Jesse Smith

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Thinking about my own new years resolutions, I started to think about how I could help others with theirs in the upcomin...
12/16/2020

Thinking about my own new years resolutions, I started to think about how I could help others with theirs in the upcoming year. Is buying your first home on your NYR list this year? Maybe someone you know? Here is a free E book I can offer you that’s a quick read, tailored down to the basics of getting your first mortgage with valuable, usable information such as:

-How down payments work

-What you need to qualify

-Paperwork that’s required

-Questions you may be asked during the process

Give yourself a head start by having all the information you need to get started in one place.

Click here to download: https://jessersmith.com/wp-content/uploads/2020/12/A-guide-to-getting-your-first-mortgage.-Ebook.zip

11/03/2020

Thinking about getting into a the rental property market? REALTOR® Anne French - Century 21 and I sat down to go over some useful information for buying and financing rental properties in Lethbridge Ab.

10/14/2020

We work with your schedule to get you the best mortgage, right from the comfort of your own home.

Call, Email or Text me today!

10/09/2020

For a first time home buyer it's a big world with a lot of questions.

That's why local REALTOR® Anne French - Century 21 and I sat down to discuss some of the more common questions we encounter from first time home buyers.

If you have any questions please feel free to reach out to either of us, contact info is at the end of the video!

Or apply directly for a mortgage by clicking here:
https://velocity.newton.ca/sso/public.php?sc=lqvq8b5kxou8

With rates this low its not hard to save a ton of money!!!fixed rates from 1.69%*refinance rates from 1.94%**Subject to ...
09/03/2020

With rates this low its not hard to save a ton of money!!!

fixed rates from 1.69%*

refinance rates from 1.94%*

*Subject to approval

Does it make sense to refinance even if you don’t need to pull out equity?Depending on the situation, it could save you ...
08/20/2020

Does it make sense to refinance even if you don’t need to pull out equity?

Depending on the situation, it could save you a ton of money! With the recent drop in interest rates to record lows there is a good chance your active interest rate is higher than what you could currently get. If you were to break your current mortgage early to get these rates it would lower your mortgage payments, and if you add those savings up over the remaining term of your mortgage it may add up to thousands of dollars in savings over those years.

What’s more, because the payment amount would be lower, you can refinance to a lower amortization (years left on mortgage) while keeping your current mortgage payments the same as they are now. Depending on your current interest rates this may save you years on the life of your mortgage payments! And when you add up years worth or mortgage payments the savings can be quite substantial, all while keeping your payments the same as they would be now.
There are a few things to keep in mind before doing this:

Number 1- Your payout penalty

If you are in a fixed term mortgage your current lender will charge a payout penalty for breaking the mortgage early. This will either be what is called the ‘interest rate differential penalty’, or ‘The 3 Month Interest Penalty.’ This means they will charge you 3 months worth of regular interest payments, whichever is higher. Once that penalty is known we can calculate the savings of refinance and make sure that the savings in the end justify the refinance.

Number 2- Making sure you are able to break your current mortgage early for a refinance

Some mortgage products will not allow borrowers to break the mortgage early without the sale of the property, this information will be on the mortgage contract you signed, or you can contact the lender directly to find this information out.

Because of the size of the average mortgage, savings in interest payments or years of loan payments have the potential to add up to tens of thousands of dollars staying in your pockets. If you would like to find out more about refinances or current mortgage rates, please don’t hesitate to call me directly at:

403 915 5956 or send an email to [email protected]

08/11/2020

One of the best things about investing in real estate is the number of options investors have for financing a rental property. Investment real estate can be funded via a conventional mortgage or private funding. But in addition to these, homeowners can buy a new home with the equity on their primary residence.



That’s because if a substantial part of your mortgage is paid-off, lenders will let you borrow money on your home equity. This is a far easier way for would-be property investors to get started in the rental property business. How does this process work?



What is home equity?


The equity on your home is the difference between the home’s market value and the amount you owe on the mortgage. When you take a home loan, lenders always require that you pay a portion of the purchase price for the property.



If this amount is 20%, the lender will provide the other 80% to complete the home’s purchase. With this arrangement, the lender owns 80% of the house, and you own 20%. That 20% is your equity in the home.



Over time, however, that equity starts to grow as you make the monthly mortgage payments or as your property value goes up. These payments allow you to slowly transfer ownership from the lender to yourself.



The longer you pay the mortgage, the more equity you earn. Home equity can also grow as a result of value appreciation. When the property’s value increases, the mortgage amount stays the same, but the owner’s equity grows.



When you refinance you have access to a maximum of 80% of the total value of your home. For instance, if you paid $560,000 to buy your home and you owe $290,000 on the mortgage, your usable equity in the property would be $158,000. But if the house has appreciated and its market value is now $610,000, you have even more equity. The combination of mortgage payments and value appreciation will bring your usable equity in the property from $158,000 to $198,000. This amount is what you have available for financing your rental property.



How to leverage your home equity


There are three ways to use home equity to finance a rental property.



