Mortgage Tips: 5 Things You Need to Know About Before Signing Mortgage
By Alban Smith
You may not be signing your life away when you sign the mortgage on your home, but you are certainly signing away a large portion of it. That is why it is so important to know exactly what you are signing, and be aware of the common pitfalls and obtusely misleading clauses and conditions of mortgage documents before you sign.
When you are signing your mortgage, there are five main things you should look out for in the process and in the documentation, including:
1 The approvals process
When you are signing your mortgage documents, find out how long the process takes from the time your application is submitted, to the time it is approved. This is important to know if you have already placed an offer on a property or block of land that you want to buy, as you can lose the property if your finance doesn’t come through in time. Therefore, make sure you are clear about how long the process is expected to take.
Also, to protect yourself if you change your mind about the loan or the property, find out about any cooling off periods in the mortgage contract. You may have a certain number of days in which you can change your mind, without incurring penalty fees.
2 Penalty fees
At the time of singing your mortgage it is important you understand all of the fees and charges which could be applied to your mortgage account. Firstly find out whether there are any penalties for early repayment of the mortgage, for example if you make additional repayments, or receive a lump sum amount and your mortgage is paid off sooner than the full term, some lenders will charge you early exit fees.
Also find out about charges for additional fees such as insurance, as there may be a tie in clause which states you must purchase the insurance from a specific company, so you can be paying more than if you had been able to shop around yourself.
You also don’t have to accept all of the fees which your lender is charging, and make sure you understand exactly what each one is for. Some lenders will hide a number of additional fees and charges in the closing cost fees, and make sure you get a copy of this statement, and match it to the amount you are then required to pay when the loan settles.
3 Interest rate
Even though you spend a lot of time shopping around and comparing rates and fees, when it comes time to sign the mortgage documents, you may forget to correlate that research with the loan you’re actually getting. Therefore, make sure you ask exactly what the interest rate will be, as many home loan interest rates are variable, and the rate may have changed from the time you researched the loan to the time you signed the documents.
Also make sure you understand the type of interest rate you are getting, whether it is a fixed or variable rate. There will be clauses in the mortgage document which will explain the circumstances of an interest rate adjustment on your mortgage, or you may have been sold on a low interest rate, but that interest rate only applies for one to two years, after which you are charged a much higher rate.
4 Sale of your loan
When you are thinking about your home and your home loan, the only sale which will come to mind is if you decide to upgrade or change locations down the track, and sell the property. However, you should also make sure you find out about whether your mortgage can be resold by your lender.
While the sale may never eventuate because market circumstances never require it, it is important to know whether your loan is eligible to be sold in a secondary market. Your choice of mortgage will have been based on the product as well as the lender, and if your loan is going to be sold to another lender after you’ve signed, then this is an important consideration. At the time of signing, you may be able to find out who your loan is likely to be sold to, if your lender does decide to sell in the future.
5 Your agreement
There is a portion of your mortgage documentation called the Acknowledgment and Agreement section. This section of the mortgage states that the information in the application is true and correct, and you are then required to sign and date the agreement.
If your income or any other information doesn’t match what is in the mortgage document, your lender could be committing mortgage fraud. However, it is you who would be responsible for providing the inaccurate information once you have signed the agreement. Plus, the lender may not even purposely provide misinformation, but an error could be the result of an admin or computer misinterpretation.
Therefore, make sure you review the details in your mortgage document closely, to make sure they really are true and correct, and reflect the information you provided to your lender.
Alban has been writing on home loans and mortgage for several years for a home loan comparison website
Home Buying Tips
Remember the adage that a man’s (or a woman’s) home is their castle? In order to find the best suited castle for you, you need to remember a few tips in purchasing a home for you. While the process may differ, be your purchase is in your own neighborhood or a home half way around the world, there are some basics that never change regardless of territory and it would serve you in good stead to keep them in mind once you decide on purchasing your home where you can put up your feet and rest your weary body at the end of the day.
Having an agent.
This may seem to be not a good piece of advice as agents would certainly add on to the purchase price of your home. This cost though would be well worth it as you save on time in looking at homes that fit your requirements. Also, having an agent would help you find those listings that have not become public, making your search much more efficient in terms of time and gas. Also, their expertise would prove invaluable as to the hidden costs and other repairs that need to be done on the home you eventually choose to become your castle.
Do your research.
Doing your research is not just going online but also doing the legwork at the home you seek on buying. Also, you need to spend time on the paperwork, which you need to prepare for by learning it before the actual sale commences. In doing this, you are able to find the best and most cost effective way of finding your home that is within your budget and your requirements.
Fixing your Loan.
