Category Archives for Mortgage Refinance
Mortgage Refinancing Advice
“How To Get The Best Home Mortgage Refinancing Advice”
If you are considering refinancing your existing mortgage, or want to better understand what a mortgage refinance action is all about and how it may or may not be beneficial to you, your family, and/or your business, then it makes a great deal of sense to seek out competent professional advice.
The good news here is there are a large number of mortgage professionals, be them brokers or agents or specialists, that have a considerable amount of training and experience on the subject matter and who are readily available in virtually all areas to provide assistance.
The challenge is getting the best advice for your particular circumstances which is not going to be automatic when speaking to any form of mortgage professional.
This is certainly not because mortgage reps are trying to mislead you in any way.
The mortgage industry is highly regulated and the standard of conduct on all players and participants is very high.
The issue you need to be concerned with when selecting a mortgage adviser of some sort is how relevant what they represent is to your particular circumstances.
For instance, if you go to a lending institution like a bank, they have very capable individuals that work in the field of mortgages.
They are also paid to meet your needs as best they can with the products they provide.
If they products they provide are not the best fit for you, it may be hard to tell at this point as you are only getting the point of view from an internally focused source of information.
The alternative is to work with a mortgage broker who is arms length to the actual sources of mortgage financing and who may be in a better position to apply more options and bring more considerations to the table than someone who may only be marketing their own products.
So being able to identify and focus in on the most relevant options is certainly a big part of any mortgage refinancing decision.
The other part of getting sound advice is dealing with a mortgage professional who can work through all the different options with you so that the best available options are well understood.
Let’s face it.
You don’t refinance your mortgage every day.
And for most, any mortgage financing decision is going to be one of the larger financing decisions they need to make.
So working with someone that has the experience, knowledge, and teaching skills to help get you comfortable with all the information available is going to be key to making a good solid financial decision that you’re going to have to live with for a while.
This is another reason why mortgage brokers and agents are a solid option for getting advice and guidance.
In most cases, it does not cost you anything to use them, and they come with more of a broad market representation which is beneficial not only from an available program point of view, but from an experience point as well due to the large number of different scenarios and solution sets they work through on a regular basis.
If you’re looking to refinance, or just have some questions, I suggest that you give me a call and we’ll go through your situation and questions together.
2012 Mortgage Refinancing Basics
“Here Is The 2012 Version Of Mortgage Refinancing Basics”
While the most of the fundamentals that apply to home mortgage refinancing are always going to be valid, there are changes that take place each year that can impact the refinance process.
So today let’s take a look at what I will call the 2012 mortgage refinancing basics that you should have a good working knowledge of before considering any type of a refinancing strategy.
To start with, the most common reasons today to refinance an existing residential home mortgage is to try and take advantage of lower interest rates, consolidate consumer debt, gain incremental capital for some other purpose, or some combination of the first three.
As we remain in a low rate environment with record levels of average household debt it stands to reason that mortgage refinancing is going to continue to be primarily focused around these two areas individually or in combination.
What Amount Of Refinancing Can Be Secured With An Insured Mortgage?
One of the more significant changes to refinancing considerations relates to mortgage insurance rules.
Over the last few years, the minister of finance has mandated the continued decline of the amount of mortgage financing could be made available for a refinance action, and in July of 2012, the limit has been further reduced to a maximum of 80% loan to value.
While non insured mortgages are also at a max lending amount of 80%, insured mortgages still play a purpose for those individuals who still may not be able to secure a top level rate, even with the 20% equity in place.
But if you’re in need of 85% loan to value from your mortgage funding then you may need to look to a private lender who has the flexibility to consider requests above 80%.
What Costs Are Specifically Related To A Mortgage Refinance Action?
The potential cost items you need to consider when refinancing have not changed in recent years and remain 1) prepayment penalties, 2) appraisal fees, and 3) legal fees.
The prepayment penalty is really the key to determining if a getting a new mortgage in place to pay out the old one makes sense at any given point in time.
If the prepayment penalty is very high, working through the rest of the number may result in you being worse off over time. That’s why its going to be important to contact your existing mortgage provider and get a statement from them of your exact prepayment penalty before you even start considering any options.
