recent immigrants and self employed individuals who cannot or do not want to disclose their financial information. You will need good credit rating and some savings. Expect higher mortgage rates on No-Documentation loans.

Canadian Mortgage Organizations and Institutions

Here you can explore Canadian agencies governing mortgage industry in each province and territory.

British Columbia

- Registar of Mortgage Brokers

Alberta

- RECA

Saskatchewan

- Saskatchewan Financial Services Commission .

Manitoba

No governing agency

Ontario

- Financial Services Commission of Ontario

Quebec

- ACAIQ

Nova Scotia

- Service Nova Scotia and Municipal Relations

New Brunswick

- Department of Justice and Attorney General Consumer Affairs Branch New Brunswick

Prince Edwards Island

- PEI Provincial Affairs and Attorney General

Newfoundland & Labrador

- Financial Services Regulation Division Department of Government Services

Northwest Territories

- Department of Justice

- Government of Northwest Territories

Yukon

- Land Title Office

- Department of Justice

Nunavut

- Nunavut Legal Registries

National Mortgage Organizations

Canadian Institute of Mortgage Brokers and Lenders (CIMBL)

Canadian Institute of Mortgage Brokers and Lenders is a national mortgage industry association founded in 1994. CIMBL holds leadership position in the industry with over 11,000 members and growing. It brings together all key players from Canadian mortgage industry, including Banks, Trusts, Insurance Companies and Credit Unions.

CIMBL Foundation is(part of CIMBL) was founded in 2000 to support research and education of Canadian mortgage industry professionals.

CIMBL also:

- Represents regulators and members of governments.

- Sends monthly newsletters and journal publications.

- Hosting of Canada’s national Mortgage Conference and Expo

Independent Mortgage Brokers Association of Ontario

The Independent Mortgage Brokers Association of Ontario (IMBA) is an organization of mortgage financing professionals. IMBA exists to advance the mortgage brokerage industry on behalf of its Members through public advocacy; to participate in consultative processes with regulators and other industry participants; and to generally assist its Members with their businesses. Members of the Association are required to meet professional standards as a condition of membership.

Mortgages in Canada, Low Interest Rates on Loans and Mortgages.

Mortgages Canada provides Home mortgages, Fixed Rate Mortgages, Adjustable Rate Mortgages, Home Equity Loans and variety of other customizable mortgages.

What are you looking for in a Mortgage?

Having established a network of mortgage brokers, banks and private mortgage lenders, Canada Mortgages can find loan that suits your unique requirements. No two buyers are equal. The unique financial situation and long term goals are the criteria by which we look for mortgages.

Are you looking for:

- Low mortgage interest rates?

- Long term mortgage security?

- Mortgages that adjust?

- Extra funds each month?

Let Mortgages Canada know. Having access to various mortgage lenders across Canada we can shop and let you know what we find. Canada Mortgages has compiled a comprehensive mortgage glossary and mortgage calculatiors to assist your shopping for mortgages. Each calculator is specially designed for specific mortgages, ensuring that you can foresee precise payment estimates, interest rates and terms.

Mortgages from independent lenders and loans from a variety of mortgage brokers is the flexibility that gets our client lowest interest rates in Canada!

Please Explore Our Mortgages:

First Mortgage

Are you a first time buyer? Not sure which mortgage to choose? Let us help.

Refinance

Looking for lower rates? Markets are just right, let Canada Mortgages assist.

Fixed Rate Mortgages

Fixed rates, for as long as you prefer. Have piece of mind knowing interest rates will never change.

Adjustable Rate Mortgages

Have your interest rates adjust. Pay lower interest than on other mortgages.

Home Equity Loans

Would you like extra cash for renovations, new car or a vacation?

Reverse Mortgages

Are you over 60? We can provide cash to help your kids or to give you more financial freedom.

Mortgages for Self Employed

Entrepreneurs and freelancers. Good Credit, Bad Credit, Savings but no recordable income. We do it all.

Looking for something else?

Explore more mortgages

Our website provides up to date, daily interest rate updates on mortgages, as we gather information from numerous financial institutions and give precise numbers on current interest rates.

Markets change, so do mortgages. If you require assistance or have questions - we will be there for you to address them, at no charge. Enjoy world class mortgage services with Mortgages Canada Company.

Everyone has got their own needs and strengths. Mortgage Canada works with you to satisfy your needs while taking advantages of the strengths. Banks only have that much in store in terms of mortgages and packages. Having access to numerous mortgage providers(including banks) we make sure you get mortgages that suite the criteria in all the aspects, such as: down payment, credit, rate, terms, opt-out, caps, benefits and more.

