The process through the banks.....

A old friend of mine I ran into the other day did not know I was a Calgary Mortgage Broker  and he told me how much a nightmare it was negotiating and arguing with the banks to find the lowest rate.   

He actually booked appointments with four different banks,  and answered the same questions over and over.  Just to get the quote on a mortgage rate that even after two weeks of shopping around arguing and negotiating I had access to lower mortgage rates all along.  He kicked himself that is for sure after we had our little talk.  

He also realized the banks only sold their products.  Which means he had a limited selection.  I showed him my rate and product sheets that I update daily which I have on all the banks and told him he wasted two of the appointments as the rate and or products were not what he was after.  Of course they did tell him differently.

He mentioned that he did not even think about wanting a broker, as he wanted to keep all his business at one place.    To which I reminded him that we actually do deal with the bank he wanted to stay at all along.

I then told him that its like going shopping in Vegas in a limo that you are driving yourself.   If you don't have a driver, sure you will see the sights, but would not a guided tour from a professional driver with a path to a destination free of traffic jams, all while you have a couple drinks taking in the sights and lights in the back with the moon roof open be a better use of your time?   
He did like the metaphor to say the least.  He is now one of my super fans!

If you want the tour just let your friendly local Calgary Mortgage Broker know and it would be my privilege to help you.

The process through a Calgary Mortgage Broker

Calgary Mortgage Brokers have a simple 5 steps program to guide you through your mortgage application and the approval process. As your Calgary Mortgage Broker I will work with you to assure the financing goes off without a hitch!

1. Connection
As a mortgage broker I have access to over 50 lenders and can arrange the right mortgage solution for your needs. Upon our initial consultation I will provide you with the following services to help you obtain mortgage financing:

• Overview of mortgage options customized to your needs
• A completed mortgage application

2. Collection
With your mortgage application, the lender requires Alberta Mortgage Brokers to collect and submit the following information: your credit report, agreement of purchase and sale(or estimated mortgage amount if you are refinancing), proof of income/employment, down payment amount, identification and solicitor information to the lender (be prepared to gather and send this documentation).

3. Submission
I will submit your application to a lender(s) that best meet your needs. With access to over 50 lending institutions including major banks, credit unions, trusts and other lenders , I can put significant negotiating power to work for you. 

4. Approval
The lender will issue an approval that will require your signature. Your approval documents will include payment details, mortgage terms and privileges, pre-funding conditions (if they apply). If your closing is more than 30 days away we will hold your approval and continue to monitor the market, within 4 weeks of closing we will contact you to finalize your approval documentation.

5. Closing
After signing and submitting all your supporting documentation, the lender will review and approve the final documents and send their instruction package to your lawyer. At this time you can meet with your lawyer to provide identification and signatures and review your final closing costs. On closing day, your mortgage funds are transferred to your lawyer.

Thank you for choosing me as your mortgage broker! Once your mortgage is closed; the stadard practice of an Alberta Mortgage Broker will be to continue to provide helpful information to guide you through market conditions. You can also contact me to navigate your mortgage options, finance renovations, purchase investment properties, or finance a debt consolidation in the future. It has been a pleasure helping you and I look forward to keeping in touch.

Credit & Debt Planning

If I have to tell someone that their debt ratios are too high to qualify for a mortgage, I always offer a solution.   Restructure, Restructure, Restructure.   If that does not work we need more income, so maybe find a co-signer or more downpayment.    Then and only then if that does make the deal I say the words that every Calgary Mortgage Broker hates saying.  Maybe you need to find a lower priced home.  Here is some more information about those ratios and what effects them.

 

Credit Cards

What you should take from this is that credit cards are merely a method of redistributing spending power over time at the expense of interest costs and in a pursuit keeping up with the neighbors and thus increasing your standard of living. There is a shifting consumer mentality from how much it costs to how quickly it can be purchased. Instead of looking at IF the purchase can be made, you have to look at should the purchase be made, and CAN I AFFORD IT?

Separating wants and needs is something that no longer crosses the consumers mind. We highly recommend reducing your credit cards to just two, and using one card more than the other. This card should be of the lowest rate available to you should you carry a balance. The problem is that with available balances impulse spending is more likely. Always try to transfer to the lowest rate card you have, if you can't get your cards down to one right away.

