16 Jan

Mortgage Basics – What is this thing We Call Credit?

Mortgage Information

Posted by: Randell Toporowski

When applying for a mortgage you are going to hear a lot about this topic.  I mean this!  You are going to hear more than you ever thought you wanted or needed to know about it!  The advice is going to come from everyone.  This includes family, friends, neighbors, real estate agents and maybe you local butcher too!  They all mean well, but the myriads of unconnected information may even leave the bold at heart quite weary.  So, here is a road map to guide you through the terrain.

Credit History:     When you apply for a mortgage one of the items the mortgage broker is going to do is review your credit report.  At the onset of working with you, you mortgage broker is going to ask for consent to acquire and review your credit report.  This report is a listing of past and present credit activity.  It includes transactions from all public records and trade information that report to that credit agency.  This public information includes payment history, amounts owed, length of history, new credit and types of credit used.  It also includes any history of bankruptcy, slow payments, collections, judgments and foreclosures.  When it is reviewed with you, your mortgage broker will ask questions about it to ensure that the report is accurate, and that it does not contain any errors.  Also, the mortgage broker will ask questions for the purpose of explaining areas of the credit report to the underwriter that may need some clarification.  Basically, it is a story, your story, of your repayment history.

Ability to Repay the Loan:     The capacity and the ability to repay the loan is an essential consideration.  Though complex it boils down cash flows in your life.  Cash flows are like water through a pipe, how much money is coming in at one end of the pipe and how much money is going out at the other end.  So, it is easy to understand that you need an income that is consistent, verifiable and stable.  Once the income is verified a couple of tests are applied to it.  The first test, Gross Debt Servicing Ratio (GDS).  With respect to the home that is to be purchased, in general terms, a borrower can only spend 32% if their gross income on the following: 1) mortgage principal and interest payment, 2) property taxes, 3) heating payments; and if it is a condo 4) 1/2 of the condo fees.  The second test, Total Debt Servicing Ratio (TDS).  With respect to the home that is being purchased, in general terms, a borrower can only spend 40% of their gross income on everything included in the GDS calculation (principal, interest, property taxes, heating payments (& 1/2 condo fees) plus all other debt.  This other debt includes: bank and other loans, car payments, personal loans, credit card payments, court ordered alimony and child support.

Loan to Value:     This is the ratio of the loan to the fair market value of the property you wish to purchase.

A qualified and licensed mortgage broker will walk you through this jungle.  With my clients this is the first discussion that I have.  Even though the industry sets standards and limitations for these ratios, I always want to make sure that my clients are comfortable with the payments they have, and ultimately, it is important to determine if they have room given their cash flows to live comfortably.  A home should not be a financial burden.  It should be your refuge from the world.


15 Jan

Mortgages and the Meaning of Life in Regina – Mortgage Professional Follow Up

Mortgage Information

Posted by: Randell Toporowski

When I was a kid I had a friend that hated brushing his teeth.  Every night before bed his Parents would struggle through the nightly ritual of having him scrub his molars, incisors and everything in between.  It caused stress and left the entire household in a state of agitation just when it was time for the opposite to occur.  His parents were trying to teach him the value of following through and benefit of this follow through was healthy gums and clean teeth.  One night I was at his house and as the evening progressed there was no tooth brushing before bed, no parent demands and no fuss.  Very Unusual!  Later I asked him why, what changed – had he conquered the parent-child hierarchy, was he now the king and could make decisions on his own; which included not brushing his teeth?  To my surprise he gave such a simple answer.  That night his mom had made brussel sprout casserole for supper.  How would it have been possible for his teeth to get dirty when the sprouts never touched his mouth.  NO FOLLOW UP NEEDED!

Canada Mortgage and Housing Corporation (CHMC) reported in their 2017 Mortgage Consumer Survey that Mortgage Brokers followed up with their clients 54% of the time after the mortgage transaction, where those customers using a Lender were contacted only 31% of the time after the mortgage transaction was complete.  Further to this, CMHC identified that mortgage clients using a mortgage broker sought more advice on interest rates, types of mortgages, financial difficulty strategies and what tools were available to manage their mortgage.

As your mortgage broker I believe that it is important to follow-up with my clients through the entire mortgage process, from pre-approval to home possession, and beyond.  I want to be available to make sure that the following processes are complete:

  • Were financial conditions removed on time?
  • Was the closing process at the Lawyers Office efficient, on time and complete?
  • Were there any unexpected costs?
  • Does the client need any support from a plumber, electrician or carpenter after the move?
  • Did the first mortgage payment process properly and was it the correct amount?

Hopefully ensuring that the clients enjoy the process of purchasing a new home.

Lenders are like my friend with the brussel sprout experience.  NO FOLLOW UP NEEDED!

Don’t be left unsupported through the entire mortgage experience, let me, a licensed mortgage professional, support you all the way!

14 Jan

Mortgages and The Meaning of Life in Regina – Where and When you Hang your Hat!!!!

Mortgage Information

Posted by: Randell Toporowski

I hang my hat in Regina.  I am a mortgage broker and an accountant.  I have a great family! A loving wife that ignores the extra pounds I have added to my waistline, the aroma of garlic sausage that I bring to bed late at night (because this is my favorite snack) and my persistent misunderstanding that the dishwasher is where the dirty dishes go.  I have wonderful children, all of which have become accomplished in their field of study and contribute to society.  I am a proud father!  My wife and I made a series of choices to get to where we are today.  Of course my receding hairline was not one of them.  That was a bonus I received from the great wizard of life.

Making Choices!  Canada Mortgage and Housing Authority (CMHC) reported in their 2017 Mortgage Consumer Survey that 64% of First-Time Home Buyers indicated that they were renting before purchasing their first home.  Of this group wanting to buy their first home and feeling financially ready were the most important reasons for them to do so.  Therefore, if you rent before you buy, you are a part of the majority and when you buy you are making the transition from tenant to land owner.  Congratulations!  This is an important time in your life! CMHC also notes that 71% First-Time Home Buyers used their savings for their down payment and 18% received a gift from a family member.

The main Concerns of First-Time Home Buyers!  There are lots:

  • Where and from whom do I get trusted information?
  • What are the current mortgage rules?
  • Down payments? Gifted Down payments? Registered Retirement Plan Withdrawals? How much?
  • What is the process to buying a new home?
  • What is default insurance?
  • Unexpected Costs and Expenses?

Make your Experience a Positive One!  When you are ready to hang your hat in Regina and purchase a home you are going to interact with a wide variety of folks.  They include: Family, Friends, Real Estate Agents, Mortgage Lenders, Lawyers and Home Inspectors just to mention a few. Each professional has their place.  My job is to help and support you with your mortgage application process.  From pre-approval to lender commitment, I will guide you through the process, mortgage products, features, rates, mortgage protection plans and explain the purchase closing costs to ease your concerns.

I have added this link to the CMHC website where you can access some valuable information in preparing for your new home purchase https://www.cmhc-schl.gc.ca/en/co/buho/plmayomo/index.cfm