And while appraisal fees and legal fees can seem almost trivial in comparison to a prepayment cost, they also need to be factored into the analysis so that you have a clear picture of the cost and benefit of any options you want to consider.
Is It Still Possible To Refinance A Mortgage If You Have Bad Credit?
Yes, you can still refinance with bad credit and in fact there can be even more options for you today than just a few short years ago.
Today there are several sub prime or “B” lender options as well as private lender options available.
The key with bad credit tends to be in estimating the time before your credit will be improved.
If you have some bruised credit that does not allow you to qualify for a new “A” mortgage today, but is expected to be corrected in a year or two, then it may make more sense to leave the existing first mortgage alone to take advantage of its rate and secure a private second mortgage to fill the gap in funding.
Then, when your credit has improved, an “A” credit refinancing can be completed.
This is a good reason why its so important to look at all the options and crunch the numbers to make sure that any mortgage financing decision you make is going to end up being the lowest cost, highest benefit to you.
One of the best ways to accomplish this is to work with an experienced mortgage broker with a solid track record of mortgage refinancings.
If you’re considering refinancing your home mortgage, I suggest that you give me a call so we can go through your situation together and review all the relevant options in detail.
home mortgage refinance requirements
“Understanding Home Mortgage Refinancing Requirements”
Home mortgage refinancing requirements are going to vary according to your particular borrowing scenario so lets take a closer look at the starting point for looking into this type of mortgage financing action.
First of all, its going to be important to understand the loan to value that exists for your current mortgage.
If you have a loan to value amount of 80% or less, you have a lot more flexibility with respect to looking at the available programs and products available.
If you require a loan to value amount greater than 80%, then you will require an insured mortgage which can only be provided in a home mortgage refinance scenario up to 85% loan to value.
So its going to be important to understand if 1) you will be able to secure enough funds when restricted to 85% lending, and 2) if the cost of mortgage insurance will be worth the benefit of getting that extra 5% lending amount.
Second, while there tends to not be any restrictions on the reason for home mortgage refinancing, you need to understand the costs that will go into the process.
If you are looking to refinance an existing mortgage with a fixed interest rate, then you will likely incurring a prepayment penalty of the larger of three months interest or interest differential.
Its going to be important to calculate this properly so that the cost is well understood and built into the decision making process when considering different options.
This is also something we can help you with so that the math is done correctly and provides an accurate basis to work from.
Third, mortgage refinancing effectively provides you with a completely new mortgage where you can reconsider the payment structure, prepayment options available, amortization period, and so on.
So its going to be important that whatever type of refinancing action you take will support both your future financial objectives as well as your cash flow.
For instance, many times a mortgage refinance will be done to get a lower interest rate.
In this case, you need to consider whether you want a fixed or variable rate, and will the benefit of a lower rate offset the cost of completing a refinancing action? Further, with a lower rate, you may be able to lower your payment. But keeping your payment the same as it was before will potentially allow you to pay down your mortgage faster, saving interest cost over time.
In other cases, a mortgage refinance is performed to acquire additional capital for some reason such as home renovation, debt consolidation, or estate planning.
With a higher overall mortgage amount outstanding after the refinance, will your new mortgage payments fit into your cash flow, or are you going to have to make some lifestyle changes to more comfortably manage a higher monthly debt servicing requirement? Or do you look at increasing your amortization period to reduce your payment which will see you paying the mortgage over more years and increasing your interest costs over time.
There are also times when a home mortgage refinancing can be forced due to cash flow or credit distress which may require you to consider a private mortgage or a sub prime mortgage product in the near term. The selection of these types of products should depend on how you see your financing profile in the next year or two so that you can select the lowest cost option for moving back to an “A” credit mortgage in the future.
Because there can be a number of different things to consider for any particular situation, I recommend you seek out the assistance of an experience home mortgage broker do that all the different areas of consideration can be properly explored and understood before any mortgage refinancing decision is made.
