Getting It Straight: Conforming Loans vs. Non-Conforming Loans

Although mortgage translations are less than obvious, it’s palpable that most Canadians demand an elevated level of clarification when it comes to the pivotal commitment. A genuine comprehension of mortgage systems is trying enough, and when combined with deciphering a plethora of terminology, the task to many seems daunting. One strong example is distinguishing conforming loans from non-conforming loans. Getting it straight, once and for all, is vital.

Conforming Loans

A conforming loan is indicative of loan limit restrictions and, simultaneously, a number of unique preconditions are enforced. The Federal National Mortgage Association (FNMA or Fannie Mae) and Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac) are government-sponsored entities that prompt and administer the market for home loans. These agencies have definitive protocols and decrees that mortgages must observe. Statutes describe and define maximum loan amounts, advisable properties, preconditions for down payments, and credit stipulations to name a few. In essence, there are a plethora of details that are premeditated, which ultimately are most advantageous and unique to you and your capacities.

The fundamental appeal of a conforming loan is that they award a lower interest rate, analogous to non-conforming loans. This constitutes lower monthly mortgage payments and, ultimately, less spending throughout the life of your investment.

Non-Conforming Loans

A non-conforming loan does not observe Fannie Mae or Freddie Mac and, consequently, cannot sell to these divisions of government. Judged as tricky and encompassing a higher level of risk, they are a challenging sell with banks imposing higher interest rates. In essence, banks write the bulk of mortgages, then conclusively settle on the portfolios of FNMA or FHLMC after being purchased from financial institutions. They are then packaged into mortgage-backed securities (MBS), which sell on the secondary market. An MBS is quite akin to a bond that is comprised of an array of purchased home loans from banks, also receiving payments reflective of bond coupons.

Non-conforming “jumbo loans” include any lending above the conforming limit; these loans are geared toward high-income earners who have good credit and productive assets. Lenders will characteristically assume a more significant risk with these mortgages by virtue of the loan size and lack of government insurance.

The appeal of a non-conforming loan is very clear cut. Although these types of loans are substantially riskier and less prevalent, they allow you to borrow more sizeable amounts, not feasible with their counterpart conforming loans. Typically, to diminish any hazard, lenders demand a significant down payment or require mortgage payments in an asset account for added security. The risk to the lender is offset through generally higher interest rates, more sizable upfront fees, and stricter underwriting requirements.

From the sale of mortgages, financial institutions use the profit of sales to invest in offering new loans at the current interest rate. But Fannie Mae and Freddie Mac are restricted from purchasing indiscriminate mortgage products. Their federal rules conform to loans synonymous with protection and security. They are most advantageous to banks, as they are sales that are deemed less complicated and conclusively more appealing to borrowers.

Our expert team at Northwood Mortgage has many more answers to simple or more intricate mortgage questions, and we look forward to connecting with you. As one of the most venerated brokerages in the GTA, our team exemplifies prized services and choice products to our clients, lenders, and investors alike.

We invite you to visit us for more insight at Northwood Mortgage.com or talk to us one-on-one for a more personal assessment, fitting your needs, at 1-888-495-4825.

source: northwoodmortgage.com

A Guide to Real Estate Mortgages

Many people struggle with the decision to buy or lease a home. It’s important to know if you want to own a home before getting yourself entrenched in the process of a real estate mortgage.

But once you determine that you’re ready for homeownership, the next step is to choose a home you can afford. With each mortgage payment, you will be building equity in your own place. It’s essential to consult a mortgage professional to help you determine how much mortgage you can carry comfortably. This will help you evaluate your financial position and set achievable goals concerning the repayment timeline.

Whether you’re a first-time homebuyer or you want to ensure that you’re ready for your next property purchase, here’s a simple guide for the real estate mortgage process:

How much debt can you afford?

A mortgage has four components that affect the affordability of a property and the mortgage, namely: principal, interest, taxes, and insurance. The principal is the total worth of the property for which you hope to be financed. This is usually about 80% of the property’s value. The interest refers to the amount of money you pay the lender for financing your mortgage loan. Property taxes are paid in perpetuity, depending on the location of your home. Insurance is also a lifetime cost that depends on the value of your property.

Lending institutions and mortgage insurers use a formula to determine whether you can afford a mortgage. It can be assessed based on your gross debt service (GDS), which includes your total homeownership costs discussed above, including mortgage payments, property taxes, and other fees. The second measure is your total debt service (TDS), which includes the GDS and debt payments (credit cards, loans, lines of credit), relative to your income. In order to qualify for mortgage insurance, the maximum permitted GDS ratio is 39%, and the maximum allowed TDS is 44%.

