Tips To Paying Your Mortgage Down Faster

Everyone knows they should make extra payments on their mortgage, but life tends to get in the way and make it a low priority on the overall budget.  Most of us will have something they could pay towards the mortgage, yet it doesn’t seem like much compared to the balance, so we spend it on other things…and let’s face it, paying down your mortgage isn’t sexy!

So is it important?  Let me show you an example of the impact of even small extra payments on your mortgage.  For example on a $250,000 mortgage over 30 years at 3.99%, 2 years into the mortgage if you were to start making $100 extra payments alone, you would knock 3.7 years off your mortgage and save $23,468!

So how do make this happen?

One of the easiest ways is to have your Bank or Credit Union deduct a small amount from your pay and have it automatically added to your mortgage or a savings account.  This makes it easier than having to remember every time you get paid to make that extra payment.  If your mortgage is with another institution, you will likely have to use the Savings account to save it up and then contact them to have the money transferred to the mortgage.  Most lenders can take out the extra payment automatically from the account your normal payments come out of.
The other way is to ask the lender to increase your payment amount by $x amount…obviously this is a more permanent solution.

What about Biweekly Payments, or Weekly Payments?
The sooner you make your payment the better.  As well, by paying in an accelerated manner, more money is being paid onto the mortgage, reducing your principal and interest costs.  For example:
$1,000 x 12 (monthly payments) = $12,000/year
$500 x 26 (biweekly accelerated) = $13,000/year
$250 x 52 (weekly accelerated) = $13,000/year
If you can manage this, it makes a significant impact on your mortgage!
Here we see just changing from Monthly to Biweekly accelerated alone knocks 4.1 years off of a 30 year mortgage!

Please note!  Some Bank’s offer weekly & Biweekly payment options which are not accelerated!!  This is useless, as it does not reduce your principal any more than Monthly payments…beware!
Other ways to pay down your mortgage faster!

•    Use your tax return to pay down your mortgage…this can make a big impact on your mortgage over the long term!
•    When you get a pay increase, increase the payment on your mortgage by the same amount.
•    If you receive any “extra” payment or gifts, put them on your mortgage asap!
•    Instead of gifts or presents on your Birthday, your spouse’s Birthday etc, pay extra down…a free & clear home is a much better gift!
•    Check with your lender consistently and ask for a new Amortization Schedule based on your new balance and payments…when you start to see the end date is getting closer (What we call Mortgage Freedom Day!) you will be able to focus on it more.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Top 7 Mortgage Tips For Newcomers

After you have immigrated to Canada, making the decision to buy a home can be an exciting but perhaps unfamiliar journey. As a mortgage broker who has worked with many newcomers, here are my “top 7 tips” to help you on your way to home ownership:

1. If you have not done so already, apply for credit. It is very important that you establish a credit report. When considering a new mortgage application, Canadian lenders will look at your credit standing.

2. Gather relevant overseas documents. Depending on your immigration status, you may need to provide copies of your work visa/permit. Make contact with your overseas bank in the event that you may need to provide a bank reference letter.

3. Get organized. Canadian lenders will need a job letter, pay stub or other forms of proof of income like income tax documents. If you are planning to transfer money from overseas for your down payment, you should also allow plenty of time to complete this.

4. Become informed. Research the basic procedures of buying real estate in Canada. For example, are you aware of the rules when buying a stratified property like a condo?

5. Create a budget. Housing costs in Vancouver and Toronto, for example, can be high. A financing budget can ensure your anticipated housing costs are manageable.

6. Get pre-approved. By providing a short application, a banker or mortgage broker can let you know exactly how much of a mortgage you can qualify for. the loans officer will review the mortgage payments, the interest rate and a closing cost budget with you in advance.

7. Use professional services. Rely on professional guidance, not the advice of friends or family members. Buying your first home can be time-consuming and frustrating at times, and the right guidance from realtors, mortgage brokers/lenders and lawyers/notaries can reduce some of the stress and the risks.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

6 Tips To Get Approved Of A Mortgage

Go to any mortgage lending website and you’ll see images of smiling families and beautiful homes accompanied by text that makes it sound like lenders are standing by just waiting to help you find the loan that works for you no matter what your situation. (To learn more about mortgages, see Mortgage Basics.)

But the truth is that lending such large amounts of money is a risky business, and that money isn’t handed over to just anyone. If your home ownership fantasies have been rudely awakened by loan officers denying your application, it’s time to take control of your situation and learn what you can do to turn that rejection into an approval.

