October 10, 2023

https://peterpaley.com/mortgages/benefits-of-using-a-mortgage-professional/

Why Use A Mortgage Broker?

When people are asked this question, the most common answers are;

– Lowest Rate! – Most of the time this is true.
– Better Terms! – Almost always this is true.
– Better Service! – Almost always this is true.
– MORE CHOICE – Always true!

Here are some of the programs and services that we offer and have access to and use on a daily basis;

– Fully Underwritten Pre-approvals
– Self-employed (less than 2 years)
– Business For Self-Stated Income
– Borrowed Down Payment/Flex-Down
– First Time Home Buyer Incentive
– First-Time Home Purchase Program (Manitoba Metis Federation)
– Purchase + Improvements
– 2nd Home/Vacation Home (5% Down Minimum)
– Hobby Farm Financing
– Commercial Mortgages including CMHC High Ratio Refinance
– Conventional Stated Income
– Conventional Bruised Credit
– Home Equity Lines Of Credit
– Hybrid Equity Mortgages
– 2nd Mortgages
– No fee/Low Fee Mortgage Transfers and switches
– Mortgage Life & Disability Insurance
– New To Canada
– Rental Property Financing
– Converting Existing Home To Rental & Buy New
– Business Loan Financing
– Business Equipment Leasing
– Vehicle/Boat/RV Refinancing
– 12-Month Rate Holds For Construction/Home Builds (completion)
– Private Mortgage Financing

If you are planning on financing a property in the near future contact us today!

If you are a REALTOR in Manitoba or Alberta and need to connect with a mortgage professional for your clients or just have some questions, we would be happy to help.

#mainstreammortgages #MortgageApproval #MortgagePreApproval #mortgagerates #mortgagebroker #mortgagespecialist

October 6, 2023 – Happy Thanksgiving!

https://peterpaley.com/refinance/

Refinancing At Renewal

Interest rates are stubbornly high. As we have been posting for the last few weeks renewals were going to be tough on some households.

Fixed mortgage rates have been steadily increasing and many renewal agreements that we are seeing are well north of 6%. In some cases, this is a doubling of a borrower’s mortgage interest rate.

The important thing to remember is to stay calm. If your interest rate is doubling, that doesn’t mean that your mortgage payment is going to double, but it will increase and the increase may be uncomfortable.

One strategy is to refinance at renewal. If there is enough equity in your home, you may be able to improve your household cash flow by taking out the equity in your home and paying off debts like credit cards, lines of credit, and vehicle/student loans. Payment affordability is going to be a hot topic in the coming months.

Even if you are comfortable with the higher rates and payments on renewal, it can really pay to get a 2nd opinion. We are able to offer you even better rates if you have a lot of equity built into your home (25%, 35%, or more). Even if we are unable to better your mortgage rate and terms, you will have the peace of mind that you made the wisest decision you could make at the time!

Contact us about your mortgage renewal or to see if refinancing is right for you!

#mainstreammortgages #mortgagerenewal #mortgagerefinance #mortgagebroker #mortgagerates

Happy Sunday!

There are 185 Open Houses scheduled for today ranging in price from $164,900 to $1,074,000 in Winnipeg and the surrounding areas.  Click the link below to be redirected to Realtor.ca where all of the open houses have been prepared for you to view.

CLICK HERE TO SEE ALL THE OPEN HOUSES LISTED ON REALTOR.CA

If you’re in the market for a new home, you can download our amazing My Mortgage Tool Box App!  Find Mortgage Rates, get pre-qualified and use our set of unique calculators.
CLICK HERE TO DOWNLOAD OUR MY MORTGAGE TOOLBOX APP

If you found your dream home today, please contact us with any questions you have and we can send you our introductory e-mail with our application process.

September 27, 2023

https://peterpaley.com/purchase-plus-improvments-mortgages/

Purchase Plus Improvements is an excellent but underutilized program, especially in our Manitoba real estate market.

The program allows a homebuyer who is applying for an insured mortgage (usually less than 20% down) to include up to $40,000.00 of home renovations or improvements in the mortgage.