How soon can you get the down payment?

For many Canadians, your home is the biggest single purchase you’ll ever make. Getting a mortgage allows you to stretch the payments out over a few years, so you don’t have to save the full $500,000 (national average home price) before moving into your own home. The minimum down payment required for a home is 5%, which translates to about $25,000.

Get Your Mortgage Pre-Approved

You must get a mortgage pre-approval before you can start looking for your new house. A pre-approved mortgage implies that the lending institution has already vetted you for a specific mortgage amount after investigating your financials, including credit rating and income. You will know how much you can spend, your interest rate, and even your monthly payments.

Mortgage pre-approval is the first step in your mortgage approval process and will allow you to move fast and place an offer, which is crucial in a competitive housing market. This, however, doesn’t mean that your mortgage is guaranteed. But if you make an offer on a home you’re interested in, the lender will assess its value to ensure it’s reasonably priced, update your application with specific figures from the property, and re-verify your financials before giving their final approval.

If you can’t put up at least 20% of the down payment, then you must get mortgage insurance. The final mortgage will then be signed off with the approval of the mortgage insurer.

Final Note

The mortgage pre-approval locks in the lender’s mortgage rate for a specific period of 60, 90, or 120 days while you look for a house. So, rising interest rates won’t affect the agreed rates during the period. Also, keep in mind that federal mortgage rules require all borrowers to pass a financial stress test of 200 basis points above the contracted rate (the 5-year Bank of Canada Benchmark) to qualify for a mortgage.

For more information on real estate mortgages, call Northwood Mortgages at 866-307-0747 or contact us here.

source: northwoodmortgage.com

Credit counseling Will Help You Improve Your Finances, This Is Why

Credit counseling is one of the most recommended debt solutions in America, especially for debtors filing for Chapter 13 bankruptcy. Before visiting a credit counseling agency, you ought to know if credit counseling works. This post answers the questions, “does credit counseling work?” What are the benefits of visiting a credit counselor? Is It Right for me?

Like general psychotherapy, there are a lot of criticisms on Credit Counseling. Some critics accuse debt counseling agencies of predatory practices, which is defined as “imposing unfair and abusive loan terms on borrowers”.

According to a 2006 audit report from the office of inspector general (IG) of the Federal Deposit Insurance Corporation (FDIC).

These predatory practices include; charging exorbitant fees, failing to meet expected standards, inability to proffer practical solutions for debtors, and deceiving clients.

Every field has its own bad eggs, and credit consulting is not an exception.

However, the red flags should not deter you from seeing the benefits of credit counseling, a field that was created with the purpose of helping debtors get rid of credit card debt.

What Are the Benefits of Visiting a Credit Counselor?

There are four major functions of a debt counselor, namely; debt management, budgeting, education, and tools application.

To paint the full picture of what each function entails, I’ve provided a bulleted list of mini-functions under each head-function.

Debt Management Benefits

* Evaluates the client’s total financial case by reviewing monthly wages, properties, credit card debts, expenses, credit reports, or other financial information.

* Develop debt management plans (DMP’s) and budgets to help clients meet their monetary goals.

* Drafts debt repayment dates in favor of clients.

* Recommend methods, such as adjusting budgets, applying for debt management plans, using personal loans, or declaring bankruptcy.

* Speaks to clients by telephone or physically to garner more financial data.

* Prepare documents to solidify legal contracts after getting a go-ahead from the client and creditor agency.

* Update records of the client’s account activity, like correspondence, financial transactions, or counseling session notes.

* Direct clients to community services or resources in cases beyond credit counseling.

* Evaluate the duration for Credit card debt repayment using the volume of debt, interest rates, income, and savings.

* Negotiate with creditors agency on behalf of clients to help adjust payments, reduce interest rates, extend payment duration, or devise a better DMP.

Budgeting Your Money to Pay Off Debt

* Evaluate the financial capacity or status of clients.

* Devise actionable methods to help clients pay their credit card debt, obtain permanent housing or mortgage programs.

* Creates monetary plans for clients while making debt repayment a priority



Financial Education to Avoid Getting in Debt

* Informs clients on financial issues, such as consumer protection laws, credit report ratings, wage attachments, bankruptcy laws, or collection actions.

* Recommends way forwards on housing issues, like mortgage delinquency, housing rental, and homeownership.

* When it comes to financial planning, credit or budgeting, debt counselors recommend educational materials for clients.


