Montreal Real Estate Blog » financing

The difference between pre-qualification and pre-approval?

Danuta Levitzki — Thu, 26 Jan 2012 11:30:19 +0000

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

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?

The amount of your monthly payment depends on what loan program you choose. We like to provide our clients with an easy-to-read spreadsheet that narrows their choices down and compares different loan programs that meet both current and long-term goals. You will have the opportunity to select a program you feel comfortable with before you make an offer on a home.

What does it cost to get pre-approved?

Pre-approval is FREE! You have absolutely nothing to lose and everything to gain

The Benefits of a Professional Consultant

Choosing the right lender is a key element to managing your mortgage. As a mortgage consultant, my goal is not just to provide you with a loan, but also to help select the one most beneficial to you and your long-term goals, and then, help you manage that debt over time. There are not many lenders out there who provide this type of personalized service.

My job is just beginning when your first loan closes. I will continuously monitor rates on your behalf, and stay in touch with you to make sure we remain on target with your financial goals.

Seek Pre-Approval before you begin your home search.
For a free consultation, you can contact Danuta!

Posted By: Danuta Levitzki. Executive Manager of Mortgage Agency at HYPOTHECA Ac Accredited. With over 10 year experience, Danuta specializes in residential and multi-unit mortgage financing. Offering the lowest interest rates and finest mortgage service in Montreal, Qc. For home purchase pre-qualification, mortgage refinance, renewal or debt consolidation please visit www.RateDirect.ca http://www.hypotheca.net

Mortgage Rates Going Up: five-year fixed goes to 5.54 %

Deya Bautista — Thu, 07 Jul 2011 11:38:27 +0000

An article by the Canadian Press:

Several of Canada’s big banks announced increases in their residential mortgage rates effective Tuesday.

Royal Bank (TSX:RY), TD Bank (TSX:TD) and Laurentian Bank (TSX:LB) all raised the posted rate for a five-year fixed-rate mortgage by 0.15 percentage points to 5.54 per cent.

Royal Bank raised its special offer rate for a five-year mortgage by 0.15 percentage points to 4.39 per cent, while TD and Laurentian raised their special offer rates for a five-year fixed-rate mortgage by 0.15 percentage points to 4.29 per cent.

Most other special and fixed rates at the banks were also going up between 0.10 and 0.15 percentage points.

Fixed rate mortgage rates are affected by the cost of borrowing in the bond market, where banks finance their home loan lending.

But, there is no reason to panic. If you’re looking for good rates, there are many options available for you. Here is a snapshot of today’s rates by RateDirect.ca – contact Danuta for more info

Posted By: Deya Bautista - Real Estate Broker working as part of the McGill Immobilier team. Specializing in high end condos in downtown and Old Montreal. For buying or selling contact Deya at: 514.917.7889 http://montrealrealestateblog.com/

Interesting: Développements McGill Family Investment Program

Deya Bautista — Thu, 16 Sep 2010 17:00:08 +0000

I came across this great new program for young buyers in Old Montreal, specifically for students (and their parents) wanting to purchase a condo with low downpayment. Développements McGill created a new Family Investment Program that offers a fantastic purchase options. Here are the details:

“We have formed an partnership with the Royal Bank (RBC) to enable families with children aged over 18 studying or working in Montreal to enrich their family assets by buying a new condo in a booming neighbourhood with one of the highest value appreciation rates on the Island of Montreal,” said Stéphane Côté, President of DevMcGill.

The partnership lets DevMcGill offer first-time buyers very advantageous terms, including:

joint mortgage application by parents and children, if desired, making it easier to get a pre-approved loan;
the child’s name only on the property deed, qualifying the condo as a principal residence and exempting it from capital gains tax when it is resold;
very modest down payment (starting at 5% of the selling price);
guaranteed interest rate until construction is completed to shelter the buyer against any rate increases;
$1,000 rebate on notary’s fees when the transaction closes.

To read the full press release visit their website: English version. Version Français

For more information on the Family Investment Program and the M9-3 project, visit the sales gallery at 800 Wellington St. in Montreal or the DevMcGill.com site.

About Développements McGill: For 10 years, Développements McGill has been building intelligent living spaces for tomorrow. Its award-winning projects, including Le Couvent Outremont at the base of Mount Royal, Le Caverhill, Le 777 and Le Orléans in Old Montreal, and Square Benny in Notre-Dame-de-Grâce, speak to the imagination.

