About Patricia McKean

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So far Patricia McKean has created 15 blog entries.

Why is it important to be pre-approved?

There is a huge difference in Pre-qualification and Pre-approval.  To get a pre-qualification (just as one of the big banks is offering in 60 seconds) only tells you the amount you could qualify for.  It doesn't know if you are qualified because no credit has been pulled, no income requirements reviewed and no down payment proof sent in.  This is why it is so important to work alongside a broker who will take the time review and provide guidance on the pre-approval process.  It is very important to have this in place when going and shopping the housing market to know what you qualify for. The other important reason is if you were pre-approved with a rate hold in place and the mortgage rules change you are grandfathered with those old rules for a time period.  For an example a family with a household income of $80,000 qualified for  new mortgage of $361,800.00 prior to May 7th when the Bank of Canada changed the benchmark qualifying rate from 5.14% to 5.34% now that same family only qualifies for a mortgage of $354,800.00.  This can make or break your chance to purchase the dream home you have your heart set on. 


How much mortgage can you qualify for?

The first step in buying a house is determining your budget and what your allowable amount will be for qualifying. The amount you can qualify for depends on your credit history and your ratios of debt to income (TDS and GDS ratios.) The normal maximum TDS & GDS ratios are 42% and 39% respectively, but for those with exceptional credit, the mortgage qualification process only looks at the TDS ratio, and relaxes it to as much as 44%. GDS Ratio: Your Gross Debt Service Ratio is your monthly housing costs (mortgage, heating, half of condo fees, property taxes) divided by your income. TDS Ratio: Your Total Debt Service Ratio is all of your monthly obligations divided by your income. With ever changing mortgage rules the latest change is the stress test which has borrowers qualifying at the bench mark rate to ensure if rates increase they can handle the extra payment requirements. Today the bench mark rate is set at 5.34%. That can affect a client who would qualify for a mortgage for $310,000 at the current rate 3.24% with a $60,000 income. Now with the 5.34% stress test that same client only qualifies for $260,000. It is very important


What is a first time home buyer?

This is a question we get all the time so thought it would be a good idea to explain. The term "First Time Home Buyer" actually does not exist anymore in purchasing a property. It used to be a few years back that in order to go as low as 5% down payment on a home you could not have owned a property for the past 5 years and the property you are buying had to be your principal residence. That is no longer the case. The new rules are only that you must be going to live in the property as your home. You can own as many other properties as you like however as long as you are going to live in the property you are getting the mortgage on you can go as low as 5% down payment. There may be some exceptions to that due to the type of property you are buying so the best advice a can give is check with us at Unbeatable Mortgages ahead of time and we can advise. It is always best to work with an experienced and qualified Mortgage Broker, to get the best advise for your home purchase.


Up for Renewal? Should you renew now or wait?

Should You Renew Now Or Wait? In every homeowner’s journey, the question of mortgage renewal will eventually come up. It seems to be a longstanding debate whether to take the chance to renew later and hope the rates go down, or go with certainty and renew now. In light of the current market, our experts have something to say on the matter: Sooner or Later Our experts highly recommend renewing sooner rather than later. It may be tempting to put off the inevitable for an extra year or so, but they advise against it. With interest rates steadily rising, people who have mortgages maturing in the next three years should seriously consider renewing early and locking in now. Avoid Rocketing Rates This may seem counterintuitive since the rate you might pay later may likely be lower than the rate you would pay to renew today. But waiting one to two years could be even worse. In a year from now, it is estimated that rates will be up on average another 1%. That would increase the standard five year fixed rate to 4.25%. Renewing today, would lock you in somewhere around 3.25% and would have no out of pocket expenses


Why use a Mortgage Broker?

Mortgage Broker 1. Get independent advice on your financial options. As independent mortgage brokers and mortgage associates, we are here for you. Our goal is to help you successfully finance your home or property with the right mortgage product for you. We’ll start by getting to know you and your homeownership goals. We’ll draw from available mortgage products that match your needs, make a recommendation, and together decide on the right mortgage product for you. 2. Save time with one-stop shopping. It could take weeks for you to organize appointments with competing mortgage lenders — and we know you’d probably rather spend your time house-hunting! We work directly with dozens of lenders, and can quickly narrow down a list of lender products that suit your needs best. It makes comparison-shopping fast, easy, and convenient. 3. We negotiate on your behalf. As Mortgage Associates, we negotiate mortgages each and every day on behalf of Canadian homebuyers. You can count on our market knowledge to secure competitive rates and terms that benefit you. 4. More choice means more competitive rates. We have access to a network of major lenders in Canada, so your options are extensive, including traditional lenders, credit unions, trust


