Just Saved My Friend $19,000 In Penalties.

Ugh, Divorce. Big D. Terrible thing to happen to people, complicated, and tough. We all know someone who has gone through it, and we all know the costs involved. The last thing on anyone’s mind when buying a home with their spouse is the potential of divorce. The first thing on everyone’s mind when divorcing is “how much is this going to cost me”. Ok, maybe not the first thing, but eventually it’s a question we all ask.

I have a real-life story for you. I have a client who bought in January 2013 and took out a 5 year fixed 2.99% mortgage. He was a first-time buyer, recently married, and starting a new life with his young family. Unfortunately for one reason or another, things turned, and 2 years later they’re splitting up. They only put down 5% so they didn’t have much equity. However, housing has still remained…


What You Need To Close The Deal

Recently I ran into a disagreement with a client over the most simplest detail. What was it? Would you believe me if I told you that the client was unwilling to provide their bank statements WITH their account number on them? So much so that the client simply walked away and went back to their home bank - the same bank that can literally tap into their entire financial picture and get their last twenty years of history in one fell swoop. But I digress.

This incident got me thinking: How can I best explain to clients what is generally needed for closing of a deal? Well, here’s a list that will prepare you for that time!

1. Employment Documentation

Often times the lender asks for an employment letter and paystub from the past 30 days. If the paystub isn’t by ADP or Ceridian, or any standard payroll processing…


Understanding Your Credit Report.

Many times I’m asked how to improve credit, how to keep good credit, or how to build credit. This blog post will identify what your credit score is made up of, and offer suggestions on what to do to affect the score.

First of all, the biggest effect on your credit is your PAYMENT HISTORY. 35% of the credit score relies on your payment history, which includes such things as details, collections, unpaid credit, amount of delinquency, dates of past due items and amounts of past due items.

Obviously it is most important to keep collections off your report, and to pay everything on time. That’s rule #1 in maintaining good credit.

The second biggest impact on your credit is UTILIZATION. This affects 30% of the credit score. This is where being over the limit hurts your credit greatly. This is also how many accounts you have, what kind of…


Standardizing Penalties

The best way to fix this mess that many borrowers are currently in is to standardize penalties across the board for fixed-term mortgages. What is the best way to do this, though?

Currently there are essentially two ways in which a lender will calculate your penalty:

1. The beneficial way.
2. The dreaded way.

If you fall under #1 then your lender will compare best rate available for term left to the rate on your current mortgage contract.

If you fall under #2 they will use a smorgasbord of excuses and arguments to justify comparing posted rates to your current rates, and/or an extension of some other evil scheme to try and exact maximum penalty from you when breaking the mortgage commitment.

Let’s look at a $450,000 mortgage that you hypothetically took out in September 2012, at a rate of 3.09%. This was about where rates were in 2012,…


What To Do When Your House Doesn’t Appraise

I’m going to welcome myself back with a story that may happen to any buyer out there going without financing condition. What’s the likelihood of it happening? Well, since I can remember, this has only occured to me three times. In twelve years. And I’ve seen a LOT of deals come across my desk, so statistically speaking it’s not a common occurrence. That being said, here’s what to do if your house doesn’t appraise and you made a firm offer on a purchase:

First of all, one single appraisal does not a value make. There are many appraisers in the city that can give us another opinion, not to mention there are still “auto-valuation” lenders that don’t ask for appraisals. As a result one appraiser’s opinion needs to be verified if truly that appraisal number has been low-balled.

If you have 5% down - the bare minimum then you really…


Reading Between The Lines

I recently read an article advertising Scotiabank’s push into the 5-year fixed rate war by way of offering 2.97% to clients. I found some of the points in the article to be quite interesting, and have added my $0.02 below.

Bank of Nova Scotia is the latest lender to push the envelope on mortgage rates, offering a five-year fixed rate of 2.97 per cent.That’s the lowest five-year fixed rate among the big banks, and comes in slightly below the 2.99 per cent rate that Bank of Montreal has sparked controversy with in recent years (Bank of Montreal’s current five-year fixed rate is 3.29 per cent).

My Take: 2.95% 5-year fixed has been in the offing by a local credit union with 61 branches in the GTA and surrounding region. This offer has been available for the past three months, so I don’t see what the big…


The Curious Logic Of The Self-Employed Program Known As “Stated Income”

I have an excellent client who, 5 years ago, would have qualified with his eyes closed and in about 1 hour for his mortgage application. He’s a high-earning corporate recruiter who works on contract for a major Canadian company, and files his own taxes under his own corporation. Let’s say his income is $115,000 based on his contract. He makes $115,000 and then deducts basic expenses as: car, travel, gas, food, lodging, CPP, EI, etc., and pays himself a salary from the company that he is the sole owner of. Following me so far?

When submitting a file under the stated-income “self-employed” program, two questions come into consideration:

1. The “reasonability” of income?
2. Is there a cash component?

Here’s where it gets tricky. Who determines reasonability? The insurer. That’s it. The insurer tells me whether the client makes money that is ‘reasonable’ or not. How do they…


Mortgage Rules Change Again (Slightly)

You know when you’re driving along and suddenly out of no where you get t-boned by a mack truck? That’s sort of how I felt when I read this headline:


However as I emerged from my dizzy state I then read further and realize “meh, nothing big here”

1. No More Self-Employed Without Income Under CMHC

This is the biggest change of the two. However in reality it’s not that major. Here’s why: CMHC requires a self-employed borrower who cannot prove income to be self-employed for more than 2 years and less than 3 years. It’s like fitting a locomotive through a mouse hole. I don’t recall the last CMHC self-employed approval I received due to this incredibly tight loophole.

Why this isn’t a big deal: It’s not a big deal because Genworth still carries a self-employed stated-income program with 10% down, and can…


How Do I Get Paid?

I met with two young first-time buyers who were eager to get the ball rolling on their home purchase. First things first was to get them pre-approved which meant we met at a local Starbucks to discuss the fine nuances of mortgage financing options. Towards the end they both asked me straight up “Ok, so how do you get paid? How much do we owe you for this?”. A great question - one that I’d like to explain here as I did to them.

I only get paid if and when I close a deal. I don’t get paid for my time to meet people before they buy something, nor to discuss a multiple-offer situation with them when it’s 7pm a rainy Tuesday, or to help them understand their options on an early morning Sunday. When the deal is closed is when I get paid by the lender. Depending on…


How I Saved My Client $19643

Recently a client we will call Jack called me in a panic. His multi-national company was offering him a glamorous opportunity to work in the far east, on a permanent full-time basis. This was just the opportunity he was working for and finally the call came, very unexpectedly.  Jack had bought a home with his wife less than 1 year ago and took a 5-year fixed mortgage at 2.84%, so obviously did not plan to be making a global move of this kind anytime soon. When I first met Jack he raved about his experience with one of the big banks, and wanted assurance that the lender or bank we picked for him would be as good, if not better. After a couple of meetings and many emails, we settled on a great lender, CMLS Financial, who offered us a fantastic rate and even better terms *& conditions.


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