With so many options on the market, choosing the right mortgages can be tricky.

Buying a home is one the biggest investments in our lives. Thanks to many mortgages and various loans we have the ability to purchase our homes. Mortgages constitute the backbone of all real estate industry and as a Canadian Mortgage provider we take extreme care in finding mortgages with lowest interest rates possible. Fixed Rate Mortgages, Adjustable Rate Mortgages, Refinance Mortgages, Home Equity Loans and others. Canada Mortgages has the ability and the honor of working for everyday, regular people, looking to build their lives and homes. Let our qualified mortgage professionals can assist you in this big step.

Apply for a mortgage with Canada Mortgages

We offer mortgages in Ontario, Quebec, British Columbia, Alberta, Nova Scotia, Manitoba, New Brunswick, Prince Edward Island, Northwest Territories, Nunavut, Saskatchewan, Newfoundland and Labrador and Yukon Territory.

We hope that enjoy your Stay at Canada Mortgages and find a mortgage you are looking for!

Fixed Rate vs Variable (Adjustable) Rate Mortgages

The choice is between fixed and variable mortgage is one that many Canadians face.

Fixed Rate Mortgages - provide security of equal monthly payments.

Variable Rate Mortgages - can save money, but payments fluctuate based on changing interest rates

A Canadian Professor York University’s Dr. Moshe Milevsky, conduced a study in 2001 where he argues that Canadians save money 88.6% of time by choosing variable rate mortgages. In 2004 he issued an update for the report, reaffirming himself.

Dr. Moshe Milevsky recently updated the report where he states that:

- Based on 1950 to 2007 data Canadians could save on variable rate mortgages 90.1% of the time by $20,630 over 15 years per $100,000 borrowed.

- Adjustable rate mortgages allows people to reduce their mortgage life by an average of 1 year.

You can find his Papers:

2001 Original Report

2004 Update

2008 Update

Mortgages Canada offers assumable Edmonton mortgages. Apply for assumable Edmonton mortgage.

What is Assumable Mortgage?

It is the mortgage that can be transferred to another owner upon sale. The mortgage provision will usually contain:

“Should the Mortgagor transfer the property to a new owner the Mortgagee has the right to require the new owner to qualify and has the right to declare the mortgage due in full.” - Edmonton Real Estate Blog

The benefit of getting an assumable mortgage from the seller are lower interest rates. Assumable mortgages in Edmonton and elsewhere, also usually have lower payments, speeding up the repayment process and saving money on interest. Getting an assumable mortgage in Edmonton is beneficial if you’re planning on selling the property to the your friends/relatives or looking forward to making a little surprise to the future buyer.

Another type of Edmonton mortgage is Retainable mortgage. It is the mortgage that you can transfer to another property. Scenario:

You sold your Edmonton house and purchased another one. If you had retainable Edmonton mortgage it would transfer to the new Edmonton property, keeping the same rates, balance and charges.

Retainable Edmonton mortgages are quite beneficial as they can save a great deal in interest rates. You are still required to pay for the transfer though.

Assumable and Retainable Edmonton Mortgage

This type of mortgage is extremely practical and beneficial, both to buyer and seller. As a buyer you can carry on the same rate and the exact mortgage, over to different properties, saving on interest rates and monthly loan payments. As a seller you can score a better deal since people will be willing to pay more for the house if they can get lower interest rates and save money in the long run. Assumability and retain options are win-win for Edmonton home buyers.

Assumable mortgages in Edmonton and throughout Canada have undergone some changes. For the buyer to qualify for the assumable loan, he must be approved by the lender or seller must maintain liability. Sometimes lenders will raise the rates a notch if buyer does not have best purchase power.

