Buy a Home Sooner to Build Equity

It can be very beneficial to buy a home you can afford sooner rather than later. A home allows you to build equity and with every mortgage payment you make each month, you are building equity in a place of your own – unlike a rent payment.

Equity is the difference between the value of a home and your outstanding mortgage balance. The longer you stay in your home (and the more mortgage payments you make), the more equity you’ll have. Unlike most things you buy, a home will almost certainly increase in value over time – which builds even more equity.

Once you’re a homeowner, the payoff can be great. As the equity in your home grows, your financial flexibility also increases. Think of it as an extra source of financing for when the unexpected happens.

An added benefit of borrowing money against the equity in your home, is it usually comes with a lower interest rate than other forms of credit, such as consumer loans, lines of credit and credit cards.

Here are some ways you can use the equity in your home:

• Pay off other debts with higher interest rates (like credit card debt)
• Renovate or repair your home – build a new room or put in a swimming pool
• For important life events – a wedding, dream vacation or university tuition
• Purchase a second home or vacation property
• Emergencies – like a serious illness

Investing in a home can have a significant payoff over time. And the sooner you begin, the sooner you’ll start building equity.

Self Employed and Buying a Home

Many people may believe getting a mortgage while self-employed is difficult or even impossible. The truth is, it’s not! The mortgage approval process for a self-employed individual can be very easy.

If you are self-employed, do you:

• Have good credit?
• Have access to a down payment (10%)?
• Have difficulty proving your income using the traditional methods, or don’t declare enough income?

If you’re missing one of these three criteria, we recommend reading further or scheduling an appointment with Devin or Wes at Your Mortgage Link to talk about how we can work together to help you achieve home ownership.

There are many rumors circulating the wrong idea about self-employed programs being offered. Here are a few statements which lack information:

“You must be self-employed for a minimum of two years before being considered for a mortgage”

If you’ve been in the same line of work for more than 2 years, regardless of if you were self-employed in the past or not, you may qualify for a mortgage. For example, if you were working for Company “A” for 3 years as a salaried electrician and decide to become a self-employed electrician, you have 3 years experience in the field.

“You can’t get a mortgage if you declare very little income”

False, even though this statement seems to make sense. If you declare very little income or if you declare decent income but it’s insufficient to support your home’s financing, there is still hope.
The traditional way to qualify a self-employed individual is by using an average income from the last two years in business. As mortgage associates, we have access to a program called “Stated Income”.

This program allows mortgage associates to use a reasonable income to qualify a self-employed worker, even if this income is significantly higher than what you’ve declared last year.

For example: If you are a hair dresser and the average income for a local hair dresser in Saskatoon is $32,000 per year, your stated income can be $32,000 even if you’ve only declared $20,000 last year.

This program is subject to special guidelines:

1. The income presented must be reasonable compared to the industry. Using the example of the hair dresser above an income of $100,000 would be very unlikely and therefore, the application could be declined, or supporting documents would need to be presented.
2. You must provide proof that you don’t owe any income tax to the Canadian Revenue Agency. This can be done by providing your most recent NOA (Notice of Assessment) or a signed affidavit.

As Mortgage Associates, we deal with many different people in various financial situations. If you are a self-employed worker, there are options offered to obtain a mortgage. Just keep in mind that a great credit and access to a down payment are crucial for these programs to work.

Are you self-employed and looking to become a home owner? Schedule an appointment with us at Your Mortgage Link and we will be happy to answer any questions you may have.

Office: (306) 244-7755
Website: www.yourmortgagenow.ca
Email: devinandwes@yourmortgagenow.ca

Devin Cristo
Mortgage Associate
License# 315791
Cell: (306) 380-6049

Wes Will
Mortgage Associate
License# 315790
Cell: (306) 380-6039

Mortgage Payment Frequency Options

When it comes to deciding how often you’d like to make your regular mortgage payments, you can choose which mortgage payment frequency option will best benefit you. You have the option to synchronize your mortgage payments with your pay schedule. In Canada, you can choose from five different mortgage payment options: monthly, bi-weekly, accelerated bi-weekly, or accelerated weekly. Since most employees get paid bi-weekly, this schedule option is the most popular.

