Home Purchasing Qualification

Posted by Anuj Gupta

"Can I buy a home with no money down?"

The mortgage brokers here at Alberta Mortgage are often asked this question, and 100% of the time the answer we provide is: Maybe, let's take a look. While there is currently no such thing as "100% financing," Canadian Homebuyers do have the ability to get financing that allows for them to make no "out of pocket" contribution towards the down payment on their new home. This article will explore some of the items that we at Alberta Mortgage are looking at in determining if it would be possible for an individual to purchase a home without having a full 5% for down payment.

There are 3 primary factors that represent the minimum requirements for purchasing a home without a full 5% down payment:

1. excellent credit
2. verifiable income
3. money for closing costs (lawyer, inspection, etc)

While these 3 basic criteria are generally always evaluated in the process of determining one's ability to qualify for a mortgage, their importance becomes paramount for those looking to purchase a home without putting 5% down from their own resources. Without any one of these 3 criteria met, nearly all mortgage lenders will not be able to help. However, if these 3 factors are met, it is likely that one of the qualified mortgage professionals at Alberta Mortgage would be able assist a potential home buyer with purchasing a home without a down payment. Other factors are involved the qualification process, but these 3 provide a strong foundation for mortgage qualification. If any 1 or more of the 3 above listed criteria are not met, it may still be possible to arrange for home financing.

For more information regarding this program, or for information about mortgage qualification in general, call Alberta Mortgage at 780-479-2222 or visit www.albertamortgagecentre.com.

Prime Rises Again...

Last week, the Bank of Canada(BoC) raised its key overnight lending rate by 0.25%, resulting in a corresponding increase to the Bank's Prime interest rate to 3.00%. For the Central Bank to have taken this action in the midst of continuing uncertainty, and ongoing fears of a double dip recession can be viewed as a sign that the Canadian Government is confident in the Canadian economy's ability to sustain it's momentum; but also can be viewed as a sign of the Central Bank's insistence for keeping to its schedule for the economic stimulus program.

For those with Variable Rate Mortgages, this is an important time to evaluate your situation and discuss the impact of a rising Prime on your mortgage with a licensed mortgage professional. Since most variable rate mortgages offered by Alberta Mortgage carry the option of converting to a fixed rate, now would be a good time to sit down with a broker and evaluate your options.

For more information about mortgage interest rates, or to discuss your situation, contact one of the qualified mortgage professionals at Alberta Mortgage at 780-479-2222 or visit www.albertamortgagecentre.com.

5 Year Fixed Mortgage Interest Rates Continue Slide

Published by Anuj Gupta, AMP, BComm
Mortgage Associate

5 year fixed rate mortgage interest rates have continued their downward fall since late-July, now falling as low as 3.79%. I expect that increased appetite for mortgage loans in the fixed interest rate segment by Canadian Mortgage Lenders will lead to further reductions in rate.

At the same time, the Bank of Canada(BoC) reduced its mortgage qualification rate by another 0.1% this week; now down to 5.49%. With this move, more Canadians are able to qualify for variable rate mortgages, as well as qualify for fixed terms shorter than 5 years.

For more information regarding mortgage rates and qualification, contact one of the qualified mortgage professionals at Alberta Mortgage at 780-479-2222 or visit http://www.albertamortgagecentre.com.

Fixed rates continue slide

5 year fixed rates have dropped again. As of today, potential and existing home owners in Canada can get a mortgage with a 5 year fixed mortgage interest rate as low at 3.89%.*

For more information regarding mortgage interest rates, or to get pre-qualified, contact one of the qualified mortgage professionals at Alberta Mortgage at 780-479-2222 or visit www.albertamortgagecentre.com.

BoC Increases Its Key Overnight Lending Rate by 0.25%

The Bank of Canada has increased its key overnight lending rate by 0.25%, signaling a possible end to a period of record low interest rates in Canada. While no concrete evidence to suggest with certainty that the BoC will continue to raise interest rates each quarter, it appears that the Central Bank is confident in the Canadian economy's ability to absorb these increases --which is great news for everyone. While higher interest rates may not be welcome, the accompanying increase in economic activity and job creation are great signs of things to come. Were the BoC afraid that the economy was still too weak to carry an increase, it is likely that we would not have seen this move.

For more information regarding mortgage interest rates, or to get pre-qualified, please call one of the qualified mortgage professionals at Alberta Mortgage at 780-479-2222 or visit www.albertamortgagecentre.com.

BoC Drops Mortgage Qualifying Rate Once More

Just 2 weeks after its last drop, the Bank of Canada has reduced its mortgage qualification rate once again by 0.10%. The mortgage qualification rate has now been reduced to 5.79% after reaching a high of 6.25% earlier this year.

For more information regarding mortgage rates and qualification, call one of the qualified mortgage professionals at Alberta Mortgage at 780-479-2222 or visit www.albertamortgagecentre.com.

BoC drops mortgage qualifying rate again

This week, the Bank of Canada lowered its Bank of Canada Posted Interest Rate from 5.99% to 5.89%. This move can be interpreted as a signal of the Bank's lowering its forecast for rate hikes in the coming months or even years.