Lines of Credit

In most cases these are secured by assets, and are very similar to overdraft protection. This revolving loan may be a fixed amount or a percentage of the outstanding balance. We recommend if you must use this for personal use to that you ensure the rates are competitive as most times they are prime based and much lower rates than your average credit card. Credit cards with higher rates are often best transferred to a line of credit if the rate is lower. The LOC if secured is often based on prime and is often a very low rate.

How much can you handle?

Based upon the above information you are in a (choose four options to fill in) All decisions on credit is not based on a single system rather a combination of a multitude of factors and referred to as 'The 5 C’s of Credit'.

Character

Capacity

Capital

Collateral

Conditions

We know that credit rating is used mostly to ascertain the rate at which the loan will be given but is generally not a trigger on whether to lend or not.

Character

Character is mostly reputation and history with the bank or lender. Credit History also plays a role in this. - Every consumer has the right to check their history and can be done via the mail for free twice per year. There are also a number of paid for websites offering this service.

Capacity

There are a number of ways to calculate your capacity. 

The 2 most common are Total Debt Service Ratio and Gross Debt Service Ratio.

Historically, lenders like to see a ratio under 0.40 for new loans.

Total Debt Service Ratio is a rough guide for the amount of debt the individual can afford.

This is calculated as monthly mortgage or rent plus property taxes heating and 50% of the condo fees plus debt payments divided by the gross family income.

Total Debt Service Ratio = (Total Housing Expense + Debt Payments) / Gross Monthly Income

Gross Debt Service is a rough guide to determine creditworthiness. This is calculated as monthly mortgage or rent plus property taxes heating and 50% of the condo fees divided by the gross family income.

Gross Debt Service Ratio = Monthly Housing Expense / Gross Monthly Income

Capital

Traded in financial markets. Its market value is not based on the historical accumulation of money invested but on the perception by the market of its expected revenues and of the risk entailed.

Collateral

Having any asset that can be used as security. For example a car, home, and land would be considered.

Conditions

The conditions of the loan, such as the interest rate and amount of principal, will influence the lender's desire to finance the borrower.

Understanding the above will help you understand where you are and the strength of your application and situation.  Knowing where you are before coming to a Calgary Mortgage broker is not required, as we can get you there that is for sure.

Some More Money Insights

Key Financial Aspects that you should know

Mortgage Education is key and understanding money is just as important.  The more you know the better you going to be.  My biggest hurdle when talking about money are these below.  A good Calgary Mortgage Broker will tell you, that you are losing your money if you leave it in your mattress, and what happens if your house burns down.  Or if you put all your money in one investment and that investment tanks like  BRE-X stock where does that leave you?

 

Investment theory

Investment returns can be traced to four possible sources. The choice of asset mix, market timing, securities selection, and chance. The most predictable of these is asset allocation or asset mix. By the appropriate mix of investments you will be more likely to reach your goals.

Risk and Return

There is risk in anything, and the only way to have no risk is to spend your money right this instant. There is market risk, exchange rate risk, political risk, and inflation rate risk. There is risk at putting your month in the mattress, not just for fire but inflation will eat away at these funds. The trick to investing is finding how what your time horizon is and what you are comfortable with in respect to fluctuations in your portfolio. The most risk you are able to take the better the potential payoff should be long term.

Diversification

Modern portfolio theory suggests you have a mix of not just securities and shares of companies but bonds as well. There are many managers out there that for a small percentage will manage your funds. Some mutual funds can hold a basket of over 2,500 different securities. If you wanted to invest in each and every one of those securities you will need far more capital. Some try to do it alone online, and if you don’t have the knowledge, interest, and time you are at risk of getting farther behind than you started.

Inflation

With the cost of good going up all the time, if your savings do not match this rate you are not going to be able to put as much gas in the car, of groceries in the shopping cart when you decided to pull the money out of your simple saving accounts or from your mattress.

 Even after a Calgary mortgage broker finds you the perfect mortgage, knowing these things will get you well on your way to actually retiring one day.