“Mortgage” means “Death Pledge”… Wait.. What?!

 

Strangely enough, the root word mortgage comes from the French word “mort”, which means “dead”, and “gage” from Old English, which means “pledge”.
In the 1500’s, this term was used in the doubtfulness of whether or not the mortgagor would pay the debt. The word does not refer — as it may seem — to the debtor’s metaphorical death, in taking on such a large loan that usually takes many years to repay. Instead, the “mort” part of the word signifies that the agreement “dies” when the debtor has repaid the creditor for the full amount of the mortgage. If the mortgagor did not pay, then the land pledged as security for the debt was taken away.
Nowadays, the term mortgage is used as a term for purchasing a property. Mortgages all have a term representing the length of time before your home is paid off and a rate which determines the principal and interest payment that will be required to be paid during this term.
If you are unable to make your mortgage payment for several months, you could lose your home. If you are ever in this situation, there are ways to save yourself from foreclosure. Contact your mortgage broker or lender for more information.

What Comes First the Mortgage or the House?

Many people get it backwards. They shop for a home, and then make an emotional decision without knowing what they are able to afford. And then are surprised and disappointed to find out that they cannot get the financing. Thankfully, mortgage brokers do the homework for the applicant to see whether they have the ability to repay the loan while in the lifestyle they are accustomed to.

Something’s to consider about your lifestyle:

  • Are you single or a family of six? Costs for food and clothing alone are very different.
  • Do you take annual vacations?
  • How often do you like to eat out?
  • Are you involved in costly sporting activities?
  • Would you be willing to sacrifice these things for a bigger or nicer home?

Also take into consideration the following:

  • Do you have car payments?
  • Do you have to repay student loans?
  • How much do you owe on your credit cards?
  • Do you have bad debts?

Falling in love with a home without considering the REAL impact on your lifestyle is a recipe for unhappiness….either in re-adjusting to a “lesser” home or disappointment over the lack of vacations or entertainment.

Our advice is to focus on your financing. Find out what you can afford from a lender’s perspective, but then, spend some time considering the cash flow realities of your choice.

Additionally, we can advise you on ways to properly represent and transfer your assets, how to explain and document your income, as well as, assist you to get your optimum credit score. This process will help smooth out some of the bumps during the mortgage process, giving you the best change to the best mortgage rates available. All your prep-work will pay off in the end.

The choice is clear get the mortgage before the house!

Thinking of Buying a House? Do your Homework First

Before you start house hunting, be sure you are comfortable with the obvious and less obvious costs of home-ownership.

 
The Price Range
The first thing you need to do is determine how much you can afford. Being pre-approved for a mortgage can help set a guideline for your monthly mortgage payment. Keep in mind one-third of a mortgage payment includes property tax and any other secondary financing or condominium management fees, if applicable.
Test this guideline by reviewing your current spending. Do you, for instance, have a commitment to a car or personal loan? How much do you spend on rent, clothing, transportation, entertainment and travel? Would the guideline mortgage payment still be comfortable considering these expenses?
 
Looking Ahead
Consider the cost of living in the home. How much will it cost to heat monthly? What about the monthly cost of insurance, electricity, water, maintenance – painting, repairs etc.? If you are considering buying a condominium, how much are the monthly management fees? How will they affect your ability to carry on a mortgage?
Predicting the cost of living in a home compared to living in an apartment can be difficult. There is a rule of thumb to help you estimate the difference between the two. Take the value of the home you are considering and multiply it by 3 per cent. Then divide that figure by 12. In our example of the $125,000 home, the monthly cost using this formula would be roughly $312 in addition to mortgage and taxes.
 
The Down Payment
The size of your down payment is a major part of your mortgage consideration. Most lenders will require a minimum down payment of at least 10% of the purchase price of the home. For instance, our example of a home in the $192,500 thousand range would require a $19,250 down payment. You would then need a mortgage of $173,250.
 
Cash Costs
When you have made an offer, had it accepted and begin to finalize the purchase, there are other costs to be paid in full. There are legal costs, registration costs, possibly house inspection costs and probably a land transfer tax. Your real estate agent will give you an estimate of these costs. Be sure to discuss with your agent the question of what lenders call “interest adjustment date”, depending on the date of your closing and the date of mortgage payment upon closing. Be prepared to pay for any heating oil left when you take over and to re-imbrues the seller for property taxes paid in advance. Don’t forget about moving charges, your mover will give you an estimate before you move. You will have to pay the movers upon delivery of the furniture.
 
Be Prepared
Some can view home-ownership as all work and no play. However, the joy of having a place to your own usually outweighs the work involved. Be sure you get the most from the experience by buying a home within your means.

 

What do I need to apply for a Mortgage in Saskatoon?

 

If you are planning to get a mortgage in the near future, it is best to be prepared.  Being prepared and having the right documents and information ready to present to your Mortgage Associate when you first meet can save tons of time, speed up the process and make things go smoothly.
The following is a summary of what lenders require depending on what type of job you have, keep in mind, we may need more information depending on your circumstance:
Salaried Employees
• Job Letter – Confirmation of your employment needs to be on company letterhead, signed by the appropriate individual confirming the position being held and your wage. If you are a recent hire, the job letter should confirm that probation period has been passed. Bonuses, car allowances and other forms of remuneration should be mentioned if applicable.
• Paystubs – Most recent paystub that shows your year-to-date earnings.
Hourly Employees
• Job Letter – Verification is made on company letterhead, signed by the appropriate individual confirming the position being held and wage. If you are a recent hire, the job letter should confirm that probation period has been passed. Bonuses, car allowances and other forms of remuneration should be mentioned if applicable.
• Paystubs – Most recent paystub that shows your year-to-date earnings.
• T4’s
Commission Income 

• T4’s and/or Personal Tax Returns (T1 Generals) from the current year and the previous year.
• Job Letter – Verification is made on company letterhead, signed by the appropriate individual confirming the position being held and wage. If you are a recent hire, the job letter should confirm that probation period has been passed. Bonuses, car allowances and other forms of remuneration should be mentioned if applicable.
Self Employed 

• Financial Statements
• Notice of Assessments (NOA) – to confirm no taxes owing.
• Personal Tax Returns (T1 Generals) from the current year and the previous year.
There are 4 main factors to qualify for a mortgage; stable income, a good credit history, making a sound choice on the property you are purchasing and how much (if any) of a down payment you have.
 
• Stable Income:  most lenders will require a Letter of Employment confirmation as well as 2 recent paystubs. They may also need the last 2 years of NOA’s (Notice of Assessments).
• Credit History: is a piece of information that is always reviewed by the lenders. We always pull a credit history when you apply for a mortgage or seek a preapproval so that we can determine which programs will best suit your situation.
• Property: choices also impact the mortgage qualifying process, as the real estate is the lender’s security – if for some reason – you are unable to repay the mortgage.
• Down Payment: are not always required as there are mortgage programs that provide cash back incentives for qualified purchasers. If you have no down payment, you generally will still need to have some cash to put down for your real estate purchase deposit and for closing costs
If you have any questions, please give our office a call! (306) 244-7755!