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The difference between pre-qualification and pre-approval?

January 26, 2012 By Leave a Comment

Updated from our Mortgage and Financing Archives. Originally posted in March 2009
Mortgage Pre-Approval

Pre-qualification is the starting point in your search for mortgage financing. A quick snapshot is taken which includes income, existing debt, savings, length of employment, etc. All of these factors will then be analyzed to determine your loan eligibility.

Pre-approval is written documentation that shows you have the support of a lender who is willing to finance you. It means an underwriter has reviewed your loan application. Based on your income, debt ratio and savings, the underwriter provides the dollar amount you are eligible to borrow. Now you can shop around for houses that fit into that loan amount category.

Here is the nice thing about the pre-approval: It gives you the leverage to shop as a cash buyer!

  • With a pre-approval in hand, you now have the power to negotiate.
  • The seller will take your offer much more seriously knowing you are already approved by a lender.
  • Pre-approval can also shorten the time it takes to close, making even a lower bid attractive to sellers who are seeking to move quickly.

What will my monthly payments be?

[Read more...]

Filed Under: Buying Real Estate, First Time Buyer, Mortgage & Financing Tagged With: , ,

Q & A: How Many Buying Brokers Can You Hire?

January 19, 2012 By 3 Comments

This is the first freshly written post of 2012. I hope you all had a great new years!
Today we’re posting a video shot last month, and here we discuss how many agents/brokers you (the potential buyer) can employ when looking for a property.

A reader sent me the question on What’s the limit amount of agents a buyer can work with. My answer is: you can work with as many as you want, as long as you haven’t signed a buyer’s brokerage contract. Something you should know: we brokers share the same database (MLS), so chances are, if you’re working with multiple brokers, you will end up getting emails from all the brokers employed containing the same listings. [if you're giving all brokers the same search criteria]

The idea is to get fast results, right? Having to go through so many people to get the same results seems counterproductive. My suggestion: meet a few agents first, but work with the one (or two) that you like the most, the ones that gives you the best service/results. Keep in mind, however, that once you decide to make an offer in a place, you will have to commit to working with one broker, for that transaction.

Transparency is also encouraged. If you are already working with a broker, when approaching a new one, please be clear and let them know where you stand.

Further questions and comments? Feel free to send me an email.

More videos are now available at the Montreal Real Estate Blog

Filed Under: Buying Real Estate, First Time Buyer, Video Blog Tagged With: ,

How to Protect Yourself When Buying New Construction

June 2, 2011 By 1 Comment

Following up with the article: New Condo Building Collapsing. Another great article by William Marsden from the Gazette, on how to protect yourself when buying new construction. The tips are quite interesting, I will add my own comments between the square brackets [ ]

The New Home Guarantee covers new condos that are part of small, one-to-fourstorey condo buildings. Highrise condo buildings are covered by private insurance plans.

Like all insurance policies, it’s important to understand fully the conditions of the Quebec government’s plan so you can protect yourself at every step during and after the construction process.

HERE ARE SOME TIPS:

1. Check with the Régie du bâtiment that the contractor is properly licensed and check his experience. Just because he holds a licence to install a foundation doesn’t necessarily mean he knows what he’s doing. [ Very Important!! - also check for any awards won by them, written articles and reviews about their company etc]

2. Make sure you read the entire condo purchase agreement so that you know exactly what you are buying and so that you understand your rights and liabilities relating to your condo and your building’s common spaces. This will help you make sure that at the end of construction, you get exactly what you were promised and that you are not liable for unforeseen payments to, for example, unpaid subcontractors.

3. The warranty covers up to $39,000 as a down payment. So don’t pay more than that. If the contractor goes bankrupt, you will probably lose anything above that amount. [ Again, do your homework about the previous work from the company to establish their credibility, financial strength, etc. Some units, depending their price, will require more than 39K as a downpayment ] [Read more...]

Filed Under: Buying Real Estate, Development & Construction, First Time Buyer Tagged With: ,

What’s Included on the Closing Costs?