Mortgage News

Desjardins Group Lowers Interest Rates - Canada Mortgages

    <<

    -----------------------------------------

       Terms                  Rates

    -----

    -----------------------------------------

    6 months open        8,90 %   unchanged

    -----------------------------------------

    6 months closed      7,05 %   unchanged

    -----------------------------------------

    1 year open          9,40 %   - 0,10 %

    -----------------------------------------

    1 year closed        7,10 %   - 0,05 %

    -----------------------------------------

    2 years              7,30 %   - 0,10 %

    -----------------------------------------

    3 years              7,30 %   - 0,10 %

    -----------------------------------------

    4 years              7,20 %   - 0,15 %

    -----------------------------------------

    5 years              7,25 %   - 0,15 %

    -----------------------------------------

    7 years              7,65 %   - 0,05 %

    -----------------------------------------

    10 years             8,00 %   - 0,05 %

    -----------------------------------------

Laurentian Bank lowers its mortgage rates - Canada Mortgages

    <<

    TERM                     RATE    VARIATION

6 month open:        8.90% to 8.90%  0.00%

    6 month close:       7.05% to 7.05%  0.00%

    6 month convertible: 7.10% to 7.10%  0.00%

    1 year open:         9.50% to 9.40% -0.10%

    1 year close:        7.25% to 7.10% -0.15%

    18 month close:      7.35% to 7.25% -0.10%

    2 year:              7.40% to 7.30% -0.10%

    3 year:              7.40% to 7.30% -0.10%

    4 year:              7.35% to 7.20% -0.15%

    5 year:              7.40% to 7.25% -0.15%

    6 year:              7.60% to 7.55% -0.05%

    7 year:              7.70% to 7.65% -0.05%

    8 year:              8.00% to 7.95% -0.05%

    9 year:              8.00% to 7.95% -0.05%

    10 year:             8.05% to 8.00% -0.05%

    >>

National Bank (TSX:NA) has adjusted its rates for residential mortgages -
Canada Mortgages

TERM                   CURRENT NEW  CHANGE
                        (%)    (%)
——————————————-
——————————————-
FIXED-RATE OPEN TERM
6 months open          8.900  8,900  0.000
1 year open            9.500  9,500  0.000

FIXED-RATE CLOSED
TERM
3 months closed        7.100  7.100  0.000
6 months closed        7.100  7.100  0.000
1 year closed          7.250  7.100 -0.150
2 years closed         7.400  7.300 -0.100
3 years closed         7.400  7.300  0.100
4 years closed         7.350  7.200 -0.150
5 years closed         7.400  7.250 -0.150
7 years closed         7.700  7.650  0.050
10 years closed        8.050  8.000 -0.050
VARIABLE-RATE CLOSED
TERM
5 years Variable rate
(discount included)    5.500  5.500  0.000
5 years Saver          6.750  6.750  0.000
5 years Capped rate    5.750  5.750  0.000

Scotiabank changes mortgage rates - CNW Group

<<

-one-year open      9.35 per cent

(decreases by 0.10 per cent)

-one-year closed    7.20 per cent

(decreases by 0.10 per cent)

-two-year closed    7.30 per cent  

(decreases by 0.10 per cent)

-three-year closed  7.30 per cent     

(decreases by 0.10 per cent)

-four-year closed   7.20 per cent  

(decreases by 0.15 per cent)

-five-year closed   7.29 per cent   

(decreases by 0.10 per cent)

-seven-year closed  7.65 per cent   

(decreases by 0.05 per cent)

>>

Commercial mortgages may be TD’s weak spot - Financial Post

Executives at Toronto-Dominion Bank have accepted deserved plaudits for avoiding the sort of subprime-related writedowns that have beset rival banks. But if pride comes before a fall, TD’s senior management will likely be growing more wary about the bank’s exposure to other areas of the faltering U.S. economy, and in particular the deteriorating commercial real-estate sector. Defaults on residential mortgages have rightly grabbed most of the negative headlines out of the U.S. financial sector, but higher defaults on commercial real-estate loans look more likely too.

Stocks lower as Fed chief Bernanke says conditions worsening - Canada East Online

TORONTO - Stock markets closed lower Thursday with investors opting to take profits after U.S. Federal Reserve Board chairman Ben Bernanke delivered a discouraging litany of what’s wrong with the American economy. In fact, he told the Senate banking committee that business prospects have worsened and predicted the economy will grow at a “sluggish” pace before recovering later in the year and that banks’ mortgage investments could lose more value. That took some of the shine from big stock-market advances Wednesday which had followed a better-than-expected reading on U.S. retail sales and New York’s Dow Jones industrials gave back almost all of Wednesday’s 179-point runup, losing 175.26 points to 12,376.98.

Real Estate News

Buying a Home - The Vancouver Sun

Buying a home is one of the biggest decisions you’ll ever make. So when it comes time to signing on the dotted line, make sure you don’t make that decision alone.

To help you put together the right team of professionals, Canada Mortgage and Housing Corporation (CMHC) offers the following whose-who list of experts and what they should bring to the table: Real estate agent. Among other services, your real estate agent will help you find a home, write an Offer of Purchase, negotiate a purchase on your behalf and save you a considerable amount of time, trouble and headaches. When choosing the agent you want to work with, don’t be afraid to ask questions or call your local real estate association for advice.

Condos are a viable option - The Daily Press

Home ownership is a Canadian dream for many people. For those with limited funds, or for empty-nesters wanting to downsize, buying a condominium is often a good option.

