The Canadian Press  Published: Monday, January 22, 2007 xml:namespace prefix =" st1" ns =" "urn:schemas-microsoft-com:office:smarttags"" />TORONTO -- The mortgage shopper has never had it so good -- nor socomplicated. The overwhelmingly good news for the home shopper is about interestrates. The posted rate for a closed five-year mortgage at Royal Bank inlate January was 6.65 per cent. But a special offer available during themonth made the same term available at 5.59 per cent. At the same time, there are more and more vehicles for the mortgageshopper to use.  For example, in the past year, amortizations have zoomed to 40-year terms, and consumers can also apply for mortgages where only the interest is paid for a certain term.  All this takes place against a background of tough competition betweenfinancial institutions for your money -- and mortgage brokers who will dothe leg work for you and shop around for the best mortgage. "In today's environment, it is far more competitive," observed PatriciaLovett-Reid, vice-president at TD Waterhouse.  "There is far more out there, and doing your homework before you go shopping for the house makes sense."  Even before you start thinking about mortgage terms and who will get your hard-earned bucks, you have some work to do -- it's critical that consumers get to know their own numbers first. That's because you aren't going to get the best rate going if you areviewed as not having your finances in order. So, you want to sit down andadd up all your assets and liabilities, including credit-card debt,RRSPs, car loans and so on.  You also want to make sure your income taxes are up to date, because youmay not get a mortgage otherwise.  You want to be armed with proof of income, in the form of pay stubs or aletter from your employer -- and they must be recent.  Before you phone the real-estate agent, you will want to visit yourfinancial institution -- or mortgage broker -- to find out just how muchmoney you can spend on a house. "There aren't many real-estate agents that will work with people who are not preapproved, these days," said Lovett-Reid.  "Why bother?"  She noted that the general rule of thumb is to allocate about 32 per centof your pretax income to housing costs.  Mortgage brokers have been growing in popularity in recent years as fewerCanadians feel loyalty to one institution to a point where they do all oftheir financial business at a single place.  A recent survey by the Canadian Institute of Mortgage Brokers and Lendersindicated that more than 31 per cent of Canadians sought the advice of amortgage broker in 2006, up from 25 per cent in 2006.  Consumers can find themselves asking for trouble if they opt for some ofthe newer products with much-extended amortization terms andinterest-only provisions.  In the case of longer terms, "you run the risk of buying too much house,"  said Lovett-Reid.  "You look at the number of luxury autos on the road. And people are leasing them because they can't afford to buy them. And they can get much more car than they could if they were buying it." She offered a few tips for the prospective mortgage shopper.   - Pay weekly. If you had a weekly payment of $415.10 or a monthly payment  of $1,640.42 on the same principal amount, the balance will be paid off  about three years earlier with weekly payments.  - Check out how much you can pay off on your mortgage each year and how  much you can increase your payments.  - Portability: Ask a mortgage specialist if your existing mortgage is  transferable if you decide to move.  "It might not be," said Lovett-Reid, ". . . particularly if you already  have a really attractive rate."">
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Tips for Mortgage Shoppers

Tips for mortgage shoppers from today’s Vancouver Sun

xml:namespace prefix =" o" ns =" "urn:schemas-microsoft-com:office:office"" /> 

  The Canadian Press

  Published: Monday, January 22, 2007

 

xml:namespace prefix =" st1" ns =" "urn:schemas-microsoft-com:office:smarttags"" />TORONTO -- The mortgage shopper has never had it so good -- nor so

complicated.

 

The overwhelmingly good news for the home shopper is about interest

rates. The posted rate for a closed five-year mortgage at Royal Bank in

late January was 6.65 per cent. But a special offer available during the

month made the same term available at 5.59 per cent.

 

At the same time, there are more and more vehicles for the mortgage

shopper to use.  For example, in the past year, amortizations have

zoomed to 40-year terms, and consumers can also apply for mortgages

where only the interest is paid for a certain term.

 

All this takes place against a background of tough competition between

financial institutions for your money -- and mortgage brokers who will do

the leg work for you and shop around for the best mortgage.

 

"In today's environment, it is far more competitive," observed Patricia

Lovett-Reid, vice-president at TD Waterhouse.  "There is far more out there,

and doing your homework before you go shopping for the house makes sense." 

Even before you start thinking about mortgage terms and who will get your

hard-earned bucks, you have some work to do -- it's critical that consumers

get to know their own numbers first.

 

That's because you aren't going to get the best rate going if you are

viewed as not having your finances in order. So, you want to sit down and

add up all your assets and liabilities, including credit-card debt,

RRSPs, car loans and so on.

 

You also want to make sure your income taxes are up to date, because you

may not get a mortgage otherwise.

 

You want to be armed with proof of income, in the form of pay stubs or a

letter from your employer -- and they must be recent.

 

Before you phone the real-estate agent, you will want to visit your

financial institution -- or mortgage broker -- to find out just how much

money you can spend on a house.

 

"There aren't many real-estate agents that will work with people who are

 not preapproved, these days," said Lovett-Reid.  "Why bother?"

 

She noted that the general rule of thumb is to allocate about 32 per cent

of your pretax income to housing costs.

 

Mortgage brokers have been growing in popularity in recent years as fewer

Canadians feel loyalty to one institution to a point where they do all of

their financial business at a single place.

 

A recent survey by the Canadian Institute of Mortgage Brokers and Lenders

indicated that more than 31 per cent of Canadians sought the advice of a

mortgage broker in 2006, up from 25 per cent in 2006.

 

Consumers can find themselves asking for trouble if they opt for some of

the newer products with much-extended amortization terms and

interest-only provisions.  In the case of longer terms, "you run the risk of

buying too much house,"  said Lovett-Reid.  "You look at the number of luxury

autos on the road. And people are leasing them because they can't afford to

buy them. And they can get much more car than they could if they were buying it."

 

She offered a few tips for the prospective mortgage shopper.

 

  - Pay weekly. If you had a weekly payment of $415.10 or a monthly payment

  of $1,640.42 on the same principal amount, the balance will be paid off

  about three years earlier with weekly payments.

  - Check out how much you can pay off on your mortgage each year and how

  much you can increase your payments.

  - Portability: Ask a mortgage specialist if your existing mortgage is

  transferable if you decide to move.

  "It might not be," said Lovett-Reid, ". . . particularly if you already

  have a really attractive rate."