Understanding Mortgage Refinance Options
“Mortgage Refinance Options Can Vary Widely From One Scenario To Another”
Your mortgage refinance options are going to depend on the specific circumstances that have lead up to the need for this financing action to be considered or be required.
The first consideration when looking at a mortgage refinance scenario is what is the purpose or need for mortgage refinancing in the first place?
Here are the three most common reasons or needs for a mortgage refinance action.
- The borrower require additional financing against a property and wants to pay out the existing mortgage or mortgages registered against the property with a larger new mortgage.
- The borrower wishes to acquire a better interest rate and/or better mortgage terms from a new mortgage lender which can create the need to acquire a new mortgage (versus transfer the existing one) to payout the existing mortgage held by the current mortgage provider.
- The current lender is not prepared to extend a mortgage renewal causing the borrower to need to seek out a new mortgage provider while using the mortgage refinance process to accomplish this move to another lender.
Regardless of the reason, a mortgage refinance creates the need to create a new mortgage or rewrite or amend the existing mortgage either to change the terms of the mortgage or to transfer it to a different mortgage lender.
The second second consideration when looking into mortgage refinancing options is the structure and requirements of any existing mortgages that would be paid out through the mortgage refinancing process.
Regardless of how a mortgage refinance is funded, any existing mortgage payouts may be subject to prepayment penalties which may not make payout the most cost effective approach.
This is where consideration is given in certain situations to a second mortgage or home equity line of credit as other options to provide additional capital for the least amount of cost.
The third consideration is given to the financial and credit profiles of the borrower or borrowers.
Forced refinance mortgage actions where either the borrower must find another mortgage lender or a certain level of funds are required, can reduce the number of potential options that are available to an existing borrower.
And mortgage refinance actions that take place when cash flow and credit are weak or sub optimal may limit the available choices for mortgage refinancing to short term lending options like private mortgages where financing can be put into place to stabilize a situation and allow time for lending criteria to be strengthened.
Because every situation is somewhat unique, and also because lender programs can change on a regular basis, it can be hard at times to determine what the most cost effective options are for a mortgage refinance requirement.
The best approach for getting a good mortgage refinance result is to work directly with an experienced mortgage broker who can thoroughly go through your situation and requirements and provide you with relevant options for your consideration.
Mortgage Refinancing Facts
“Do You Consider Your Mortgage Refinancing Choices Carefully At The Time Of Mortgage Renewal?”
Mortgage refinancing is not an action restricted to those that either require additional funds from their property or those that are required to find a new mortgage provider.
The reality is that every time a mortgage interest term is coming to its end, mortgage renewal with the existing lender as well as mortgage refinancing with potentially a new lender is something that should always be considered.
The reasoning here is that, depending on who’s statistics you adhere to, mortgage lenders renew about 80% of their existing mortgage portfolio. Or put another way, of the accounts that are paying on time and have not provided any repayment for the lender, the level of renewal is extremely high.
So while getting the renewal is a very important business activity for mortgage lenders, the renewal process is not necessarily approached as a way to renew the customer for their continued loyalty.
In fact, most mortgage renewal offers provided by mortgage lenders to their existing borrowers offer the bank or institutional lender’s posted mortgage interest rate.
This is typically not the best rate that the lender is prepared to offer, but its the starting point for the renewal process.
In most cases, the mortgage holder will sign the renewal for potentially a higher than market interest rate, and continue on with the lender for a further interest term.
Being open to mortgage refinancing is simply developing a mind set that your goal when committing to a new interest term is to get a market rate for your particular situation. Being that everyone’s property, level of income, and credit profile are going to be different, what’s best for one borrower is not necessarily going to even be available for another.
That being said, when you get to renewal time, it makes a great deal of sense to respond to the mortgage lenders offered renewal rates by asking them if they can quote a lower rate.
It also makes sense to go to the market place through an experienced mortgage broker and get competitive rate quotes as well.
And while costs are incurred to switch from one lender to another, the cost savings on interest can far outweigh the incremental cost of moving. Some mortgage lenders even pay for the transfer costs themselves.