For more information regarding mortgages, mortgage interest rates or to get pre-qualified, call one of the qualified mortgage professionals at Alberta Mortgage at 780-479-2222 or Apply Online.

Mortgage Interest Rates Discussion

It looks like mortgage interest rates are beginning to settle once again; with a drop of nearly 0.30% over the past 2 weeks in five year fixed rate mortgage interest rates --lessening the blow of the nearly 1% increase in early May, 2010. Today, existing and potential Canadian Homeowners can get a 5 year fixed rate mortgage with an interest rate as low as 4.35%, subject to qualification criteria.

Just 3 weeks ago, it appeared that we were finally on a path to returning to historical averages in mortgage interest rates --but the trend was unable to be sustained. With increased pressure from foreign markets, and a drop in real estate activity has resulted in precisely the drop indicated above. Normally, spring means higher fixed mortgage interest rates, however, this year that may not be the case. In the coming weeks and months, if market activity increases and other economic factors allow, Canadian mortgage lenders will likely again test the market's ability to tolerate a return to what would be considered historically "normal" fixed mortgage interest rates.

For more information about mortgage interest rates, call one of the qualified mortgage professionals at Alberta Mortgag e@ 780-479-2222 or visit http://www.albertamortgagecentre.com.

Federal Government Imposed Changes for Mortgage Qualification Take Effect

As of today, April 19th, 2010, the following changes have officially come into play in connection with the announcement made by the Federal Government earlier this year:

1. Home owners will only be able to refinance their homes up to 90% of its value. As recently as last week, homeowners were able to refinance up to 95%, but now will only be able to take out up to 90% of the equity from their homes.

2. For any mortgage term shorter than 5 years, and for variable rate mortgages, consumers will need to qualify at the greater of new Bank of Canada Posted Mortgage Interest rate or the Contract Interest Rate. Last week, for terms shorter than 5 years, borrowers were able to qualify at the Contract Rate. This change makes a tremendous difference to buyers who were on the bubble.

3. Those looking to purchase rental/investment properties will now need to put a minimum of 20% down on the purchase of rental/investment properties.

For more information about how these changes would/could effect you, call one of the qualified mortgage professionals at Alberta Mortgage @ 780-479-2222, or visit www.albertamortgagecentre.com.

More Pressure on Fixed Rate Mortgages

Just 1 week ago, the vast majority of prime mortgage lenders in Canada raised their fixed mortgage interest rates for 3-5 year closed term mortgages. It appears that rates are again set to be increased. Canada's largest bank, RBC has just issued a press release confirming that the bank will be increasing its fixed interest rates by an additional 0.25%, effective Wednesday April 14th. While it is unclear as to whether RBC's competitors will similarly increase their rates for the second time in 10 days --it is clear that financial institutions are looking to increase fixed mortgage interest rates.

If you are looking to be in the market for purchasing a home sometime within the next 3-4 months, it may be a good time to contact a mortgage broker and secure a rate hold --thus protecting yourself from further increases in rates.

For more information regarding interest rates, or to get prequalified, contact one of the qualified mortgage professionals at Alberta Mortgage @ 780-479-2222 or Apply Online @ http://www.albertamortgagecentre.com.

Variable Rates Continue Falling

As expected, variable rate spreads have continued falling, now as low as Prime - 0.40%!*

This latest jump pushes totals to a difference in variable rates of over 1.40% in the past 8 months alone. If the trend continues --as I suspect, we could see variable rates falling back to 2008 levels (Prime - 0.90%) within the foreseeable future!

For more information regarding variable rate mortgages, and to get yourself pre-qualified, contact one of the qualified mortgage professionals of Alberta Mortgage @ 780-479-2222 or visit http://www.albertamortgagecentre.com today.

*subject to qualification criteria

Government of Canada tweaks rules on mortgage qualification

Earlier this week, a few changes to mortgage qualification in Canada that would be implemented on April 19th, 2010 were announced by Finance Minister Jim Flaherty. These changes include an adjustment in the qualifying rate used in mortgage qualification, a reduction in the amount of equity Canadian Homeowners will be able to pull out of their homes, and an increase in the down payment requirement for those looking to purchase rental/revenue or investment properties.

Here's an explanation, and my take on these changes:

1. Borrowers will need to qualify using a 5-year fixed rate regardless
of what term they choose. If you want a 1.95% variable rate, for
example, you will need to show that you can afford payments at the
lender's 5 year rate. Since banks use their posted rates(normally at
least 1% higher than what you eventually get down to after
negotiating) to qualify potential borrowers, this change will have a
much greater effect on them as opposed to some of the lenders
available through mortgage brokers(who only have 1 fully discounted rate
available). While it has not yet been clarified as to whether ALL mortgage lenders will be required to use the same rate, my understanding is that each lender will be using their own posted bank rate.

2. No longer will you be able to refinance your home to 95% of it's
value. 90% will be the new refinance maximum. The bad thing about this
change is that homeowners will no longer be able to replace as much
high interest credit debt with relatively lower interest mortgage
debt. The good news is that upon sale, you will be more likely to have some equity left in the home.

