Blending Vs. Blending-And-Extending: What The Diff?

Today’s post focuses on a little-known mortgage feature that some lenders do not have, but that can bite you in the rear at the most inopportune time: When it’s time to move your mortgage. We’re talking about blending vs blending-and-extending your mortgage when you’re moving up, across or even down the property ladder. What do I mean by this exactly? Easy:

When you sell your property and buy another one, and if the math makes sense to stay with your bank or lender, you have the option to transfer your mortgage over. Hidden deep deep down in the disclosure documents you received when you first bought your house and took out a loan was the option to blend OR blend-and-extend. Not every lender has both options and here’s why it can get rather messy:

If you’re breaking in the middle of a term (let’s say a 5 year), and moving, some banks or lenders will force you to “ride out” the existing number of months you have left and blend your rate. However where this becomes complicated is, these lenders force you to use the much harder qualifying rule, therefore, even though you’ve gone firm on your purchase & sale, and you went to the bank to make sure you qualify, the bank forgot to apply the harder qualifying rule and voila: you’re now left with having to pay a penalty to leave.

Some numbers to back this up please you ask? Here you go:

Sonya and Billy bought a house in 2013 and just had triplets. Their 2 storey townhouse had only 2 bedrooms and they are running out of room. They have a 5 year fixed mortgage at 3.19% from 2013 December, and now, they bought a new 5 bedroom home and are increasing their mortgage by $150,000…


Got Married? Congrats! Now Merge Your Credit!

Today’s post will discuss what to do if you get married and/or have a different legal name vs your “home country” name. This is crucial for maintaining your good credit rating because, borrowing is all based on your beacon score. No beacon? No loan! This is also an example how I #createvalue for my borrowers, by going the extra step required to make their borrowing roadmap without any detours.

Gary and Angela called me to get pre-approved for a mortgage. We discussed things in detail from a high-level point of view prior to pulling their credit. Once they were satisfied with the potential numbers, we did a credit inquiry. Lo and behold, Angela’s credit showed up as the dreaded BEACON REJECT - which is credit-report-slang for “Hey! You have no active/actual credit!”. This was a surprise to everyone since Angela showed me three credit cards she had in her possession which must result in a credit score being active. When we looked at her ID, though, we had two names: Married name on her ID but maiden name on her credit cards. A-ha!

A quick call to Equifax yielded the recommendation to merge the two credit reports together, and combine one credit score, report, and history that had all relevant information including her mortgage details, great repayment history of her credit score, as well as all previous and current employment information. Although not a simple process, we managed to simplify it for her by having the right relationship with the credit reporting agency including a business-only call centre that helps very promptly.

This type of transaction can be for people who have been recently married OR people who have two names:  Example, if you moved to Canada and had your “original” name on your citizenship and Government paperwork, but…


#assignmentgate in BC!

The Globe and Mail has been selling a lot of newspapers lately with their deep-down investigative journalism about the Vancouver housing market lately. Included in that is this weekend’s piece about The Real Estate Technique Fuelling Vancouver’s Housing Market which, to me, read a lot like sour grapes by sellers of already-vastly-overpriced-homes. A bit of greed, too. Let me not suggest that what is happening in Vancouver right now in light of these findings (and previous ones) is fair or equitable to the average Vancouver-ite. However, reading the reaction of some of the homeowners, I can’t help but think they should only look in the mirror and “blame” themselves for making “only” $4.843M in tax-free money on their home in 29 years.  Broken down, that’s like making $151, 172 PER YEAR of tax-free money. So, where’s the beef?

The beef is simply that Realtors are doing a lot of door-knocking, offering very rich prices for these homes, sellers are selling, and then that contract gets flipped once, twice, or more, for a higher price. Eventually the buyer that was originally on the paperwork has gone and left, and the new, actual buyer, has ended up paying hundreds of thousands more for that home (in this one case, $1M more). Is that fair? Absolutely not. However what kind of person agrees to an offer brought to them by a single Realtor who happened to be door-knocking, accepts the offer, doesn’t read the assignment clause, doesn’t ask their lawyer to review the offer, and then feels slighted that they were ripped off?

The moral to the story here is simple: As much as the public may loathe the work of a Realtor lately, a good Realtor is still someone that can (and does)…

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