January 4, 2010 By 6 Comments

To first time buyers, closing costs are always sort of a mystery: They have a slight idea of what it is, but don’t know what’s specifically involved or how much it will cost. Many people think it is just the notary fee and that’s all.

Sorry folks, that’s not just it.

In addition to the mortgage down-payment, you (the buyer) will need to put aside some money for the costs related a home purchase. What are these closing costs?

Here is a short list of the basic expenses you can anticipate: [Read more...]

Filed Under: Buying Real Estate, First Time Buyer Tagged With: ,

Buying an Income Property to Live in

June 8, 2009 By 9 Comments

There is a fundamental difference between buying a property solely for investment purposes and buying it to live in it.
We all want to live rent-free. Having the revenues cover all of the expenses, including the unit we occupy. And while all of this is feasible, it is important to mention that certain factors affect this outcome: size of the building, revenues, etc. So let’s take a look at what we can expect when searching for a income property.

Buying a property as an investment alone

Your home is else where, but you want to buy as an investment. This is all a numbers game: a property that generates enough revenues to cover all the expenses and then some. The bigger the property (with larger units) the bigger the revenues, in this case you can expect to have expenses paid, plus a little extra at the end of the year. But this does not always occur with smaller properties such as duplexes or triplexes.

Buying an income property to live in it

You’re contemplating to buy, say, a triplex and you’re planing to live in it, your main concern does not go so much in:
After all expenses are paid; How much does this property gives at the end of the year? Chances are with smaller properties they would cover only the expenses.

If you’re living in it, and you only have one unit with tenants, it’s highly unlikely you’ll be making a surplus of money at the end of the year, much less going on vacation with property revenues.
Instead, ask yourself: How much does “your” portion of the mortgage represent?

For example: [Read more...]

Filed Under: Buying Real Estate, First Time Buyer Tagged With: ,

Home Ownership: Quality of Life Program

June 2, 2009 By 1 Comment

This morning I received the latest electronic bulletin from the Montreal Real Estate Board, and I was pleased to read about one more addition to the First Time Buyers Program, a new take on the RRSP maximum withdrawing amount as well as the possibility to have all RRSP holders (not just first time buyers) to invest in Real Estate. Here is a copy of the bulletin, that explains what the Quality of Life Program has to offer:

The Québec Federation of Real Estate Boards, through its Quality of Life program, is making access to home ownership a top priority in its government relations initiatives. Representatives of the Federation’s Government Relations Committee made a concerted effort to have the ceiling lifted on the maximum amount of money that can be withdrawn under the Home Buyers’ Plan (HBP). The maximum that can be withdrawn is now $25,000 for each RRSP-holder, so couples can now withdraw a combined total of $50,000 to buy their first home.

By the fall of 2009, the Federation will lobby the federal government for a new commitment – that of opening the Home Buyers’ Plan to all RRSP-holders. This would make the HBP available to first-time buyers, and to all people who want to use their RRSP to invest in real estate. Hopefully, the Government of Canada’s Department of Finance will grant the Federation’s request during its next economic update. [Read more...]

Filed Under: Buying Real Estate, First Time Buyer Tagged With: , ,

STOP Paying Your Landlord’s Mortgage!

April 13, 2009 By 14 Comments

Lets begin this article by stating: Renting is wasting money!

All those payments you’ve made at the end of each month, you will never see them back again. Ever.
But your landlord will, once he/she decides to sell the property.

If you remain a tenant, you are making your landlord rich, but you do nothing for yourself. But if you put those exact same dollars into a house payment instead of rent, you create “equity”…value that you own, that later can send your children to college, finance the start-up of your own business, or pay for your retirement.

For example:

If you are currently paying $1,000 a month for rented housing, then over the next three years, your landlord will effectively have reaped $36,000 of your hard earned cash! You’re paying his mortgage when you could be building equity in your own property.

What if I don’t have the money to buy a home right now?

There are many loan programs available that offer low and no down payment options. [Read more...]

Filed Under: Buying Real Estate, First Time Buyer Tagged With: ,
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