After going through a market rate comparison, if you find that your current mortgage lender is prepared to offer you a proper market rate for your new mortgage term, then it likely makes sense to just stay where you are.
But the point here is that its up to the borrower to make sure the relationship stays equitable, otherwise you may end up paying a higher rate which over time can add up to a considerable amount of money that could have been used for other things, such as paying down the mortgage principal.
If you are going through a mortgage renewal process and want to discuss mortgage refinancing options, then I suggest that you give me a call so we can go over your situation and requirements together.
Mortgage Renewal Effort
“Are You Putting In The Necessary Effort Before Signing Up For A Mortgage Renewal With Your Existing Lender?”
When you have a mortgage term coming do, what do you typically do?
If you’re like most Canadians, the answer would be very little which is hard to understand considering the potential amount of money involved and its impact on your cash flow which directly influences your life style.
Studies have shown that more than half of mortgage holders are likely to renew their mortgage with their current mortgage provider without first making sure that their new offering was competitive in the market place.
There is nothing wrong with being loyal to a lender and vise versa, provided that the business relationship is equally good for both parties.
And because mortgage lenders all know through their own surveys and data analysis that the majority of their mortgage holders review, there is no incentive for them to offer a best in market renewal option or even one that’s close.
That being said, if you a mortgage lender has room to move in their rate and you are prepared to leave for a better one, they are likely going to improve their offering to you to retain your business.
But that also speaks to you understanding the options that are available to you in the market place and how the process works.
Whether it seems logical or not, if you want to stay put with your current mortgage provider and still want to be paying a competitive interest rate, then you’re going to have to do at least some market research, or get someone like an independent mortgage broker to do it for you.
With knowledge in had, the same knowledge that your mortgage lender already holds, there is more likely going to be the opportunity for a fair and equitable deal constructed that benefits both parties.
And also remember that there is a certain level of precision required with these numbers so you also need to pay attention to the details as close enough will likely take more money out of your pockets than you may be aware of.
Take the example of a $300,000 mortgage. If you are able to get your current mortgage lender to reduce their mortgage renewal offering by 1/2% based on competitor offerings, this basically increases your annual cash flow by approx. $1,500 to spend with as you please, including paying down the principal on your mortgage.
Better this amount go into your pocket than the lender’s pocket.
Once again, nothing wrong with staying put with a lender, provided that its equitable to do so.
Blended Mortgage Rates
“One Way To Bring Down Your Fixed Mortgage Rate Is By Extending
Your Mortgage Term”
With the fixed mortgage rates at near record lows, and the prospects for further decreases based on where the 5 year bond yield is sitting right now, everyone with an above market fixed interest rate on their existing mortgage is trying to figure out how take advantage of these record setting rates for fixed interest terms.
The big problem for most fixed rate mortgage holders is that if they were to leave their lender for a lower fixed or variable rate somewhere else, they would have to pay a prepayment penalty based on three months interest on the principal amount being repaid, or interest differential, whichever is the higher.
So if you have years left on your fixed interest rate term, the prepayment penalty could be significant and prohibit you from mortgage refinancing at all.
One solution that will be available to some fixed interest rate holders (this will depend on your mortgage lender) is to blend your existing mortgage term with a new mortgage term at the lower rates.
For example, if you have two years left on your existing fixed term mortgage where the annual posted rate is 4.5% and you are prepared to sign up a new two year term with your mortgage lender where the rate is 3.5%, the new blended rate between the two mortgages will be close to 4.0%, depending on the exact day you refinance and if there are any other lender costs that get added into the equation.
Through this blending process, you are basically paying the prepayment penalty over time, but there is no up front outlay of funds, no mortgage discharge for an old mortgage, and registration for a new one.
The end result is that you have been able to reduce your fixed interest rate.
You’re still going to be at a rate higher than the existing market rates, but at the new blended rates you can either drop you payment amount as you will be paying less total interest, or leave the payment the same and pay down the principal faster.
Once again, this will not be available through all mortgage lenders, but for those that do offer this type of mortgage rate blending opportunity, it can be something to consider, especially if fixed rates continue on a downward path.