* Explain federal policies to clients, such as the DMP rules, the pros, and cons of enrolling in debt repayment plans, or lender concession policies.

Tools and Apps To keep You Debt Free

* Studies financial records for missing cheques, payment history, returned cheques, held money, or other similar cases to resolve client’s issues.

* Releases funds to creditors on behalf of clients.


* Oversees the foreclosure, repossessions, or removal of levies.

Best Credit Counseling Agencies in America

Credit counseling is a legit practice in America. Credit counseling society is dominated by non-profit organizations and Christian/religious entities.

The idea of credit counseling was spearheaded by lenders and credit agencies during the mid-’60s in a bid to curb the continuous outbreak of personal bankruptcies.

Even though there’s a difference from nation to nation or within a nation, consumer debt is basically made up of credit card debt, car loans, and home loans.

Credit counseling aka debt counseling deals with consumer debt, which isn’t in the client’s capacity to pay.

Aside from educating the client and creating a proper budget that suits the client’s income, credit counselors assist debtors in devising a debt management plan aka DMP.

In the United Kingdom, DMP is also known as IVA, an Individual voluntary arrangement.

For a DMP to be effective, the client has to give the credit counselor the mandate to negotiate with the creditor(s) on the behalf of the debtor.

How Much Will You Save? Check If You Qualify In Two Simple Steps

* Step 1 – Select your debt amount below to see if you’re eligible


* Step 2 –Answer a few quick questions & join hundreds of thousands of Americans on the path to becoming debt-free

The aim of negotiation is to reduce the interest rate, extend payment date, lower monthly minimum payment, and waive outstanding late charges.

After the agreement has been made, the debt would be consolidated into a single payment, depending on the case at hand.

Not all debt cases demand a DMP or IVA, some debt counselors would go as far as negotiating debt relief or debt consolidation.

Does Credit Counseling Work: A Critic’s Perspective

Critics around the globe have criticized credit counseling, on the basis that the idea originated from credit agencies, who wanted to prevent debtors from seeking better alternatives.

Predatory practices include demanding unlawful or exorbitant fees, inability to meet the required standard, inability to proffer actionable solutions for clients, and neglecting the debtor’s interest in favor of the creditor.

Regulations Protecting Americans from Predatory Practices

The society of credit counselors is loosely regulated by the Federal Trade Commission (FTC) in America.

The FTC is the nation’s debtor’s protection agency, which can slam credit agencies with a lawsuit for deception, extortion, and offenses of any nature.

Though the federal government has created policies protecting debtors, individual states may also regulate DMPs.

The attorney general of the state has the power to protect citizens from predatory practices.

There are two major associations representing the interests of creditors, namely: the Association of Independent Consumer Credit Counseling Agencies and the National Foundation for Credit Counseling.

SUMMARY

Like I noted earlier, the major benefit of enrolling for credit counseling is guidance.

To get the most out of credit counseling, you ought to be attentive to every debt solution proffered by the credit counselors.

Then, you can decide to opt-in for DMPs, debt relief, debt forgiveness, or bankruptcy.

With respect to education, tool application, Student loan Debt, debt management, and budgeting, debt counseling works.

It is also important to know that the debt counselor is not a magician: he/she can only persuade creditors to reduce the interest rates or extend the payment date, but the final decision lies in the hands of your creditors.

Though, most creditors prefer DMPs to bankruptcies.

source: ussa.inquirer.net

Types of Home Loans

It is necessary for investors to understand that the business of real-estate might look transparent from a regular perspective with a robe of simplicity on. However, certain crucial aspects need to be investigated before investment in any property. Before you enter into a purchase agreement to buy your next home, it would be to your greatest advantage to locate the most valuable home loan program for you and your family. The complexities of each home loan type might overpower, yet with a little research and exhortation from a proficient credit officer you ought to almost certainly discover a home loan program that will give you and your money related circumstance the best advantages. Up front installment, financing cost, credit term, and private home loan protection all portray a home loan, however seeing how rules contrast from home loan program to program will enable you to locate the most worthwhile parts of each advance kind and the least demanding way to endorsement.

The following is a rundown of the four fundamental home loan types, they include: Regular,  Federal Housing Administration (FHA), Veterans Administration (VA), and the United States Department of Agriculture (USDA). As you filter through the rules of these home loan types, you will find that the up front installment, FICO rating, work history, co-endorser choices, and property condition prerequisites change extraordinarily.



