5 Benefits on How to Protect Your Mortgage With Life Insurance

For potential homebuyers and current homeowners, a home is a costly investment with a long-term commitment. That's why every homeowner carrying a mortgage needs to get life insurance. Life insurance that covers a mortgage is called mortgage life insurance or mortgage protection insurance. This kind of insurance is designed to protect the lender, just in case they are unable to pay for their monthly mortgage fees. In this article, let's highlight five benefits on how to protect your mortgage with life insurance.

1. May protect homeowners due to sudden unemployment

With Canada's unemployment rate fluctuating every year, sometimes homeowners might face unexpected job loss due to termination or disability. The benefit of having mortgage life insurance alleviates the stress and financial burden related to unemployment by covering the period when the homeowner is out of work. At Northwood Mortgage, we offer a series of mortgage life insurance options that target the specific time frame if a homeowner loses their job, falls ill, or becomes physically disabled, causing unemployment.

2. May protect homeowners due to unexpected death

If the homeowner dies, the mortgage life insurance will cover the remaining amount left on the mortgage. Along with unemployment, death in the family can cause financial strain, especially when the homeowner passes away. Mortgage life insurance is a great benefit because homeowners are assured that after death, the mortgage will not become their family's responsibility.

3. Mortgage life insurance frees up your budget

When it comes to having mortgage life insurance, homeowners can free up their budget by the funds they get from other insurance policies. For example, the funds received from a personal life insurance or employer benefits could be used for payments on other financial obligations such as car payments, other bills, and university tuition. What would usually go towards the mortgage can be spent wisely on other expenses because the homeowner has mortgage life insurance.

4. Mortgage life insurance is convenient

Another benefit that mortgage life insurance offers is convenience. By covering unemployment, death, and other bills, it is an added layer of security in case unexpected circumstances should occur. With all its benefits, it is also easy to qualify. To purchase a mortgage life insurance policy, homeowners do not require to submit to a life insurance medical exam. This is a very convenient benefit to have for sickly individuals. In case the homeowner is denied life insurance due to medical illness, the homeowner with mortgage life insurance is financially protected.

5.Mortgage life insurance accommodates new homebuyers

For potential first-time homebuyers who can only afford a small down payment, getting mortgage life insurance can secure the home of their dreams. They can use mortgage life insurance through the Canada Mortgage Housing Corporation, which requires a 5% downpayment.

Northwood Mortgage
As you can see, choosing a mortgage insurance policy should be decided carefully. However, investing in mortgage insurance can safeguard you and your family's future in the long run.

At Northwood Mortgage, we have an expert staff of mortgage agents specializing in life insurance and mortgages in Toronto, Brampton, Mississauga, and the GTA. We take the time to listen to your needs, and we cater our services to each client.

If you would like more information on mortgage insurance coverage and protection in Toronto and the GTA, we invite you to book a FREE consultation with one of our Northwood Mortgage agents by calling 416-969-8130 ext. 111, toll-free at 888-492-3690, or contact us here. Once we receive your request, one of our mortgage agents will contact you within 24-48 hours to arrange an appointment.

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How Monthly Payments Work for a 30-year Fixed-rate Mortgage

When looking for mortgage solutions, the number of options at your disposal can be daunting. For instance, some people may opt for a second mortgage, while others may opt for a 30-year fixed-rate mortgage instead. In Canada, the 30-year fixed-rate mortgage is more popular than the second mortgage option, and accounts for roughly 80% of all home purchases; its popularity has not waned since its inception. Here, we will focus on how monthly payments work for a 30-year fixed-rate mortgage.

What is a fixed-rate mortgage?

A 30-year fixed-rate mortgage is a loan issued by a financial institution that has an interest rate that is fixed for the duration of the loan. It usually has a repayment term of three decades, although the homeowner can refinance or sell their home before the 30-year term ends if they wish. The interest rate is determined when the loan is first issued to the homebuyer.

How Principal and Interest Payments Work

When you make your monthly mortgage payments, a part of the amount will be put towards the interest on the loan, while a portion will be invested towards the principal amount. During a conventional 30-year fixed-rate mortgage, you would be paying mostly interest payments during the first few formative years of your mortgage. As such, you are likely to struggle to reduce the principal by any significant amount during the first few years of the mortgage.

However, as time persists the financial tables turn, and the composition of your monthly payments will flip, as less money will go towards the interest and more is applied towards reducing the principal amount that you borrowed. As you enter the later years of your 30-year fixed-rate mortgage, more of your monthly payment will be put towards paying back the principal, which will allow you to build equity at an accelerated pace.

Your Monthly Payment Remains Constant

While the composition will change over the lifespan of your mortgage, in terms of the payment charges, the actual total amount that you will be expected to pay will not change whatsoever. Moreover, the interest rate that you are expected to pay will also not change. It is for this reason that this mortgage solution is referred to as a 30-year fixed-rate mortgage, as the rate amount remains constant.

Another option that some Canadians may decide to take is an adjustable-rate mortgage. As the name implies, the interest rate may fluctuate throughout the loan, which makes it a riskier option for many Canadians, while the fixed-rate mortgage option is arguably the safer of the two.

To learn more about fixed-rate and variable mortgages, call Northwood Mortgages at 888-492-3690 or contact us here.

source: northwoodmortgage.com

What Is Mortgage vs. Real Estate?

Real Estate is everything that mortgage needs, although Mortgage and Real estate relate to each other like peanut butter and jelly, In this article, I will give you a quick Mortgage101 and run down on how real estate transactions work.

What is Mortgage?

For the majority of people that buy real estate, the need for a mortgage in order to finance the cost of the property is essential for making real estate ownership a reality. If you have opted to buy a home, apartment, or other property you will probably need to take out a mortgage.

While a mortgage is usually considered to be a loan by many people, it is, in reality, a lien on the property. When the bank maintains a mortgage on a property, it means that the bank can reclaim ownership of the property if the buyer does not make loan payments on time.

A mortgage works in a similar fashion to a car loan. Taking out a mortgage means that the amount loaned out is secured by the property itself. Mortgages also have to be paid in monthly installments so that the principal and interest are covered.

Mortgage loans are typically calculated so that the principle and interest payments are spaced out over a set period of time. The terms are typically between 10 to 30 years for the average mortgage and last until the entire principal has been paid off.