Some payment frequencies actually accelerate your mortgage repayment allowing you to reduce the total amount of interest you pay over the life of your mortgage. Choosing an accelerated payment also gets you out of mortgage debt years sooner.

What Are Your Options?

 

Monthly Mortgage Payment
A monthly mortgage payment is when your mortgage payment is withdrawn from your bank account on the same day of every month (i.e. on the 1st). With a monthly mortgage payment, you make 12 payments per year.

Bi-weekly Mortgage Payment
A bi-weekly mortgage payment is when your monthly mortgage payment is multiplied by 12 months and divided by the 26 pay periods in a year. With a bi-weekly mortgage payment, you make 26 payments per year.

Accelerated Bi-weekly Mortgage Payment
An accelerated bi-weekly mortgage payment is when your monthly mortgage payment is divided by two and the amount is withdrawn from your bank account every two weeks. With an accelerated bi-weekly mortgage payment, you still make 26 payments per year but the payment amount is slightly more than a regular bi-weekly mortgage payment.

Weekly Mortgage Payment
A weekly mortgage payment is when your monthly mortgage payment is multiplied by 12 months and divided by the 52 weeks in a year. With a weekly mortgage payment, you make 52 payments per year.

Accelerated Weekly Mortgage Payment
An accelerated weekly mortgage payment is when your monthly mortgage payment is divided by four and the amount is withdrawn from your bank account every week. With an accelerated weekly mortgage payment, you still make 52 payments per year but the payment amount is slightly more than a regular weekly mortgage payment.

The Benefit of Accelerated Payments

The one major difference between regular and accelerated payments is how the payment is calculated. With an accelerated payment option, you end up making roughly one extra payment a year. It’ll cost you a little more on a monthly basis, but will save you thousands in interest and help you pay off your mortgage even sooner.

If you have any questions regarding this topic, please give us a all today at (306) 244-7755 or email us at devinandwes@yourmortgagenow.ca.

Visit us online at www.yourmortgagenow.ca

Happy People Live in Small Houses

Thinking of Purchasing a Smaller Home?

Moving into a smaller space does have its benefits, and there are a variety of reasons for downsizing your home, even if you're not retiring. Are you:

• An empty-nester and no longer need a large home?
• Tired of the up-keep of a large house, both inside and out?
• Wanting to reduce your living expenses?
• Traveling more?
• Ready to put your energies in creative projects, not housework?

Even though downsizing usually means leaving a home full of memories, a familiar neighborhood, and friends, it also helps you de-clutter and free up your time by spending less time cleaning and maintaining your home, and having more time for other things.

Another great benefit - smaller homes are less expensive to purchase, and less expensive to keep (mortgage, insurance, taxes, heating, cooling, electricity, etc.). There is also a wider market to sell a smaller, reasonably priced house to a larger percentage of the population than a more expensize, less affordable one. A great opportunity for those looking to build their equity and not yet ready to buy into a large home.

Looking to Move Out of the Renting Lifestyle?

If you are still living as a property renter and are thinking of purchasing your first home, one thing to take into consideration is the space you will actually need and how much you'll be able to afford.

Some things to start asking yourself before deciding on the type of property you want to buy:

• Do you have a growing family and require the space for play and sleep?
• How long do you plan on living in your first home? 3 years? 5 years? Or are you looking for that forever home? Maybe you only need a starter home right now and don't want the hassle of cleaning the extra space you are not using.
• Are you looking for a place with a yard to finally move out of your condominium suite? Even if you don't have a family to accommodate in order to buy a home, owning your own living space can be very rewarding, especially when you have your own yard to entertain friends and family.
• Will you be able to afford the maintenance of your new home? As a home owner, after all, you essentially are your own landlord. A pipe bursts in the middle of the night? Guess who’ll be up fixing it or calling (and paying) the plumber? (Hint: you.)

Whether you are buying a home to fit your growing family, or are looking to purchase something smaller to fit your own needs, chances are, you'll need a mortgage.

If you have any questions, please feel free to give us a all today at (306) 244-7755 or email us at devinandwes@yourmortgagenow.ca.