What Are Your Options?
Everyone’s financial situation is unique. With that in mind, here are six different options for making your homeownership dreams a reality.

1. Get a Cosigner

If your income isn’t high enough to qualify for the loan you need and if you can find a cosigner with enough disposable income, part of that person’s income can be considered toward your loan amount regardless of whether the person will actually be living with you or helping you pay the bill. In some cases, a cosigner may also be able to compensate for your less-than-perfect credit. Overall, the cosigner is guaranteeing the lender that your mortgage payments will be paid.

If you decide to go this route, just make sure that both of you understand the financial and legal obligations the cosigner takes on when he or she signs the loan documents. In the event that you default on your mortgage, the lender can go after your cosigner for the full amount of the debt. What’s more, not only will your credit score plunge, but your cosigner’s will too.

Of course, you shouldn’t take this route if you know you aren’t responsible enough to pay the mortgage on time or can’t afford the monthly payments, but if you have income that a lender isn’t willing to consider (such as self-employment income from a new business that has been very successful) and you and your cosigner are both confident that you can make the payments on your own, then getting a cosigner may be a good option. (Find out more in Getting A Loan Without Your Parents and Mortgages: How Much Can You Afford?)

2. Wait

Sometimes conditions in the economy, the housing market or the lending business make lenders less generous with loans. If you’re in a climate where everyone is panicking, then it may be best to wait things out. When conditions improve, lenders may become more accommodating.

In the meantime, you can work on improving your credit score, reducing your debt and increasing your savings. While you’re waiting, home prices or interest rates could drop. Either of these changes could also improve your mortgage eligibility. On a $290,000 loan, for example, a rate drop from 7% to 6.5% will decrease your monthly payment by about $100. That may be the slight boost you need to afford the monthly payments and qualify for the loan.

3. Set Your Sights on a Less-Expensive Property

If you can’t qualify for the amount of mortgage you want and you aren’t willing to wait, switching to a condo or townhouse instead of a house, accepting fewer bedrooms or bathrooms, or moving to a less attractive or more distant neighborhood may give you more options. As a more drastic option, you could even move to a different part of the country where the cost of home ownership is lower. When your financial situation improves down the road, you might be able to trade up to the property, neighborhood or city where you hope to end up.

4. Ask the Lender for an Exception

Believe it or not, it is possible to ask the lender to send your file to someone else within the company for a second opinion on a rejected loan application. In asking for an exception, you’ll need to have a very good reason, and you’ll need to write a carefully worded letter defending your case. Your letter should avoid excuses and sob stories and focus only on the facts. Explain how the incident that is preventing your loan from being approved, such as a charged-off account, was a one-time event that will never occur again. This one-time event should have been caused by a catastrophe such as a large and unexpected medical expense, natural disaster, divorce or death in the family. The blemish on your record will actually need to have been a one-time event, and you’ll need to be able to back your story up with an otherwise flawless credit history. (If your credit history could use some house cleaning, see Five Keys To Unlocking A Better Credit Score.)

5. Try a Different Lender

Sometimes one lender will say no while another will say yes. If the first lender you approach rejects you, there’s no reason not to try out a few other options. If every lender rejects you for the same reason, though, you’ll know that it’s not the lender that’s the problem, it’s your financial situation. Your only choice at this point is to fix the problem.

When shopping for a second opinion, don’t give lenders any inkling that you are feeling even remotely desperate for a loan or they may take advantage of you by tacking higher fees onto your loan or raising your interest rate. Of course, if you are a higher-risk borrower, you may encounter some of these fees no matter what.

Be careful to avoid loan sharks, too. Remember, you don’t want just any loan, you want a reasonable loan. One major potential benefit of homeownership is the financial security it can bring, but if you get a bad loan, that aspect of homeownership disappears. In a worst-case scenario, a bad loan could result in your losing the home, as it did for many who bought homes during the carefree lending days of the housing bubble. (To learn more about the housing bubble, see Why Housing Market Bubbles Pop.)

6. Team Up With Someone Else

Two incomes are better than one, so if you can’t qualify on your own, perhaps you have a family member or friend that you trust enough and like enough to make a major purchase with and live with. It won’t be enough to just put them on the loan, of course - they’ll need to actually help with the mortgage payments to make it work, and chances are they won’t want to pay half the mortgage unless they’re living in the new home with you.