Mortgage Refinancing Considerations
“Things To Consider When Contemplating A Mortgage Refinancing In 2011”
When considering a mortgage refinancing, we first need to look at the reasons for a mortgage refinance action and the goals that you are trying to accomplish by doing so.
The primary reasons for refinancing an existing mortgage include 1) current mortgage holder wants to be paid out for some reason and you have to retire the existing mortgage as a result; 2) you want to increase the amount of borrowing against your home; 3) you want to secure a lower rate mortgage; 5) you want to adjust your payment schedule; 5) some combination of all these points.
The specific objectives for mortgage refinancing will allow you to more quickly focus on the lenders and mortgage programs capable of meeting your requirements.
Prepayment penalties can be significant and potentially make the exercise of refinancing non cost effective when you look at the cost of either getting more capital and/or getting the a lower interest rate.
If a prepayment penalty is going to be invoked by a potential mortgage refinance, then the next step is to do the math to see exactly what your cost for breaking the existing mortgage is versus the incremental benefit you will receive in lower rates, higher mortgage advance, etc.
There can be other costs that you need to consider, depending on the type of property you have and the type of new mortgage you are trying to secure.
For instance, a commercial mortgage can require a commercial appraisal, environmental report, and third party accountant prepared financial statements, which can significantly increase the outlay of costs necessary to get a new mortgage in place.
If the new mortgage is from a private mortgage lender, there are likely going to be lender and broker fees that will have to be paid out of the mortgage proceeds.
At the very least, there is going to be legal costs required to register a new mortgage if the lender or the mortgage amount changes.
So, before proceeding too far, make sure you clearly understand the cost/benefit equation related to your particular situation.
If the costs are in line with moving forward, then the focus shifts more to the rates and terms of competitive offerings available to you in the market.
The amount of financing required will also be a key consideration if you are looking at higher loan to value ratios.
In the spring of 2011, the mortgage regulations changed whereby mortgage refinancing through banks and other institutional lenders was reduced from 90% to 85%. This can become the key limiting factor in a mortgage refinancing decision when a high loan to value ratio is required.
With respect to rates, which may be the biggest single factor in your decision making process, there is the age old question of fixed versus variable.
More and more people have been moving to variable rates in the last few years, but with variable rate discounts being reduced and fixed mortgage rates expected to drop further in the near term, there still should be some serious consideration at any point in time as to which type of rate will work best for you.
Each mortgage refinancing scenario can having many, many variables to consider.
The best way to approach any mortgage refinancing exercise is to work with an experienced mortgage broker who can not only help identify the key areas of concern and focus, but get you working with the most relevant lending programs saving time, and potentially money by not missing deadlines or signing up for a mortgage that isn’t the best available fit for your needs.
Click Here To Speak With Toronto Mortgage Broker Joe Walsh
Calculating Mortgage Prepayment Penalty
“Prepaying Your Mortgage For Any Reason Is All About The Math Associated
With Doing So”
Most of the time, a borrower will prepay their mortgage through a refinancing process to get a better interest rate.
But there can be other reasons whereby someone has come into additional funds and wants to use all or part of their incremental cash flow to pay down the mortgage balance.
Regardless of the reason, the first thing you need to do before providing funds to your mortgage lender with instructions to apply an amount to the principal balance outstanding is to understand exactly what the costs are going to be to do so.
If you have an open mortgage with a variable interest rate, there is likely not going to be any type of prepayment penalty.
But if you have a fixed interest rate mortgage, you may have to pay a prepayment penalty unless prepayment privileges are provided for in your mortgage commitment and you are staying within the limits of these privileges.
The basic rules around prepayment penalties on fixed rate mortgages is that you will have to pay the greater of interest differential or 3 months interest.
Interest differential is basically the difference in rate between what the lender provided to you when the mortgage was written and what the lender could lend out in the market today, multiplied by the remaining principal and time left on the interest term.
For an example of basic prepayment penalty calculator, here is one you can refer to by clicking the following link … http://www.canadianmortgagetrends.com/canadian_mortgage_trends/interest-rate-differential-ird.html
But the challenge with any type of calculator such as the one provided in the link above, is that they are based on one set of assumptions.