 Ready For a Quick Quiz? 

A mortgage is typically the largest debt that any homeowner will ever have. Before applying for a mortgage, you should have a good idea of what is involved in the application process so that you can be sure that you will be approved. In addition, understanding the terms of a mortgage before you sign a contract is important so that you will know whether or not you can really afford it.

Qualifying for a Mortgage

If you want to be approved for a mortgage, there are a number of criteria that need to be met in order to qualify. The first important point is to make sure that your credit score is good to excellent. At a minimum, you need a credit score of 680 or better.

Some of the other factors that will help you to become qualified include:

* A front-end ratio of 28 percent
* A back-end ratio of 36 percent
* Being employed at the same job for at least two years
* Verification of your earnings and employment
* Thorough documentation of your financial situation
* An appraisal performed by a professional
* Private mortgage insurance (applies in some cases, especially when the amount of the down payment is low).

Mortgage Types

There are several different options when it comes to the type of loan that you want on your property. In addition, only certain types of loans are available to specific individuals. The three main types of mortgages are conventional loans, VA loans, and FHA loans.

Conventional Loans: Conventional loans are offered by private lenders, typically banks. You can not obtain a conventional mortgage from the government. In addition, these types of loans often have strict requirements that mean that you must have good credit. In addition, you must have cash available to cover the down payment, which can be up to 20 percent of the value of the mortgage in order to get approved.

FHA Loans: FHA loans are offered by the Federal Housing Administration. These loans are given out by the government. FHA loans are designed for individuals that can not afford to make a substantial down payment or have other credit issues.

VA Loans: VA loans are guaranteed by the U.S. Department of Veterans Affairs. These loans are only available to military personnel that incisively on duty or are veterans. There are also some qualifications that must be met in order to obtain these loans.

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Real Estate Debt

While mortgages can be helpful for obtaining homeownership, occasionally homeowners run into financial problems.

These problems can be caused by issues such as unsecured debt, credit card debt, loss of employment or other problems. If you have a mortgage, there are options for helping you to pay your mortgage while getting your debt problems under control.

Mortgage Refinancing

Mortgage interest rates have reached the lowest levels in some time. If you want to find some money for paying your other bills, refinancing your mortgage to a lower rate could help. It is important to understand that refinancing does come with fees and it may also extend the length of your mortgage.

Cash-out Refinancing

Cash-out refinancing is available to homeowners that have a significant amount of equity in the property.

After a cash-out refinance you will have cash that you can use to pay other debts. A pitfall of this method is that unsecured debts are now tied to your property and you have compromised the equity in your home.

Home Equity Loans

Home equity loans or second mortgages can be used to pay off other debts. You are eligible if you have equity in your property. You will receive a lump sum of money at a fixed-rate.

Real estate transactions encompass both the buying and selling of property. In order to perform such transactions, decisions must be made regarding the home’s value, the current status of the local real estate market and what terms for buying or selling would be best.

What is Real Estate?

Here Are Some Real Estate Types

Real estate comes in three main types which are resident, investment and residential. Residential real estate refers to the individual properties that are owned for residential purposes. It is the most common form of real estate in the United States.

Commercial real estate refers to properties that are used primarily for business purposes. Investment real estate refers to real estate that the owner buys in order to earn income. The investor is not looking to live or use the property personally. Rather, the property is leased out to another individual, which can help generate income for the property owner.

Real Estate Benefits and Drawbacks

Since real estate transactions are taking place in an ever-changing market, there are some risks associated with owning real estate. These risks include:

* The potential for a decline in property values due to changing market conditions
* Potential liability for any problems that occur on the property
* Risk of going into debt due to mortgages

Although these drawbacks are significant, this has not stopped people from investing in real estate. When things do go well, owning real estate can result in significant financial rewards. Some of the benefits of owning real estate include:

* Short term profits realized upon selling the real estate in a market upswing
* The potential to take out additional loans for other needs while using the owned real estate property as collateral
* The diversification of an investment portfolio

source: usa.inquirer.net

Best Mortgage Rates: Wells Fargo Home Loans

With unparalleled experience in the mortgage arena, The Wells Fargo home loan team is here to assist you with every step of the home purchasing process. Whether you are in the market for a new home or looking to refinance your home, the expert mortgage team at Wells Fargo will help you find a home loan that is suitable to your financial needs.

Purchasing a New Home

When starting the home buying process, you need to first decide what price range you can afford. A big part of the Wells Fargo mortgage rates are determined based on your income, debts, and other financial data. This can be determined by looking into your current financial situation which includes both your gross annual income and credit score. The team of experts  at Wells Fargo can help you find ways to increase your credit score. Often times there are items placed on a credit score that can easily be disputed and rectified, even during the purchase of a new home.

Home buyers also have the option to get prequalified on a home loan. This can give them an up-to-date estimation of what they can afford. This estimation is helpful when making your final home buying decision. A Wells Fargo mortgage rates expert will walk your through the prequalification process and answer any questions that you may have.

Wells Fargo Mortgage Rates

When it comes to home loans, there are several options available to home buyers.

Fixed-Rate Mortgage

A fixed-rate mortgage guarantees that monthly payments and interest rates will remain the same over the course of the loan’s life.
Adjustable-Rate Mortgage (ARM): This is when you have a lower initial interest rate than compared to fixed-rate. The rates and monthly interest rates are subject to change after the initial fixed-rate period.

Jumbo Loans

These are for customers who need financing for higher loan amounts. They provide financing above standard Fannie Mae and Freddie Mac loan amounts.

Your First Mortgage

This is meant for first-time or repeat home buyers who have limited cash available for a down payment. Keep in mind that Wells Fargo mortgage rates are dependent on your credit score.

Government Loan Options

Eligible customers have availability to loans such as FHA, VA, and the Guaranteed Rural Housing. They offer low down payments, down payment assistance programs, and provide options for home buyers with credit concerns. Wells Fargo mortgage rates can fluctuate because of different loan programs.

New Home Loans

The home buyers who purchase a newly constructed home receive:

“Builder Best” extended rate lock program
A dedicated team that is specialized in home financing for new home builds.

