Hi, everybody. Rowan Smith from the Mortgage Center. I want to talk today about self-employed people and what the banks want to see from you in terms of the income documentation.
Like everybody else, they want to see notices of assessment to prove that you’re filing your income-tax, as in you have no arrears, and they want to see how much your filing on there.
But what about somebody who’s been a plumber for 25 years and finally decides to go out on their own. They go out on their own and they’re making way more money, but they’ve only been doing it for a year and a half.
Here’s the thing, that’s a tricky situation for a bank. The bank wants to see that you’ve got a two-year track record of income. But if you were employed back then and now you’re self-employed, how do they make the connection?
Now, not all banks, but several of them have a much more open idea here. What they’ll do is they’ll look at your historical earnings as a plumber, or whatever your job was. As long as you transitioned into self-employment in the same industry doing the same thing they’ll use an average of income over those years, including your start-up years, but also including your years as a salaried employee.
This is particularly important for a guy who’s been self-employed for only one year but has been doing something for 25 years. Often times they move to self-employment not because they were foolish but because they saw there was a lot more money to be made if they were the boss rather than just collecting a salary.
So, if you know somebody in this circumstance, someone who’s been told, “You haven’t been in business long enough,” but they’ve been doing the same job for a very long time, have them contact me. It’s Rowan Smith from the Mortgage Center.
Hi, everybody, it’s Rowan Smith with the Mortgage Center. I’m here to talk about biweekly payments and why they pay your mortgage down faster.
Now, I want to use a nice simple example to show you why this works, because it’s no magic and it has nothing to do with just making more frequent payments. You are, in fact, paying extra money when you pay a biweekly accelerated and you’re paying it down quickly.
So, here’s how it works. Let’s use a nice round number of 1,000 dollars. If that was your monthly mortgage payment, you would pay 12 times a year, you’d pay 12,000 dollars throughout the year. But if you were paying biweekly accelerated, they chop that payment in half.
So, 500 dollars times, times how many? Well, there’s 26 biweekly payments in the year. So, there’s not 24. People often confuse that, because they assume 12 months, 24 payments. There’s not. There’s 26 biweekly payments throughout the year.
It’s like when, if you’ve ever had a paycheck that comes in every 2 weeks, and then, twice a year, you’ll receive a paycheck, but you won’t have the corresponding obligations. It’s almost like found money. But it’s not. It’s just because the biweekly payments are 26 times throughout the year.
So, 26 times 500 is 13,000. So, like I said, on monthly, with 12,000. On biweekly, you’re at 13,000. So, you’re actually paying 1,000 dollars or one full extra payment per year. That has an effect of shaving several years off your mortgage. Depending on 25 or 30 years, it’s anywhere between 4 and 5 years that it knocks off right off the top.
So, if you want to pay it down a little bit quicker, accelerated, or biweekly accelerated, is the way to go. If you’d like that, and you know somebody else would like to pay down their mortgage faster, have them contact me.
Hi everyone. Rowan Smith at the Mortgage Center. Going to talk today about my favorite topic and probably my most popular one on all of my blogs, former marijuana grow ops. I want to talk about a specific program that’s come out for these because in most of my prior posts I’ve described what’s required when you’re financing a grow op. I’m going to do so today and cover the new program.
First and foremost, if you’re looking at a property that’s a former grow op it must be fixed. It must already be fixed. It’s not something that you’re going to be fixed, it has to be repaired and what we call remediated. If it’s not remediated your really only choice is to either purchase the property in cash or to purchase the property through a private lender. Usually the rates are much higher in those circumstances.
Let’s assume that the home is fixed. How do you prove that? First off, if you walk into your average bank, Scotia Bank or TD or something, you’re probably going to get declined right off the get-go if you announce that it’s a former grow op, even if it was a former grow op 10 years ago. If it shows up on the property condition disclosure statement or in any of the documentation it was a former grow op, and the seller’s under an obligation to report that, then it will probably be declined in most circumstances.
There are some lenders that I work with that offer the same rates as all the other financial institutions who have a much more open mind about former grow ops. They just want to make sure that they’re fixed and that there’s no potential problems in the future. Here’s what they want to see. First off, environmental air quality testing. Cost between $1,500 and $2,000 depending on where you get it done. There’s a couple of firms that I’d highly recommend over the rest because they’re more widely accepted amongst the financial institutions. If you need that information contact me.
