Bonds and your Mortgage Interest Rates

Mortgage brokers watch the interest rates every day, and what effects them.  The biggest influence on the interest rates is the bond market. 

 Investors have also been closely observing changes in the U.S. and looking for signs of whether the economic situation has improved enough for the Federal Reserve to decrease the amount of financial assets it buys in the markets — so-called tapering. The quantitative easing program, involving the purchase of US$85 billion of bonds each month, has preserved interest rates low and also helped fuel a strong rally on U.S. stock markets.

Traders also observed to the start of a two-day hearing by Germany’s constitutional court on the validity of a key European Central Bank program that has been recognized with calming the 3 1/2 year-old euro debt crisis. The Federal Constitutional Court is considering arguments against the European Central Bank’s offer to buy government bonds and lower borrowing expenses for indebted countries.   Adversaries of the bond-buying program say the program oversteps the European Central Bank’s mandate, which forbids it from financing governments.


Now how do these two items effect you?    Well when the appetite for bond purchases from governments "tapers off" that send the price down, which sends yields upwards.  I would appear we could expect bond yields to continue to rise over the coming weeks/months ahead. If bond prices go up, so do mortgage rates as they are correlated.   Less bond purchases, equals higher mortgage rates.  Which means more finding the lowest mortgage rate become increasingly important.   Call or text your Alberta Mortgage Broker soon to lock in a rate 403-807-8779

Need a mortgage document checklist?

You are about to contact your lender or Alberta Mortgage Broker, and want to get some paper work ready.  Well this is what you might need.

You should get a nice little check list when you get the process started, but this will help you get things in order or at least give you some expectations around what you might need to dig out of the filing cabinet for this mortgage.  Of course every case is different, so if it does not apply to you don’t worry about it.  

• Proof of a minimum 3 year Employment History (Minimum 3 months at current job PLUS previous employment details, employment letter stating not on probation, last two pay stubs,

• Address of where you have lived for the last 3 years.

• Verification of Assets such as RRSP’s, vehicles, quads, trailers, or other property that you

• List of Liabilities and personal loans and the monthly payments for them

 

• Proof of your Down Payment for the home you are purchasing, including a 90 day history of those funds

• A signed Gift Letter if the funds you are using for the down payment are being gifted to you for your purchase.  Be mindful that most lenders have their own letters you might have to get signed.

• A Void Cheque for where your payments will be taken from

• A copy of the Purchase and Sale Agreement

• Your most recent Property Tax Assessment to prove there are no property taxes owing in your name

• MLS Listing of the property you are buying

• Statement of Existing Mortgage if you are paying it out to refinance, etc.

• The name and contact information for your Lawyer

• Separation or Divorce Documents if applicable

• Court Orders pertaining to child or spousal support payments, and 3 months of account statements to verify the payments are being paid and up to date

• Your most recent Notice of Assessment to prove there are no taxes owing in your name

• Bankruptcy Discharge Papers, if applicable

If the list seems over whelming, just take it one step at a time, as being a lender, or a Calgary Mortgage Broker its all about getting everything in order to paint the best possible picture we can.  We are trying to show stability, ability to pay back the loan, and that you have the character to pay it back.   If you have questions on your mortgage, pick up the phone and call or text  403-807-8779

Some hints as to what a lender is after.

What does a lender really want?

You think it’s all about a great credit score?  Think again.  There is so much more to the equation.  Like how often have you moved, how stable your employment is, and do you have access to way to much credit.

An Alberta Mortgage Broker can tell you it’s not that hard to qualify for a mortgage if you know what they are looking for.  If we can’t get you qualified quickly we will set you on a path to get you there.  Even right after bankruptcy people have become home owners.  The real trick is knowing when and who to approach with your deal after determining where the prospective home owner is at. 

Most lenders look for:

• good and established credit. That’s why it’s important to pay your bills on time and keep your credit

card balances low as possible.

• If you have too much debt as well, where if you decided to throw your budget out the door, that is seen as a risk for the lender.

• adequate income to support your mortgage and your other obligations

• a property that is marketable, and that the purchase price is appropriate

•a down payment or equity in the home.

Most borrowers are all too often just worried about getting approved or what the rate is.  Finding the lowest mortgage rate possible is important.    It means you can usually afford a bigger mortgage.

The lenders want to make sure you can afford your payment and lenders use two simple calculations to estimate how much mortgage and debt you can afford to carry.  This is the Gross Debt Service Ratio (GDS) and the Total Debt Service Ratio (TDS).

The lender has underwriters that perform checks on everything, from are you actually working, to does your paystubs match what you said you make for income.  They will often require the below list. 

Letter of employment- starting income, start date, non-probationary,  title, and signed and dated.

Pay stub- Last two

MLS (Multiple Listing)-   Some lenders don’t like private sales.

Bank statements-  to verify savings

Investment statements

Offer to Purchase

Firm sale on current home

Gift letter

Loan balances

Mortgage statement

Credit card statements

Notice of assessment (NOA)

T1 General

T4(s)

Verification of business- if self-employed.

Lenders will often ask the Alberta Mortgage Broker to prove that the client has the 5’C’s of credit.  Usually credit score will not determine if the deal is approved rather it will be used in finding the lowest mortgage rate possible.  

CMLS Financial Enters Residential Mortgage Market!

Great news, another lender enters the Calgary Mortgage Broker lending market.  Since CIBC First Line left, there was concern the space was shrinking, now a well renowned player has entered the ring.   

CMLS started back in 1974 under the banner Penmore Investment Services, as a commercial Mortgage Intermediary.  In 2004 split into two companies which allows it to still focus on Commercial as Penmore Mortgage Capital Corporation, while the other Canadian Mortgage Loan Services is created to establish more diverse products to mortgage investors.

In 2011, Canadian Mortgage Loan Services changes its name to CMLS Financial Ltd.  In 2012, Penmore rejoins the company again under CMLS Financial LTd, and in 2013 Monday February 25th they launch their Residential Mortgage Division.  

Having existing mortgage assets over 8 billion already in existence and around since 1974 means they are not starting up, they know lending, they are successful at it, and have been doing it for longer than many Calgary Mortgage Brokers have been alive.

With over 100 employees they have the capacity and efficiency to assist Calgary mortgage brokers in this competitive marketplace with not just some great products, but some great mortgage rates as well.

Give me a call should you want to know more!  403-807-8779