Cash Out Refinance

This is utilized for home owners who want to access available equity from their home.This will replace your existing mortgage with a new loan that’s larger than original loan balance. Also, when you close this type of loan, you will be able to access the money you borrowed to pay for any major purchases.

Home Equity Line of Credit

This is meant for the homeowners who want ongoing access to the available equity in their home. During the “draw period” you can borrow money as you need,  up to your available line of credit. Relationship discounts can be accessed and your interest rate may be lower than other unsecured forms of credit.

Closing on Homes

It is recommended that home buyers hire a home inspector to conduct a house inspection on the home they are considering to purchase. This includes not only items that can be seen in plain sight, but also the overall structural integrity of the home, inside and out.

Home buyers themselves are also encouraged to get involved in the inspection process. Look around for any major repairs in walls, flooring, the foundation, and any other areas that need to be addressed.
Closing on a house generally takes anywhere from 30-90 days.

What is Included in the Origination Cost?

This includes all charges that lenders and brokers included during the entire transaction. These include application fees, processing expenses, underwriting fees, as well as payments to the lender.

What is Included in the Closing Costs?

Your down payment, prepaid property tax costs, and insurance escrow amounts are all included in the closing cost.

Calculate!

Wells Fargo mortgage rates offers several home lending online calculators in order to determine how much house you can afford. These tools allow you to see the different loan options and show you how committing to a larger down payment can help save you money and time. This last task can be completed by using an amortization calculator.

Refinancing

Refinancing is a great option for homeowners that want to lower their monthly payment. For example, if you are paying a certain amount for a twenty year loan, the Wells Fargo mortgage rate advisor could work with you to lower your down payment by extending the loan out over more time. Our team of experts are ready to help you achieve your refinance goals! Refinancing can allow you to take money from your home equity and place it towards other expenses. Many homeowners will choose this option to fund home improvements or a potential remodel.

Rent vs. Buy

This decision is ultimately left up to the individual. However, looking into several factors associated with this process can help a potential home buyer make a better purchase decision. Gross annual Income, tax credits, credit scoring, down payment amounts, and the size of the home are all variables taken into consideration when determining whether you should rent or buy a property.

Wells Fargo mortgage advisors are qualified and eager to work with home buyers. The team of experts will help you with the entire process, from the initial online applications to closing day. We want to make your home purchasing goals come to life. Come by any Wells Fargo branch or search for a local Wells Fargo mortgage consultant today!

source: usa.inquirer.net

Chances to Get a Second Mortgage with Bad Credit

If you need funds quickly, but don’t have cash in the bank and can’t get a loan, borrowing on your property is a good next option.

In fact, getting a second mortgage in Toronto is usually cheaper than a loan because you are using equity in your home as security for the borrower.

Second Mortgage in Toronto

However, there are certain steps you can take to improve your chances of getting a second mortgage. If you have applied for a loan and been refused, you’ll know the reason why—and it’s most likely bad credit history.

First, use one of the three main online credit bureaus to find out what your credit score is. By checking out your credit rating, you should be able to pinpoint the problem and possibly fix it. For example, if you are weighed down with credit card debt, find a way of paying it off. Or, at the very least, increase your monthly repayments.

How to Take Out a Second Mortgage

Now, let’s take a look at the options. The first one is to take out a second mortgage, using the equity in your house as security against the second loan. If your bank or current mortgage lender won’t give you a second mortgage, then shop around. The best place to start is with a decent mortgage broker, who will have access to many different sources of funding, including online banks and financial firms.

When it comes to a second mortgage, 99 percent of the time you will pay a higher interest rate than the rate on your first (primary) mortgage. Your repayments will likely be higher, too. Don’t just take the first mortgage on offer. If the terms don’t work for you, such as a high interest rate or high payments, then ask the broker to seek out alternatives. You need to find a second mortgage that works for you and within your budget.

Finally, with this first option, you will likely be in the position of making two mortgage payments a month. That can stretch your finances and make covering your monthly expenses challenging.

Cash-Out Refinance Loan

The second option is to consider a cash-out refinance loan. This option is a new mortgage loan that replaces your current mortgage and, in addition, gives you the sum in cash that you want to borrow. The interest rate is going to be higher, and your monthly payments will be higher too. That means you have to think through this option carefully. If you suddenly lost your job, how would you make the second mortgage payments, as well as your day-to-day living costs?

If, after exploring every option for a second mortgage, you can’t find a lender, think about asking someone to co-sign your loan. This means that the co-signer will be responsible for the debt if you fail to make your payments.

Get the Facts Before You Borrow

Despite everything we’ve said above, you may find that the interest rates on the second loan are in fact lower, depending on the current interests rates and the economy.

Whatever you decide to do, check out the overall costs, conditions, and terms. And if something is confusing or doesn’t make sense, be sure to ask questions. At Northwood Mortgage, we will help you find that second mortgage in Toronto—even if you do have a bad credit rating.

source: northwoodmortgage.com

Things You Should Know Before Going for a Second Mortgage in Toronto

If you own a home in Canada then you have probably have heard of a second mortgage at some point in your life. A second mortgage is similar to a first mortgage, in that it is a loan secured by your property. As time passes you will accumulate more and more equity on your property. A second mortgage is primarily intended to use the equity that you’ve accumulated over the years.

According to a report by Business Insider, almost 2 million Canadians have a second mortgage, and nearly as many that have a HELOC. Some Canadians will use their second mortgage in order to avoid having to declare bankruptcy. In any event, a HELOC, for those unaware, is also another form of a second mortgage, because it serves as a line of credit for home equity. In other words, the person will supplement a second loan over their first in order to access their equity. Below are some things that you should know before going for a second mortgage in Toronto.

Different Types of Second Mortgages

A revolving HELOC works similarly to a credit card. That is, the borrower will have access to equity in perpetuity as they continue to pay off the principal (what they owed previously) over the upcoming months and years. Moreover, a HELOC can be modified to become a closed second mortgage, which functions much like a loan for a vehicle. That is, the borrower will receive only one lump sum of money from their equity and they must pay it off in a gradual manner.

It should also be noted that it is difficult to qualify for a HELOC of any kind, because they tend to only be offered to those with an impeccable credit profile and who happen to live in a prosperous urban area. Hence, those who have a poor credit profile or have a meager income will only likely have one option at their disposal—a private mortgage.