You need the air quality testing. What they’re looking for is they want to see if there’s mold in the air and spores and whatnot. That will ensure that it’s a livable property. Depending on the city you’re in you may also need to get a re-occupancy permit. The city may have pulled the occupancy permit if it was a busted former grow op. Not all places are on-board with this system, though, so please speak to me if you think that may be an issue.
If the occupancy program is not in place then you’re also going to require, third, is going to be a letter from the city that confirms that your property confirms to all municipal bylaws. That’s essentially the same thing as the occupancy permit but a lot of times, in some cities, they don’t pull the permit. They’re not going to issue a letter that says the permit was never pulled. What they’re going to do is give you a comfort letter instead that says the property does not infringe on any bylaws.
Certain municipalities will also want some sort of letter from the electrical company saying things have been set back up and hooked back up to code. Again, you need to speak with me depending on the municipality you’re in. The bottom line here is that I don’t recommend trying to get these properties financed on your own. Chances are you’re going to walk in there and they’re going to either laugh you out of the property, out of the building, or they’re just not going to treat you with due respect, they’re not going to take it seriously.
Several former grow ops do have great value. They’re perfectly fine homes, especially when the grow op was out in the back garage, but to the banks if it’s in the garage or in the house or five years ago or last week, fixed or not, it’s a former grow op until you bulldoze it. That’s just the current state of the law right now.
The new program I’m talking about, effectively, if a property has been a former grow op more than five years ago and we can document that it’s been fixed and has been lived in for that period of time I have one financial institution which will waive a lot of those additional requirements I looked at. They may still want a full appraisal on the property and they’re still going to make sure you qualify under all normal guidelines. They’re still going to charge you full discounted rates but they’re not going to ask for that expensive air quality testing which often is the deal killer for many people.
Again, property must be fixed, environmental air quality, occupancy permit if it got pulled, if it did not get pulled comfort letter from the city, any other municipal bodies such as the hydro company that explains what’s been done, and chances are you’re going to need a full appraisal in all circumstances regardless. If it’s been over five years, we can chop that list down by a big amount, make it much more simple.
If you or someone you know is looking into a former grow op don’t go walking into your bank alone. Please call me. I can at least offer you solutions and suggestions on how to get this approved. There is no fee for my service so please call me. I’ll help you out. It’s Rowan Smith at the Mortgage Center.
You won…the house is yours and now you do not qualify for the mortgage to buy out your partner……….Is this the situation you find yourself in?
I recently worked with a woman who had separated from her husband in 2008. She is living in the family home with her children and her husband is making the mortgage payments. Something happened in their dispute and along the way he started missing mortgage payments. The mortgage is in both names and the end result is that her credit score dropped significantly.
December 2011 she received the court ordered divorce settlement, which granted her the family home. This means she now has to secure a mortgage in her own name to take over the mortgage loan and pay him his share of the settlement agreement. She went to the current mortgage holder (the bank) to arrange for a new mortgage. The bank said no thank you, we won’t refinance your mortgage for you.
On paper she should qualify for the mortgage on her own. She has a fulltime job and she is receiving child support payments regularly. She has sufficient income to qualify for the loan and to be able to afford to make the mortgage payments on time. The problem here is that her credit score is significantly below the threshold that lenders rely on to determine her credit worthiness to qualify for the loan.
Protect your credit score
Your credit score is what gives you the ability to finance future purchases. If your score becomes damaged during divorce, moving on can become extremely difficult. Part of my mortgage service is to counsel you on ways to preserve and improve your credit score during divorce.
Remember, if mortgage payments are missed because your spouse has failed to make a payment, YOUR credit score will suffer too. Regardless of what your divorce decree says or what’s fair, if you have a joint debt, you’re responsible for it.
Here are some ways to protect your credit score BEFORE any payments are missed:
• If possible, close all joint credit cards immediately. If you can’t close one because there is still money owed on the account, freeze it so no one can continue to use it.
• Make sure you continue making at least the minimum payments in the meantime. Then come to an agreement with your spouse on transferring the joint debt to individual credit cards.