3. People buying non-owner occupied rental properties will need to put
down 20% to get an insured mortgage, versus 5% previously. The idea
behind this move is to reduce speculative purchasing in the Canadian
Market, and provide more breathing room to investors in the event of market property value swings.

Keep in mind that these changes will only take effect on April 19th,
2010 --meaning buyers still do have a little time to get into a
home/refinance/buy an investment property before things change. One
thing of note however, is that most mortgage lenders in Canada are
likely to implement these changes BEFORE April 19th in order to ensure
that all files are being underwritten in accordance with the new
legislation on the effective date of change.

For more information regarding these changes, call one of the qualified mortgage professionals at Alberta Mortgage @ 780-479-2222 or visit www.albertamortgagecentre.com today.

Variable Rate Mortgage Spreads Expected to Get Better

Posted by Anuj Gupta, AMP, BComm of Alberta Mortgage

In 2008, it appeared that Variable Rate Mortgages had changed forever. The consensus opinion among industry experts was that Canadian Home Owners would not see "Prime - " for a long time. The prediction was that it would at least be a few years before the market would even see variable rate mortgages @ Prime. However, with increased competition and returning stability it appears that Canadian Homeowners can expect a much sooner return to the days of deeply discounted Variable Rate Mortgages.

Shortly after the initial "market meltdown of 2008" in early 2009, many Canadian mortgage lending institutions either increased their variable rate spreads as high as Prime + 1.00%, or abandoned variable rate lending terms altogether. It appeared that things had changed forever. However, in the 3rd Quarter of 2009 we saw heavy competition in the Variable Rate Market return. Lenders began aggressively pricing their Variable Rate Mortgage Products, and have continued the trend. Presently, Variable Rate Mortgage terms have fallen to Prime - 0.30%*, and swing of 1.30% in 12 months!

As 2010 continues, I would expect to see this trend continue. Of course, anything can happen --but the market is indicating a return of deeply discounted variable rate mortgage terms.

For more information regarding variable rate mortgages, or to be prequalified call one of the qualified mortgage professionals at Alberta Mortgage @ 780-479-2222 or Apply Online @ http://www.albertamortgagecentre.com.

*subject to qualification criteria.

Mortgage Interest Rates Commentary

Here’s a little commentary on interest rates I found that provides some insight into why I believe we will not see any dramatic increase in mortgage interest rates –in contrast to some of the stories I’m sure many of you have been hearing. It looks like we have good news for Variable Rate Mortgage holders, and those looking to get into the market:

“The annual inflation rate rose a less-than-expected 1.3 per cent in December, said Statistics Canada, and core inflation stayed at 1.5 per cent - a half a percentage point below the Bank of Canada's target rate.

In addition, consumer prices dropped last month.

"The way markets look at it is that because inflation remains subdued, it puts even less pressure on the Bank of Canada to raise interest rates and that softens the currency," Bank of Montreal chief economist Douglas Porter told The Canadian Press

. He added that business can't raise prices due to the weakness of the economy and the strength of the Canadian dollar has quashed import prices.
Bank of Canada governor Mark Carney will release the bank's next Monetary Policy Report Thursday.”

--source: mortgagebrokernews.ca

One thing to keep in mind about interest rates is the key difference between fixed and variable rates. Variable rate mortgages are set against the Bank of Canada’s Prime Lending Rate and are therefore directly connected to the Canadian Government’s monetary policy(ie. High inflation = increase interest rates). Therefore, you can expect to see variable rate mortgage holders remain happy with their mortgages for the foreseeable future. In contrast, fixed rate mortgages are priced based on the Canadian Mortgage Bond Market –meaning they are often subject to investor speculation and media reporting. This relationship is the reason why 2009 saw rapid increases and decreases throughout the year in fixed mortgage interest rates. I would expect we’ll see the same type of ups and downs for at least the first 2 quarters of 2010, but in my estimation the average rate should remain fairly stable.

What will we see this year? I expect to see interest rates rise slightly(0.25-0.50%) over the course of the year, but I will keep you all posted throughout. Let me know if you have any questions. For more information regarding mortgage interest rates, or to get your rate held call one of the qualified mortgage professionals at Alberta Mortgage at 780-479-2222 or Apply Online @ http://www.albertamortgagecentre.com today.



Regards,

Anuj Gupta, AMP, BComm

Mortgage Associate

Alberta Mortgage

780-479-2222 ext 14

www.albertamortgagecentre.com





When Results Matter

Fixed Rates Set to Rise

After an up and down 2009, it looks like 2010 will be starting off with rising interest rates. With the economy appearing to have begun recovering, fixed mortgage interest rates are now expected to move upwards in an attempt to combat rising inflation. As interest rates rise and property values increase, it may become increasingly difficult for prospective home buyers to qualify for mortgage financing. It may be a good idea at this time to contact a qualified mortgage professional now and secure a mortgage rate if you are looking a purchasing a home sometime in the first quarter of 2010.

For more information about interest rates, and to secure a rate hold call one of the qualifed Mortgage Associates at Alberta Mortgage @ 780-479-2222 or visit http://www.albertamortgagecentre.com.