The Two Main Reasons Why Second Mortgages are Used

The most popular reason why a second mortgage is used is to pay off a consumer debt that has high interest. Many homeowners will also use a second mortgage in order to upgrade their home for resale or to renovate it for their own recreational purposes. Leveraging a second mortgage is highly recommended at the moment because credit card interest rates are presently 15%. As such, you can save a large sum of money by opting for a second mortgage.

For instance, let us imagine that you owe $30,000 on your credit card. In such a scenario you would have to pay roughly $600 in minimum payments every month; This is of course assuming that a 3% minimum payment is required. Now, if your interest rate was 15% APR then you would owe $4,500 in interest charges after just one year has elapsed. This is before you even get to the principal amount that is owed. As can be seen, interest charges can make or break first time homeowners who aren’t too careful with their fiancees.

Due to the aforementioned problems, many Canadians turn to a second mortgage in order to pay off their credit card debts. The end result is that their interest rates will be reduced because their second mortgage is secured by their home, which serves as the primary asset in this case.

Remember that Your Home Will Be Used as Collateral

If you have decided to take out a second mortgage on your home you must remember that your home will actually be used as collateral to secure the loan. As a result, if you fail to pay it off then the lender can foreclose on your property the same way they could with your first mortgage. However, the tradeoff is in the significantly lower interest rates that you will be charged, as your home will serve as an asset that will back your loan.

Take Advantage of Interest Only Payments

It is possible to only make interest payments with many of the second mortgage products that various lenders offer their clients; this will allow you to have easier and more affordable access to your home before you opt to sell your house to the highest bidder. Your monthly payments will also be significantly lower.

To further illustrate, if you were interested in renovating your home before resale or are interested in renegotiating your first mortgage, then you could remodel your home using the funds procured from the second mortgage. You could also have the option to pay off the interest charges. Then after you are done giving your home a makeover you could then resell it at a higher price and then use some of the money that you’ve made to pay off your second mortgage.

Avoid Private Mortgage Insurance

When a person applies for a standard mortgage in Canada they need to acquire private mortgage insurance if they are unable to put a minimum 20% down payment on their house. The end result is that they will have to pay fees, known as Canadian Mortgage and Housing Corporation fees, which can actually be quite exorbitant.

For instance, if you were to take out a half a million dollar mortgage with a 5% down payment then you would have to pay 4% worth of Canadian Mortgage and Housing Corporation fees. In other words, you would need to pay almost $20,000 in fees because you weren’t able to make the minimum 20% down payment.

The good news is you can take out a second mortgage in order to avoid private mortgage insurance. Of course this also means that you will have to add additional expenses to your monthly budget but it can still be a more affordable alternative to having to pay private mortgage insurance fees.

If you would like to learn more about obtaining a second mortgage in Toronto, please visit our website or call us at 1-888-495-4825.

source: northwoodmortgage.com

4 Reasons Why You Should Get Pre-Approved for a Mortgage

The first thing to do before deciding on whether or not to buy a home is to set aside a budget., however, trying to set up a budget by yourself can prove to be a very taxing and difficult task. The amount of debt your holding, your down payment amount, your credit score, as well as your job history are all factors that you need to take into consideration before creating a budget for your new home. As such, it is highly recommended that you consult with a qualified lender in order to be pre-approved for a mortgage. Then and only then should you set-up a consultation with a real estate broker.

Getting pre-approved for a mortgage can be used to your advantage in a financial situation. Below are 4 reasons why you should get pre-approved for a mortgage, and how doing so can be leveraged to your benefit.

Boost Your Credibility

Getting pre-approved for a mortgage demonstrates to all the parties involved that you are not only committed to buying a home but are also capable of doing so. Most sellers don’t want to deal with uncertainty before they sell their home, and you can showcase your seriousness about the transaction by getting pre-approved for a mortgage. In fact, your offer may directly depend on getting a mortgage approved, and the lack of assurance can cause trepidation in the seller’s mind; they may worry that the deal will fall through, wasting their time and effort.

As a result, some buyers will only work with people who have been pre-approved for a mortgage so that they have some peace of mind. For instance, in the event a seller has multiple prospective buyers, the chances that you will be their choice will go up exponentially if you’ve been pre-approved, as it will significantly boost your credibility and reliability as well.

Helps Your Realtor Work More Effectively For You

Nothing defines a budget more effectively than being pre-approved for a mortgage. Your agent will now have all the tools and information needed to help you buy the home of your dreams. Having that precious intel will allow them to focus your search far more efficiently. You can prioritize according to your budgetary restrictions, and also go through your wish list by clearly identifying your needs and preferences. What’s more, your real estate agent will use the information you’ve provided to hone in on specific neighbourhoods, getting you the home of your dreams quicker than you can say, ‘pre-approved mortgage’.

Being pre-approved also means your agent can use that information to negotiate a better deal for you. The leverage that a pre-approval can provide should never be underestimated, nor should the competitive advantage that it provides prospective buyers over their non-approved counterparts. Think of a pre-approved mortgage as a bargaining chip that your agent can use to help you get the best possible price or value for your hard-earned dollar, as the seller will know that the offer on the table is solid.

Enjoy Peace of Mind

By having complete control over your finances you will avoid the ambiguity that often comes with a new home purchase. The lender should outline all of the clandestine costs that you may not have been aware of prior to purchase and should explain what you can and can’t afford so that you don’t suffer financially in the long run. A pre-approved mortgage means you don’t need to worry about accidentally overextending your finances or any fees getting overlooked in the process.

The last thing you want to do is make an offer on a home that you simply cannot afford, either now or long term. Applying for a mortgage — any type of mortgage — can be arduous and stressful. Getting pre-approved takes care of matters up front, and having your finances in check allows you to go through the transaction with both control and confidence.

Smart Business Sense

Believe it or not, getting pre-approved for a loan is a fairly easy process. You don’t need to worry about paying any fees either. You can have the peace of mind that there is no obligation on your part even in the event that you are pre-approved for the mortgage. In other words, there is no pressure or costs to worry about, so why not see if you qualify? There is literally nothing to lose other than a few moments of your time, and being pre-approved can be the difference between owning the home of your dreams and settling for mediocrity.