Each mortgage lender can have their own unique twists as to what goes into a prepayment calculation for any particular mortgage.
As a result, there can be large differences between what you THINK the prepayment penalty is based on your own math and what the lender actually calculates it out to be.
This why its important that if you are looking to prepay any amount of principal on your mortgage that you first contact the lender and 1) get their exact prepayment penalty calculation, and 2) their calculation on paper for you of what the penalty will be to you for a given scenario that you outline to them.
With the exact information in hand, you will be in a much better place to make an informed decision about whether or not, for example, a mortgage refinancing for a lower rate is going to be 1) cost effective in the long run, and 2) cash flow affordable in the short run.
In some cases, prepayment penalties can be substantial, so don’t assume you know the math until its verified with the lender.
That way you’re not going to be unpleasantly surprised by a larger than expected prepayment penalty after you’ve committed to refinance your mortgage.
The best way to decide what to do and get any relevant math correct is to work with an experienced mortgage broker who can go through all relevant scenarios with you so you know you’re making the right decision.
Click Here To Speak With Toronto Mortgage Broker Joe Walsh
Sub Prime Refinancing Options
“Potentially Lower Cost Refinancing Options Available For Citifinancial, Citi-Corp, Household Finance, Avco Finance, And Accredited Mortgages”
Here in Canada, companies like Citifinancial, Citi Corp, Household Finance, Accredited, and Avco Finance provided modest amounts of financing rather quickly to borrowers with few other options.
In some cases, overtime, these could have become consolidated into these companies sub prime mortgage products similar to other debt refinancing in the market.
And during the recent recession, this type of funding remained available when other forms of financing on distressed credit situation either pulled back on issuing loans or left town all together.
But the sub prime market is starting to rebuilt itself with more lenders and offerings getting back into the game to provide sub prime offers to different slices of the residential mortgage market.
The result is that for certain borrowers that currently have a Citifinancial mortgage, Citi-Corp mortgage, Household Finance mortgage, Accredited mortgage, or Avco Finance mortgage, you may now have different and perhaps better mortgage financing options available to them in the market.
Specifically if you are in a situation where your mortgage will not be renewed or is in demand for repayment from your current sub prime lender, provided you have some equity in your property, there is a good chance that options are available either from an institutional lender or a private lender.
Or if you are paying a mortgage rate of 9% or higher, there is also a good chance, depending on the equity in the property and your borrowing profile, that a better sub prime option can be available to you as well at the present time.
If you’re considering refinancing an existing mortgage, you’re going to have to consider prepayment penalties. But for certain types of sub prime mortgages where the borrowings are integrated among credit cards, term loans, and home mortgage advances, the stated mortgage balance may be considered open for prepayment and could be moved to another lender without much cost.
Once again, the above mentioned secondary market lending sources can provide a valuable service for short term financing and have filled this role very well, especially since 2007.
For some people paying these mortgages, there may now be better options available in the market as things start to return to more normal sub prime lending.
If you have a mortgage in Canada with Citifinancial, Citi-Corp, Household Finance, or Avco Finance, or Accredited, and either need to refinance or would like to better understand your options, please give me a call and we’ll go over your situation and options together.
Click Here To Speak Directly With Toronto Mortgage Broker Joe Walsh
Main Question Regarding New Canadian Mortgage Rules
“Can I Switch Lenders In The Future Even If My Original Mortgage Doesn’t Qualify Under The New Rules?”
Ok, first lets revisit the new rules.
Amortizations on bank and institutional mortgages can’t be higher than 30 years.
The loan to value offered under an insured mortgage loan or an uninsured residential home mortgage for a mortgage refinancing, cannot exceed 85%.
If you’ve already got a mortgage in place where the amortization is greater than 30 years and the loan to value is higher than 85%, how do the new rules apply to you if you want to move your mortgage from one lender to another.
From what I’ve been reading, you can still make the move to another lender and retain the higher amortization and loan to value, provide that…
- The amortization period does not increase
- The loan amount does not increase
- The loan to value amount does not increase
While on the one hand, that’s good news to those who are in this situation.