• If you do not have a credit card in your own name, get one now. Building your own credit history takes time, so start today!
• While waiting to sell your home or refinance it, make sure your mortgage payments are up to date, even if it comes out of your own money. This protects your credit score and you’ll likely be able to claim the funds back under court order.
• After you have moved out of the home, make sure have your name removed from the property title AND from the mortgage, so your credit score doesn’t continue to be impacted.
For this client, she was able to get approved for a mortgage with a lender who charged a fee and a higher interest rate for a one year open term. I am working with her to improve her credit score and in one year we can look at placing her mortgage back with a traditional lender (mortgage company or a bank).
I believe that if she had of consulted with me earlier in the process I could have given her some advice and developed a strategy that would have helped her to achieve her goal, owning the family home, without the last minute stress, frustration and added expense.
If you are going through the divorce process and owning the family home is one of your goals, let’s talk and develop your strategy. Call, text or email me today….. Karen@Mortgagecentrebc.com 604-726-9550
Debbie Burgin is rebranding divorce one woman at a time. If you would like more information about Debbie Burgin and her divorce coaching services, please go to her website The Joy Of Ex
Debbie Burgin: This is Debbie Burgin at The Joy of Ex, and today I’m interviewing mortgage broker Karen Boies. Karen is a Vancouver mortgage broker who specializes in…?
Karen Boies: I specialize in working with women in transition, so women that are going through divorce that need some additional education and support in that planning process.
Debbie: OK, so that said, when I was going through my divorce, my first thought was, where am I going to live, where are my children going to live? But I also thought, even though I had a house, I thought, I have no money to pay the mortgage on this house, and I can’t afford to move. So, what are the implications with regard to women who are divorcing? How do you help them decide those things? Can I move, can I afford to stay, what are my options?
Karen: Absolutely. So, what I like to do as a mortgage planner is sit down and kind of work out a strategy or a plan. So we look at where they are right now, the home, the job, whatever income that they’ve got coming in. Hopefully their spouses, if there are kids involved, they’re paying child support, maybe they’ve agreed to pick up some of the mortgage payments. And just sort of look at the financial situation as it is right now, and then look at it based on what the woman thinks she’s going to end up with. You know, we know under the courts that they’ll have to pay a certain amount of child support, so we’ll look at that, whether or not they think they’re going to get any alimony, and then look at the scenario if they sell the house, and how much equity they might end up with out of that house. And now once I have that information, I can show them what they’ll qualify for in a mortgage to buy their own home, if they have to sell and move. Or alternatively, we can look at the option of using the child support, the alimony, if they think they’re ultimately going to end up with alimony. And then the solution of them staying in the home and buying their partner out.
Debbie: So, what would you say are the first steps? Let’s say I’m getting divorced, so I know that my husband is heading out the door, I’m moving out, whatever the circumstances are. I’m going to end up having to consider where I’m going to live. Where are my children going to live? What are my first steps?
Karen: Well really, I think that the first steps are…hopefully the couple will have a conversation when it comes to what’s in the best interest of the kids. So if the relationship is ending, hopefully he wants you to stay in the house and you will keep your financial situation as if you were still living in the house and keep paying the bills. But what I tell women is, if you don’t already know whether or not you have a credit score, you need to make sure that you have a good credit rating. And then after that, all credit cards or bank cards that you have in a joint name, if possible you need to close those so that you’re not continuing to accumulate debt on them. Or if you can’t close them, then you need to freeze them.
Another thing you need to do is, if you are getting child support or any alimony, you need to keep a record. It’s surprising how many people think it’s OK to accept cash and not deposit it in the bank account. Like, keep 500 bucks cash and they don’t put it in the bank account. Well, when everything gets settled and you get a separation agreement, you’ve got to have a record that you’re getting this money. So if they are paying you cash, you need to deposit it so that there’s at least a 90 day history of you receiving this money.
Now, I can use it to qualify you for a mortgage. Just to let you know, I get paid by the bank in most cases. I mean, if we have to use a private lender to fund the mortgage for you, they could charge a fee. However, if I get you financing at a traditional bank or a traditional mortgage company, they’re going to pay me for bringing the client. So, I work for you to help you reach whatever your goal is, and then after the mortgage funds, I stay in touch with my clients to work with them to continue to work on things like budgets, optimizing their mortgage so that they take advantage of it and pay it down if they can so that they’re developing more equity for themselves for going forward.