You can also use the opportunity to speak to a financial advisor. They will address any fears or concerns you may have, and help you make sound financial decisions right from the get-go. In fact, they will help custom tailor a solution that caters to your unique needs, your future plans, your current budget, as well as your future earning potential. With so many advantages and no real drawbacks, it just makes smart business sense to consult with a financial advisor to determine if you qualify for a pre-approved mortgage.

When Playtime is Over

Shopping online for your fantasy home can be a fun experience, but when you are actually serious about turning your dreams into a reality, then getting pre-approved for a mortgage can help create a solid foundation before you take the final step and become a homeowner.

For more more information about getting pre-approved for a mortgage, call Northwood Mortgage on +1 (888) 495-4825 or contact us here.

source: northwoodmortgage.com

How To Choose Between a Variable or Fixed Rate Mortgage

The difference between fixed and variable rate mortgages has narrowed over the last few years. Fixed rate mortgages have the advantage of peace of mind, as the payments are fixed monthly. However, their rates have also been steadily increasing in recent years. In comparison, variable rate mortgages tend to be lower in their rates, but also include additional risks. As a result, determining which to go with can provide a nerve-racking and daunting task. Here, we will help you choose between a variable or fixed rate mortgage by assessing your risk tolerance, lifestyle, and income.

Rewards vs Risk

As mentioned, variable rate mortgages, which also go by the names adjustable rate mortgages, tend to entice prospective homeowners with their lower base interest rates when compared to fixed-rate mortgages. However, the initially lower interest rates also have their drawbacks, as interest rates are subject to change without notice. As a result, volatile market conditions can cause interest rates to rise exponentially, placing a greater financial strain on buyers who aren’t prepared to absorb the additional costs.

As a result, you need to determine whether or not you can afford a possible interest rate increase in the future before deciding which choice is better for you and your family. For instance, if you think you’ll be able to afford a sudden 2% increase in interest rates, then a variable rate mortgage may be the right choice. To better determine which option will suit you, you need to assess your current income and potential future earnings. If your current job has room for advancement then you may be able to whether any interest increase storms in the not too distant future.

Mitigating Risk

You can actually take advantage of a variable rate mortgage while also mitigating some of the risk by fixing your monthly payments at an amount that is higher than the required minimum payment. In other words, if you simply make the minimum monthly payments then a variable rate mortgage may not be right for you, as you may be unable to take the hit of a marketed interest rate increase in the not too distant future.

This is why many financial advisors recommend that borrowers set their payments at the current 5-year fixed rate. This will allow borrowers to have a buffer in the event that rates rise in the future. In addition, they will be able to benefit from the lower variable interest rate as they will be able to allocate more of their payments in order to pay down the principal.

In other words, you’ll be able to benefit from your prepayment privileges while also staying ahead of your amortization payments. Another advantage is that you’ll be able to lock in for the remainder of the term in the event that interest rates do rise, essentially providing you with the best of both worlds.

Understanding Market Volatility

It doesn’t really matter whether you have a dozen doctorates in economics and finance or just a high school diploma. Trying to determine the ebbs and flows of interest rates is virtually impossible. Some borrowers may opt to stick with a variable rate mortgage when interest rates are low and then switch to a fixed mortgage rate when they notice interest rates start to increase.

However, most financial experts advise against this strategy due to the volatility of the market. The safe bet is to think of your long-term financial goals and needs. That is, if you think you will save more money on average over the long-term by going with the initially lower interest rates of a variable rate mortgage, then chose it.

Analyzing Conversion Rates

If you are currently under a variable mortgage plan then check to see the conversion rates, as well as whether or not you can convert it to a fixed rate at any time. If you can convert at any time with your current plan then find out the interest rate you would obtain if you were to switch out for a fixed mortgage option. Also, don’t just settle for the posted rate. That is, the posted rate may be 5.69% but a little sleuthing may help you obtain a lower fixed rate, such as 3.69%

Opt-In for the Popular Choice

Many Canadians end up choosing a fixed 5-year term when deciding on which mortgage scheme to go with. Also, the drop in rates, as well as the narrowing of the spread between variable mortgages and fixed rate mortgages, have only made choosing a fixed rate mortgage plan even more appealing to many Canadians.

The general rule of thumb is that when fixed-rate interest rates are within a point of their variable rate counterparts, then going with fixed is the way to go. As of this writing, the differential was within 1 percentage point. Many young families with children opt for the fixed mortgage option because it is the safer bet. Having a fixed rate means that families can budget easier and more effectively and plan for the length of their mortgage term. If you are the type of person who always chooses an extended warranty plan when you purchase a new gadget or appliance then it recommended that you choose a fixed mortgage option for that additional peace of mind.

Don’t Decide Alone

Deciding on whether to go with a fixed term mortgage or a variable term mortgage is not an easy task, and should not be taken lightly. Volatile market conditions and an uncertain job market can prove dire for some first-time homeowners, so your best bet is to plan a meeting with your financial advisor to determine which option is best suited for your unique needs. They will be able to better assess your finances, your future goals, both career and family in order to recommend the best mortgage solution for you and your loved ones.

For more more information about choosing the right mortgage for you, call Northwood Mortgage on +1 (888) 495-4825 or contact us here.

source: northwoodmortgage.com

3 Things To Know About Mortgages For Overseas Properties

There are many good reasons to invest in property overseas. You may want to use the property as a vacation rental or as a vacation home for yourself and your family. Your child may be going to university overseas, and you may be thinking about buying a property as an investment where they are studying. Getting a mortgage for an overseas property is different than getting a mortgage in your country of residence, however, and there are some things to consider.

1. Hire an Expert

Even if you are experienced in buying real estate, the rules are often quite different when it comes to buying overseas. The best thing to do would be to find a local real estate agent in the country where you want to buy, who is experienced when it comes to dealing with overseas buyers. By working with a local agent, you can better understand the local laws and regulations when it comes to home purchasing and financing.

2. Getting Financing is Challenging

Obtaining a mortgage for an overseas property can be challenging. If you have a credit score from a foreign country, it won’t be counted overseas. You will have to obtain a mortgage from a bank in the country you are purchasing in, and the application process will be similar to that in your home country. You will still have to prove income and provide all other supporting documents. As a foreign buyer, you will likely be unable to get low mortgage rates.