Conventional Mortgage

These loans are backed by Fannie Mae or Freddie Mac who have set regulations and requirements for their procedures. The Fannie Mae mortgage-backed bond is linked to mortgage interest rates via Fannie Mae. The Freddie Mac mortgage-backed bond is linked to mortgage-backed bonds via Freddie Mac.

Mortgage programs that use conventional mortgage interest rates include the "standard" 30-year fixed-rate mortgage rate for borrowers who make a 20% downpayment or more; the HARP loan for underwater borrowers; the Fannie Mae HomePath mortgage for buyers of foreclosed properties; and, the equity-replacing Delayed Financing loan for buyers who pay cash for a home.


Federal Housing Administration (FHA)

The FHA home loans have been helping many borrowers seeking a low down payment mortgage program, and also for those that need a bad credit mortgage. FHA mortgages can help a 1st time home buyer or 2nd time home buyer. You're able to use the FHA loan as many times as you move to a new home.

FHA home loans are now being given to people with blemished credit. The Federal Housing Administration is a government agency that insures the loan you are applying for from private lenders. Anytime you are unable to pay, they will partly do so on your behalf. With the government securing the loan, it definitely gives lending company the assurance they need. For this reason, even with a bruised credit score, you can apply for this loan and use it to buy or construct your own home.


Veteran's Administration (VA)

VA loans require a Certificate of Eligibility that documents your past or current military service, it is exclusive to those who bravely served our country and are available to those who have served our country and offer a number of advantages.

Lenders with trained personnel that work with the VA home loan program can easily acquire this document. However, in some cases, the applicant must fill out a form or other form online or by mail to receive the document. You must also have a reasonably Good Credit record.


United States Department of Agriculture (USDA)

This loan type is a loan from the United States Department of Agriculture, this program is overseen by the Rural Housing Service (RHS). This loan is designed for borrowers with low income that live in rural areas that have trouble getting financial assistance from traditional lenders.

How Mortgage Rates Are Determined in Canada

For many Canadians, their home is the biggest investment they will ever make, and their mortgage the most significant loan. When shopping for a mortgage, people generally look for ways to get low mortgage rates.

A mortgage rate doesn’t refer to the size of the mortgage loan, but rather the interest rate on your mortgage. Obviously before you buy, you’ll want to search for a low mortgage rate. There are many factors that affect mortgage rates in Canada, and a fuller understanding of these factors can be an immense help to the inexperienced buyer when applying for a mortgage.

In this article, we’ll look at a basic outline of how mortgage rates are determined in Canada, including some ways to get a low mortgage rate.

Fixed vs. Variable Rate Mortgages

There are two kinds of mortgage loans available to Canadians: fixed or variable rate mortgages. A fixed rate mortgage, as the name suggests, keeps the same interest rate and monthly payment for the duration of the term. A fixed rate mortgage is ideal for those who want more stable financial planning, and want to avoid any surprises due to sudden inflation.

A variable rate mortgage adjusts based on the lender’s prime rate, which is determined by the Bank of Canada’s overnight rate. This means the interest rates can change day to day. While obviously there is some risk involved with a variable rate mortgage, they can often save Canadian homeowners money. While the monthly payment remains the same, lower interest rates mean that more of your monthly payment goes towards your principal. While some homeowners fear sudden increases in mortgage rates, banks generally avoid this so as not to incur any backlash.


The Mortgage Market

Mortgage rates are set based on a number of factors. These factors, or steps, are referred to as the secondary mortgage market. When you are granted a mortgage loan, the following steps occur:

• Your mortgage is sold by the bank/lender to a third party investor, known as the aggregator.
  
• Your loan is combined with other loans by the aggregator to form a mortgage-backed security.
  
• The mortgage backed security is divided into shares, which are sold to other investors.
  
  

Therefore, your mortgage rates are based on what the aggregator will pay for the mortgage, but also by the worth of the mortgage-backed security and what investors are willing to pay. This creates a competitive mortgage market, with homeowners benefitting from low mortgage rates and investors benefitting from higher mortgage rates.

It can be complicated to understand everything that goes into determining mortgage rates in Canada. The best way to understand mortgage rates is to consult with one of our mortgage professionals. They understand the market thoroughly and will be able to explain how everything works, and help you find a low mortgage rate! Contact us today to schedule a consultation.

source: northwoodmortgage.com

Fixed Rate Mortgages: Should You Choose A 15-Year Or A 30-Year?

