Looking at the Bigger Picture

Jeff Evans

All parties – bankers, lenders, mortgage brokers — have a responsibility to perform due diligence with every valued client we deal with. However, there is one step that is either over looked, or not valued, by some folks in this business. And it is a step that I feel should probably be held in the highest interests: placing our clients in a mortgage that will be serviceable not just today, but for years to come.

I’m not sure why some institutions don’t seem to value this aspect when providing their clients with a mortgage. Is it because it is hard thing to do? Maybe. But all it really takes to do this is to provide the best estimation of your balance at the end of the first term as possible, and wager against what future rates might look like.

Let’s start with what we know right now: rates are bound to go up at some point. Just how much they’ll go up… now that we don’t know. That’s where the “wager” comes in. If I wager that rates will be up between 3% and 5% over the next 5 years (or whatever initial term you’re partial to), it stands to reason that I’m doing my best to limit your risk of entering into a “said” mortgage for today.

I’ll also take your estimation of what you think your salary will look like in 5 years. That gives us an idea of what we can expect down the line. From this perspective, we can devise a “likelihood” of what your future mortgage might look like. At the very least, you’re going into this mortgage with an idea of what could happen over the course of this major investment.

Of course, we could be off. Rates could be up 6% to 8%, or maybe even less than 3%. It’s impossible to tell. But by going through a few scenarios, I can help you plan for the inevitable ups and down that come with a mortgage. I believe it is important that you enter into this investment with both eyes open, and that you are prepared for a number of different scenarios.

When a lender tells you what you can qualify for on paper as a maximum mortgage… I highly recommend that you consider letting me play the scenarios first! It’s easy to get starry eyed with how much you can afford on paper today. But by running through the scenarios as we just discussed, I can help you protect your risks today, while taking into account tomorrow’s uncertainties.

This isn’t as wild as it sounds, and I believe it is more than worth the time involved. So before you jump into a mortgage with a bank, let’s run the numbers a few different ways, so I can provide you with a more complete picture
of what you are capable of when it comes to committing to a mortgage. That’s my job, and I love it!

******
The above blog post is courtesy of Chris Turcotte; a Mortgage Broker and Owner of CENTUM Mortgage Choice in Brandon, MB.

CENTUM Mortgage Choice is Brandon’s Premier Mortgage Brokerage committed to saving you time, money and stress during the mortgage process.

Author: Jeff Evans

I am a mortgage broker, hair salon owner, squash player, student, and husband, aspiring to do good for people.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Related Articles

Vancouver mortgage broker with “lower” fees
Jeff Evans
No Comments

I have had a in interesting case with a returning client who came to me recently for help with his mortgage.  As a mortgage broker in Vancouver, it is necessary to be creative in making solutions work for my clients, which currently can often involve secondary or private lending solutions.  This was a case where such creativity would be necessary.Read More

home buyer mortgage broker
First Time Home Buyers Mortgage Broker Tips And Tricks
Jeff Evans
No Comments

Among the services I provide to my clients, I consider myself to be a "first-time home buyer mortgage broker".  As a first time home buyer mortgage broker, I know how difficult it is to get into the real estate market, particularly in Vancouver, and it brings me a particular amount of job to help someone get past the challenges if being a first time home buyer.

I have recently completed an e-book and will be launching it soon.  I believe it will be very helpful for not just first-time home buyers, but for anyone who is not as knowledgeable in residential mortgage lending, about how to make your home buyer mortgage broker application appealing to a mortgage lender.

As a sneak preview, here are three tips on improving your mortgage application as a first-time home buyer.

3 Home Buyer Mortgage Broker Tips

  1. Take advantage of the home-buyers plan to fund your down-payment.  This program is not technically ONLY for first-time home buyers, but all first-time home buyers are eligible.  Under the plan, you can borrow up to $25,000 from your RRSP for the purchase of an owner-occupied residence.  If you and your spouse are both applying, then you can withdraw $25,000 each. It is a loan, so it has to be paid back over 15 years (or 1/15th of the loan will be added to income for that year).  However, there is no withholding when you withdraw it, it does not have to all be declared as income on any given year, and you don't even have to use all of it for down-payment!  You can use it for any purpose that you need it for. A good mortgage broker, like myself, can help you with some of the finer details and complex situations that often arise from these situations.
  2. Make sure you pay your bills on time. If you have a high balance on your loan, or you have a lot of debt, those also have a significant negative impact on your credit score, but you can get the bills down and there is no record of your high debt levels.  However, when you miss a bill payment, it stays on your credit bureau for 6-7 YEARS.  This not just negatively impacts your credit score, but lenders look at this when assessing risk, and they have been particularly uncompromising and (unreasonable, paranoid, strict...and other words that I cannot put in print) in the last few years.  While you likely do not have to wait 6-7 years to become bankable if you have had gone through a period of bad credit, the less negative credit on the bureau, the better. At least make the minimum required payments and you will go a long way to making yourself appealing to them.
  3. Having no credit is just as bad as having bad credit. Many people feel that not requiring credit should prove your ability to pay your bills and should be good evidence of credit-worthiness.  This is not how mortgage lenders think.  If you currently do not have any credit, then you do not have any documentation that you are an acceptable credit risk, and no matter how strong your income is, you will have difficulty obtaining a prime mortgage approval.  Make sure you have at least 3 different credit facilities in your name.  (Secondary credit cards in a spouses name are not considered acceptable for establishing your credit).

I am excited to launch my home buyer mortgage broker e-book soon, in which I go into much greater detail and give many different ideas to help home buyers prepare for home ownership, but as a mortgage broker in Vancouver, you are welcome to contact me in the meantime to discuss your circumstances and see if there are any options for you.

mortgage broker Vancouver BC
Good news regarding OSFI rule changes
Jeff Evans
No Comments

This is just a quick note to let viewers know that IF you are one of the people with 20% or more down-payment and are in a position that the new OSFI rule changes affect your pre-qualification, that I can extend the current guidelines into the new year by up to 120 days provided that I have an application and am able to get a pre-approval in place with a lender for you before January 1.Read More