May 2015

 
 
 
 
 
 
Kelly Hudson Mortgage Professional
Dominion Lending Centres Aegis Mortgage Services
Phone: 604-312-5009
 
 
 
 
 
 
 
 
 
 

In this issue

 
 
Test Drive a New Mortgage Payment Today  
Will a 'Credit Inquiry' Lower My Score?  
About Dominion Lending Centres & DLC Leasing  
Did You Know...  
Homeowner Tips  
 

Hi

Welcome to the May issue of my monthly newsletter!

Spring has sprung in most of the major Canadian real estate markets. This month’s edition of the Dominion Opinion discusses taking a newer (and often larger) mortgage for a test drive.

Please let me know if you have any questions or feedback regarding anything outlined below.

Thanks again for your continued support and referrals!

 
   
   

Test Drive a New Mortgage Payment Today

 
         
 

In both rising markets and softer markets there will be many people contemplating making a move to a larger home and with that larger home often comes a larger mortgage. Last month’s newsletter offered technical tips to help prepare for the process of porting your mortgage to a new property, this month we will talk about preparing for a payment increase in advance.

We test drive cars before we buy, we try on clothes before we buy, we even sample wines or beers before we commit. Yet when it comes to taking on a mortgage payment, or increasing our mortgage size, and thus payment, few of us take the new monthly payment around the block. Instead, we are often so caught up on other aspects of the process that 30 days after moving in when that first payment is withdrawn, there can be a degree of post-closing payment shock.

Knowing your numbers in advance is one thing - living with the numbers in advance is another.

 

Here is a table for quick calculations of the possible increase in mortgage amount you may be considering:

Mortgage Amount Monthly Payment
$10,000 $45.75
$25,000 $114.37
$50,000 $228.74
$100,000 $457.48

*Based on a 2.69% 5yr fixed rate amortised over 25yrs.

The key to this is not simply doing the math and knowing what you future payments will be for the next 25 years. The key is to actually increase your current mortgage (via your prepayment privleges) by the corresponding amount so that you are making that new payment for a few months prior to taking action. Alternatively, you might choose to withdraw an amount equal to the proposed increase from your account and stash it in a ‘safe‘ place like a savings account, an actual safe, or a parents care. The key is to start replicating that new payment and confirm you can live with it prior to actually taking it on.

 
   
 

Will a ‘Credit Inquiry’ Lower My Score?

 
 
         
 

Your ‘beacon score’ is an indicator for a lender as to whether a client is likely to make payments on time and in full. Beacon (credit) scores are sometimes referred to as FICO scores, and both names are derived from the credit bureaus that developed the scoring system. Keeping track of this important number is vital. Inquiries to your score are recorded and tracked on the credit report as well. However not all inquiries are created equal.

Credit Inquiries

Each time a creditor (potential lender) checks your credit report, a record is created of this event. There are two types of inquiries, soft and hard. A soft inquiry occurs when you pull your own credit report. (Worth doing on an annual basis and FREE via mail at either Equifax or TransUnion.)

A hard inquiry occurs when submitting loan or credit applications with your written authorisation to inquire. A lender cannot process a hard inquiry without your written permission. There is a process to have non-authorized credit inquiries removed from your report.

Effects on Your Score

Soft inquires do not affect the credit score. Consumers can pull their own credit score as many times as they wish without repercussions. Hard inquires affect the score to varying degrees. Multiple inquires that occur in a 14-day span are (typically) counted as just one inquiry. This helps those who are credit shopping (mortgages, personal loans, etc.) and need to have their credit pulled several times. Multiple inquiries are rarely the reason that people are denied credit, unless the score was borderline to start with.

 

This said, inquiries for‘good debt’ such as a mortgage have far less impact on one's credit score than multiple inquires for ‘bad debt’ such as a car loan/lease or debt consolidation.

Who has access?

Only individuals with a specific business purpose can check your score. Creditors, lenders, employers and landlords are some examples of approved business people. The inquiry only appears on the credit report that was checked. For example, if a landlord uses Experian to check the creditworthiness of an applicant, the credit check will only appear on Experian’s report, not TransUnion or Equifax. To limit the number of soft inquires made on your credit report, contact the credit reporting agencies and request that they remove your name from marketing distribution lists.

Conclusion

Having a few inquiries in a period of a couple of weeks while determining whether to work with a specific Mortgage Broker will (in most cases) not have a notable negative impact on one's credit score. If your score is at or near 600 or 680 then one must be more cautious with inquires as this affects certain mortgage product availability.

Working with an independent Mortgage Broker typically results in one inquiry on your bureau for the use of multiple lender partners of that Broker. Thus more than one rate-hold can be placed with more than one lender without negative credit consequences via a Broker. Yet another great reason to work with a Dominion Lending mortgage professional!

 
   
   

About Dominion Lending Centres & DLC Leasing

 
         
 
 
We are Canada's largest and fastest-growing mortgage brokerage!
 
We have more than 2,300 Mortgage Professionals from more than 350 locations across the country!
 
Our Mortgage Professionals are Experts in their field and many are ranked among the best nationally.
 
We work for you, not the lenders, so your best interests will always be our number one priority
 
We have more than 100 mortgage programs, making it easy to choose the best fit for your unique situation.
 
We close loans in all 10 provinces and 3 territories.
 
We can process your mortgage in as few as 7 days.
 
We are the preferred mortgage lender for several of Canada's top companies.
 
Dominion Lending Centres' Mortgage Professionals are available anytime, anywhere, evenings and weekends - and we'll even come to you!
 
 

On April 2nd CMHC announced an increase in their mortgage insurance premiums for homebuyers placing less than 10% down. The premium increase will raise the cost of mortgage insurance by $450.00 per $100,000 of mortgage balance effective June 1, 2015.

A more meaningful metric is that this translates into a net cost of just $5.00 per month for the average CDN homebuyer submitting their purchase transaction for financing June 1, 2015 and beyond.

There is no ability to avoid this premium with a Pre-Approval. The older lower premium will only be applicable to purchase transactions submitted for approval by the end of May, 2015.

For a more detailed example, click here.

 
 
 
 

 

 

 

Homeowner Tips

Spring ‘To-Do’ List:

 

We will go easy on you this month with a brief ‘to-do’ list for homeowners;

  1. Clean and maintain your gutters and downspouts
  2. Address cracks. From driveways and walkways to window seals.
  3. Tidy your outdoor space, from leftover snow shovels & sleds to attacking the budding weeds early on.
  4. Ensure outdoor faucets, lights and plugs are all in working order.
  5. A great time to for a semi-annual furnace filter change as well.
  6. Mix a pitcher of lemonade and sit back and enjoy a sunny Sunday afternoon.