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Tag: mortgage refinance

  • Five tips for a quick closing to your mortgage refinance

    Five tips for a quick closing to your mortgage refinance

    If you are closing your mortgage refinance, you’ll likely be required to use a lawyer or a title company to close your new mortgage.

    Refinancing a mortgage means paying off an existing loan (mortgage) and replacing it with a new one.  In most scenarios, your new lender may be a different institution than the one that holds your current mortgage and part of the amount you borrow may be used to pay off your existing loan to your current lender.

    Closing mortgage refinance delays are not uncommon and are caused by a variety of factors.  There are, however, multiple things you can do to ensure your mortgage refinance closing happens seamlessly and on time.  Here are some of them:

    Have valid government photo ID

    Since the beginning of the pandemic, many Canadians have not had the opportunity to renew their drivers’ license or passports. 

    While there has been a grace period during the pandemic, a valid government-issued photo ID is required.  If you are planning to close on a property or a mortgage, an expired drivers’ license or passport will not be accepted.  

    Ensure you provide updated debt statements

    If you are refinancing to consolidate debt, your lender may require your lawyer or title company to pay off your debtors out of the proceeds of your refinance.  For your debtors to be paid and to avoid accumulating additional interest, you will likely be asked for the latest statements for each debt.

    If you’ve already provided these statements to your mortgage agent or bank, you may be wondering why you may need to resubmit them again.   Occasionally the mortgage application to approval process may take weeks.  If a statement is out-of-date, the balances to be paid may be incorrect.  Therefore, you may need to obtain statements again for the purpose of closing.

    Statements must contain key items such as your name, your account number, and your most recent balance to be processed.  Most statements can be obtained online through online banking or by calling the company.  It may be a tedious process, but the quicker you can obtain the statements, the quicker your refinance can close and the impact of consolidating debt takes effect.

    Provide your lender with lawyer’s information

    Your lender will require your lawyer’s information to send mortgage instruction to the lawyer’s office.  In most cases, this information will be required when you sign your new mortgage commitment.  Delaying providing your lawyer’s coordinates and contact information to your lender may delay your closing.

    Schedule closing off peak

    Real Estate and Mortgage transactions peak from April through September and because purchases and sales have a firm deadline, chances are your refinance closing may get delayed.  If possible, choosing a closing date in the beginning or the month will increase the chances of your mortgage refinance closing on time.

    Close virtually

    Virtual closing is now an option in most Canadian provinces.  Quite simply, it means that you can sign your closing documents from the comfort of your home, without having to go into a lawyer’s or notary’s office.  

    A virtual closing isn’t only a convenient option, but when it comes to accelerating the closing of your mortgage, it eliminates a lot of the back-and-forth scheduling and time constraints required to book an appointment.   When you use Deeded, our virtual closing experience can be completed in the evenings and even on weekends.

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  • Gifting a Downpayment:  What You Need to Know

    Gifting a Downpayment: What You Need to Know

    With rapidly increasing home prices greatly outpacing growth in salaries and incomes, it is becoming very difficult for first-time buyers to save for a downpayment so they can get into the housing market.

    As a result, it is now becoming more common for parents to assist their children gifting money towards a downpayment for a home.

    Gifting money towards a downpayment means that you are not obligated to repay the person gifting you the money. In most cases, the parents who are gifting money towards the down payment will not own an interest in the property either.

    In Canada, you can typically buy your first home by paying 5% down. However, it is advisable to put in 20% down. Because, when you pay less than 20%, you are obliged to purchase mortgage insurance, which increases your overall monthly payments.

    If you’re one of the lucky ones to receive a cash gift towards your downpayment, the buck doesn't stop there. Your lender will typically ask for something called a gift letter.

    A gift letter may be required by your lender to show and prove that you are indeed getting a part or your entire down payment as a gift and from who. It’s an important distinction that proves that you do not have any other debt obligations when applying for a mortgage. 

    Key Takeaways:

    • • A gift letter is a document used by mortgage lenders to ensure that monetary assistance given by family members to help you cover a mortgage down payment will not need to be paid back.
    • • Mortgage Gifts may only be made by direct family members and are non-taxable in Canada.
    • • While gift letters are enough to help you cover your down payment, mortgage lenders require far more proof before they certify your loan.

    What is A Gift Letter?

    A mortgage gift letter is a document completed by your benefactor (the person or people giving you the money) that declares that a one-time monetary contribution they’ve made to you has been given as a gift to be used for the down payment of the mortgage you are applying for. 

    The distinction in a gift letter that the money given, is a gift, is important as your mortgage lender needs to confirm that you will be under no obligation to pay the money back. 