Bank of Canada Boosts Prime Rate at 3%

Deya Bautista — Mon, 13 Sep 2010 11:00:22 +0000

Bank of Canada governor Mark Carney raised the overnight lending rate a 0.25% point on Wednesday morning.

CTV News reports:
The decision marks the third straight month that the central bank has boosted the rate, which was set at a rock-bottom 0.25 per cent during the recession.

The overnight lending rate affects short-term borrowing, such as variable-rate mortgages and some lines of credit.

The steady rise over the last few months suggests the Bank of Canada sees Canada’s economy rebounding and no longer feels interest rates need to be at virtually zero in order to stimulate recovery.

Well, considering that back in January 2007 the prime rate was at 6%, we are not doing so bad right now.

New Rules for Canadian Mortgages

Deya Bautista — Thu, 18 Feb 2010 12:20:31 +0000

You’ve probably read about the new regulations regarding Canadian mortgages for buyers/ investors and home owners wanting to re-finance. In case you haven’t been following, here is the scoop.

Three changes will come in effect on April 19:

Qualification: All borrowers will need to meet standards for five-year fixed-rate mortgages regardless of whether they’re seeking a loan with a lower rate and shorter term.
Refinancing: The government is lowering the maximum amount Canadians can withdraw when refinancing a home to 90% of its value, from the current 95%.
Speculation: It will be required a 20% down payment for government-backed mortgage insurance on “speculative” investment properties. As opposed to 5% down-payment for investments not occupied by the owner.

I’ve posted a list of articles written by the media. You can also check out The Canadian Mortgage Trends for an interesting and detailed post.

Wednesday Links: Mortgage Rules in the Media

Deya Bautista — Wed, 17 Feb 2010 21:56:56 +0000

Reckless speculators get a cold shower – The Globe and Mail
Ottawa’s decision to hike minimum down payment required to obtain insurance on investment homes likely to have immediate effect.

Don’t worry, home loan rules can still be bent - The Montreal Gazette
The good news or bad news, depending on your perspective, is you can still buy a home in Canada with almost no money…

Home buying rush expected in spring - The Globe and Mail
That may be the calm before the storm. Analysts expect a hot spring real estate market given Finance Minister Jim Flaherty’s move to tighten mortgage standards yesterday.

The trouble with bubbles: They’re elusive – The Globe and Mail
Some say government spending has overinflated global assets; but even the best minds have missed calling most collapses

Understanding the Home Appraisal Process

Danuta Levitzki — Wed, 02 Dec 2009 14:30:12 +0000

Consumers are often baffled by the home appraisal process. They may feel their home is worth a certain dollar amount, and therefore, the appraised value doesn’t make sense to them. It is important to know that appraisal guidelines are dictated by the lenders.

In many provinces, the lenders must disclose the purpose of the appraisal, as each situation carries its own set of rules. In essence, lender guidelines force appraisers to put a fair market value on a home based upon comparable sales in the area where the home is located, as the home must be bracketed according to size and value.

For example:

There is no set amount associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, and the local marketplace supports the value of a pool at $15,000, that item will be bracketed as [$15,000] on the appraisal.

Upgrades can usually be expressed at full value in newer homes since they required investing additional money onto the cost of building the home. On the other hand, the amount invested in upgrading or remodelling an older home is rarely reflected in full in the final appraisal.
The reason is the home had value in its original condition, and again, the value of the upgrades must be supported by comparable examples within the same marketplace.

These comparisons must be drawn from current market activity within the last six months. Some lenders may want to look at both closed and pending sales to see if there is any room for negotiation. This is a safeguard to prevent appraisers from over-valuing the home in question.

It is further stated in the guidelines that appraisers can only place a value on homes that have status as “closed/funded transactions.” However, when property values rapidly increase within a marketplace, appraisers are generally permitted to make concessions and put more weight on the evidence provided by comparisons to pending sales and listings. This allows for a “real time” appraisal.

Although there is no formal standard to speak of, most lenders give the appraiser a 5% margin of error. If the file is reviewed and the appraiser is off by 8%, there is a good chance the value will be cut by the full 8%. It is in the best interest of both the appraiser and the homeowner not to push the value up higher than the market will support, otherwise the property evaluation may be exposed to a strict appraisal review.

As a loan executive, I make it a point to follow lender guidelines at all times, and work within the systems they provide. This promotes a good relationship with the lender, and smooth closure for my borrowers. As always, you are welcome to contact me if you have any questions.

Call me directly for a free consultation.