Cash-out refinancing
With this option, you first have your primary home revalued, and then you take a new mortgage on the home based on its current value. This new mortgage is used to pay off the outstanding amount on the old mortgage.



Doing this frees up the equity you have built upon the home. You can cash-out on this equity to finance a new property. Although refinancing your home creates a new loan, it also provides cash for further investment.



There are some costs to you as the borrower by doing a refinance, including the new appraisal of your property, lawyer or FCT fees for changing the mortgage on title, and any applicable payout penalty if you are breaking your current mortgage term early. So it is important to know these costs, especially the mortgage payout penalty, before committing to a refinance as they can dictate whether it is worth doing or not.



Home equity loan
The second way to use home equity to finance a rental property is through a home equity loan. This extends a loan to you up to a certain percentage of your home equity. In Canada, this can be as much as 65% of the home’s value, as long as the loan amount and outstanding mortgage do not exceed 80% of the home’s value. Home equity loans come in two variants:



Traditional Home Equity Loan; This is a fixed loan amount paid to you in one lump sum. It adds a second loan to your primary mortgage and is regarded as a second mortgage. This second loan is subordinate to the first loan; in case of default and foreclosure, the first loan will be settled before the second.



Because traditional home equity loans pay out a large sum at once, they work best when you need to make significant one-time payments on a property.



Home Equity Line of Credit (HELOC); A HELOC does not make lump sum payments; it puts a portion of your home equity at your disposal. It is similar to a credit card loan because you can repeatedly borrow and repay all or part of the money.



Furthermore, you only pay interest on the amount you draw. This option is best when investing in things, like, a pre-construction condo. Your interest payment is limited to the money you use.



Why you should leverage home equity for real estate investing


-Firstly, using the equity in your home relives you of the burden of finding new cash for a new mortgage. And because the new property immediately starts to accumulate equity, you can repeat this process repeatedly until you build a sizable property portfolio.


-With a HELOC, you have access to a loan with an indefinite term – most HELOCs in Canada have an indefinite term. And with HELOCs, you only have to pay the interest on the loan every month.

03/09/2020

What qualifies, or disqualifies someone for a mortgage?

When a bank say they can, or cannot, make the numbers work, what numbers are they talking about? The majority of people have no idea, they either get pre-qualified just to know how much they can get approved for, or make a wild guess and put an offer on a house and worry about making it work later. So, what makes the numbers work? I hope to shed some light on the subject by explaining the two most important things that mortgage approvals are based on so that you can be a more informed shopper.

The first is the Gross Debt Service (GDS) Ratio, this states that your mortgage payments (principle and interest), your property taxes, heat bill and if applicable 50% of condo fees cannot exceed 39% of your total annual gross income. These are the basics costs of home ownership and a lower ratio makes the lenders more comfortable that you can keep up with paying the bills.

The second is the Total Debt Service (TDS) Ratio. This is everything included in the GDS ratio, plus all other monthly debt obligations like car payments and credit card bills. This ratio cannot exceed 44% of your gross annual income. This is the ratio that kills the most mortgage approvals, especially when it comes to vehicle loans, some vehicle loan payments are so large you may as well be applying for 2 mortgages!
Lets looks at an example, for easy numbers lets say you make $100,000 a year, and your car payment is $1000, That’s already 12% of your income taken up by that one payment, so if you are close on the GDS ratio that payment alone would put you over the TDS ratio. These ratios are federally mandated to the large ‘well known’ banks (or ‘A’ lenders) as a way to protect the Canadian real estate market and all of the industries that are connected to it.

There are two types of Alternative Lenders known as ‘B lenders’ and ‘Private Equity Lenders’ which are not mandated by the government and can therefore work around those ratios mentioned earlier.

Most B lenders are willing to go to 49% GDS and 49% TDS, while Private Equity Lenders are less interested in income than they are in the equity of the property. Both of these lenders will however require bigger down payments and higher interest rates that you would otherwise be paying with an ‘A’ lender, along with any applicable fees they may charge.

11/15/2019

Dominion Mortgage can lend on Agricultural and Residential zoned properties that have farming activity on them.

The property can have agricultural components such as barns, stables, fencing, and even animals.

As long as the zoning allows for residential usage and there is an owner occupied dwelling on the property we can do Purchases and Refinances, both High Ratio and Conventional.

Residential use only (may include agriculture-related buildings, such as a barn or stable)
Zoning must permit residential use
No maximum on acreage
Max annual income of $50,000 may be generated as a result of operations using the buildings or land (Income generated does not qualify as income for financing purposes)
Eligible High Ratio, Conventional Insured and Conventional Uninsured
Eligible for Purchases and Refinances

We do these these properties at 'A' rates with no surcharge to the client.

11/12/2019

Protecting your pre-approval,

People mistakenly believe once they’ve been pre-approved or approved by a lender it’s all done.

But what they don’t realize a lender may pull their credit 30 days prior to close. They also don’t realize lenders can request updated documents in that time. And, if some of the original information that got you the mortgage approval in the first place changes, and for the worse, you could lose your financing. Here’s a short list of actions that could put your approval on pause:

-Having additional credit reports pulled by another broker or lender

The lender will often pull your credit again right before financing. If the lender sees that other brokers or lenders have pulled your credit, the lender views this as credit seeking and it can put your funding in jeopardy.