Debbie: Awesome. You are in Vancouver.
Karen: Yes.
Debbie: Do you do mortgages outside of Vancouver?
Karen: Yes.
Debbie: OK.
Karen: I’m licensed in the province of BC, so I can do mortgages throughout BC. I’ve done one for family members back in Ontario and New Brunswick, so I can do a one off like that. And we just do it through Skype conversation and email and texting if we need to.
Debbie: How do we get hold of you?
Karen: My name is Karen@mortgagecenterbc.com, and my website is KarenBoies.ca.
Thank you for watching the interview. If you have any other questions, please call Karen at 604-726-9550
Oh the times, they are a changing! (to be referenced later, stay tuned)
Never at any point in history has so much information been available online to us as customers. Whether we are planning a vacation, securing a mortgage or buying a new car, most people are doing their research online, long before they make the final buying decision.
Recommendations and Online Reviews matter when you are in the business of providing a service or product. It is how business is done. Examples: TripAdvisor, Yelp, Google Review
I receive testimonials from my clients and referral partners all the time. I am grateful that they take the time to let me know how I made a difference in their life. Google makes it easy for you to write a review and ensure your experience is shared with those who are thinking about doing business with me in the future.
SO now I have a big favour to ask of YOU… Will you write a Google Review for me?
I wanted to talk about the good and the bad sides to lease to own homes. Lease to own is also called LTO, RTO, rent to own, lease to own. But essentially what you’re doing is you are leasing to own a home much like you lease to own a car. The good sides of lease to own I’ve gone through in a lot of my other videos.
The great side to it is, if you can’t buy today for any reason, such as bad credit, you don’t have enough down payment, you have too much debt compared to your income ratio. Maybe you just started your own business, things of that nature where you simply need to, what I like to call, buy yourself time, then lease to own is a fantastic situation.
Now, why not just rent? Why lease to own? Well, a couple of reasons. If you’re going to lease to own it sets you on a program. It holds you accountable. Where a lot of people will rent for 10 years before actually taking the time to save up the down payment, or actively wanting to fix their credit, with lease to own you’re on a schedule. You need to fix things in order to buy your home at the end of the lease. It creates great accountability, as well as, depending on the investor that you’re working with, a great system in place to help you save down payment or pay down debt or what have you. That’s definitely a great side.
The other side is, when you rent you always have that temporary feeling as well as that, “I have to ask mom or dad if I can hang a picture in my room” feeling. When you lease to own your own home, if you want to do renovations, if you want to get rid of the carpet and put in laminate floors, if you want to put in a new vanity in the bathroom, if you want to knock down a wall, you can do that because it’s your house and you don’t have to ask anybody about it. If you want to hang a picture in your house, put as many nails in the walls as you want.
It’s your security. It’s your property. If you hurt the value of the home, that’s to your own detriment. Obviously, you want to do things to preserve it, take care of it. It’s your house. It gives you that sense of ownership. Lease to own, there’s a lot of great reasons on why you want to do that.
Now, why are some negative reasons on why you don’t want to do it? Well actually, that’s not the right way of putting it. Some ugly sides to the lease to own world, that is, simply you not doing your due diligence or teaming up with somebody who is very much out for themselves. Lease to own in concept is fantastic, and if you do it with the right person, that’s a great situation.
I make sure I very carefully screen people that I refer you to to make sure that they are above board, and that they’re on the level, and that they’re really doing this because they want a good, safe investment, while at the same time they’re helping out you and helping you to achieve your goals.
Now, what are some negative things that can be done, and what can you do about it to prevent these things from happening to you? Well, the number one thing that happens is that you’ll get into a home that’s, let’s say, $600,000, but you never actually got pre qualified for $600,000. When the two year lease is up, guess what? You only qualify for a $400,000 place. What do you do? Nothing. You honestly can’t do anything.
You now cannot fulfill the lease contract, which means you lose your initial down payment that you gave the investor. The investor gets to keep it. You lose all of your rent credits that you’ve accumulated throughout the two year or three year lease. They get to keep the house. You basically walk away with nothing, where, for the last two or three years you’ve just been paying inflated rent. That’s it. You obviously don’t want that to happen to you.