On the other hand, it could be harder than you think to find a lender that will take on your mortgage and assume the amortization and loan to value that comes with it.
Mortgage lenders have already changed their programs to adjust to the new rules and are only dealing with the exceptions related to property purchases that were closing prior to the rule change.
As a result, most lenders will likely not have the flexibility in their go forward programs to accommodate your requirements, and the ones that do may not be offering the rates you’re looking for.
If you find yourself in this situation, the best first step is work with an experienced mortgage broker who will be able to help you identify the best options available to you in the market and then help you get the new mortgage in place.
Give me a call and we can go through your situation together and discuss relevant options for mortgage refinancing.
Click Here To Speak With Toronto Mortgage Broker Joe Walsh
Forced Mortgage Refinancing And What To Do About It
“Is Your Mortgage Lender Refusing To Renew Your Mortgage?”
With all that’s happened over the last two years in the mortgage market to the south, the ripple effect still hits the Canadian shores from time to time. Some of the sub prime mortgage lenders in the states have also been operating in Canada. And for the ones that have not been able to survive the impacts of the recent economic turmoil in the U.S. housing market, their financial down has had direct impact on Canadian mortgage holders as well.
The result has seen mortgage holders forced into a situation where they must repay their existing mortgage in a market that doesn’t always provide any easily visible options.
For example, say that you were able to secure a high ratio mortgage 5 years ago on average credit from a sub prime lender and during the 5 years you never missed a payment. But one of the reasons you were dealing with a sub prime lender was due to some combination of credit and repayment history. Now, 5 years later, the mortgage is being called, real estate values in your area may have dropped, and you’re still in need of a high ratio sub prime lending product that may no longer exist in the market.
So what do you do?
There are a number of different mortgage refinancing strategies that can be considered, each will depend on what you have to work with and the mandate of the mortgage lender that is rapidly moving through collection to foreclosure.
You could look at paying out the mortgage in full, offering a settlement, purchasing the mortgage, or financing the mortgage itself.
The first thing you may want to consider is getting some legal advice from a real estate lawyer with experience dealing with these types of situations.
The second thing you might want to look at is finding an experienced mortgage broker who also has had experience with these types of financing scenarios. The mortgage broker would likely have very good access to private mortgage financing sources as this could very well be the only option available to you.
Working through the different scenarios with the right expertise can not only save you a bunch of time, but can potentially lead to a solution that doesn’t involve losing your home.
If you have a tough refinancing scenario such as what’s described above, or some other variation, please give me a call so we can further discuss potential options you can consider.
Click Here To Speak With Joe Walsh, Your Toronto Mortgage Broker
More Info On New CMHC Refinance Rules
“CMHC Provides Additional Clarity Regarding New
Mortgage Refinancing Rules”
The newly proposed mortgage refinancing rules for insured mortgages that will reduce the amount that can be refinanced under an insured program 90% to 85% starting March 18 of 2011 did not allow an exemption for existing collateral mortgage holders looking to change lenders.
Most collateral mortgages require a mortgage refinancing to move from one lender to another. But if an existing mortgage has a balance outstanding in excess of the 85% threshold outlined under the new refinancing rules as initially described, the borrower would not be able to change lenders. This initially appeared to be reducing mortgage choice and opportunity from certain individuals who held down insured mortgages greater than 85%.
This week the CMHC came out with a further clarification to the rule change and stated that an exemption to the rule would allow for mortgage transfers for insured mortgages over 85% loan to value to take place provided that there was no increase to the mortgage or any increase to the amortization period.
In the past, the CMHC did not have any restriction towards mortgage transfers from one lender to another for mortgage amounts over 80% loan to value.
With the clarification, the new rule as fully described would now appear to more fully cover the different scenarios existing mortgage holders may in counter if they find themselves in a refinancing situation.
Keep in mind that while CMHC will allow the refinancing to take place under the borrower’s insured mortgage status, mortgage lenders will still have to approve any and all mortgage refinancing requests under their own criteria.