    Your mortgage lender wants to know that you are financially capable to make your monthly mortgage payments to them. If they cannot confirm that the money you receive from your benefactor is a gift, they will see it as added debt that will increase your financial stress and make it more difficult to pay your mortgage. Therefore, there is a possibility that they may not approve you for the mortgage.

    What Does a Gift Letter Look Like?

    Many financial institutions will have templates or examples of gift letters that you may use, however if you choose to write your own, make sure your gift letter includes:

    • • The name of the mortgage borrower.
    • • The donor’s name, address, and phone number.
    • • The donor’s relationship to the borrower.
    • • How much is being gifted and when it was gifted.
    • • A statement saying that the money is a gift and that it is not to be paid back
    • • The property’s address.

    Will a Gift Be Taxed?

    Unlike the United States, Canadians don’t have to fear a “gift tax”. You can be gifted any amount of money at any time with no tax implications.

    Gifting a downpayment must be made by a member of your immediate family. That includes parents, siblings and grandparents. In rare circumstances, individuals with special relationships (such as godparents or close family friends) may request permission from your lender to provide a mortgage gift. 

    The amount of your mortgage down payment that may be covered by mortgage gifts can vary from lender to lender.

    It’s important to remember that although you may receive help from family to cover your down payment, that may not be enough to ensure you are approved for a mortgage. You will need to ensure that you meet criteria in terms of credit score, income and much more.

    As helpful as gift letters can be, there are many rules and criteria you need to review before you can be approved. If this looks overwhelming to you, rest assured that the Deeded team is here to help however we can.

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  • Insurance: Everything You Need To Know When Closing

    Insurance: Everything You Need To Know When Closing

    Whether you’re closing on a home or refinancing your mortgage, you are going to need to look into various insurance products.  Some of these are going to be mandatory, others are optional, and some are just common sense to have or look into.

    Here are the various types of insurance products you will encounter when closing your home or mortgage transaction:

    Home Insurance

    A home insurance policy covers your home and its contents in various situations such as floods, fires, break-ins and personal liability if someone gets hurt on your property.

    If your property has a mortgage, your lender will likely require that you have the appropriate coverage and that you submit proof of your coverage prior to closing your transaction.

    While home insurance costs can add up, there’s really no good reason to leave your biggest asset unprotected.

    When shopping for home insurance, you can use a broker who would typically shop around for the best rates with the insurers they work with, or you can obtain a policy directly from an insurance company.

    Be sure to read the fine print before you purchase a policy as they are not all the same and coverages of certain items and situations can vary among insurers.  Your mortgage lender may also have requirements for minimum coverage levels which you’ll need to consider when shopping around for a policy.

    Costs vary depending on coverage, home value and additional factors

    Condo Insurance

    Your condo corporation will typically carry a commercial policy to cover common areas and the shared exterior and interior aspects of the condo. In most cases, this policy does not cover your individual unit and your contents. You’ll need a personal condo policy to protect your unit.

    For example, if a homeowner in a unit above you has a flood and the water causes damage to your unit and belongings, the home insurance policy of both parties will likely cover the claim.

    Like home insurance, most mortgage lenders will consider having a policy for your unit as mandatory and you will require to produce proof of coverage prior to closing (often referred to as an “insurance binder”).

    The cost of condo unit insurance varies depending on coverage, condo value and additional factors

    Renter's or Tenant's Insurance

    If you plan to rent your property or rent part of it, your tenant’s contents and liabilities may not be covered, even if you have a homeowner’s policy in place on the property.  

    For example, if your property is tenanted and there’s a flood, your home insurance may cover the cost of repairing your property, but if your tenant’s possessions such as their TV or couch suffers damages as a result, your insurance company will likely not cover these items.

    While tenant insurance is not mandatory in Ontario, as a landlord, it is a good idea to require your tenants to obtain their own insurance to cover their possessions and personal liability while living in your unit.  Landlords typically incorporate such requirements as part of the lease agreement.

    The cost of tenants insurance may vary with the level of coverage needed, but in most cases, it is an affordable monthly payment.  

    Title Insurance

    Your property’s title is legal proof that you are its owner. It describes your rights to the land and any limitations like giving your local phone and power companies legal right to construct, repair, replace and operate wires on a section of your property.

    Title insurance is a policy that protects the homeowner and lender against future issues that may arise with the title of the property.

    For example, you purchased a property with a shed that was built by the previous owners. It is later discovered that the shed partially sits on the neighbour’s property.  In this case, a claim can be made to correct the situation.