Now, what can you do to prevent that situation? Get pre approved. Don’t get pre approved by somebody who’s never even heard of or done anything with lease to own. You need to work with somebody who has worked with lease to own, understands the fundamentals of it, the different options that can be added to a contract, and most importantly, how long you’re going to need, realistically, to fix your situation so that you can be able to afford the place that you get into at the end of your lease term.
Obviously, if you’re working with a crooked investor, then they really don’t want you to qualify. They’ll put you into a $1 million home. You’ll think they’re the greatest things ever until your lease comes up and you can’t afford it. Because now they keep the house, they keep your rent credits and they keep your down payment. That seems like a really good situation for them. If you’re working with someone who’s on the level, there’ll be numerous things they’re going to make you do. For one, get pre approved, and get pre approved by someone that they trust. They’re going to mandate that. If you’re working with someone and they don’t mandate that you get pre approved, that’s not a good thing.
Another thing that’s optional and not always offered, but I would definitely ask for it, is an option to extend or an option to purchase early in your contract.
For example, if you’re really, really good, you manage to fix whatever was negative in a shorter amount of time than what your original lease term was. It would be great for you to be able to buy early, because that means you get to buy it at a lower price. An option to purchase early would be great to have in your contract. Likewise, though, if maybe something doesn’t get fixed in time or you just, for whatever reason, want to keep doing the lease for one more year, an option to extend would also be a great part to leave into the lease as well.
Those are some things you can ask to see if they’re on the level. Other questions you need to ask the investor is, “Have you done this before?” [chuckles] You won’t believe how many people have never, ever done this before, but they can talk a real big game. Now, just because it’s someone’s first time doesn’t mean you shouldn’t use them. What you need to do is ask, “Who is your mentor?” And, “Can I meet them?”
Because a lot of people are looking to do this. It is a great investment option. It’s safer, for the most part, other than just doing a buy and hold, meaning a rental property and all other kinds of things. It might be their first time. It doesn’t mean that they’re not a good person to deal with, but you want to know who is their mentor and who’s going to be handling these contracts. Make sure you ask those questions.
As well, if this is someone who has done it before, I want you to ask, “How many have you done before?” And, “How many have you done in the past that have come to full fruition, who have actually purchased out the lease and bought their home at the end?” And, “Of those who have not purchased, why was it and was anything done to try and help this happen?” Ask those kinds of questions. Get pre approved. Look out for yourself, and look into lease to own. It is a great option, but only if you do it with the right person, all right.
If you have any questions about this, I’m Leah Coss. I am with The Mortgage Centre. I’m a Canadian mortgage broker. I cannot help you people in the US. I’m sorry.
If you have any questions, leave a comment down below, email me, call me. Don’t forget to subscribe to my videos. Give a thumbs up if you like this post. Other than that, I will talk to you later.
Hi, everybody. It’s Rowan Smith from the Mortgage Center. I want to talk today specifically about lines of credit. More importantly I want to talk about lines of credit that you want to keep but you maybe want to renegotiate maybe the mortgage in front of it. This is something that comes up from time to time.
Let me give you an example. Suppose you had a $100,000 mortgage on your $500,000 home. But you also had a $100,000 line of credit from a different institution. When you’re first mortgage comes up for renewal and you want to renew it, your choice is to stay with that institution or replace that mortgage amount dollar for dollar from another institution.
Now, to do that you need the permission of the line of credit company that’s issued that line of credit. They have to grant, what’s called a grant priority or offer priority agreement allowing the new mortgagor to go in front of them on title.
Now, this becomes problematic when someone just wants to renew but they want to move from one bank to another bank. In that case you often can’t, it’s not as simple as just a renewal. And unless you’re keeping every single feature of the mortgage the same, the amortization, the remaining amortization and what not, then it can be switched over.
But if you want to get an extra five grand for some small renovations or you want to borrow some money to pay off a car loan or what not, in order to do that you have to get rid of that line of credit. That doesn’t mean that you can’t set up a new one with the new institution, it just means that that existing one will have to be collapsed as part of it.
