Jayman Financial Corp.

Answers

How much can I afford to pay for a home?
To determine 'affordability' you will first need to know your taxable income along with the amount of any debt outstanding and the monthly payments. Assuming it is your principal residence you are purchasing, calculate 32% of your income for use toward a mortgage payment, property taxes and heating costs. If applicable, half of the estimated monthly condominium maintenance fees will also be included in this calculation.

Second, calculate 40% of your taxable income and deduct all of your monthly debt payments, including car loans, credit cards, lines of credit payments. The lesser of the first or second calculation will be used to help determine how much of your income may be used towards housing related payments, including your mortgage payment. These calculations are based on lenders' usual guidelines.

In addition to considering what the ratios say you can afford, make sure you calculate how much you think you can afford. If the payment amount you are comfortable with is less than 32% of your income you may want to settle for the lower amount rather than stretch yourself financially. Make sure you don't leave yourself house poor. Structure your payments so that you can still afford simple luxuries.

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What is a home inspection and should I have one done?
A home inspection is a visual examination of the property to determine the overall condition of the home. In the process, the inspector should be checking all major components (roofs, ceilings, walls, floors, foundations, crawl spaces, attics, retaining walls, etc.) and systems (electrical, heating, plumbing, drainage, exterior weather proofing, etc.). The results
of the inspection should be provided to the purchaser in written form, in detail, generally within 24 hours of the inspection.

A pre-purchase home inspection can add peace of mind and make a difficult decision much easier. It may indicate that the home needs major structural repairs which can be factored into your buying decision. A home inspection helps remove a number of unknowns and increases the likelihood of a successful purchase.

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What is the minimum down payment needed for a home?
Borrowers normally need a minimum five per cent down payment from their own resources to purchase a home. Using CMHC's or Genworth Financial, 100% financing products, lenders can provide borrowers with the option of owning a home sooner. The downpayment can come from a variety of new sources, such as borrowed funds or lender incentives, provided the funds are arm's length to and not tied to the purchase or sale of the property.
These products are intended to appeal to first time homebuyers who may lack a cash downpayment, but have a good credit history and sufficient income to support the financial obligations of home ownership.
100% financing products have the same flexibility as other CMHC or Genworth Financial Mortgage Loan Insurance products - fixed, adjustable, or capped variable interest rates and interest terms as short as six months. CMHC's or Genworth Financial popular purchase plus improvement feature is also available.
Consistent with other CMHC or Genworth Financial Mortgage Loan Insurance products, the 100% financing product allows the option of borrowing up to 1.5 per cent of the purchase price to cover closing costs. If the closing costs are borrowed, any associated payment is to be included in the Total Debt Servicing calculation based on a 12 month repayment period.

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What is mortgage loan insurance?
Mortgage loan insurance is insurance provided by Canada Mortgage and Housing Corporation (CMHC), a crown corporation, and Genworth Financial, an approved private corporation. This insurance is required by law to insure lenders against default on mortgages with a loan to value ratio greater than 75%. The insurance premiums, ranging from .50% to 2.75% (for traditional down payment), are paid by the borrower and can be added directly onto the mortgage amount. This is not the same as mortgage life insurance.

*see your lender for premium surcharges and other terms & conditions which continue to apply.

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What is a conventional mortgage?
A conventional mortgage is usually one where the down payment is equal to 25% or more of the purchase price, a loan to value of or less than 75%, and does not normally require mortgage loan insurance.

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How does bankruptcy affect qualification for a mortgage?
Depending on the circumstances surrounding your bankruptcy, generally some lenders would consider providing mortgage financing.

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How will child support affect mortgage qualification?
Where child support and alimony are paid by you to another person, generally the amount paid out is deducted from your total income before determining the size of mortgage you will qualify for.

Where child support and alimony are received by you from another person, generally the amount paid may be added to your total income before determining the size of mortgage you will qualify for, provided proof of regular receipt is available for a period of time determined by the lender.

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Why should I use a Jayman Financial Mortgage Agent?
Financial Institutions sell only their own products to the public through their own sales force. As a result, they are not able to provide unbiased advice or selection since by doing so they risk losing your mortgage to a company whose product may provide more value to you. Jayman Financial Mortgage Agents on the other hand, sell a variety of mortgage products and services as they deal with many lenders, not just one. Because of this they are able to search for product from a variety of lenders, including banks, trust companies, insurance companies and credit unions, for the one that offers the best product, rate and terms for your particular needs. Thus, they can be totally objective in their recommendations to you.

Jayman Financial Mortgage Agents are also able to negotiate on your behalf, structuring deals to meet the criteria of the lenders, and therefore getting you a mortgage solution that works for you. Remember a Jayman Financial Mortgage Agent works for you!

Based on Jayman Financials Buying Power, fees are paid by the lender. Jayman Financial Mortgage Agent can shop among the various financial institutions for the mortgage rate and product that best suits your needs, in almost all cases, at no cost to you the client.

When you deal directly with a Financial Institution and your mortgage is declined, for whatever reason, you must begin the application process all over again with another Lender. When you deal with a Jayman Mortgage Agent the application can quickly be redirected to another Lender, or several other lenders, for consideration.