    Title insurance also protects against existing liens against the property’s title (e.g. the previous owner had unpaid debts from utilities, mortgages, property taxes or condominium charges secured against the property), title fraud, and errors in surveys and public records.

    Most lenders will require you to obtain a policy to insure your title as the policy also protects the lender’s interests in having a marketable property.  Learn more about title insurance here.

    Unlike usual insurance premiums that are paid monthly or annually, Title insurance is a one-time premium based on the value and location of the property.

    Mortgage Default Insurance

    Mortgage default insurance (also known as “mortgage insurance”) is mandatory on all mortgages with a down payment of less than 20 percent of a home’s purchase price.

    This insurance protects lenders, but also allows qualifying buyers purchase a property with as little as 5% down payment.   

    Mortgage default policies typically costs between 2.8% to 4% of the mortgage amount. This cost can be rolled onto the mortgage so it’s not an out-of-pocket expense.

    Life, Disability and Critical Illness Insurance

    While it is difficult to imagine, when taking on a mortgage, it is a good time to consider unfortunate scenarios whereas you may not be able to pay your lender and may put your home at the risk of foreclosure.

    While life or disability insurance may not have been a topic you thought about in the past, it may be worthwhile considering a policy to protect you and your family in a worst-case scenario. 

    Life insurance is not mandatory, but a good idea to look into.  Disability and critical illness policies are also options that would supplement your income should you not be able to work due to a disability or a critical illness.  These products are also typically offered through your employer’s benefit plans.

    Costs can vary depending on type, coverage, and personal factors. 

    Home Systems Warranty

    You moved into your new home in the summer.  Come fall, you turn on the furnace and discover it isn’t working.  You’re devastated when find out that you need a new furnace at a cost of $4500.  

    In reality, the systems in your home are complex and can be expensive to repair or replace.  There are several options that will cover major home systems and even appliances should they break down or require repair. 

    While absolutely optional, if you are looking to reduce the risk of expensive repair bills during the course of your home ownership.  There are various options that will have you covered and sleeping well at night.

    Costs vary depending on the coverage you are looking to get and the home’s age.

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  • Mortgage Refinancing – What is it and What’s The Process?

    Mortgage Refinancing – What is it and What’s The Process?

    Mortgage refinancing is the process of paying off an existing loan and replacing it with a new loan with different terms than your original mortgage.

    There are many reasons why home owners choose to refinance a mortgage. The most popular reasons being converting from a variable rate mortgage to a fixed rate one (or vice-versa in some cases), consolidating debt from higher interest loans or credit cards or accessing some of the equity in the home to finance larger purchases such as renovations, a new vehicle, or a down payment on an investment property. 

    Refinancing is often confused for having a second mortgage, but in reality, the two are very different.  A second mortgage is in addition to your first and does not replace it as a refinancing would.  Mortgage refinancing gives the borrower new money that can be used to pay off the original mortgage, ideally with better terms.

    Should I Refinance?

    The decision on whether or not to refinance should be based on your financial goals. For example, if you’re looking to improve your monthly cash flow, take advantage of lower interest rates to reduce your payment or consolidate debt, refinancing may be a viable option.

    Unfortunately, every situation is unique so consulting with a mortgage professional who can calculate potential costs, penalties and legal fees for your refinance is always a smart decision before proceeding.

    I’ve Decided To Go Ahead, What’s The Process To Refinance?

    If you decide to take advantage of refinancing, your mortgage professional or current lender will need to process an application, similar to the one you did when you first got your mortgage.

    This means you'll need to be prepared with documents, paperwork, and an appraisal that supports your application.   

    1. 1. Depending on your credit and other variables, your mortgage professional will likely ask for proof of income, such as pay stubs, T4 slips and employment letters.  
    2. 2. You will likely need to have an appraisal done on your property to determine the current value and thus what you’ll be able to borrow.  Your mortgage professional can order an appraisal on your behalf, but you may be on the hook for costs of the appraisal
    3. 3. You’ll need to hire a lawyer to put together required documentation, title insurance and arrange for signing the new mortgage documents.  

    Deeded can help with your mortgage refinancing and make closing your refinancing a breeze.

    How Can Deeded Help?

    When it comes to refinancing your mortgage, our team at Deeded makes the process as easy as possible so you can "close" and access your money quicker.    

    Our team helps you understand your obligations, can expedite the process and help you navigate the legal documents that needs to be signed before funds are released to you. 

    With Deeded you’ll never need to leave your home to close your mortgage refinancing deal. We’ll come to your home and office, making it convenient and stress-free.

    We also made our fees for refinancing your mortgage clear and transparent so we can avoid surprises at closing and leave more money in your pocket.

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