Stick-handling a Mortgage in Thunder Bay’s hot housing market

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Your MoneyTHUNDER BAY – Business News – Stick-handling a mortgage in Thunder Bay’s hot housing market is something potential homeowners need to do. The biggest purchase that most people make is their home. Choosing a mortgage is one of the most important parts of that decision.

Vince Mirabelli
Vince Mirabelli

Vince Mirabelli from RE/MAX First Choice Realty says “One should always be looking at what they are getting themselves into in terms of financing.  People tend to rate shop which is not always the best idea.  Sometimes the lowest rate has the highest restrictions or penalties in the end”.

“Those are called teaser rates. They get you with the lowest rate then you get to read the fine lines.  Picking the right mortgage specialist or broker and qualifying their services is also a must”.

Research is Key to Finding a Mortgage

Nathan Lawrence
Nathan Lawrence

“In a competitive real estate market, such as the one we are currently experiencing in Thunder Bay,” shares Nathan Lawrence from Dominion Lending Centres Lakehead Financial. “The best thing a house hunter can do is get prepared.  The first step in being prepared is getting pre-approved to find out  how much you can afford to spend on a house.  Take the time early in the process to meet with a licensed Mortgage Agent to review your financial situation, maximum purchase price and mortgage payments”.

“Just like the bank qualifies you for the mortgage you should be qualifying them to see if they will provide you the service you deserve. While loans and mortgages are simpler here in Canada than our counterparts in the U.S., there are still many facets to consider before ‘signing your life away’,” adds Mirabelli.

Nina Ruberto
Nina Ruberto

Nina Ruberto, a  licensed real estate agent with Royal Lepage comments, “I think the most frustrating thing I see when working with clients and discussing financing, is that they only focus on the lowest interest rate – and that’s it. They will play mortgage specialists against one another in almost a bidding war, and just focus on the lowest upfront rate. They don’t stop and ask the right questions, and look at the total package”.

“Then two years later when they have to sell due to a separation or other common factor, they have a huge penalty on getting out of the mortgage, and they feel trapped and angry,” continued Ruberto. “I always advise the client to look at the mortgage offering as a whole, because you just never know”.

“Make sure you know your rate, your term, the amortization period, if you are open variable or if you are locked in, any hidden processing fees and closing costs, insurance costs, and mostly important any penalties for paying out earlier,” advises Mirabelli. “People seem to be the most shocked at the penalties that they weren’t explained at the beginning when all of a sudden they are left holding the bag”.

Lawrence adds, “Working with a Licensed Professional that will shop the mortgage lenders for you, will save you valuable time and energy”.

“When preparing for your meeting with the Mortgage Agent, it is important to understand what documents they will require from you.  Go prepared to ensure you get the most out of the meeting . Understand that the agent will likely need to see documents like pay stubs, tax returns, existing mortgage statements, bank statements and statements for your debts.  All of these items will help the Agent during the pre-approval process. When finished your pre-approval meeting, you should know your maximum purchase price, what the mortgage payments will look like, have a better understanding of the financing process and know what paperwork you’ll require to finalize the financing process when the time comes”.

Echoing the comments from the Real Estate professionals, Lawrence says, “The important thing to remember is that not all mortgages are created equal, so take the time to ask questions about the various options and how they compare”.

“An independent Licensed Mortgage Agent will speak with you about your current needs & future plans to ensure they are recommending the best lender and mortgage product that fit your personal needs.  A home is the largest purchase the average Canadian will make during their lifetime, which makes getting the right mortgage a very important step in the home buying process”.

RE/MAX Thunder Bay
RE/MAX Broker Vince Mirabelli is active in the community as well as in Real Estate.

The process in the United States is not quite the same as in Canada

Ray Brousseau, Executive Vice President with Carrington Mortgage Services, says, “Go to the ice cream store and you’ll pay so much per scoop. But the final price of your dessert will vary according to whether you want cones or cups and sprinkles or chocolate sauce. And when the store tallies your bill in most jurisdictions you’ll also need to pay a tax to the local government”.