Condos are hot lately. Some cities in Canada are going through a major condo boom with lineups when new units are released. Building of new condos is one-third of all new home construction, up from one-fifth a decade ago. When you buy a condo, you are personally buying your unit. That unit could be an apartment-type building, townhouse, semi or even a detached home.

Is Your Agent a Double Agent? - Real Estate Intelligence

Let’s say you walk into an open house and you’re approached by the friendly real estate agent sitting at the dining room table. You’re very interested in the house and she says that she can represent you in its purchase. If you agree, you could be giving up your right to an advocate who solely represents your interests by signing up with a dual agent — multiple representation in real estate parlance.

Calgary real estate market healthy despite U.S. turmoil - Calgary Herald

CALGARY - Canada’s real estate market remains healthy despite the current credit situation that is reverberating out of the United States and the Calgary market continues to be an attractive one for potential investors, says a global report released today.mDTZ Barnicke’s “Global Views 2008″ real estate report said 2007 was another strong year for investment activity as “investors, both foreign and domestic, continued to view Canada in a positive light.

How Does a Home Equity Loan Work

What’s a home equity, how does home equity loan work? What are the prons and cons? What is HELOC and should you consider home equity loan? This article will explain what it is and how does a home equity loan work.

Home Equity Loan(or home equity mortgage) is debt against the equity of your home.

What is Home Equity?

Home equity is the value or the portion of the property that you own. Let me give you an example.

You want to buy a house for $200.000 and have $30.000 down payment. You arranged with your bank for a $170.000 mortgage with $30.000 to buy it. In that case:

House Value: $200.000
Banks Equity: $170.000
Your Home Equity: $30.000

Home equity is the amount that you own in your house.

Let’s say after 10 years of living in that house you paid out $90.000 on the mortgage. Not only you paid out $80.000, the house value has gone up by $50.000! Instead of $200.000 your house now costs $250.000. In that case the calculations are:

House Value: $250.000
Your Home Equity: $30.000(down payment) + $80.000(paid over 10 years) = $110.000

But since the value of your house has gone up by $50.000, you can add that $50.000 on top!

So the new calculation is.

House Value: $250.000
Bank Equity: $90.000(since you pay mortgage over time, bank equity goes down)
Your Home Equity: $110.000 + $50.000 = $160.000

Home equity is the amount you own in your house. Your home equity may go up if the price of your house goes up.

How Does a Home Equity Loan Work?

Let’s take previous example again. The price of your home went up by $50.000 in 10 years, meaning that your home equity grew by $50.000 in 10 years(the total amount you own).

Suppose you want some cash all of a sudden. Your kids go to college, you feel like doing renovation, medical bills mount up or you simply feel like taking a hot vacation or driving a sexy car.

You can take a home equity loan, against the equity in your house. As we know, your house value has gone up by $50.000, so you can go to the bank and say:

I want $50.000 grand right now. My house value has gone up by $50.000, and I own more than that in my house, can you give me some cash?

The bank says yes, and gives you $50.000 cash. In exchange you sign papers, guaranteeing to pay off that $50.000 over… lets say 10 years. If you fail to pay it out, bank comes in, sells your home and gets back the $50.000 it lended.

Home equity loan is a second mortgage against your property. Your guarantee to pay it out and collateral is your equity that you own in your house.

The two Types of Home Equity Loans and Interest Rates on Home Equity Mortgages

There are two types of home equity loans.

Home Equity Loan

It is like a regular mortgage. You borrow a big sum of money agaist the equity in your home(like we discussed above) and pay it back over time.

The interest rates are fixed. So if you borrowed at 6%, it will stay at 6% until you pay it out.

Home equity mortgage is good for people who need money for one big occasion, like a wedding, education, renovation etc.

Home Equity Line of Credit or HELOC.

Another type of Home Equity Loan is called home equity line of credit or HELOC for short.

It works just like a credit line. Imagine a line of credit, lets say for $60.000. You have it and can take as much money as you want, up to $60.000, at any time. You want a $100 for a good dinner? Go ahead and take it from the credit line. Need $20.000 for a new car? Go ahead and borrow it. There is no limit(up to $60.000) and you can pay it back any time, partially or in full.

The home equity line of credit is absolutely the same, the difference being is that you borrow against the equity in your home. So suppose your equity is $100.000, you can get a HELOC for $100.000. and spend as much as you want, up to a $100.000.

When you get home equity line of credit, lenders give you a special type of card that you can use. Kind of like a credit card.

HELOC allows you to borrow as much as you need when you need it. There is a set date by which you should pay out whatever the balance you owe. If you fail, lender will take your property away.

