A while ago I [Jason Dornstauder] was approached to do a Radio Show and answer some Mortgage Questions from Trustedregina.comÕs Facebook subscribers. As I am one of the Trusted Partners, and anyone who knows me knows I love an audienceÉI said, ÒYes!Ó Well, On October 31, 2012 Ð yesÉHalloween; we taped our Studio Session. Oh What Fun! Although we taped on that Wednesday, the broadcast didnÕt take place until Saturday Nov 3, 2012. You can view/listen to the show below: Below is the list of questions that were presented to me. Only 3 of these questions were answered on the broadcastÉbut they are all such good questions Ð I figured the best way to answer these for the masses was to go through my blogÉand of course, to share it with those of the TrustedRegina.com following Ð and our Company Facebook Page! Voila! New Blog Material! Enjoy. First, here are the questions: TRUSTEDREGINA.com PERSONAL FINANCE SHOW Mortgage Questions for Jason Melissa: My husband is thinking about going on piece-work in Carpentry. How would this affect our ability to get a mortgage if he did it in November and we wanted a mortgage in the spring? Lisa: What please is the longest amortization for a mortgage in Canada currently? Thanks! Shelley: When you want to mortgage an acreage property, why is only the house and 3 acres included as the appraisal of the value? Why not the rest of the land or the out buildings? Ed: Is securing a mortgage on my clear home a sound idea? I am 2 yrs from retirement for the purpose of renovating is to receive a higher selling price. Cheryl: Is it wise to re-mortgage my house to make renovations, i.e. deck and /or finish the basement. Wanda: with regards to obtaining a mortgage, what is the difference between a chartered bank and mortgage brokers? Ann: Ð Jason, I know you are penalized if you sell too early but what if you suddenly come into some money, can you pay off your mortgage without penalty? Charmaine Benson: When re-mortgaging your home, is it done for the original mortgage amount or can you remortgage at the current value of your home? Chris: Jason, What is the difference between fixed rate, variable rate, and Adjustable rate mortgages? 10. Debbie: when you do a home equity loan what is the highest percentage of the amount you can borrow. 11. Michelle: Jason, is there a penalty to sell your house when the mortgage isnÕt up for renewal yet? 12. Michelle Jason, what is the difference when you go through the bank for a mortgage or a broker? 13. Debbie: Is it easy to get bridge financing on a mortgage? 14. Trent: when is the interest rate expected to go up? 15. Bre-ann: Question for both the Financial Advisor and Mortgage SpecialistÉ..my friend just inherited $100,000 from her Grandpa who just passed away. She is a single mother of a 3 year old. Could I get advice on what she should do with her inheritance? Should she pay down her mortgage (which she is currently locked into at 4.75 percent with a balance owing $110,000), or should she invest it into a split registered and non-registered portfolio. She has no savings but does have $15,000 in RRSPÕs. Your advice could be an opportunity to change her life. Thank you. And nowÉthe Answers! Answers to Mortgage Questions: Melissa: As long as your husband has a minimum of 2 years (preferably 3 years) in the carpentry industry Ð it is still possible to obtain a mortgage. However because we like to see a 2 year average of income for Self Employed professionals Ð you may have to wait for up to 3 years to purchase a home. Now, that being said, we do have a program set up for New Self Employed Professionals that is exactly like every other mortgage out there except for the requirement that we would need to see a 10% Down Payment from your own resources. Typically the Down Payment is 5% from either a gift from family, borrowed, or from your own resources. With respect to proving the source of the Down Payment, a 90 Ð day history is required by way of Bank/Investment Statements. Lisa: The longest Amortization for a typical mortgage is 25 years. However, some lenders will permit up to 30 years when a down payment of 20% or more is put down. Shelley: Acreages are tricky in this province due to the Farm ActÉlenderÕs donÕt like them as it is because foreclosure is difficult. Most lenders will value the Home and Garage and the first 5 acres. The reason they shy away from Out Buildings and remaining acres is because they are only concerned with the immediate Homestead piece and the rest to them is of little or no value. Ed: I donÕt think securing a mortgage on your home is a good idea if you are 2 years from retirement. Even though you want to improve the home with the funds Ð you could wind up in a tumultuous situation. For instance Mortgage Prepayment Penalties. Instead, I recommend you Secure a modest Line of Credit against your home that provides you the freedom to use the funds if/when you need them Ð as well as the flexibility of paying it off at anytime without penalty. Currently our Line of Credit Program is priced at Prime + .50% (3.50% as of today). Cheryl: When it comes to refinancing