Experts recommend you buy your first couple properties overseas outright, as it is unlikely you’ll be able to get a loan. Once you have a bit of a portfolio overseas, it will be easier to get a loan for future purchases.

3. You Can Leverage Your Current Property

While it’s difficult to get a mortgage from a foreign bank, some homeowners use the equity on their current residence to finance a purchase overseas. Speak to a mortgage broker about obtaining a home equity loan or refinancing in order to finance an overseas’ property. Refinancing can be tricky, so it’s best to seek the advice of a professional.

Buying a home overseas can be very rewarding. If you choose to use it as a holiday rental, you can make a good income. If you are moving overseas yourself, it’s a great investment and a good way to diversify your portfolio. While it is more difficult to get a mortgage and to get low mortgage rates overseas, it isn’t impossible. Of course, your ability to find low mortgage rates will differ depending on where you are buying. If you are considering buying a property overseas, contact one of our mortgage experts today for more information and advice!

source:  northwoodmortgage.com

Selling and Buying a New Home? Here are Your Options

For many homeowners, the purchase of a new home is dependant on the sale of their old one. While it would be ideal for the selling of your old home and purchase of your new home to happen at exactly the same time, the dates rarely line up like that. You may have sold your current home but are still searching for a new one. Or, you may have found the perfect property but are lacking a buyer for your current home. Selling and buying a new home can be daunting; fortunately, you do have options, and it can be done!

Sell First

There are some benefits to selling your home before buying a new one, the biggest one being that you will know exactly how much you can afford on the new home. If you don’t sell first, you may be overly optimistic about the value of your home and buy something you can’t actually afford. Or, you may lowball your new home and be disappointed when you find out what you could have had! Selling first will give you certainty about what you can afford, which is a great position to be in when buying.

Selling first means you’ll only have one mortgage payment—on the new home—rather than have to juggle two mortgages. However, some homeowners don’t like the uncertainty of selling their home without having somewhere else lined up. Selling first means you would have to find accommodation, whether with relatives, friends, or with a rental. You would also possibly have to put your belongings into storage, which can be a big hassle.

Buying First

Buying a home before selling your old home gives you lots of time to plan your move. However, buying first means you could end up paying two mortgage payments at once if your current home isn’t paid off. Whether or not you can afford this depends on your financial situation. If you can afford it, buying first is a good way to ease the selling process by taking the pressure off finding a new place.

Rent Your Old Home

If you feel you aren’t able to afford two mortgage payments but have found a new home you don’t want to miss out on, you could move into the new home and rent out your old property. While this requires the added pressure and stress of finding tenants, and being a landlord, it can be really helpful for paying off your mortgage and alleviating the financial stress of owning two properties.

These are just a few of the options available when it comes to selling and buying a new home. If you are considering selling and buying, speak to a mortgage professional to see what kind of potential expenses you can expect. Contact our experts today to set up a consultation!

source:  northwoodmortgage.com

How Mortgage Penalty Is Calculated In Canada

For most home buyers shopping for a mortgage, interest rate is the most important aspect of the process. However, it’s important to look past mortgage rates and also consider penalty rates. While no one plans to break their mortgage, there are many reasons you may have to in the future and it’s smart to plan for all possibilities.

Unforeseeable circumstances such as divorce, a move, a change in finance, or other personal circumstances may mean that you can’t complete your mortgage term. It’s important to plan for the possibility that you may not be able to see your term through right from the beginning, or you may get hit with a huge penalty. When discussing your mortgage, either with a bank or mortgage broker firm, make sure you ask about the process of breaking a mortgage, and the penalties involved.

Mortgage penalty is calculated using the interest rate differential. Typically, the penalty is calculated by taking the greater of three months interest on the remaining balance, or the interest for the remainder of the term on the remaining balance. There’s little point in trying to save a couple dollars a month on a low interest rate, if you end up getting hit with thousands in penalty rates for having to break your mortgage. Looking ahead to all possibilities can help you be prepared in the face of unexpected costs, and avoid any nasty surprises.


Something to consider as well when it comes to mortgage penalties is the difference between a fixed and variable rate mortgage. Fixed rate mortgages tend to have higher penalties than variable rate mortgages. It’s worth visiting a mortgage broker firm and discussing these options, as it can be overwhelming to research it all on your own.

When searching for lower penalty rates, it’s all about the lender. Smaller mortgage broker firms tend to offer better penalty rates than the larger ones, or banks. Even though it may be the last thing on your mind when shopping for a mortgage, planning ahead for the possibility of breaking your mortgage can save you thousands of dollars.

At Northwood Mortgage, our mortgage professionals work hard to find you the lowest and best mortgages rates and terms. Mortgage shopping can be difficult, especially for the first-time home buyers, and there are so many factors to consider. Our mortgage experts can help you navigate the tricky world of mortgage shopping, and find you the best mortgage for your needs. Contact us today to set up a meeting.

source: northwoodmortgage.com

3 Signs To Refinance Your Mortgage

Refinancing your mortgage simply means replacing your existing mortgage with another one. Homeowners often refinance their mortgages in order to get better interest terms and lower mortgage rates. When you refinance your mortgage, your existing mortgage doesn’t simply disappear. Rather, it is paid off and a new loan is created. You may be thinking of refinancing to get lower mortgage rates, or perhaps you’d like to change your interest terms, for instance, from a variable to a fixed rate. Here are some signs that it could be a good idea to look into refinancing:

1.Current Interest Rates Are Lower
Most lenders advise the best time to refinance is when the interest rate is at least two percentage points below your existing mortgage rate. If the current interest rate is substantially lower, refinancing can be a good way to save money. By getting a lower mortgage rate, you will be able to build equity in your home more quickly.

2. Making a Big Purchase
If you need to make a big purchase, such as a car or education, you can refinance your mortgage in order to take out a line of credit on your home. A home equity line of credit allows you to use your home equity as collateral in a substantial loan. If you choose to refinance and take out a home equity loan, then the value of your home will be appraised. This means that if you’ve made substantial improvements to your home over the years, or the market has gone up, you can take out sizable home equity lines of credit, while paying off your mortgage.

 3. Home Equity
Having greater home equity, meaning the percentage of the home you own outright, can make it easier to qualify for refinancing. Most lenders want to see that your equity is at least at 20% before approving a refinance, however in some cases you can still qualify with less than that. Put simply, the more equity you have in your home, the better your refinance terms will be.