Once you’ve decided that you want a fixed rate over a variable rate mortgage, you then have to determine if you want 15 or 30 years. Taking on a loan for 15 years may seem impossible to some people, while others may think that’s just the right amount of time needed to pay it off. Generally, Canadians opt for anywhere from 25 to 30 years for their mortgages, but that doesn’t mean you have to too.

Fixed rate mortgages: 15 years

With 15-year fixed rate mortgages, you have the advantage of paying off the loan faster. Once you’ve paid off your mortgage, you can focus on putting money aside for other things like your retirement, children or grandchildren’s educations, vacations, etc. You’ll also save money on interest since you’ll pay more interest over 30 years than you will over 15. For example, 4% interest on a $200,000 home is $66,288 over the course of 15 years. The same amount of interest on the same property for 30 years is $143,739. Finally, with a 15-year loan you can build up the equity in your home quicker because you’re taking less time to pay off your loan.

Fixed rate mortgages: 30 years 

For fixed rate mortgages at 30 years, you’re looking at increased time to pay back your loan. You’re also looking at a lower monthly payment but, as aforementioned, more interest to pay over the 30 years. However, when you have lower monthly mortgage payments to make, you can save more money to put towards retirement, credit card payments, etc. With a 30-year mortgage you get to keep more cash in your pockets, but you will be putting less towards your mortgage. You can also make extra mortgage payments over the course of the 30 years to reduce the balance, but watch out for prepayment penalties.

Are the monthly payment amounts really that different?

With fixed rate mortgages at 15 years, you’d think that the monthly payments would be double those of 30 years. This isn’t usually the case. Let’s use the same example as before with the $200,000 mortgage at 4% interest. The 30-year monthly payments would be about $950. The same mortgage with the same interest at 15 years would see a monthly payment of about $1,450. That’s less than double with a difference in monthly payments of approximately $500.

Which one is right for you?

When it comes to choosing a 15- or 30-year fixed rate mortgage, you must evaluate your financial situation. Sit down with your mortgage broker and lay everything on the table. Your broker can help you make the decision as to which one is right for you by reviewing your financial situation and explaining in detail what your monthly payments will be, the interest and how you can manage a 15-year vs. a 30-year loan.

source: northwoodmortgage.com

Six Tips For Choosing The Best Mortgage Broker

If you are currently looking for a mortgage and have decided to enlist the help of a mortgage broker, then you’ve made a smart move. The next step is ensuring that you find the best mortgage broker. How do you do this? Gather as much information as possible and ask important questions. Here are some key things you should know about the broker, as well as the ways in which you can find this information.



    Judge by Experience

    The mortgage brokerage industry does have a fairly high turnover rate, so it is important to know how long the broker has been in business. This helps to determine if the mortgage broker is a seasoned professional who has been through hard and good times, as opposed to a newbie who has just come in.

    Ask About Mode of Compensation

    Brokers are generally compensated in two ways: fees and yield spread premiums. Fees are a percentage of the loan amount, while yield spread premiums are direct compensation for signing the borrower up for a higher interest rate than what they would have otherwise opted for. While the latter may be a bit controversial, they are actually suitable for borrowers who cannot afford the upfront costs associated with the loan. If you can’t pay upfront, then you pay over time. Ask the broker about yield spread premiums before signing anything.

    Ask About Rate Locks

    Rate locks are a way for some brokers to speculate on the rise and fall of interest rates—often at the borrower’s expense. Ask the broker about rate locks and how they handle them. However, to prevent the broker from doing any kind of speculation, it is best to get something in writing.

    Ask for References

    Ask your broker for references. If he/she has satisfied clients, then it’s best to ask them directly, and they will give you honest answers.

    Surf the Internet

    Do some background checking on the mortgage brokers. See what their credentials are and whether they are licensed and listed. There should be an online directory for registered brokers.

    Interview At Least Three Brokers

    You should have a shortlist of at least three mortgage brokers before deciding on the best one. Compare them and see which one you feel most comfortable with.

Deciding on a mortgage broker can be a detailed process, but making the effort could save you thousands or tens of thousands of dollars in the long run. If you are in search of a mortgage broker, then contact us today. Our specialists can help you find the best mortgage for you, and we will be more than happy to answer all your questions.

source:  northwoodmortgage.com

The Difference Between Fixed Rate Mortgages And Variable Rate Mortgages

One of the first questions that homebuyers ask when taking out a loan is: Should I get a fixed rate mortgage or variable rate mortgage? It’s not something that should be taken lightly, because the difference between the two loans could translate into thousands of dollars over time. One is not necessarily better than the other. The one you eventually choose will depend on your personal taste, financial situation, and the prevailing economic climate.

