Written on October 24, 2017
WHAT YOU NEED TO KNOW:
If you are planning to do any of the following:
• Refinance your existing mortgage
• Switch your existing mortgage to a new lender
• Purchase an investment property
• Purchase with 20% or less down
• Purchase with 20% or more down (stress tests now apply to conventional mortgages too)
You may find it harder to qualify for the funding you require.
Although rates are still low, the “stress test” levels are rising. This means that you have to show that you can manage payments for a rate that is 2% higher than your actual rate.
For example if you are given a rate of 3.39% you will need to qualify at 5.39%.
There are good reasons for this stress test. The banks are trying to discourage buyers who are stretched to their limits at current rates and who may default on their mortgages if interests rates rise in the future. Lessons learned in 2008!
If you think that these new regulations are going to affect your borrowing power, and you are thinking of buying or refinancing in the new future – ACT NOW!
After Dec.31st your options will become more limited.
Please call the Love Real Estate Group for more information – 778-486-9924
Written on July 20, 2017
When you arrange a mortgage with your bank or other lender you will be offered Mortgage Insurance. It is hard to know what to say. It reminds me of standing at the Rent-a-Car counter trying to determine if I need their “strongly recommended extra insurance”. What to do!!
Yesterday an insurance agent explain it to me like this:
Here’s the concept:
In case of death, Mortgage Insurance will pay off your mortgage.
Here’s the catch:
1. Mortgage Insurance does not underwrite your policy until you apply to have the policy paid out. Underwriting means that they accept liability under an insurance policy, thus guaranteeing payment in case loss or damage occurs. This means that even though you have paid for the insurance, it still may be denied. Apparently only 66% of policies will ever pay out.
2. It’s expensive.
3. The bank is the beneficiary.
4. The cost is the same no matter how much is remaining on your mortgage.
5. You may not be able to insure both you and your spouse.
Here’s the alternative method of securing your mortgage:
Buy Life Insurance:
1. Life Insurance is underwritten at the beginning of the process, ensuring that you qualify before you pay.
2. The cost is less expensive (half) compared to mortgage insurance.
3. You are the beneficiary and you can choose how best to apply the funds.
4. The policy does not depreciate with the mortgage.
5. You can insure both you and your spouse.
Conclusion – The only thing that mortgage insurance has going for it is convenience – point of sale. Clearly purchasing Life Insurance instead of Mortgage Insurance will give you a more secure, higher pay out at less cost.
I’ve just learned about a great product that allows you to collect and store rain water and then automatically irrigate your garden when it is needed. It’s called the Garden Conservepump and it uses an automated irrigation sensor that waters your garden only when needed, reducing the amount of water you use for irrigation, resulting in lower consumption, lower city water bills and healthier plants. Check it out at www.iduscontrols.com.
Did you know?
You can get include renovation costs in your mortgage to purchase a home. Paying off your renovation costs at mortgage interest rates can make buying a fixer-upper affordable. Talk to your mortgage provider about how to qualify for this option. It works like this:
You estimate the costs of improvements (up to 10% of the value of the house) and the future value of the house with the improvements.
You pay for the improvements out of a line of credit and when they are completed the house is reappraised to confirm that the improvements were made.
Then the remaining funds are released. You pay off your line of credit and the amount is added to your mortgage.