Refinancing can be risky and the best way to determine if it’s right for you is to speak to one of our mortgage professionals. Mortgage rates can change quickly and we are dedicated to finding you low mortgage rates, as well as short-term rate promotions. If you are considering refinancing, but would like more information about how to proceed, contact us today.

source:  northwoodmortgage.com

What Happens After Your Mortgage Is Paid Off?

Fixed rate mortgages, variable rates, mortgage terms, payments schedules—these will all be things of the past when your mortgage is paid off. However, you can’t just make your final mortgage payment and forget about it entirely. There are steps to take when finishing paying off your mortgage. So, what happens after your mortgage is finally paid off?

 When Last Payment Is Done

After you’ve made the last payment on your mortgage, you’re still not home free. No matter the type (fixed rate mortgage, variable mortgage, etc.) making the last payment doesn’t clear your debt until the appropriate paperwork is filled out. You’ll also need to pay a discharge fee to the lender to fully rid yourself of the mortgage. The discharge fee removes the legal registration of the burden from the land titles from the lender. Depending on the lender the discharge fee can vary but it’s usually in the $350 range.

There is no law saying you have to pay the discharge fee immediately after making your last mortgage payment but you should do it within months. Without paying the discharge fee you will not be able to sell your home, transfer its title or obtain another mortgage.

Once the Mortgage Has Been Discharged

The lender will send a document to the registry office letting them know that your title is now clean and there is no longer a lien on your property. This means that if you sell your home, all the equity is fully yours. Then, you’ll need to look over your mortgage statement. Fixed rate mortgages, variable mortgages, all mortgages in fact, come with a statement. This is a document that is sent out twice yearly to show the balance, insurance rate, monthly payments and balance of tax account (if the taxes are paid with the loan) of the mortgage. When you receive this statement after making your final mortgage payment make sure it shows zero balance.

You’ll also need to verify that your credit report no longer contains your mortgage. Keep in mind that this could take a few months. Furthermore, if you had mortgage insurance with your loan, this will expire the moment the mortgage is paid off, so you don’t need to worry about it any longer.

The Final Steps

When you’ve paid off your mortgage in full, you are still required to pay property taxes. If your taxes were rolled into your mortgage, you’ll have to call your city and arrange to make the payments on your own. Now, it’s up to you whether you wish to borrow against the home again. You don’t have to take out fixed rate mortgages or traditional mortgages, you can take out a line of credit instead.

source: northwoodmortgage.com

Home Equity vs. a Loan: How to Choose the Best Option

For many Canadian homeowners, their home is the biggest investment they will make in their lifetime. There are several options for loans for homeowners, and in this article we’ll look at two options: an equity mortgage versus a mortgage loan.

Home Equity Mortgage

A home equity mortgage is different than a regular mortgage loan in that it acts more as a line of credit. If you take out an equity mortgage, the bank will agree to lend you a certain amount, but with the equity in your home acting as collateral.

An equity loan will usually have lower interest rates than a line of credit, and these rates will usually be variable, fluctuating with the market.

An equity mortgage does not require a monthly payment like a traditional mortgage loan does. Rather, it works like a credit card where you will need to make a minimum monthly payment. Taking out only what you need rather than having to make a set monthly payment can help homeowners save money on interest rates.

Many homeowners prefer the flexibility of an equity mortgage. However, it can be riskier than a traditional mortgage in that if you cannot make your payments, your home is at risk.

Mortgage Loans

A traditional mortgage loan can come as a fixed rate mortgage or variable rate mortgage. First, you will need to be approved by your lender. Once you have been approved, your mortgage is calculated based on your income, any existing debt, and the price of the property. Mortgage rates are based on the mortgage market.

Whether you have a fixed or variable rate mortgage, you will make the same monthly payment for the duration of your mortgage term. With a variable rate mortgage, the interest rate fluctuates based on the rates set by the bank. A variable rate mortgage, though riskier than a fixed rate, can save homeowners money if interest rates fall, and offer greater flexibility.

The biggest factor in deciding which loan is right for you is your financial planning. A mortgage loan is best for people who want to pay off their mortgage in a specific amount of time and make the same payment each month. A home equity mortgage allows greater flexibility and can be more adaptable, especially if you have unexpected expenses.

There are many complex factors when it comes to choosing the right loan. Consult one of our professional, experienced mortgage agents today to discuss which option is right for you!

source: northwoodmortgage.com

What Is A Variable Rate Mortgage?

When mortgage shopping, many buyers think that a fixed rate mortgage is the only way to go. However, a variable rate mortgage may actually save buyers money in the long run, although it can be riskier. Here’s how variable rate mortgages work:

 As opposed to a fixed rate mortgage, which is a flat rate paid throughout the mortgage term, without fluctuating interest fees, a variable rate mortgage is based on lender prime rates, and will fluctuate with the bank’s interest rates. If you are considering a variable rate mortgage, it’s best to speak to a mortgage expert as they will have a thorough understanding of the current interest environment.

While a fixed rate mortgage allows for better financial planning and eliminates the chance of any surprise, there are some reasons why a variable rate mortgage may be a better option. For one, if you know the lender’s rates are currently low, and you’re planning to only own the property for a short time, a variable rate mortgage may help you save money. Other possible perks of variable rate mortgages include:

    -If interest rates are expected to fall, you could capitalize on that in the future.

    -More flexibility: The penalty and extra interest fees are much harsher on a fixed rate mortgage if the mortgage is broken. The interest will be less on a variable rate mortgage.

    -Although it’s not without risk, variable rate mortgages have been proven to save Canadians money over time.

    -With a fixed rate mortgage, your payment won’t change even if interest rates drop significantly.

There is really only one risk to variable rate mortgages, which is the risk that interest rates will rise suddenly. This is, however, unlikely, as banks will try to avoid raising rates in order to avoid public backlash.

If you are considering a variable rate mortgage, you should be able to still cover your payments should there be a raise in interest rates. If you are able to afford the risk, then a variable rate mortgage can definitely save you money. If interest rates are currently low, and you want greater flexibility with your mortgage, then a variable rate mortgage can give you that.