Fixed Rate Mortgages

Fixed mortgage rates are as the name implies: fixed. The interest that is established when the loan is first taken out is the interest you will pay for the duration of the loan. This is regardless of the prime interest rate, which could be higher or lower than what you are paying on your mortgage.

Advantages: Fixed rate mortgages are a good choice for those who are seeking peace of mind when it comes to their finances. If your income is fairly stable and predictable in the near (and perhaps long-term) future, then you can afford the luxury of knowing that regardless of what happens, your rate won’t change.

Disadvantages: The major disadvantage is that you cannot take advantage of low interest rates and may very well end up paying more than you would if you had taken a variable rate mortgage.

Variable Rate Mortgages

Variable rate mortgages, on the other hand, are not fixed. The interest rates fluctuate according to economic conditions, and this could be above or below what you would be paying on a fixed mortgage. Variable rates do carry an element of risk, but they can be worthwhile if interest rates dip for a prolonged period of time.

Advantages: If interest rates are set to fall in the coming months, then you would be much better off with a variable interest rate. It is good for those who have an appetite for risk and are in a position to pay the current rate in anticipation that it will drop in the coming months. Historically, variable rates have proven to be less expensive over time, but you need to be able to see things from a long-term perspective.

Disadvantages: Rates can go up instead of down, and if you aren’t prepared for the challenges that come with this, then you could be in a difficult position.

You should go over your financial situation as well as the prevailing economic conditions with a qualified financial advisor. At Northwood Mortgage, our agents will be happy to help you make the best decisions in light of your situation.

source:  northwoodmortgage.com

Mortgage PreApproval Benefits [Video]

Getting a Mortgage Pre-Approval is your first step in obtaining a mortgage. In this video, Northwood Mortgage agents Jason Hollingworth and David Steinfeld explain what a Mortgage PreApproval is, how to get one, and why it’s beneficial.

Subscribe to our Youtube Channel for more tips on mortgages!

https://www.youtube.com/c/NorthwoodMortgageLtdToronto

source: northwoodmortgage.com

How Student Loans Can Affect Your Mortgage Application

The latest figures show that almost $30 billion is owed by Canadian students in student debt. With many people going back to school in their adult years, this increasing level of student debt brings with it numerous challenges for the average Canadian student. This is clear when examining how student loans can impact your ability to buy or sell a home. And so within this article, we’ll look at how student loans might impact a buyer during their mortgage application process.

Your Debt to Income Ratio

When buying a home, your lender will calculate your debt to income ratio by adding up your monthly payments, along with your expected mortgage, and dividing the total by your monthly income. To qualify for a loan with most companies, your debt-to-income level should be less than 43%. For those with a $20,000 student loan looking to buy a house for $300,000 or more, this debt-to-income ratio could prevent lender approval.

You May Need a Higher Down Payment

In order to decrease their mortgage amount, and thus the amount they’ll be comparing with their income, buyers might consider using a higher down payment for their property. This might mean waiting a little longer to buy their dream home or selling another asset such as a business or a vehicle in order to increase their down payment amount.

Options to Decrease Mortgage Application Challenges

While student debt can have a significant impact on the mortgage application process, buyers do have numerous options available to help overcome these challenges. Let’s look at several steps buyers can take to mitigate the impact student debt has on their mortgage application:

• Consolidate Loans Into One

For those with numerous loans in addition to their student loan, such as a credit card, it can help to consolidate the loan into one loan repayment. This can reduce the overall cost thereby reducing the debt to income level for the mortgage applicant.

• Choose a Longer-Term Mortgage

Another way a person with student debt can reduce their long-term debt to income ratios is to choose a longer mortgage term. This will provide a longer period to pay off the mortgage, thereby decreasing month-to-month costs.

It’s important not to let student debt prevent you from moving forward on your home purchase! There are multiple avenues towards buying a new home for those with student debt. To learn more, speak with our trusted experts directly today.

source: northwoodmortgage.com

What Income Verification Methods Are Required When Applying For A Mortgage?

When applying for a mortgage, you will need to demonstrate to a lender that you have a substantial enough income to pay off the mortgage in the future. But how exactly can you reasonably prove your income? This article will detail the methods you can use to verify your income to a mortgage lender.

 Make Copies of your Records

The first step is to provide your lender with copies of your records that indicate your income. This means your two most recent pay stubs, your most recent checking account statement, your current savings account statement, and your federal income tax returns from the previous two years. This should provide your lender with enough information to accurately gauge your income and financial situations.