All Mortgage Penalties Are NOT Equal

Patricia McKean Blogs This is a story about Tom and Mary. Two different people with similar mortgages, but very different prepayment penalties. Tom and Mary each buy a house at the exact same time for the exact same price and get a mortgage for the exact same amount. The only difference is Tom uses a Big Bank, and Mary uses a monoline lender for their mortgages. Let’s assume they both received a rate of 2.99% for a 5 year fixed term. Three years into their mortgages, Tom and Mary are both going to be paying off their respective mortgages which are both at $250,000 at the time of the payoff. Now to keep the comparison fair, we will pretend that interest rates have not changed at all for any of the terms, whether it is the posted rates or the discounted rates. The rates are based on the actual interest rates at the time of writing. Now because they have ended their 5 year contract early, they will have to pay a penalty. Both agreed at the time they took out their mortgage they would pay the greater of 3 months interest or the Interest Rate Differential (IRD). The IRD


What is the Difference Between a Fixed and a Variable Rate Mortgage?

Difference Fixed Variable Rate Mortgage What is a Mortgage Rate? Mortgage rate describes the amount of interest charged by a lender to the mortgage holder each year. It is expressed as a percentage, just like the Annual Percentage Rate on a credit card. The lower the mortgage rate, the less a mortgage holder ends up paying in the long run. Mortgage rates are decided according to many factors, including borrower finances and market conditions. What is a Fixed Rate Mortgage? A fixed rate mortgage is a common loan where interest rates remain unchanged until the term of the mortgage is up. Its simplicity makes it the most popular type of home loan. Neither principal nor interest will fluctuate with time, so there are no “surprises.” Fixed rate mortgage terms are usually 3-5 years. During that period, monthly payments don't changed unless changed by the borrower. In general, if you want to change the interest rate of a fixed rate mortgage – to take advantage of superior market conditions, for example – you need to refinance the loan. This essentially generates a new loan referred to as a refinance. What is a Variable Rate Mortgage? A variable rate mortgage is a


Self Employed and Time to Get a Mortgage?

  Self Employed Time Get Mortgage With all of the new rules, where do our self-employed clients sit amongst all of the changes? That’s a question that we have been working on solving for the last couple years as all the adjustments are being implemented. In the past, we had the great NIQ (No Income Qualifying) Mortgage which allowed clients to take as little as possible out of the company to get the tax break and then to simply “state” their income with as little as 10% down to qualify on an A side mortgage. But lately, having your cake and eating it too, is gone. The product still exists with the 10% down, but with tighter parameters on the A side, we are having to justify the stated with proof of company financials and other documents to support what income is being used. Don’t forget the mortgage insurance premium is also increased on this program. 35% down and bank statement deposits to verify, will get you into the program on the B side, but you won’t be seeing those top rates offered and likely a 1-2% fee on top of the mortgage. So what is the new strategy as


Confused by Mortgage Insurnace?

Confused Mortgage Insurance If you put less than 20% down on a property, then you may be familiar with mortgage default insurance, some people refer to this as CMHC insurance. Truth be told, there are three providers of this type of insurance, CMHC, Genworth and Canada Guaranty. That said, mortgage default insurance should not to be mistaken for mortgage creditor insurance. Mortgage creditor insurance protects the ownership of your family’s home by making sure the mortgage keeps getting paid or gets paid out during the most difficult of life’s circumstances. There is confusing amongst clients with understand which is which. By law, lenders can only provide mortgage financing to those with at least a 20% down payment, unless the mortgage is insured against default. Now in some instances, mortgage default insurance may also be required by some lenders for individuals with more than a 20% down payment. Why is this you ask? Some lenders require this because the loan is considered higher risk, such as self-employed borrowers or properties in remote locations. It also allows lenders to access cheaper funds for mortgage and in return give their borrowers much lower interest rates. Who Pays the Premium Sometimes the client does


There is a better option out there than Mortgage Life Insurance

Better Option For Mortgage Life Insurance Buying a house can be a stressful and exciting event. It’s not surprising, then, that first-time buyers can inadvertently sign up for something they may not need—like mortgage life insurance. Clients  know about their mortgage payments and property taxes, but they weren’t sure if they had insurance for the mortgage. If something happened to one of them, how would they pay it off? Inadvertently buying mortgage life insurance is a common occurrence. (Mortgage life insurance is also called mortgage protection, creditor insurance or simply mortgage insurance, but it’s different from mortgage default insurance or CMHC insurance, which protects a lender if a homebuyer who makes a down payment of 5% to 19.99% can’t pay the rest of the mortgage.)  As first-time homebuyers, the couple was new to the mortgage process and waded through a lot of options, but didn’t talk about insurance with the bank. Bank employees are often “simply checking off a box on the application”. The clients don’t discuss their health or disclose any pre-existing health conditions like diabetes or heart disease; the bank doesn't demand a medical examination or medical records. This is crucial because for clients, who already have diabetes