Not everyone has the ready cash to make an outright purchase of a home. Thus before purchasing a home, it would be best to have a loan approved for the purpose. Also, in getting a loan, you would have a limit as to the home price you can purchase, thus giving you a ceiling and not overburden your financial plans in the long run. Having a loan also would help you in making the right purchase since you need to fit the home into your financial resources.
Negotiating the Price.
The common error that many purchasers do is comparing listed prices between homes for sale. The secret here is not on the listed price but in the ability to negotiate the purchase price. Thus it would be better to find out the comparable sale prices for homes similar to your prospective purchase. Also, you can negotiate the price with the owner based on the current condition of the house, the payment scheme and overall goodwill and rapport you can build in order to lower the overall purchase to your advantage as the buyer.
Do a complete inspection.
Don’t just look at the overall look of the house. You need to get into the nooks and crannies of the property you would eventually call your home. Once you agree on the purchase, you cannot go back to the seller to have things repaired at their cost. Thus it is best to do a complete check up of the home before your purchase and have the owner repair what you find before eventually assuming ownership of the property.
The aforementioned are some of the fail-safe tips that home purchasers should do before parting with their money on their future home. In doing these steps, the buyer can be rest assured that their future castle would be well worth the price they have paid for the future.
For more information on home purchases, do visit us at http://www.propertycommunity.com/property-in-the-uk/ditching-the-high-street-agent-saves-property-sellers-thousands-in-fees.html or join the discussions at www.propertycommunity.com.
Choose Your Home: Top Ten Things To Consider When Buying
By Greg Andruff
10. How long do you think you will live there (people move on average every 4-7 years)? Or, if you are an investor, when do you hope to cash out if ever? What is your exit strategy?
9. Location –- Is your purchase close to shopping, traffic, airport? What area/neighbourhood is the property in? Is it close to schools and parks or close to downtown?
8. Is the property restricted by certain rules? Be aware that in a strata or a heritage home, certain rules and restrictions can possibly hamper resale.
7. Market conditions — You don’t buy the market but you want to know what conditions you are working in. (Is it a buyers, sellers or balanced market? Are you in a seasonal market?)
6. Is the property close to transit? Bridges? What about paying tolls?
5. What is the property condition inside and out? An inspector is cheap insurance. Typically, older buildings will require more work, so be aware of that. There may be a chance for sweat equity…
4. Think about resale: Is the property easy to get into but hard to get out of?! What is the type of ownership — strata, freehold, or co-op? Co-ops tend to trade at a lower price because they require 35% financing up front. This may or may not be an advantage to a buyer.
3. Neighbours — Talk to the neighbours before you buy. What is the neighbourhood like? Are there mostly older people, families, or professionals? Keep this in mind, especially in a strata where you live right on the other side of the wall from your neighbours! Does your neighbour have a dog that howls at the moon?
2. Think about the future. Is there a possible transit connection (bridge or train) being built soon? Is there a development going in around the corner, or a half-way house, old folks home, or super complex and how does that relate to you?
1. Mortgage qualification – Most importantly, you need to know your budget. What type of mortgage do you want or need? Best rates are not everything: flexibility or readvanceable principle may be more valuable! Be sure to talk to a professional mortgage broker about your options.
Greg Andruff is a member of a successful Vancouver residential real estate team, Team Andruff.
They strongly believe in helping educate and inform their client to make confident buying and selling decisions in any market. To contact Greg visit www.GregAndruff.com or call 778-899-4267*
Are Foreclosures a Good Deal for First Time Home Buyers?
By Greg Andruff
I had a client say to me the other day, “This listing is a foreclosure. What does that mean? Tell me about foreclosures.” I have worked with clients to buy foreclosures. This type of transaction for first time buyers can be very risky and stressful.
Can there be opportunity when buying a foreclosure?
Yes, but you are going to want to have some experts such as realtors and builders to help you with the process. A savvy buyer will also want to have a capital reserve to deal with the possible damage that will likely have been done to the property and be ready for a lot of work to get the property back to a regular living condition. It will be a long and hard process and for some at the end of the day it pays off, but for many it is not worth the trouble. This type of purchase is not for the faint of heart, or typically for a first time buyer either.
Foreclosure offers are expected to be “unconditional offers” (i.e. “a subject free offer”). Of course the buyer can always complete their “due diligence” in advance of making an offer, by going ahead and arranging for pre-approval on financing, inspection and in the case of a condo, even pre-reading all the documents (Minutes, Budget, By-laws, Rules…and so on). This type of buyer needs to know there are no guarantees the bank will accept the first offer declared at court, so one may be spending time on a deal that may not go ahead. This is the case when additional and more competitive offers are provided in court. There is no requirement to give any advance notification if there is more than one offer.
