Mortgages....Simplified!

Jason Skare | Mortgage Agent
Tel: 647-800-2977 Cell: 416-846-2609

Dominion Lending Centres Estate Mortgages

It's everyone's favourite topic, mortgages! Luckily they have been simplified today. Jason Skare from Dominion Lending Centres, is here to explain mortgages and the preapproval process, a great read especially for first time buyers.

Jason Skare is a real estate investor and a mortgage agent for the last 5 years, he brings his knowledge, experience and expertise to assist clients in navigating through the mortgage process and becoming mortgage free sooner and ensuring future affordability of his client's homes. Jason is licensed by FSCO and is a member of CAAMP and IMBA.

On top of arranging mortgages for you, Jason is also offering any new clients 6 months of FREE house cleaning for any mortgages $250,000 or more, what a great deal!!!

Take it away Jason......

Mortgage Tips for First Time Home buyers

Buying your first home can be exciting and stressful at the same time. Having the knowledge and expertise in your corner is one way to mitigate that stress. I want to share a few tips and tricks to ensure the mortgage process is a smooth one.

Pre-Qualification vs. Pre-approval

Many people are still confused about pre-qualification vs. pre-approval and what each means to your home buying process. Pre-qualification is a simple mathematical calculation that determines how much you can “theoretically” afford. There is no asset or liability factors taken into account or credit score so you may not even know if you can qualify. Pre-approval is done when an application is taken, a credit check is done on the applicants and you can get a rate hold. In order to qualify for the best rate on the market, most lenders require a minimum beacon score so it’s important to check your credit score at least on an annual basis to ensure you are at acceptable levels.

Pre-approval does not guarantee the house you decide to purchase will be approved by the Lender, especially now with tighter lending standards. It just means you are approved for a certain amount for a certain rate “conditional” on the approval of your home purchase. If you are taking a conventional mortgage (20% downpayment or more) the lender will usually require a home appraisal to ensure what you pay is in-line with other property values in the area. Remember that what you paid for the property may not be what the appraiser feel it’s worth.  Purchase price is not a direct reflection of a homes value. The best example is when a house gets multiple offers and goes for $50,000 above asking price. The appraisal may come in at $50,000 less and the lender may decide to mortgage for the lower amount requiring CMHC insurance or a higher downpayment.

What’s in your Future?

When we look at obtaining a mortgage, many people focus on the lowest rate. As important as rates are, your future plans should dictate your Mortgage product. Maybe you are a new couple buying your first Condo. After a couple of years you decided to start a family and find yourself in need of a house or your job relocates you or you find yourself having a relationship change.

Is your Mortgage “portable” (can you move it to another property and if so how much will it cost?) or what are the penalties to break the mortgage? In many cases, that penalty can be thousands. You probably have heard the record low 5 year fixed 2.99% mortgage. What you probably didn’t know is that many of these products were “no frills” which mean no prepayment privileges, no portability and on average, $6700 higher penalty for breaking that mortgage. A good Mortgage Professional should be asking you these questions to help locate a product that’s right for you.

Strategy against future rate hikes

One of the most common mistakes I see is the assumption that after 5 years of paying off your Mortgage, your payments will be lower. If you start with a 25 year amortization and 5 years later you are at 20 years and have paid off some principle, your payments will be about the same if rates are the same...here’s an example.

$300,000 Mortgage at 3.5% with a 25 year amortization= $1497.00/month

$258,000 Mortgage at 3.5% with a 20 year amortization= $1498.00/month.

That’s not too bad but what if rates rise and in today's ultra-low rate environment, it’s a safe assumption that rates will go up in the next 5 years. Let’s say that the same $258,000 mortgage after 5 years of payments has a rate of 5.5%...your monthly payment would now be $1772.00

For some people, that may be unaffordable. Having a proper plan in place can protect you against these rising rates when they occur is vital and not as difficult as you may think.

Having a professional work with you to ensure you future is secure or that you are making the correct decisions is crucial. Your Mortgage Professional should be reviewing your mortgage annually with you to ensure you are on the correct path to Mortgage freedom.

Did this help simplify mortgages for you? Still have questions, make sure to give Jason a call or send him an email (416-846-2609, jskare@dominionlending.ca)! You can also follow him on twitter, click here and make sure to "like" his facebook page, click here.

Don't forget to check out Jason's mortgage rates below:



 Thanks again Jason!