Since there is risk and more complexity involved with a variable rate mortgage, it’s important to seek out the advice of mortgage experts to guide you in the right direction. Northwood Mortgage can help you with all your mortgage needs, whether you choose a fixed or variable rate mortgage. Contact us today with any questions about how we can help you, or apply now!

source: northwoodmortgage.com

Five Tips For Increasing Your Home’s Equity

Equity is the magic word when it comes to homeownership. There are equity mortgages and other products that you can tap into when you’ve increased the value of your home. However, equity doesn’t grow on trees, so here are five tips for increasing your home’s equity:

  1. Pay off the principal: The quicker you pay off the mortgage principal, the more equity you build up. Look into acquiring prepayment privileges from your lender. Or if the prepayment penalty isn’t that great, it may make sense to pay off your principal as quickly as you can even if you’re penalized because you’ll be that much closer to getting an equity mortgage (or similar product).

  2.  Hire an inspector: A certified home inspector will tell you how much your home is currently worth and what improvements are necessary to up its equity.

  3.  Make upgrades to the kitchen and bathrooms: Get rid of old tiling, upgrade your appliances, get a new showerhead – do whatever it takes to upgrade your bathrooms and kitchen. Moreover, if you have an unfinished basement, finish it. You can even add a basement apartment if there’s enough room to have a full bath, kitchenette, bedroom and living area.

  4.  Create more curb appeal: Curb appeal is how enticing your home is from the street. Ask yourself this: “When people drive by, do they stop and marvel at how beautiful my home is?” If the answer is no, then you have work to do. To create more curb appeal, make sure that your front door, roof, porch, windows – basically any area of the home that is visible from the street – is revamped or at least looks new. Manicure your lawn as well because overgrown hedges and grass can make a property look uninviting.

  5.  Clean your house: A clean house is an attractive house. Even if you’re not planning on selling your house, hiring professional cleaners to clean your home’s eavestroughs, windows and doors can increase its equity. Make sure everything gets a deep clean, from the light fixtures to the furnace to the garage door. Another bonus of cleaning your house is that you can declutter. Getting rid of old clothes and boxes from your attic or garage will not only create space, it will make moving easier when/if you do sell your home.

Once you’ve put money back into your home, you can take money out of it. Equity mortgages are available that use the amount of equity built up in your home to determine how much you can borrow. You can also refinance or take out a HELOC (home equity line of credit).

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

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

Everything You Need To Know About Mortgage Pre-Approval

Getting pre-approved for a mortgage is always good news for prospective homeowners. Unfortunately, many of them tend to mistake pre-approval for actual approval. Hence, it comes as a shock to many of them when they get turned down for a mortgage. Pre-approval is not the same as a final approval, so it is important that you appreciate the difference when looking to secure a mortgage.

Your pre-approved figure may not be your actual figure

It is fairly easy to get pre-approved for a certain amount; that is because lenders often don’t ask for extensive documentation in the pre-approval process. The pre-approval figure is merely an estimate of how much the lender could potentially give. The actual amount is only given after a thorough examination of the property in question and the financial status of the homebuyer. In the end, the amount the prospective homeowner qualifies for might not match the value of the house.

Pre-approved rates are not necessarily the best

Statistics show that most homeowners don’t end up taking the mortgage they were pre-approved for. Pre-approved rates are often slightly higher than the market rate, and this is assuming that you are pre-approved. It is best to check rates 30 days before closing, as they tend to be slightly lower than the market rate.

Your financial situation is crucial

Many lenders pre-approve you without asking for details about your financial situation. However, this will change when it is time for a formal approval. It is only when the lender gets a better idea of you financial situation that they will determine that you can get a mortgage at the pre-approved rate.

The property itself is important

Your financial situation is not the only thing lenders take into consideration. The property itself is also a big factor in whether you get the mortgage. The property might be overpriced, or it may belong to a certain category of buildings that the lender doesn’t approve for.

Pay attention to features

Pay attention to all the features that come with a pre-approval, such as rate holds, discounts, and penalties. Also, choose lenders that have a thorough vetting process for pre-approval. This way you will less likely end up with surprises in the end.

Getting pre-approved is useful, but it is not a guarantee of anything. It is actually quite possible to get a good mortgage without pre-approval. The best way to take advantage of pre-approval is to make sure you have your own finances in order and do as much shopping around as possible. For more information on pre-approval, contact us today.

source:  northwoodmortgage.com

Ways A Second Mortgage Can Help Your Financial Situation

Life happens – and there are things that may crop up that may put a serious damper on your financial situation. Owning your home can help mitigate these problems through the use of a second mortgage.

 Consolidating debt, for most people, is a reality in this economic climate. Homeowners with at least 20 per cent equity in their homes can apply for a second mortgage, which is a great way of working away at reducing your debt. It’s also an option when you need extra cash for things like medical expenses or renovations.

Do I qualify?
The interest rates on second mortgages are often higher than first mortgages, yet carry lower interest rates than credit cards. If you pay other debts on time and choose to get a second mortgage, you may find your credit score improving, a definite bonus!

Here are a few things lenders will look for in those who apply for second mortgages:

    Income. Are you gainfully employed? Or have a consistent source of income? Lenders will want proof that you’ll be able to make payments
    Equity. The more you have invested in your home, the better. A larger down payment for those buying a home is also a plus. The less risk a lender has to take, the better for you
    Credit score. A higher score equals lower interest rates
    The property. The investment needs to be secured by the lender if you are unable to make mortgage payments

The good and the not so good

On the plus side:


    Your first mortgage doesn’t need to be discharged, so you’ll have no penalties or fees
    Most carry a term of one year with only interest payments
    There are many choices of lending institutions, so financing can be more easily arranged
    If you’ve got a mortgage and a positive credit history, chances are you’ll be an ideal candidate
    You can use up to 80 per cent of your home’s value to arrange for the mortgage.

On the not-so-plus side:

    You’ll face higher interest rates
    Second mortgages may carry longer terms but repayment may be required sooner depending upon the terms of the loan
    There is a possibility of default, in which case the second lender has the option of purchasing the home


If you’re thinking a second mortgage may be an option for you, speak to the experts at Northwood Mortgage about your situation. Schedule an appointment and have all your questions answered.

source: northwoodmortgage.com