Lowest Rates-w Music April2017

Hello, my name is David So. I have been a licensed mortgage broker for almost 30 years. For the past few months, the mortgage rules seem to change every few weeks. What you are familiar with a few months ago are probably no longer true today. And will most likely be a different story a few weeks from now. Today, I like to share with you about who gets the lowest interest rates. As a mortgage consumer, the lowest interest rate is often the first thing on our wish list. However, the interest rate pricing game is getting very complicated. In fact, we lay it out in a chart format to make it easier to understand.

There are a three mortgage words you need to be familiar with. Insured, Insurable and the word uninsured. Insured simply mean your mortgage with be insure with CMHC or similar insurers. The borrowers will have to pay the insurance fee, which often is added to the mortgage amount. Insurable are mortgages the will meet CMHC guidelines, but not necessarily insured. Uninsured, as the word implies that it does not meet insurance guidelines. And the mortgage rate pricing is based on which of the three category it goes into.

Let’s take a look at Purchases and/or switches. When you switch your mortgage from one lender to another, without any increase of mortgage amount, this is called a switch or transfer. In the case where you need more money, it will be a refinance which we will talk about under non-insurable.

This category, meaning a purchase or switches, when the borrower pays the CMHC fee. It offers you the lowest possible interest rate. As you can see, at the time of this video, interest rate as low as 2% is available for a Variable rate mortgage and as low as 2.54% for a 5 year fixed term mortgage.

When one purchase with more than 20% down payment. CMHC insurance fee is no required. However, the interest rate will be higher than the insured mortgage. The higher the down payment, the better the discount.

CMHC no longer insure purchases above one million dollars. This will fall into the uninsurable mortgage and will be charged a higher interest rate. The rule, in this case, is the purchase price. If one buys a 2 million dollar property and require only $300,000 mortgage, there would still be a premium to the interest rate. In fact, the majority of the lenders would not fund an uninsured mortgage at all.

CMHC no longer insure refinances. If you need any kind of equity-take-out, meaning, increasing your mortgage amount. You will be paying a higher than the best available rates.

There are also other factors that affect your interest rate. The credit score is a very important one. Obviously, the better the score, the better the rate. In fact, if you score is low, you may not even get an approval. Other pricing factors like having a 30-year vs 25-year amortization, ETO (Equity take out) and the mortgage amount, just to name a few. It all contribute to the pricing factor.

At this point, you are most likely frustrated, confused and feel this is not fair. Please do not shoot the messenger. It is what it is. There are numerous groups lobbying the government as we speak. At the mean time, we have to do what we have to do. For the past 30 years, I have learned that interest rate is a small part of mortgage planning. This is very easy to proof. Most of us have enjoyed super low-interest rates for the past few years. Historic low for that matter. Are you any richer because of that? Getting a mortgage is not an event, it is a process. A very carefully planned process in order to save thousands of dollars. I use a very simple four step process. 1. my plan must give me peace of mind. 2. Manageable Cash Flow. 3) There must be a way to quickly pay off my mortgage. 4) My mortgage can also be a tool to provide me with financial security.