Debt and Loan Statements

Your income will not be the only factor that your lender will want to verify. Your mortgage lender will want to know about any debt obligations you have. As such, you should provide your lender with copies of your most recent credit card balance(s) as well as the most recent statements from any other outstanding loans you have, such as personal, auto, or student.

Provide Employer Information

Your lender may also request that you send them the information of your employer. This includes your employer’s name, your office or work address, and the phone number to the human resources department. Your lender might want to call to enquire about and verify how long you have worked there and what your salary is.

If you have Unverifiable Work

Many people who apply for mortgages have not been in steady employ in recent years. This can make getting a mortgage more difficult, but by no means impossible. If you have been in and out of work, have been working as a freelancer, or are self-employed, then you will have to take some extra measures to demonstrate your income. This usually means providing your lender with copies of more years’ tax returns, such as four or five. You may also want to provide bank statements going back several months or years.

Most Importantly, Be Honest

Remember, while it may be tempting to try to exaggerate your income in order to impress your prospective lender, this will ultimately only hurt you. Any competent and ethical lender doesn’t want to give you a mortgage you can’t repay and drown you in debt. Financial honesty and responsibility are always prudent.

source: northwoodmortgage.com

Purchasing Or Refinancing A Home? How to Play it Safe

When it comes to purchasing or refinancing a home, you want to play it safe because mortgage fraud is something you definitely don’t want to get caught up in.

Mortgage fraud takes places when a person intentionally provides erroneous data on a loan application in a bid to get a mortgage that he or she probably would not have qualified for had he or she entered accurate information on the loan application. You need to be aware of this sort of crime so that you don’t fall prey to con artists.


What is Mortgage Fraud? 


Various sorts of mortgage fraud exists. One very popular one involves a criminal finding an unsuspecting person with good credit to serve as a so-called straw buyer. As part of this scheme, the crook will seek to have the straw buyer place his or her name on the home mortgage form. The con artist may, in exchange for the straw buyer’s assistance, promise to pay a sum of money or offer some other incentive.

Although the promised payday may prove alluring to the straw buyer, the truth of the matter is that the straw buyer will be the one left to shoulder responsibility should the mortgage default. If it’s proven that the straw buyer understood that he or she will fully engaged in fraudulent activity, he or she could be forced to cover any post-property sale shortfall, and could also be dealt criminal charges.

How Can You Remain Safe From Mortgage Fraud?

Fortunately, there are plenty of ways to steer clear of mortgage fraud. For example, you should refuse to accept any payment or reward offered to place your name on a mortgage application unless you plan to buy the property in question.

Another tip is to work only with real estate agents and other industry professionals. You also need to, among other things, keep your personal information private. Nefarious people who have access to your personal information can potentially use ID theft in order to commit mortgage fraud — without your knowledge.

Don’t fall victim to mortgage fraud. When purchasing or refinancing a home, be sure to go through the proper channels to get your business taken care of properly. If you work with industry professionals, steer clear of too-good-to-be-true offers from potential con artists and guard your personal information. This way you’ll be able to safely purchase or refinance your home.

source: northwoodmortgage.com

BDO signs biggest syndicated term loan of $500 million

BDO Unibank Inc. has closed a $500-million, three-year syndicated term loan with international banks, marking its largest syndicated loan transaction to-date.

“BDO intends to utilize the facility for refinancing of an existing term loan and for general banking and corporate purposes,” the bank said in a disclosure to the Philippine Stock Exchange Thursday.

It signed the three-year agreement with various lenders across the Americas, Europe, Asia, and the Middle East.

The deal is considered the largest syndicated loan transaction by a Philippine financial institution to-date.

“The facility generated strong interest and was oversubscribed, prompting BDO to upsize it to $500 million from the initial tranche of $350 million,” the Sy-led lender said.

Lead arrangers and bookrunners for the deal were Bank of America N.A., Deutsche Bank AG-Singapore Branch, The Hong Kong and Shanghai Banking Corporation (HSBC) Limited, Mizuho Bank Ltd., Standard Chartered Bank, and United Overseas Bank Limited. – Jon Viktor Cabuenas/VS, GMA News

source: gmanetwork.com

Are Mortgages Different for Properties that you’re Intending to Rent?

Mortgages for buildings you’re planning on renting depends on the property.

If a property is used primarily as a personal residence, but includes rental units, then your mortgage will be similar to a normal home mortgage.

Alternatively, if the property is only intended to be rented out to others, you will need a different and often more difficult-to-obtain mortgage.

