Mortgage Terms You Need to Know 101

presents

TERMS YOU NEED TO KNOW - 101

TRANSLATING MORTGAGE INDUSTRY TERMS INTO EVERY DAY LANGUAGE

A little about Geoff Lee…

√ Co founder and Director of the Imani Orphan Care Foundation – www.imaniorphancare.com

√ Over 22 years of real estate experience and investment

√ Ranked amongst the top 3% mortgage brokers in Canada by CMP magazine

√ Finalist in 2014 CMP Canadian Mortgage Awards for Best Customer

Service from an independent office

LET’S RECAP…

CREDIT 101

• What a credit score is…

• All you really need is 680 – 800 to get the best mortgage rate…

• How the credit score is calculated…

• How to fix your credit problems…

MORTGAGE QUALIFICATION 101

• How to qualify for a mortgage either self-employed or employed…

• Stated Income…

• Gross Debt Service Ratio and Total Debt Service Ratio

• Mortgage Insurance

GIVE IT TO ME IN ENGLISH PLEASE!

So what are the terms you need to know???• High Ratio Mortgage

• You are putting less than 20% down

• Requires mortgage insurance

• Conventional Mortgage• You are putting more than 20% down

• Generally does not require mortgage insurance

GIVE IT TO ME IN ENGLISH PLEASE!

• Subject Property• What you are buying

• Non Subject Property• Other properties that you own

GIVE IT TO ME IN ENGLISH PLEASE!

• LOAN to VALUE (LTV)• What you owe on your “loan” to what to what the property is valued at

• SECURED and UNSECURED Lines of Credit• Secured

• “Tied” to something you own – collateral

• Unsecured

• Not “Tied” to anything – no collateral

•

GIVE IT TO ME IN ENGLISH PLEASE!

• Amortization• The length of time it takes to pay off your mortgage

• Affects your monthly payment at times much more than the rate

• Fixed term mortgage• Locked in for a “fixed term” you have chosen

• 1 -1 0 years

• Penalty if you break the “fixed term”

GIVE IT TO ME IN ENGLISH PLEASE!

• Variable Rate Mortgage (VRM)• Can be Open

• No penalty if you break

• Can be FIXED TERM

• Penalty if you break.

GIVE IT TO ME IN ENGLISH PLEASE!

• FLEXDOWN• Using untraditional sources for your down payment

• Borrowing from

• Employer

• Credit Cards

• Unsecured Lines of Credit

GIVE IT TO ME IN ENGLISH PLEASE!

• STATED INCOME – self employed (BFS)• What you report as income to Canada Revenue Service vs what you “STATE” your income to be to

the Lender.

• REFINANCING• To take the money that you owe and take out a new loan to pay off.

GIVE IT TO ME IN ENGLISH PLEASE!

• RENTALS• ADDBACK (subject and non subject properties)

• To take a % of the rental income from investment properties and ADD it BACK to your income

• OFF SETS

• Reduces the rental expense add balance back to Gross Income

GIVE IT TO ME IN ENGLISH PLEASE!

• NET RENTS (non subject properties)• Taking the 2 year reporting average from your T1 Generals (Statement of Rental Activities)

• Determine if there is a surplus/loss

• Input that surplus/loss into the application

• Do not include any NON SUBJECT properties debt into the file

GIVE IT TO ME IN ENGLISH PLEASE!

• DEBT CALCULATION RATIOS (DCR) (subject and non subject properties)• Calculate the NON SUBJECT and SUBJECT property debt

• Determine if there is a surplus/loss

• Input that surplus/loss into your application

• Do not include NON SUBJECT and SUBJECT properties debt into the application

“The ONLY thing constant in life is change…”

Anonymous

“Lasting Quote….”

Get in touch with us….

www.geoffleemortgage.comTwitter: @geoffleecaLinked In: http://ca.linkedin.com/in/geoffleemortgage/Email: Geoff@geoffleemortgage.comPhone: 1.778.552.3489

Thanks so much for attending the GLM Mortgage Group workshop – MORTGAGE QUALIFICATIOM 101.

If you have any questions please call me at 778.552.3489 or email me at geoff@geoffleemortgage.com.

“We specialize in getting you the fastest “YES” at the SHARPEST RATE… GUARANTEED!”

- Geoff Lee