Conclusion

To go from rejected to preapproved, it’s important to know what lenders are looking for in an applicant. If you’ve been turned down for a mortgage, make sure to ask the lender plenty of questions about things you could do in your specific situation to make yourself a more attractive loan candidate. With time, patience, hard work and a little luck, you should be able to turn the situation around and become a residential property owner.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Mortgage Rates Stay Flat to Begin Busy Week

Mortgage rates stayed in line with recent 4-month lows today.  In some cases, there was a slight movement in the closing costs associated with prevailing rates, but the rates themselves didn’t change.  The most prevalent Conforming 30yr fixed quote (best-execution) remained at 4.125%.

Every day since last week’s jobs report has been relatively calm for mortgage rates.  Even then, there was reason to believe that we could be lacking some direction until the next major round of economic data came in.  That culminates in next week’s jobs report (which is occurring so close to the previous report due to shutdown-related rescheduling), but the current week can certainly play a role.

Economic data is an important factor in mortgage rate movement for 2 primary reasons.  First, there’s the basic deductive logic that a stronger economy can support higher interest rates, thus stronger economic data tends to push rates higher, all other things being equal.

The second reason has to do with the Federal Reserve’s current role in bond markets.  While market participants no longer expect the Fed to reduce asset purchases soon, the longer-term assessment of Fed policy still affects rates.  If markets think the Fed will continue to push back the eventual end of their buying program, it gives rates more room to stay or move lower.

These two factors both suggest the same movement in the same circumstance, i.e. weaker data suggests lower rates and stronger data suggests higher rates.  But as far as the Fed policy component is concerned, some of the economic data is significantly more important than others—namely the big jobs report next week.

That’s not to say that the other data can’t have an impact, but it has to be fairly unified in its suggestion or the report has to be one of the more important ones.  Tomorrow’s Retail Sales data is a good example of a non-employment-related report that has the power to move markets.  It’s joined by several other reports that together, stand a much better chance to ensure we don’t end tomorrow in relatively unchanged territory for a 5th straight day.

Loan Originator Perspectives

"Good start to the week, auction today was well received, overall lack of any action is a net positive. Keep a close eye on the data Tuesday and Wednesday, auctions, and earnings for some of the big boys this week. FOMC on Wednesday is probably the most important piece of the week.  Safe to stay floating as long as you are closely monitoring the data.  Rates at multi month lows warrant strong consideration to lock." -Constantine Floropoulos, Quontic Bank

"Plethora of data unfolding this week, from Fed Statement on Wed to weekly unemployment, housing starts, and ADP’s October unemployment report (Labor Dept’s report released next week). Will be interesting to see Fed’s take on the DC drama’s impact on the economy and housing. By week’s end, we should have a decent indication on whether our two month bull bond market will continue." -Ted Rood, Senior Originator, Wintrust Mortgage

"Nothing has changed with my current outlook. I like floating loans and only locking when within 15 days of funding. Today’s rates opened pretty similar to Friday and MBS have gained since the weak housing data at 9am. I recommend to float all loans over night, unless your lender has repriced better today, then I would lock if within 15 days." -Victor Burek, Open Mortgage

Today’s Best-Execution Rates

30YR FIXED - 4.125%
FHA/VA - 3.75-4.0%
15 YEAR FIXED -  3.25-3.375%
5 YEAR ARMS -  3.0-3.50% depending on the lender

Ongoing Lock/Float Considerations

• Uncertainty over the Fed’s bond-buying plans and more recently over Fiscal Policy has been making for a tough interest rate environment.

• A lack of data due to the government shutdown caused rates to experience moments of paralysis while headlines suggesting the shutdown might/might-not end, as well as a seizing-up of short term funding markets caused unexpectedly high volatility—enough to be felt in longer term rates like mortgages.

• After a deal was reached to avoid going over the debt ceiling, funding markets thawed and rates returned to the same ‘wait and see’ range that existed before the Fiscal drama. 

• Markets continue to be most interested in economic data and it’s suggestions about the longer term trajectory of the economy.  This will shape expectations for Fed policy in the coming months, and thus inform the direction of interest rates.

• The stronger the data the more likely the Fed is seen as reducing asset purchases.  Rates would rise under this scenario, but the most recent FOMC Meeting (and more importantly, the Fed’s decision to hold off on tapering) suggests that they’ll attempt to keep the pace of rising rates moderate as long as inflation isn’t adversely affected.  The delayed release of the September jobs numbers on October 22nd helps confirm that.