If you have any questions about this or you want to know if there’s a way to work around in your situation, because there are examples where you can do the mortgage without redoing the line of credit, please give me a call. It’s Rowan Smith from the Mortgage Center.
Hi, everyone. Rowan Smith from the Mortgage Center. I got a call today about a client who wanted to do some renovations on the home when they bought it. And they said to me, “But I don’t have the money for doing the renovations I’d like it built into mortgage. Is that possible?” Yes, there’s a few different ways to do it. One of the most common programs is “Purchase plus Improvements”. And under that program, the way it works is, you borrow money.
I’m going to use a nice, round example, you buy a $100,000 home, you put five percent down, that’s $5000. You have a $95,000 mortgage, but you want an extra $10,000 to do some renovations.
The way that it works is you have to first get a quote from a contractor that explains what the work he’s going to be doing and the cost that it’s going to be to get that work done. You’re going to present that when you do your mortgage application.
So, when you write the offer you need to get a contractor in there right away to that quote because your mortgage broker is going to need it in order to submit it with your deal to the bank to ask that extra $10,000. You won’t be able to get it afterwards, so you have to do it as part of the transaction.
So, they send in the application, see, and the bank looks at it and makes sure that the work that they’re doing is appropriate for that price. And if they approve it then the full amount of the mortgage gets advanced to the lawyers office.
But you don’t get your $10,000 to do the renovations. You have to do the renovations first, provide receipts, provide proof of the work that’s done, often times they’ll require an appraisal to go through to make sure that the work is in fact done. And then they’ll release the dollars to you.
So, if you’re doing a big ren, you wanted $40,000 or something like that, you can still do it, but you have to have the means to come up with the cash to pay trades and materials in advance and then the mortgage money will come to you later.
So, yes, you can use the line of credit where you can borrow money from family and friends but you have to have a way to get the work done first and then they release the funds. Now, is there times when you can get around this? Yes, but generally you need 20 percent or more down payment or set up a structure like that.
If you’re someone in either of those situations with less than 20 percent down or more than 20 percent down and you want money for renovations while you’re buying the home or after give me a call. From the Mortgage Center I’m Rowan Smith.
We’re at 2011 right now and it wasn’t that long ago that you were able to get a 40 year amortization. Then it got cut down to 35 years. From there it’s now being cut down to 30 years, but I still get the question all the time, “Can I get higher than a 30 year amortization? I heard a rumour that I can.” The quick answer to this is yes, it is possible to get a higher than 30 year amortization for a mortgage, but the other part to that is it is not available at every lender. There is some government law that you need to understand first before you start asking for exceptions like that.
Now the first thing to lay out is that the government has set a mandate that if you put less than 20 percent down on the purchase of your property, or if you have less than 20 percent down in your home if you’re refinancing, you must have a cap of 30 years for an amortization. You cannot go any higher than that. That’s simply to safeguard you so that we don’t have any kind of economic collapses again, like we just experienced. Because of that 30 years is your maximum. No ifs, ands or butts. You can’t pay anyone off. You can’t talk to a friend and get a good deal. 30 years is your max because it’s a government set law. OK?
Now, that said, if you are putting more than 20 percent down, and if you go to one of the very few lenders out there who are still offering this, you can still get 35 years. In fact there’s still maybe one or two lenders that will still let you do 40 year amortization. Depending on the size of the property that you’re getting or trying to afford, you may need that extra amortization. But, if you’re going to buy something, not much, you must put at least 20 percent down payment.
So, that’s it. If you’re looking to buy a house at less than 20 percent down, which most of you are, don’t even ask about amortization; you are capped at 30 years. OK? But if you’re putting more than 20 percent down exceptions can be made, but chances are your bank won’t be able to do it for you. There are just, truly, one to two lenders out there we’ll say three or four lenders that will let you go to 35 years, and then one or two that will let you do 40 years. To try and fish them out yourself is going to be really difficult, so I do recommend going to a broker or coming to me.
If you have any questions about amortization let me know. Leah Cross with the Mortgage Centre. Don’t forget to subscribe that way you won’t miss any videos. As well, leave a comment down below. Email or call me if you have any questions. Other than that give a thumbs up if you like the video and it was helpful to you. I guess that’s it for now. Good luck with the amortization and I will talk to you later.