Some mortgage programs will not take over an insured mortgage if its above a certain loan to value level that is set by the individual lender. So while the CMHC is not technically going to be a barrier to limit choice in the market place for those individuals with high ration mortgages that want to change lenders, the individual applicants are still going to have to fit into mortgage programs that are interested in these types of deals.
To get more information on the new rule changes or any other insured mortgage requirements, please give me a call and we’ll get all your questions answered as soon as possible.
Click Here To Speak With Joe Walsh, Your Toronto Mortgage Broker
Toronto Mortgage Refinancing
“We Provide Toronto Mortgage Refinancing Options For Residential and Commercial Mortgages”
Toronto mortgage refinancing has become a bit more complex lately as the mortgage markets continue to settle out from the impacts of the recent recession.
Its not always going to be a given that your existing mortgage provider will renew your mortgage term, even if you’ve kept your payments up to date.
Over the last year or so there have been some mortgage company failures which has resulted in their portfolios either being sold off or taken over by a receiver whose job may very well be to just collect mortgages as the mortgage terms expire.
Even if you’re not in this type of situation, depending on your financial profile and the type of real estate property you own, there may be less options available to you than their were a few years ago as some of the program offers in the market have contracted.
When going through a Toronto mortgage refinancing exercise, you also have to be aware of the upward pressure on interest rates and that it may be wise to lock in a rate with another institution prior to your term coming due to protect yourself from interest rate increases prior to the end of the interest term as well as avoiding any prepayment penalties for renewing the mortgage early.
If you’re looking to get a better deal and/or consolidate debt through your Toronto mortgage refinancing activities, the best way to approach this exercise is to work with an experienced Toronto mortgage broker who has a solid working knowledge of the current market. For residential mortgages from institutional or bank mortgage providers, the broker is typically paid by the lender, providing you with their expertise and services for free in most cases.
Because of all the changes taking place in the market and the upward pressure on interest rates, making the right mortgage refinancing decision for your particular situation may be harder to figure out than you may think. And even if you’re able to complete the refinancing activity, its easy to leave money on the table with a less than optimal mortgage financing option.
If you’re considering a Toronto mortgage refinancing scenario, I suggest that you give me a call so I can quickly assess your situation and provide you with relevant mortgage refinancing options for your consideration.
Toronto Refinance Mortgage Options
“Toronto Refinance Options For Your Mortgage Can Be Considerable Compared to Other Locations”
If you’re considering refinancing your Toronto based residential mortgage, then you’ll be happy to know that your Toronto refinance mortgage options can be better and considerably more in number than if you lived most anywhere else.
The reason for this is directly linked to the Toronto real estate market place, which tends to be one of the strongest and most liquid in the country. Sure, the Toronto market is going to experience ups and downs like any real estate market, but it’s always going to be full of active buyers, which is the main ingredient for a large supply of real estate mortgage lenders, including the more aggressive side of the mortgage market.
On average, both residential and commercial real estate in Toronto is more likely to be sold quicker and for a more predictable value than real estate just about anywhere else in Canada. As a result, mortgage lenders have less fear of loss or having to hold property they have had to take back for long periods of time.
The net result is a higher level of competition for mortgage financing opportunities. For strong or weak credit applicants, this can lead to better loan to value ratios and rates and more lending choices.
Obviously, the higher quality the property is to begin with, the more the above will hold true. But even for less spectacular properties, there typically will be more active mortgage lenders available than you would find in other locales.
Probably the largest advantage for mortgage refinancing comes in cases where private mortgage financing is required. The reasons for needing to refinance via a private mortgage can be considerable including bank mortgage foreclosure, construction mortgage failure, debt refinancing, etc.
Many times private mortgage refinancing offers can be hard to locate or be very hard on rate due to a lack of interested lenders. But many times with Toronto based deals, private mortgage lenders will show a greater interest level for these refinancing deals, even in high distress situations due to the strong re-marketability of the underlying property. And because of the large private lender supply focused on the Toronto market, there is a better chance that someone is going to be interested in your deal.
If you need to better understand your Toronto refinance options, give me a call today and we’ll work through your options together.