• (As always, please keep in mind that our Best-Execution rate always pertains to a completely ideal scenario.  There are many reasons a quoted rate may differ from our average rates, and in those cases, assuming you’re following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

How To Consolidate Your Debt?

Are you trying to figure out how to consolidate your debt? One of our readers, Ricky, wrote on the Credit.com blog that he is “trying to consolidate bills since divorce to get back on track.”

Another reader, Norma, wrote:

I have too much credit card debt with high interest. I applied for a loan to consolidate all into one payment, I didn’t get it because of something on my credit report. My payments are always on time by using auto payments. Sears raised the interest to 16.24%, Chase raised theirs to 29.99% and there is no talking them down either. I plan not to use either of the cards again now or after they are paid off.

How can they charge such high interest on credit cards when the savings account is paying 1.25%?

Once you’ve decided to consolidate your debt, there are several important steps you need to take so that it’s ultimately beneficial for you.

1. Check your credit reports and get your credit score.

You can get your credit reports from each of the three major credit reporting agencies for free once a year at AnnualCreditReport.com. It’s a good idea to review them so you don’t end up in the situation Norma found herself in, getting denied due to a mistake or negative items you weren’t aware of on your credit reports. Your credit report should also list most, if not all, of your debts, which will help you with the second step.

You can check your credit score for free using Credit.com’s Credit Report Card. It will show you what factors in your credit are strong and what may need some work. You can also find out whether your credit is excellent, good, or not so hot.

2. Take an inventory of your debt.

Make a list of the balances you owe on each of the cards or loans you want to consolidate, the interest rates and the monthly payments. This will help you identify the debts that are most important for you to consolidate. For example, in Norma’s case, while both of her interest rates are high, she should try to consolidate the balance at 29.99% first, since it is so high.

3. Research debt consolidation options.

You may be able to consolidate with a loan from your local bank or credit union, an online lender that offers personal loans, or by transferring a balance from a high-rate credit card to a low-rate one. If you get a consolidation loan online, be sure to deal with reputable lenders as there are scammers who will take the information consumers submit with applications and use it fraudulently.

Before you apply, try to find out if the lender can provide you any information about its credit requirements. Some lenders, for example, may require a minimum credit score or won’t extend credit to those with bankruptcies listed on their credit reports.

4. Apply for a consolidation loan.

Once you’ve narrowed down the field of places to get a consolidation loan and learned as much as you can about their lending requirements, it’s time to apply for a consolidation loan. In most cases, you can get an answer almost immediately. If that answer is “yes,” you can move onto the next step.

If the answer is “no,” take a careful look at the reasons you were turned down. If you think those answers don’t really apply, try calling the lender and ask to be reconsidered for the account. If you are turned down due to the debt you are carrying, for example, but explain that you are going to use the new loan to consolidate that debt, you may have a shot at getting the loan. It doesn’t hurt to ask!

If you can’t get approved for one of these loans after trying a couple of lenders, you may want to talk with a credit counseling agency. These agencies can often help clients lower their interest rates or payments through a Debt Management Plan (DMP). If you enroll in a DMP, you’ll make one payment to the counseling agency which will then pay all your participating creditors, so even though it’s not technically a consolidation loan, it feels like one.

5. Consolidate your debt.

If you are approved for a consolidation loan, you can then use that new loan to pay off other debts. If you don’t get a new credit line large enough to consolidate all your debt, focus on paying off your higher rate loans or balances first.

6. Pay your loans off as fast as possible.

If you can add a little extra to your monthly payments, you’ll be able to pay off your new loan faster. Even if you don’t, you’ll want to do your best to avoid the temptation of tapping the credit lines you have just paid off. After all, your goal with debt consolidation should be to dig out of debt — not to dig the hole deeper!

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Begin Your Project With These Home Improvement Tips

If you are interested in home improvement but don't know where to start, don't worry. There are lots of great resources available no matter what kind of project you are considering. Whether it's fixing a leaky faucet or completely remodeling your home, this article can give you tips to help you on your way.

Insulate your home in order to save energy and lower your heating and cooling bills. Check the attic, as well as windows and doors. Any leaky spots should be fixed. Weather stripping can be added to doors and windows and new insulation can be added to the attic. You want to keep air that you paid to heat or cool, inside the home.

Make sure to have a contractor or electrician install a power outlet in the cabinet above where the microwave will go. If you don't do this, you will be struggling to find a place to plug it in during or after the installation of the microwave and hood vent.