Typically the eligible types of improvements are cosmetic (kitchen, bathrooms, flooring, paint), mechanical (furnace, air conditioning, electrical), and exterior maintenance (windows, doors, roof). Ineligible improvements would typically be foundation repairs. The general rule is the renovation should add value to the home.

Why is the program underutilized? This could be stemming from a number of different factors;

1. The program is generally not well known.

2. The renovation quotes need to be provided upfront at the time the application is submitted for approval. This means that the homebuyer needs to have the quotes done even before writing an offer.

3. The real estate market over the last 10 years has not allowed for the required time to get quotes and due proper diligence on a home purchase. The market has heavily favored sellers, and multiple offers were almost always expected.

4. The purchase plus process adds more work for everyone. The REALTOR will need to spend more time helping arrange quotations, the mortgage broker will need to do more calculations and follow-ups with the clients post-funding, and the lawyer will also need to hold the renovation funds in trust until they are completed, inspected, and approved by the lender.

5. The homebuyer will need to have the financial means to cover the cost of the renovations to completion because the lender won’t allow the renovation funds to be released until they are completed, inspected, and approved.

It may be a bit of a hassle. However, in today’s changing market where interest rates and home prices remain higher, mortgage qualification policy remains stagnant and unhelpful, and the market balances itself and dare say moves to a buyer’s market, the Purchase Plus Improvements Program is an EXCELLENT way for a homebuyer to get an improved home they want in a location they want.

Contact us for more details!

#mainstreammortgages #purchaseplusimprovements #mortgagebroker #renovations #firsttimehomebuyer

Fall Market Update.

As you may have heard, The Bank of Canada opted to maintain its policy rate at 5% as of September. The recent rate hikes over the spring and summer have slowed the housing and mortgage markets as potential buyers were unsurprisingly spooked by the rise in mortgage rates. More recently, fixed-rate loans have become more expensive because of the rise in longer-term interest rates. As a result, housing affordability became a bigger hurdle and led to a slight decrease in home prices by 6% in major markets over the summer.

With The Bank of Canada currently maintaining the 5% policy rate, many hope this will be the peak in overnight rate changes. If so, homeowners and potential buyers will be granted some breathing room. We will find out more with their upcoming announcement on October 25th.

As we turn the corner into Fall and start looking ahead to the coming year, analysts are forecasting stronger housing markets. The expectation is that The Bank of Canada will gradually cut interest rates by mid-year, allowing potential buyers to better navigate their affordability.

As the supply shortage continues, new listings are likely to rise and provide much-need inventory. As we move into 2024 and start to see interest rates decrease, motivated sellers will move off the sidelines and housing demand is expected to be resilient.

For anyone who is thinking about purchasing this season, it is important to get pre-approved to guarantee your interest rate for 90-120 days while you shop the market. This way, you will avoid being impacted by potential rate changes and can properly estimate your budget for mortgage costs. Plus, pre-approval will indicate to the seller that you will not have issues obtaining financing (assuming nothing changes between now and the purchase with your job, savings, etc.), which is key during the current economic landscape.

To help you make the best decision possible, download the My Mortgage Toolbox app to determine what you can afford, and what your mortgage would look like at various interest rate levels.

You can also reach out to us today for unbiased advice if you have any concerns, or questions or just want to get started on your pre-approval!

https://peterpaley.com/home-building-construction-mortgages/

Let’s talk about building a new home. Over the last few years, it has been a very stressful process. Global supply chain problems, long delays, and rising interest rates unquestionably put much financial strain on many home buyers. In Winnipeg, homebuyers walked away from their contracts due to higher interest rate costs and not being able to qualify for the mortgage any longer.

The real reason I wanted to post about this today was that we are now offering a 12-month rate hold for new construction mortgages that are default mortgage-insured & done on a completion basis. At the time of writing, we can offer 5.89% for a 5-year fixed-rate mortgage and hold it for 12 months.

This is more of a pre-qualification, rather than a pre-approval, meaning, that will will get the lender to approve you for the purchase now, however, the onus will be on the borrower to re-qualify 120 days before possession.