for improvements, it is a difficult decision to make. If itÕs a major renovation, say $20k or more Ð then yes. It is a good idea (as long as you donÕt incur any ridiculous mortgage penalties). However if it were less than thatÉI would consider other avenues first. I believe that a working line of credit is the best avenue in this instance if it fits. If not, then consider the use of the improvement Ð if to make you happy to occupy longer Ð then a 3 Ð 5 year fixed mortgage may be optimalÉif for the sake of resale Ð then consider a term that fits your end goal. Wanda: The difference between a Chartered Bank and Broker is easily explained as the difference between 7-11 and Costco. Banks are set up with multiple Òconvenience itemsÓ for the comfort of one stop shoppingÉbut like heading to 7-11 for groceries Ð expect to pay more than you should! Banks are priced like a Retail Store. Brokers are more like Costco Ð we have More Variety, More Products, and are priced considerably lower. For instance Ð the 5 year posted rate at most Chartered Banks today is 3.99%. Sure you can get a better rate if you grind them upÉand because you are such a good client for the past 10 years and they really value the time you took to go in and see themÉand since you are there Ð they will discount it to you and give you 3.39%Éor even 3.29%. NowÉcome in to my office Ð and if you meet CMHC or other insurer guidelinesÉyou get 2.99%, and you donÕt have to beg, plead, or screamÉitÕs yours because you qualify for it! Additionally, banks have Targets for their personnel to achieve. These targets are volume and price based. The more they sell for a higher price Ð the better. Brokers get paid for sending volumeÉthatÕs it. Now, of course some brokers still subscribe to the ÒFloor and CeilingÓ pricingÉwhere they determine what rate you Òshould haveÓÉbut for the most part, most brokers will give you the lowest rate possible for what you qualify for. Keep in mind, different products require different pricing, as well they may require other qualifications for applicants. Ann: If you suddenly come in to some money and you have the ability to pay out your mortgage in fullÉwell, first off Ð what a great problem to have. Second Ð YES. YES YES YES YES! Pay it offÉif the ÒpenaltyÓ is LESS than the total interest you would have paid for the remainder of your term. So, that is to say Ð if you have 3 years remaining and the total interest yet to be paid is $22,000.00 over the next 36 months Ð and you can pay it off today for a penalty of $20,000.00 Ð itÕs a good idea. You actually save the $2000.00 up front, and the extra benefit Ð you can now take the mortgage payment and contribute it to long-term savings! Charmaine: Òre-mortgagingÓ is often the same as refinancing. Refinancing is always done by the current value of the property to a maximum of 80% of the value by todayÕs regulations. Chris: The difference between Fixed Ð Variable Ð and Adjustable is quite simple. A Fixed rate is just that ÉFIXED Ð unmoving. Adjustable Rates are geared to correspond with the movements of the Prime Rate. If prime goes up by .50%, then your rate does the same. There is a slight difference between Variable and Adjustable Ð although most bank and broker personnel say they are the same thing Ð but they are not. Today most of the ÒVariable RateÓ mortgages are actually truly ÒAdjustable RateÓ mortgages. A true variable rate has a capped payment where the amount of principle and interest variesÉand short falls on interest will require a Balloon payment to catch up. Adjustable Rate mortgages keep the proportion of principle and interest the same and no balloon payments are required because the payment goes up or down with the rate to offset any potential cost changes! 10. Debbie: 80% is the highest Refinance amount. 65% is the highest if itÕs done as a Secured Line of Credit. 11. Michelle: Penalties exist on any breach of the mortgage contract. Sale, refinance, pay off from lottery, etc. 12. Same as WandaÕs Question from #6. 13. Debbie: Bridge Financing is unique to people who are selling one home to buy another. Typically itÕs needed for the short period of time that you have taken possession of you new home but have not given up possession of the home you have sold. ItÕs part of most lending criteria in these situations Ð your broker should bring it up if this is your situation. 14. Trent: I wish I could tell you when rates are supposed to go upÉbut my crystal ball runs on pixie dustÉand I am fresh out of pixie dust. My advice Ð if you can borrow now that rates are low and secure the rate for a long periodÉthere really is no better time to do it. 15. Bre-ann: I suggest she maximize the pre-payment privileges of her existing mortgage. Then invest the remainder Ð using a qualified investment planner. Again, being mortgage free is pretty awesome Ð if the penalties are low enough Ð consider that monthly mortgage payments put toward a monthly investment contribution will certainly gain a lot of steam! Well, thatÕs all I have for you today! Stay Classy Interweb! Jason from FocusÉyour Mortgage Super Hero!