Buyers should be aware there is no negotiating with the “owner” as the ownership in a foreclosure has now become the bank or creditors. The bank/creditors are expecting an “unconditional offer” because their bottom line is the recovery of their capital. To buy a foreclosed upon property, the buyer decides upon a “price,” and then actually negotiates with the bank in advance of the deal going to court. Once there is agreement on price, they will submit your offer to court for approval. Once the offer is submitted to court everyone else knows the price of your offer because it is now public record. Typically this should not be your best or final offer, as explained following, as the process gets even trickier!
Again once the buyer has gone through all of this due diligence, and arrived at this point, another purchaser may offer more! Anyone is allowed to come to court and offer on the property, since the courts wants best value for the creditors as possible. Often the buyer will likely have to make a second “blind” offer, which will be above their first offer, if someone else bids on the property at a rate higher than the first & original offer. It is very challenging to know what to offer in this case because they are all sealed bids. Again another reason to have a seasoned realtor guiding you!
Furthermore, even if there are no other offers (i.e. meaning you and the creditor pursuing the foreclosure action already agreed on a price), in Canada, the Foreclosure Court judge, called “The Master,” may disallow your offer if it is deemed too low or unreasonable, as it is the courts job to protect the overall position of creditors. It is not like in the USA where there are tones of “good deals.” The Canadian courts look out for all the parties’ involved, not just the group that enacted the foreclosure proceedings. This process is a reasonable check on values to safe guard creditors as reasonably as possible.
The whole transaction is very fragile from the point of view of the potential buyer who can be shifted out of the process very easily. As if that is not enough, there is even more risk! The buyer takes the property: “as is, where is.” In some cases the creditors or previous owners will have sold off the appliances, sometimes even the toilet! Yes in a foreclosure, the court is selling only the realty, not the fixtures! Moreover, the previous owner may have chosen to garner retribution at the “unfair” world. This for example could mean … tossing a can of paint across a room, or flushing a bag of concrete down the toilet and you can bet that they will not have cleaned up before they left. So typically the expectation is to receive possession of the property in a degraded state. As well, in some cases the former owner may not have vacated. A bailiff may have to forcibly remove them from the premises and change the locks.
Now going back to my conversation with my first time home buyer, she decided to continue looking at other properties…which I would typically recommend for most of my clients…That is unless the client is really keen to work through the foreclosure process and have the means, time and ability to manage the risk involved.
Greg Andruff is a member of a successful Vancouver residential real estate team, Team Andruff.
They strongly believe in helping educate and inform their client to make confident buying and selling decisions in any market. To contact Greg visit www.GregAndruff.com or call 778-899-4267*
Ready to Buy? Advice From A Realtor
By Colette Gerber
Ladies, did you know that it’s a Buyer’s market? And did you know about 35% of people buying their first home are single women? As a group we (yes, I too am single) have more disposable income than any other time in history. After you’ve made the decision to buy, the first step should be to obtain mortgage pre-approval.
Lenders are beginning to recognize the power women wield with their disposable income and are willing to lend generously to single females. Personally, I prefer to use a mortgage broker since they will shop a number of lenders to ensure you get the best possible rate without gender bias. Mortgage pre-appproval gives you clout when it comes time to make an offer to purchase. Knowing that you have financing in place, sellers will take your offer seriously. As well, the pre-approval letter-which you should get in writing- establishes how much you can spend on real estate. This ensures you are looking in the correct price range.
In the current Buyer’s market there is a larger inventory of real estate than there are people wanting to buy. As a Buyer, this gives you the opportunity to look at multiple properties and give some thought as to what you like. For most properties, multiple offers are not currently a concern. This is good news since it takes the pressure off having to make a quick decision. However, having said that, if you find something you really like you should have your Realtor write an offer as soon as possible. If the property is that good, chances are others will feel the same way and you don’t want to take a chance and lose the property.
Let’s talk about Realtors for a moment. Did you know that as a Buyer it doesn’t cost you anything to work with a Realtor? Realtors get paid by the Seller only when a deal completes. Working with a Realtor can save you time, money and inconvenience. Time: they search the listings every day to see if anything suits your criteria so you don’t have to spend time on the computer. Money: when it comes time to negotiate, they will do everything they can to ensure you get the best possible purchase price. Inconvenience: they know the pitfalls a Buyer can encounter so a good Realtor will stay involved in the entire buying process, until they hand you your keys. Women know the importance of listening. They understand you want great bathrooms, need closet space to accomodate your shoes and that you don’t care if the floor is ¼” or ½” real or faux wood. I encourage you to work with a female Realtor who “gets” what you want…..
Colette Gerber is RE/MAX Realtor who works anywhere in the Lower Mainland that the business takes her. She was recently awarded her Accredited Buyer’s Agent designation, joining the 1 ½% of BC Realtors with this prestigious accreditation. You can contact Colette by visiting www.colettegerber.com
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