Similarly, mortgage rates and costs vary according to your specific loan needs.

“The cost of a mortgage is partially represented by the interest rate,” said Brousseau, a lender active in more than 40 states. “But there are other expenses to consider and the result is that to get a good mortgage you have to look at all the costs in the transaction.”

Mortgage Terms and Explainations

Interest Rates

Let’s start with interest rates. Everyone surely wants the best available rate, but don’t be confused by what appear to be wildly-discounted interest quotes. In fact, mortgage money is a commodity that’s priced by the marketplace within a fairly narrow band at any given time. This means most mortgage quotes are likely to be bunched close together — and if you see a rate that is strikingly low, then logic dictates that the loan being offered is not the same as other mortgage products — or maybe a loan that is not available to most borrowers.

Qualifying for the lowest rates also depends on a borrower’s finances. Considerations such as cash, equity and credit are among the factors that count in the lending process, a reason why lenders spend so much time documenting loans. “The best rates go to those with the best financial profiles,” said Brousseau. “That makes sense in the marketplace and rewards the most qualified borrowers as well.”

The APR

The APR or “annual percentage rate” is a standardized way to look at loan costs. It measures not only interest but also certain loan expenses. For instance, imagine that a loan from Lender Smith has an interest rate of 3.4 percent and a 4.5 percent APR. Lender Jones offers 3.5 percent but a 3.8 percent APR.

The Smith loan has a lower rate but far higher closing costs. The Jones loan has a higher rate but much lower closing costs. Which is the better mortgage? You have to consider issues such as how long the loan will be outstanding and how much cash you have up front when making a decision.

Pricing

At the ice cream store we saw that our order could be customized. The same can be said for mortgage interest. For instance, we might pay more up front in the form of “points” to get a lower rate over the life of the loan, or we might have the lender pay some or all the closing costs in exchange for a somewhat higher rate. Which is the better strategy? You have to look at your personal situation and consider things such as your finances, how long you expect the loan to be outstanding, and the lender’s offer.

Closing Fees

When making a loan offer lenders will outline terms and conditions with a written form called a “good faith estimate” of closing costs or “GFE.”

“It’s important to review the GFE with the loan officer,” said Brousseau. “Lenders generally feel that some fees are necessary and required to make the transaction work, but with individual mortgages there may be items that can be negotiated, funded through the loan or even waived.”


Nathan Lawrence is a licensed Mortgage Agent with Dominion Lending Centres Lakehead Financial.  For more information about mortgage financing feel free to visit www.NathanLawrence.ca or contact Nathan at 807-620-2655 or nlawrence@dominionlending.ca

Vince Mirabelli is a licenced broker with RE/MAX FIRST CHOICE REALTY LTD, Brokerage. He services the Thunder Bay and specialize in Relocation, Industrial, Foreclosure Property, Investments, Luxury Homes, New Construction, Office, Retail, Residential Acreages, Business Opportunities, Land, Multi-Family, Development Land, Lake/Beach Property, Rentals, Farm/Ranch, Condominiums, Farm/Land, Horse Property, Military, Vacation and Resorts, Buyer Brokerage, International, Time Share, Property Management, and Auctions. You can contact Vince at (807) 474-1765.

Nina Ruberto is a licenced Real Estate Agent with Royal Lepage. Nina can be reached at 807-474-8444, or through her office at 807-623-5011. As well she can be reached by Email: nina@ninaruberto.com. Born and raised in Thunder Bay, Nina has always been involved in contributing to the community. After completing her Bachelors of Arts at the University of Western Ontario in London, she came back to her hometown to open her first retail business, Global Experience. Since 1994 she has been operating this successful local business which has given her priceless experience in both customer service and negotiating. In only four years since becoming a licensed real estate agent, Nina has made her mark in the Thunder Bay market.

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