Dually licensed as a Mortgage Broker and REALTOR®, Sharie Minions loves and is involved in every facet of the real estate business. An established Mortgage Broker facilitating several hundred mortgage transactions since 2010, Sharie can help you simplify your real estate purchase or refinance by acting as your go-to throughout the whole process. Looking for a mortgage broker but already have a REALTOR®? No problem. Sharie frequently works with other realtors and would be happy to work solely as your mortgage broker to assist you through that part of the process.
Port Alberni is a vibrant waterfront community at the Heart of Vancouver Island. Once thought to be nothing more than a ‘stinky mill town’ Port Alberni now enjoys a diverse economy, a massive network of trails, a mixed use waterfront perfect for kiteboarding, wind surfing, stand-up paddling, boating, fishing, and much more. Port Alberni is a community that embraces it’s industrial history, while valuing the active, livable, bustling community it’s evolved into.
What is CMHC insurance and what do I need to know about it?
Posted on Aug 14, 2017 in Mortgage Market Updates and News
CMHC or Canada Mortgage and Housing Corporation, is a topic I constantly get questions about. So what is CMHC? When is it required? What are the benefits? What are the costs? When do you pay it? What do you need to know.. Here's everything you as a mortgage borrower, need to know about CMHC.
What is is and when do I need it?
CMHC is mortgage default insurance. It's required on every purchase mortgage in Canada where the purchasers are putting less than 20% as a down payment. For first time home buyers, putting less than 20% down (typically 5%) is the norm. Default insurance is required regardless of where you buy, who your lender is, how strong your application is, etc. It's simply a requirement of putting a small down payment.
What is it?
Now that we understand generally what CMHC is, it's important to understand what it is not. A lot of clients hear insurance and start to make assumptions about what they're covered for, so I like to be clear. It's not house insurance. You will still need to insure your home for fire, earthquake, content loss, etc. It's not life insurance. You will not be covered through CMHC in any way if you or another borrower on your mortgage pass away, become disabled, etc. Default insurance covers the lender (this is a really important part - the lender), if you default on your mortgage, your house is foreclosed, and the lender loses money on the sale, and associated costs. It's not an insurance to cover you. It's an insurance that you pay, to protect your lender. In other words, it allows your lender to have very little risk as if the mortgage isn't paid, they'll generally recover their losses from CMHC. So what it does do, and although I've made it sound a bit grim here's the upside, it allows lenders to lend to borrowers with very small down payments. Wouldn't it be awful if we had to save 20% before we could purchase a home? CMHC gives us the opportunity of being able to buy without having to save large down payments.
Who else offers it?
I keep saying CMHC, but in reality, your mortgage may not be insured with CMHC. CMHC is just the most well known insurer. There are two other insurers in Canada who can insure your mortgage, Genworth and Canada Guarantee. They all cost the same and follow generally the same guidelines, but different insurers definitely tend to be more flexible on different situations so having all 3 is definitely advantageous to borrowers.
Do I have to be approved for it?
Yes. Insurers review and approve each mortgage application. You likely won't know your mortgage has gone through CMHC approval as it's a step you're not involved in. Lenders typically first review your application and preliminarily approve it, then they send it to an insurer for their approval. If they can't get one of the 3 insurers to approve it, your mortgage is declined. Insurer approval can often be the most difficult approval to get and borrowers some times end up feeling frustrated that the lender was okay with their application, and even though they met the insurer guidelines, they were still declined. The insurers have the final say on who is approved, and this can definitely be challenging and frustrating. Not all lenders deal with all 3 insurers. In fact most lenders deal with only Genworth and CMHC, so sometimes it's a challenge to match up an application that is suited to Canada Guarantee, with a lender that works with CG as well.
What are the costs?
Default insurance is not cheap, and rates have been on the rise the past few years as well. The fees are standard and don't vary lender to lender. They do vary based on down payment type (saved and gifted makes for lower fees than a borrowed down payment) and also based on down payment %. Insurance rates increase with each 5% increment of your down payment. See rate table below.
One important thing to note, is that default insurance fees are included in your mortgage, not paid upfront. So this is not a cost you have to save for when you buy your home additional to your down payment. It's also only paid once for the most part. You pay it when you buy your home, but you don't pay it again when you renew your mortgage in 5 years. There are situations where you'll pay a 'top up percentage' which would be if you were purchasing a new more expensive home and increasing your current mortgage. In which case you'd only pay it on the new funds borrowed.
What else do I need to know about CMHC?
That should generally cover it. Your mortgage broker should be very familiar with default insurer guidelines, options, etc. If your application is strong, you'll likely never even hear about insurer approval except for when your broker is explaining the insurance cost and what it represents.
As always, if you have any questions about mortgage approvals (purchases, refinances, renewals) or real estate purchases, please feel free to call, email, or text.
Mortgage Broker and REALTOR®
Posted on Aug 13, 2017 in Mortgage Market Updates and News
Quick Tips to Improve Your Credit
Posted on Apr 27, 2017 in Mortgage Market Updates and News
It's no secret credit is important. Having a low credit score can prevent you from a doing things; from setting up a cell phone account to getting a mortgage. Credit is such a huge part of life nowadays, and everybody's been through something, so people often end up stressing a lot over their scores. The nice thing about credit that I've found, is everything is repairable.