-Applying for additional credit elsewhere

The lender calculates your debt based on the amount of credit you have. If you are applying for new credit, the obvious assumption is that you are planning on using it. Don’t get any new credit until the closing date is passed.

-Closing out credit accounts

Credit is not a bad thing… unless you are having a hard time managing it. Old credit shows a long history of being able to handle credit. Lenders like that, so don't rush to cut up your credit cards just yet. If you can, make above your minimum monthly payments to get in a better standing with your current accounts.

-Moving money around without a paper trail

When you settle with the bank on the contract of the mortgage, the lender will require bank statements showing your saved money. They look at the history along with the balance. If there are any unusual deposits, you will need to explain where the money came from. Be prepared to show a paper trail. If your down payment comes from savings, keep in mind the bank will want 90 days bank statements to ensure the money is accounted for.

-Increasing your debt

The lender always looks at your debt-to-income ratio. If you increase your debt, you can risk going over the maximum amount of debt compared to your income.

The biggest, and most common offence to this rule is buying a new car or obtaining a big box store credit card.

Don't be tempted! If you want to keep your current pre-approval amount, keep your ratio steady.

11/06/2019

We all know owning a second rental property is a great way to invest and build your wealth portfolio. Unfortunately, a lot of homeowners sitting on plenty of equity are afraid to use that money for a down payment to purchase a rental or investment property. The idea of a second or third mortgage tends to spook people away. While there are always financial risks in any investment, there’s a little-known incentive that might make you take the leap from homeowner to real estate mogul.

You can expense the interest on a mortgage as long as the INTENT for the funds are used on an investment property.

Thus, when you’re refinancing or taking equity, you can pull money from your existing owner-occupied home and use the funds on a rental property. Now the interest on the money you pulled out (and only that money, not any existing money) can be written off or expensed against your rental income.

You could expense your rental income down to a negative which in turn lowers your overall taxable income. Putting even more money back into your pocket.

It might only lead to a savings of a few hundred dollars a month, but not many people know it’s an option and is an extra incentive to consider.

You’ll definitely want to talk to your accountant and your mortgage broker to get more details.

There are also a few things to consider if you’re going down this route for an investment property.

You must claim your rental income on your tax return. It’s tax evasion if you don’t.

Mortgage rates are also typically cheaper for owner-occupied homes compared to rental or investment homes. Don’t be tempted to tell your broker or lender the house use will be owner occupied when it will actually be a rental because you want the lower rate. That is mortgage fraud. You could get charged and or the lender could call the balance.

While taking on a second or third mortgage might seem a little daunting, there are some options available to save you money and your mortgage broker can help.

Taken from Dominion Lending November news letter, to sign up for these monthly emailed news letters visit www.jessersmith.com

10/30/2019

If you’re credit challenged but want to get into the housing market, it can be a tough road to hoe. But improving your credit to a point where a lender will give you chance, is very doable.

First, I won’t bore you with the detailed minutia of credit scores. Basically, what you need to know is a score above 680 puts you in a good position to get financing, while below will make it tough and improvement is needed.

Your credit score tells lenders some basic stuff about your credit: How long you’ve had credit, your ability to pay back that credit and how much you owe. And so your credit score is affected by how much debt you’re carrying in regards to limit, how many cards or tradelines you have and your history of repayment.

If you’re a young person and new to the world of credit, consider the 2-2-2 rule to help build up your credit. Lenders want to see two forms or revolving credit, like credit cards, with limits no less than $2,000 and a clean history of payment for two years. It’s also good to note, a great credit score will also include keeping a balance on all those cards at any given time below 30 per cent of the limit.

To ensure your score stays in playoff form, make sure to pay off any collections, like parking tickets,

and correct any old or incorrect reporting on your credit score by contacting Equifax to have it removed. Some people also forget their credit cards have an annual fee and fail to pay them off too.

This cannot be stressed enough, if you want to keep or attain a good credit score, you have to pay your credit cards or tradelines on time regardless of whether you owe $1 or $1 million.

There is a tendency when things get really bad to consider declaring bankruptcy or a consumer proposal. A consumer proposal is a formal, legally binding process to pay creditors a percentage of what is owed to them.

You really want to avoid these two options. Instead, there are companies out there that will perform the same function and negotiate your debts, but it won’t impact your credit or carry the stigma of bankruptcy or a consumer proposal.

Lastly, if you already own a home and have some equity, but you’re still drowning in credit debt, consider refinancing your mortgage. Sure, you might not get the great rate you have now or you might get dinged for breaking your mortgage early, but using the equity in your home to get rid of high interest credit payments could keep more money in your pocket at the end of the day.

(Shared from Dominion Lending October Newsletter, sign up for monthly emails at www.jessersmith.com)

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#60-550 WT Hill Boulevard
Lethbridge, AB
T1J4Z8

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+14033949422

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