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In The Know

Each week a new industry-related question will be posted by our very own director, Steve Lydon of Secure Capital. Be sure to check back weekly!

Be… In the Know!

The Voice – March 3, 2021

Q – What is a HELOC?

A -A Home Equity Line of Credit, or HELOC, is a loan in which the lender agrees to lend a maximum amount within an agreed period, where the collateral is the borrower’s equity in their house.

The Voice – February 25, 2021

Q – What is a bridge loan?

A -A bridge loan is a temporary financing option designed to help homeowners “bridge” the gap between the time your existing home is sold and your new property is purchased. It enables you to use the equity in your current home to pay the down payment on your next home, while you wait for your existing home to sell

The Voice – February 11, 2021

Q – What is the average closing cost?

A – Closing costs typically range from 3% to 6% of the home’s purchase price.1 Thus, if you buy a $200,000 house, your closing costs could range from $6,000 to $12,000. Closing fees vary depending on your state, loan type, and mortgage lender, so it’s important to pay close attention to these fees.

The Voice – February 4, 2021

Q – What is a Credit Score Based On?

A – A credit score is based on credit history: number of open accounts, total levels of debt, and repayment history, and other factors. Lenders use credit scores to evaluate the probability that an individual will repay loans in a timely manner.

The Voice – January 28, 2021

Q – What is APR?

A – An annual percentage rate (APR) is a broader measure of the cost of borrowing money than the interest rate. The APR reflects the interest rate, any points, mortgage broker fees, and other charges that you pay to get the loan. For that reason, your APR is usually higher than your interest rate.

The Voice – January 21, 2021

Q- What is a mortgage discharge

A- A mortgage is a loan secured by property, such as a home. When you take out a mortgage, the lender registers an interest in, or a charge on, your property. This means the lender has a legal right to take your property. They can take your property if you don’t respect the terms and conditions of your mortgage contract. This includes paying on time and maintaining your home.

When you pay off your mortgage and meet the terms and conditions of your mortgage contract, the lender doesn’t automatically give up the rights to your property. There are steps you need to take. This process is called discharging a mortgage.

A mortgage discharge is a process involving you, your lender and your provincial or territorial land title registry office.

This process varies depending on your province or territory. In most cases, you work with a lawyer, a notary or a commissioner of oaths. Some provinces and territories allow you to do the work yourself. Keep in mind that even if you do the work yourself, you may have to get documents notarized by a professional such as a lawyer or a notary.

The Voice – January 14, 2021

Q- What is the difference between a Mortgage Broker & a Mortgage Agent?

A- A Mortgage Broker is either a firm or individual who is licensed to work on mortgages and employ other mortgage agents. In contrast, a Mortgage Agent works on behalf of the firm or individual with the Broker’s license.

The Voice – January 7, 2021

Q- What is FSRA?

A- The Financial Services Regulatory Authority of Ontario (FSRA) is an independent regulatory agency established to replace the Financial Services Commission of Ontario (FSCO) and the Deposit Insurance Corporation of Ontario (DICO). The agency is flexible, self-funded and designed to respond rapidly to an evolving commercial and consumer environment. In this capacity, FSRA will promote high standards of business conduct, foster a sustainable, competitive financial services sector, respond to market changes quickly, promote good administration of insurance and pension plans and encourage innovation.

The newly created agency protects Ontarians by regulating credit unions and caisses populaires.

The Voice – December 16, 2020

Q- What is “Interest Rate Differential” IRD

A. Interest Rate Differential (IRD) The IRD is a compensation charge that may apply if you pay off your mortgage prior to the maturity date, or pay the mortgage principal down beyond the amount of your prepayment privileges.

The Voice – December 10, 2020

Q – What is a Private Mortgage

A –  Compared to more conventional mortgage types, private mortgages are a unique financing option for the thousands of mortgage applications that do not fall within the banks’ parameters. Private mortgages are typically short-term (1–3 years), interest-only loans, secured through an individual investor or institution—instead of through a bank or chartered financial institution. This means you get fast financing, skipping the red tape, and the lengthy approval process of big banks.

More importantly, private mortgage approval is based on the property’s value, not on your credit score or income. That makes private mortgages a viable option for people with a below average credit rating, little down payment, or those who can’t provide traditional proof of income.

The Voice – December 3, 2020

Q – What does Collateral Mortgage mean?

A – A collateral mortgage is a re-advanceable mortgage product, meaning that your lender can lend you more money as your property value increases without having to refinance your mortgage.

 

CMBA Customized Policies & Procedures Manual:
All Brokerages in Ontario must have an up-to-date Policies & Procedures Manual. CMBA’s 2020 Policies & Procedures Manual includes all the Regulatory changes that have come about as of November, 2020. For more info, or to order your customized manual, contact us at deanna@cmbaontario.ca