Buying used chairs with bad upholstery on the seat portion isn't all bad. A lot of times, you can easily remove the seat, take out the staples holding the stretched fabric across the cushion and switch it out. You can mix match any fabric of your choice, and staple it back to the bottom with a heavy duty stapler.

Seal cracks and openings that exist around your home, as this keeps bugs out and your warm or cool air in. Caulk the baseboards, areas around windows and any other areas that require it. Once the caulking is dry, bugs will be hard-pressed to find a way inside, and air will not be allowed out.

Even the simplest home improvement projects can seem overwhelming at first if you don't have a good grasp of the basics. Once you know what you're doing, though, any project is manageable. Just apply what you've learned from this article, and before you know it, you'll be one step closer to turning your house into your dream home.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Add Value To Your Home With These Home Improvement Tips

So you've made the decision to make home improvements. That's a great idea. There is plenty of work and patience involved in completing any project you choose. You need to do some research and educate yourself about home improvement before getting started. If not, then pay attention to the following tips.

If you have an older home, you may find that there are hardwood floors underneath any carpeting currently installed. Many homes prior to 1950s were required to have hard wood as their sub-floor. This means that there may be gold in those floorboards. They may need some refinishing, but not having to pay to have them installed would be a huge money saver.

Make sure that your home is well insulated. Insulation is important in keeping the temperature of your home consistent, regardless of the temperature outside of your home. This is helpful in keeping down the cost of your energy bill in the heating and cooling of your house. Insulation is also effective in reducing the noise coming from outside. Furthermore, it adds to the value of your home (be sure to keep all receipts and invoices so that you can prove what work was done).

A good tip for those interested in home improvement is to do personalized projects. Think about your interests and hobbies. Add your own touch to home improvements.

Painting the interior walls of your home can be a great way to freshen up your decor. Painting is inexpensive and allows for much creativity, based on your color choices. It's also easy to change, should you decide to go in a different direction. To add a quick and effective punch to any room just grab a can of paint and go!

Adding accessories to your room can be a great way to make a space feel like your own. Infuse your own personality into your room by carefully choosing some accessories to your liking. Make sure not to go overboard with decorations because it can make a small room feel rather cramped.

If you have any doors that squeak upon open or closing, try using a little lubricant. Apply a small amount of commercial lubricant to the door hinge and open and close the door to allow it to enter the crevices. You can also try this with cooking oil, though the results may not last as long as a commercially available lubricant.

As you can see, there is some great advice in the above article to help you do your home improvement project the right way. Great! Re-read the tips from the article above a second time to ensure you will remember them when the time comes that you need them.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Time-Proven Techniques For Better Home Improvement Projects

A home you want to live in forever or a home you plan to sell are truly the same when it comes to home improvements. You can increase the value of your home with very simple projects. This article will give you some great suggestions on how you can best improve your home.

Changing a tire can be problematic if you don't happen to be a very strong person. Loosening the lug nuts, in particular, can take more strength than many of us have. Use a cheater bar! A yard long piece of pipe that is just big enough to fit over the end of your lug wrench will give you that extra leverage to get the job done.

Hardwood, tile and other smooth surfaces may seem like a good idea in high traffic areas like stairs and hallways, but those same areas can then echo and reverberate throughout the entire house. You wouldn't want to hear every footstep going down the hallway if you were in a bedroom sleeping.

Make sure to have a contractor or electrician install a power outlet in the cabinet above where the microwave will go. If you don't do this, you will be struggling to find a place to plug it in during or after the installation of the microwave and hood vent.

Maybe the house or apartment you're living in is great, but the view to the outside is not. If you have any offending sights that you wish to conceal, consider putting some plants or flowers on your window sill or in a window box. If you would like to take drastic measures in concealing your offending view, plant some shrubs or large trees in front of your window. This can ensure that you have a nicer view.

When doing home improvement, watch the highly visible improvements. If you are trying to sell your home you do not want people to be put off by unattractive features. Although a number of important home improvements cannot be seen, if you want to sell your house you must focus on the ones that can be.

One valuable home improvement project that could save you money is the installation of ceiling fans. Having a fan in each of your rooms can help keep them cool and allow the air to circulate. If you use the fans instead of air conditioning, your summer energy bill will be much lower.

There's a lot to be said for home improvement projects. It may only take you one weekend to accomplish. Now that you have some information in hand, it is time to get started on your next project. Just choose one and get started.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.