Interest rates are variable(adjustable), meaning that you pay different rates every time market conditions change. The rates may go up and down, regardless – you always pay the market price.

Pros and Cons Of Home Equity Mortgages

Pros

- You deduct taxes for home equity loans of up to $100.000
- Can be used for variety of purposes: buying new items, medical bills, education, renovation, debt consolidation, emergencies, vacations
- Lower interest rates than credit cards and car loans

Cons

- Can be risky for people who love to spend too much
- If you don’t pay you lose your house
- If the home market value goes down you end up owing more than the value of your home
- Home equity lines has variable rates, meaning that monthly payments go up and down

Mortgage Underwriting

Mortgage underwriting is the process that determines whether you will get a mortgage. There are many stages of underwriting and many factors that affect it. This article will teach you what lenders look at and some tips that will help you get through mortgage underwriting.

Underwriting Step 1: Information Verification

Due to the number of people making false claims on their applications, most lenders need to verify information you provide. This includes:

• Calling your employer
• Checkingyour current property status
• Analyzing Credit Score

It is in your best interest to include valid information, since false claims may go on the record, making it harder in the long run. If you get declined, shop a couple more lenders, search online.

Underwriting Step 2: Appraisal

Lenders want to know that the property being bought is worth the asking price. Independent appraiser will look at the property, estimate the value and report back to the lender. This is done ensure property is in the condition to be sold at a later date, estimate future pricing and to prevent mortgage fraud. As funny as it sounds, a number of people scammed TD Bank for millions by buying parking spaces, disguised as condos.

Underwriting Step 3: Title Search

Title refers to the ownership. Lenders want to know they’re lending money on a property that does not have any other owners. This includes relatives, spouse, kids etc., as it can cause problems in the future. Image a relative showing up, saying: “I own this place.” Not a good situation, hence lenders back themselves up.

Underwriting Step 4: Flood Certification

What if the lake strikes? An Ocean? Property will be damaged. If your area poses risk of being flooded, lenders will require Flood Insurance.

Underwriting Step 5: Home inspection

In this mortgage underwriting stage independent inspectors look at structural integrity, base, foundation, walls, mechanics, plumbing, electricity. It may be necessary to repair your house to get the mortgage. If lenders find a flaw they are less likely to give you the mortgage. Home inspection is billed to the borrower and is around $300-600

Mortgage Underwriting Tips

To ensure you stand the best chance of getting through mortgage underwriting, try a couple of tips:

• Give lenders complete documentation
• Answer quickly to all the requests
• Check regularly, ask on the status of the underwriting
• State the truth on mortgage application
• Keep all the record of conversations to insure yourself, just in case

Good luck in your mortgage underwriting process.

Information About Deferred Interest loan, Know Before You Sign up.

Deferred interest loan also known as the negative amortization mortgage is a type of mortgage that does not reduce the principal balance but actually increases it over time.

As you go for negative amortization loan you have the option of paying less than the required amount each month. Every penny that you come short is added to your principal.

Positives of deferred interest mortgage:

–Low Payment
–Can purchase bigger homes

Negatives of deferred interest loan:

–Does not pay off balance
–Balance increases with time
–Can “shock” when time for paying off balance comes

Negative Amortization Mortgage and Interest Only Mortgages

Deferred interest mortgage is an interest only loan with one difference.

You can come short on payments.

With interest only mortgage, you pay only the interest on your mortgage for the first couple of years. After set period of interest only payment expires, mortgage changes to “regular” loan, where you pay for both principal and interest.

This can come of shock to a number of people. Lets say on a $200.000 an only interest payment was $1000 for 7 years. As time passes by, you haven’t reduced the principal by a penny and now you must pay it off faster. The amount due every month can raise to $1400, which can come as a surprise.

Deferred Interest is Similar to Interest Only Mortgage

Deffered interest mortgage is similar, but you can come short on interest rate payments. For example, if your payment is $1000, you pay $800 each month. Every $200 you miss goes on top of the principal. So instead of $200.000 you will have $200.200 and so on.

In a sense, deferred interest mortgage acts as if you are borrowing more money.

Who can benefit from Negative amortization?

– Deferred interest mortgage can be suitable for people who are confident that their income will go up with time.

– People who are running a business and need more cash for years to come.

Is deferred interest mortgage dangerous?

It can be. In some cases people may end owing more then the value of their home. After years of payments, the principal may only grow, hitting borrowers wallets both in the short and in the long run.

As Deferred interest mortgage helps people afford bigger houses, some people may bet that the house value will go up with time, but betting on real estate can be quite tricky.

The suggestion is to be careful. Deferred interest loan has it’s ups and downs. Research before signing anything on paper.