Credit is the first thing we look at when going through a mortgage application. If a score is low, we're often stopped dead in the water before we can really even get going. The best time to start looking for ways to repair your credit is now, because it can take any where from a couple months, to a couple years.
Here are some quick tips to improve your credit, and as always, give me a call to go over it with you in person and help make a plan that works specifically for you.
Pay off any collections.
if you have collections showing on your credit bureau, it's important to get them paid off right away. Making payments on collections often only covers the interest and doesn't actually get to the debt owed, so it's vital to talk to your creditor about when your debt will be paid off with your current payments if you're making them.
Keep credit card and line of credit balances below 50% of the available limit.
This is a really important one that is not widely known. Using less than 50% of each credit card or line of credit you have available is very helpful to your credit. As soon as even one debt becomes high or maxed, your score starts to drop.
Make sure you don't miss payments by setting automatic minimum payments for credit cards.
Did you know you can set up automatic minimum payments for your credit cards so that you'll never miss one of those annoying $10 minimum payments? It's crazy how many people I see with derogatory marks on their credit bureau because they've missed a $10 payment, just out of forgetfulness. Most major credit cards give you the option on their website of setting automatic payments (even from a different bank). Then you know it's always taken care of.
Avoid letting companies pull your credit unless they're totally necessary.
Each time your credit is pulled it drops your score a few points. A few points here and there shouldn't make an impactful difference on your score, but if you pull it too many times in a short period of time, it can start to effect you more heavily. Places like Telus, Fortis, Hydro, etc will often allow you to pay a small deposit, rather than having a credit pull done. This can save an unnecessary pull if you're in a time of trying to repair your score.
Avoid taking on new debts
That pre-authorized credit card with a low introductory rate may seem appealing when you get the letter in the mail, but if you're trying to increase your credit score, opening new debts (car loans, personal loans, lines of credit, credit cards, etc) will likely reflect badly. Credit pulls and new debts (especially when there are a couple of each around the same time) give the illusion you're shopping for credit and therefore having money issues.
Everybody's situation is different so this isn't meant to be a guide that will necessarily build every person's score to where they need it, but rather some quick tips that if followed, will have a positive impact on your credit score. The great thing about credit is in a lot of situations, making some small adjustments can have a quick impact. If you're looking for a home, the sooner you sit down with me and review your credit report, the better.
Getting ahead with low mortgage rates
Posted on Apr 9, 2017 in Mortgage Market Updates and News
It's no secret we've been going through an extended period of unusually low interest rates. While on the surface it seems great for buyers and people looking to refinance their mortgages, there's a 'dark side' if you will, to what the past few years have created. In my career as a mortgage broker in Port Alberni, I work with a lot of first time home buyers. Likely because I'm fairly young :) I tend to attract younger clients. The concerning trend I've seen over the past few years is more and more people who think these rates are normal. Why is that concerning??? Well, a good chunk of people buying homes today (not my clients) don't fully understand the mortgage process. They either don't think about what happens at the end of their 5 year term, or don't realize and account for the fact that rates could be substantially higher when they go to renew their mortgage. People are increasingly often trying to buy to the maximum of what they can afford, while concurrently not working in jobs that tend to have increasing incomes. So when rates begin to increase, and people's 5 year mortgages mature, we could have a lot of people surprised, and possibly not able to afford, their new mortgage payments.
The good news? The Federal Government recently addressed this issue by enacting rules that created a 'qualifying rate'. The qualifying rate means we have to calculate the mortgage people can qualify for at a higher rate (a more traditionally normal rate) than what they will actually be paying on their mortgage. Currently the qualifying rate for a mortgage with less than 20% down is 4.64%. Typical mortgage rates right now are substantially lower at around 2.5% for 5 year fixed rates.
So how can you take advantage of unusually low interest rates? Make your mortgage payment based on the qualifying rate (4.64%), rather than the contract rate (2.5%). This of course doesn't change the actual rate you're charged on your mortgage (still the very low 2.5%) but it allows you to get used to a payment that is more inline with normal expenses for a home in your pricerange. You'll pay your mortgage balance down faster, and also be comfortable with a higher payment if rates happen to increase during your 5 year term and you end up renewing at a higher rate.
Here's an example of how you'll save:
Mortgage amount: $250,000
Interest rate (5 year fixed): 2.5%
Amortization: 25 years (meaning it will take you 25 years to pay off your mortgage)
Monthly payment: $1120
To qualify for this mortgage you would actually need to be able to afford a payment of $1403/month (based on the 4.64% qualifying rate).
If you made your minimum payment ($1120/month) on the above mortgage, you'd end up with an outstanding balance after your 5 year term of about $211,500. If you increased your payment to the payment you need to be able to afford to qualify for the mortgage ($1403/month), your outstanding balance after 5 years would be about $193,500. This puts you $18,000 ahead on your mortgage and sets you on a path of paying your mortgage off in 18 years (if you continue with increased payments) rather than 25 years.
Have questions about your mortgage? I'm happy to help.
- TMG - The Mortgage Group Canada Inc.
3610 Estevan Drive, Port Alberni, BC, V9Y 5R2
- Cell: 250.730.0239
- Fax: 1.877.474.5346
- Email: firstname.lastname@example.org
- RE/MAX Mid-Island Realty
4213 Princess Road, Port Alberni, BC, V9Y 5R2
- Phone: 250.723.5666