Mortgages for Personal Residences with Rental Units

Many houses have outbuildings, basements, or additional floors that can be used as rental properties.

Even if you are intending to rent these out, the mortgage process will be similar to a normal personal residence. This also applies to second homes that are rented out to lodgers during some months of the year.

Like a standard mortgage, you must provide 5% money down. You will also need to provide proof of income. Fortunately, you can add in projected rental income. This income may help sell the bank on your ability to maintain the mortgage.

To calculate potential income, find a good rent estimate using the rentometer. Combine this estimate with reasonable guesses of depreciation to find your additional income.

Mortgages for Non-Owner-Occupied Rental Properties

Buying a property with the intention of renting all or almost all of its units requires a different kind of mortgage.

Mortgage providers will only offer rental property mortgages with a 20% down payment. This is because the CMHC offers much more limited coverage for rental properties than for residences. Mortgage providers need to manage this risk by asking for more money up front.

They will also need to assess your income against all of your existing mortgages. You will need to prove that your current income and any projected income from your properties will be sufficient.

This requires in-depth calculations of income versus taxes, depreciation, maintenance, and payments. Use a calculator from a trusted company to estimate the likely net profit or loss from your future property. Better yet, hire a professional property assessor.

Even if your property will initially run at a loss, you can still mortgage it if your other income is high enough to ensure payments.

Debt coverage ratio for a rental mortgage varies by bank. Some banks provide a flat ratio of 11%. Others calculate it from the likely profit of the rental property.

The Northwood Advantage

Northwood specializes in providing commercial loans for apartment buildings, and we provide a solutions for different properties and incomes! Contact us for a consultation today.

source: northwoodmortgage.com

World Bank Group earmarks $500-M loan to rebuild Yolanda-hit Central PHL

A $500-million in loan for reconstruction of areas struck by Typhoon Yolanda, the strongest to make landfall on record, is being mobilized by the World Bank Group.

The emergency loan, requested by the Philippine government, is being finalized to support reconstruction of typhoon-hit areas, the Washington-based lender said in a statement Monday.

The group is also “ready to provide” additional support, including through a conditional cash transfer program that provides funds to poor families, according to the World Bank.

Resources could also be directed to providing temporary shelters and to help with debris clean up, providing short-term jobs to poor families.

“We are committed to supporting the government in its effort to recover and rebuild, and to help Filipinos strengthen their resilience against increasingly frequent extreme weather events,” World Bank Group president Jim Yong Kim said in the statement.

Moreover, the World Bank is deploying global disaster experts to help in rebuilding communities.

“Given the scale of this disaster, the country will need a long-term reconstruction plan. We can bring lessons learned from our work in reconstruction after disasters hit Aceh, Haiti, and other areas that might be helpful in the Philippines,” said Axel van Trotsenburg, World Bank vice president for East Asia Pacific.

The World Bank is also providing technical assistance for design of public infrastructure that can withstand 250 to 280 kilometer per hour wind speed and resist sever flooding

“In the midst of this terrible tragedy, the Government is determined to build more resilience into homes, buildings and roads to reduce risks in the future, which is critical in a country that is subject to an increasing number of severe weather events,” said Motoo Konishi, World Bank Philippines country director.

Typhoon Yolanda barreled through central Philippines on November 8, flattening coastal towns and cities and killing thousands of people. – Sieg Alegado/VS, GMA News

source: gmanetwork.com

UCPB says loans, trading gains drove 2012 net income up 22%

The United Coconut Planters Bank (UCPB) grew its net income by 22 percent last year, mainly through its loan portfolio and trading and securities earnings.

UCPB posted a net income of P3.73 billion for 2012, up by 22 percent from the P3.06 billion in 2011, the bank said in a statement Monday.

Total loans went up by 24 percent to P87.72 billion from P70.52 billion, with the consumer portfolio growing by 33 percent. Corporate accounts make up 45 percent of the loan portfolio.

Non-interest income jumped by 47 percent to P3.1 billion from P2.1 billion due to higher trading gains in securities and better fee based income. UCPB noted that ATM transactions increased by 20 percent.

Moving forward, the growth in fees will stay robust on the back new products launched like the UCPB Connect, an online facility that provides banking flexibility and convenience to clients, which also allows users to access their bank statement and pay bills through mobile devices.

As of end-2012, the bank posted total assets of P218.72 billion—up by 9 percent—due to sound financial fundamentals and knowledge of the current market conditions, while total capital increased by 15 percent to P20.27 billion. — VS, GMA News

source: gmanetwork.com