There are two kinds of construction mortgages. The “Completion” and “Construction Draw”.

The completion mortgage means that you are going to give your builder a 5%-10% deposit, get qualified for the mortgage, pick out all your finishes, and the builder will have a house ready for you in 4-12 months. 100% of the deposit will form all or part of your down payment and You don’t have to really do anything else but update a couple of required mortgage documents closer to the possession date.

The construction draw process is more complicated, and involved and there is a greater chance of errors and more risk to the lender. In fact, many lenders aren’t even considering these applications any longer. The builder will divide the contract into usually 5 components so that the build can be funded as the home is being constructed. The 5 stages or draws are:

1. Land Advance (100% for insured files and 50-75% for conventional)
2. Basement/Foundation (15-17% complete)
3. Framing & Roof (30-35% complete)
4. Lock-up (60-67% complete)
5. Completion (97-100% complete).

The lender won’t provide any of the required funds upfront with the exception of the land advance. The borrower will need to stay one step ahead of the contractual payments. This means the borrower will need enough funds to for example fund the entire cost of the foundation/basement. Once that stage is complete, the lender will request an appraisal at the borrower’s expense to confirm the basement is completed. This will happen at each stage.

Sounds pretty easy right?

The challenge that we run into a lot is that the builder’s contract doesn’t always match up to the prescribed draw schedule set out by the lender and the insurers. This means that the borrowers will need to be able to have the means to fund any contractual shortfalls. Your mortgage professional should be able to identify the contractual shortfalls using a simple spreadsheet. However, more shortfalls can happen due to extra & unforeseen costs, weather delays, and as we’ve seen through the pandemic, massive cost increases in supplies. Most lenders will want to see the financial means to not only qualify for the mortgage but to also have a 20-25% cost overrun provision. The reasons for this were listed above but the biggest cost overrun in most home builds is upgrades. Yes, when a new home buyer walks into the lovely showrooms to pick out cabinets, floors, countertops, and tiles, what one can afford doesn’t look nearly as nice as what one cannot afford.

If you are interested in going through the building process whether a completion or a construction draw we would like to help!

Alternative Lending/ “B”- Lending

The alternative lending space was truly formed from the adage “Necessity is the mother of invention”. Unlike, the prime/”A” lending space where the Banks and Credit Unions prefer to lend, alternative lenders like to particularly lend to borrowers who don’t fit the small box set out by the Banks.

A stigma may have formed over the years that “B” lending was only for people with bruised or damaged credit. Although bruised/damaged credit is one of the areas served by alternative lenders, it’s becoming moreover an excellent and popular option for the self-employed, luxury home market with values over $1.5MM, rental property investors, and commissioned salespeople.

About “B” Lenders

Generally, the mindset of the “B” lender is different. Whereas the “A” lender focuses mainly on the borrowers (income, credit score, down payment, net worth), the “B” lender on the other hand is focused on the property (Value, saleability, condition, loan-to-value, and location, location, location).

The alternative lender typically will want a minimum of 20% down or equity (more depending upon the application). They like major urban markets where there is a minimum population of 50,000 or more, and most importantly they want the property to be in good to excellent condition.

Lending rates are usually 1%-2% higher than the banks to offset the risk to the lender and there is also a 1%-3% lender fee which is used to help compensate the lender and the mortgage broker. The documentation requirements are generally the same as an “A” lender.

Clients Who Fit Best With Alternative Lenders

A typical client profile for a “B” lender is

1. High value property $1,500,000+

2. Properties to be held in company/corporate names

3. 2nd mortgage products HELOC & Credit Card.

4. Bad credit

5. Self-employed borrowers without a 2-year history in business or low-claimed income.

6. Previous bankruptcy or consumer proposal (even double bankruptcy)

7. Can use mortgage proceeds to payout an existing bankruptcy or consumer proposal early.

8. Commissioned Sales People

9. Rental property portfolios under 10 properties.

As banking regulations tighten along with the bank’s credit and risk policies, “B” Lenders are available to find the right lending solutions.

#mainstreammortgages #alternativemortgage #mortgagebroker #selfemployed #badcredit