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Can I use gift funds as a down payment?
Most lenders will accept down payment funds that are a gift from family as an acceptable down payment. A gift letter signed by the donor is usually required to confirm that the funds are a true gift and not a loan. where the mortgage requires mortgage loan insurance, Canada mortgage and housing corporation requires the gift money to be in the purchaser's possession before the application is sent in to them for approval. where mortgage loan
insurance is provided by GenWorth this is not a requirement. See 'what is mortgage loan insurance?' for further information.

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What is a pre-approved mortgage?
A pre-approved mortgage provides an interest rate guarantee from a lender for a specified period of time (usually 60 to 90 days) and for a set amount of money. The pre-approval is calculated based on information provided by you and is generally subject to certain conditions being met before the mortgage is finalized. Conditions would usually be things like 'written employment and income confirmation' and 'down payment from your own resources', for example.

Most successful real estate professionals will want to ensure you have a pre-approved mortgage in place before they take you out looking for a home. This is to ensure that they are showing you property within your affordable price range.

In summary, a pre-approved mortgage is one of the first steps a home buyer should take before beginning the buying process.

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Should I wait for my mortgage to mature?
Lenders will often guarantee an interest rate to you as much as 90 days before your mortgage matures. And, as long as you are not increasing your mortgage, they will cover the costs of transferring your mortgage too. This means a rate promised well in advance of your maturity date, thus eliminating any worries of higher rates. And if rates drop before the actual maturity rate, the new lender will usually adjust your interest rate lower as well.

Most lenders send out their mortgage renewal notices offering existing clients their posted interest rates. The rate you are being offered is usually not the best one. Always investigate the possibility of a lower interest rate, contact Jayman Financial for the "Best Rates First!" If you don't, you may end up paying a much higher interest rate on your renewing mortgage than you need to.

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What is a down payment?
Very few home buyers have the cash available to buy a home outright. Most of us will turn to a financial institution for a mortgage the first step in a potentially long-standing relationship. But even with a mortgage, you will need to raise the money for a down payment.

The down payment is that portion of the purchase price you furnish yourself. The amount of the down payment (which represents your financial stake, or the equity in your new home) should be determined well before you start house hunting.

The larger the down payment, the less your home costs in the long run. With a smaller mortgage, interest costs will be lower and over time this will add up to significant savings.

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How can you pay off your mortgage sooner?
There are ways to reduce the number of years to pay down your mortgage. You'll enjoy significant savings by:

Selecting a non-monthly or accelerated payment schedule
Increasing your payment frequency schedule
Making principal prepayments
Making Double-Up Payments
Selecting a shorter amortization at renewal

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How can you use your RRSP to help you buy your first home?
Today, about 50% of first-time home buyers use their RRSP savings to help finance a down payment. With the federal government's Home Buyers' Plan, you can use up to $20,000 in RRSP savings ($40,000 for a couple) to help pay for your down payment on your first home. You then have 15 years to repay your RRSP.

To qualify, the RRSP funds you're using must be on deposit for at least 90 days. You'll also need a signed agreement to buy a qualifying home.

Even if you have already saved for your down payment, it may make good financial sense to access your savings through the Home Buyers' Plan. For example, if you had already saved $20,000 for a down payment - and assuming you still had enough "contribution room" in your RRSP for a contribution of that amount you could move your savings into a registered investment at least 90 days before your closing date. Then, simply withdraw the money through the Home Buyers' Plan.

The advantage? Your $20,000 RRSP contribution will count as a tax deduction this year. Use any tax refund you receive to repay the RRSP or other expenses related to buying your home.

While using your RRSP for a down payment may help you buy a home sooner, it can also mean missing out on some tax-sheltered growth. So be sure to ask your Jayman Financial Mortgage Agent whether this strategy makes sense for you, given your personal financial situation.

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What are the costs associated with buying a home?
First and foremost, you have to make sure you have enough money for a down payment - the portion of the purchase price that you furnish yourself.

To qualify for a conventional mortgage you will need a down payment of 25% or more. However, you can qualify for a low down payment insured mortgage with 0% down.

Secondly, you will require money for closing costs (up to 1.5% of the basic purchase price).

If you want to have the home inspected by a professional building inspector - which we highly recommend - you will need to pay an inspection fee. The inspection may bring to light areas where repairs or maintenance are required and will assure you that the house is structurally sound. Usually the inspector will provide you with a written report. If they don't, then ask for one.

If you are proceeding with a conventional mortgage you will have to provide the lender with a property appraisal - you will need to pay an appraisal fees. An appraisal is a process which determines the market value of property. This will usually be performed by a professional appraiser who will prepare a comprehensive report complete with photographs of the home.

You will be responsible for paying the fees and disbursements for the lawyer or notary acting for you in the purchase of your home. We suggest you shop around before making your decision on who you are going to use, because fees for these services may vary significantly.

There are closing and adjustment costs, interest adjustment costs between buyer and seller .

Finally, you will be required to have property insurance in place by the closing date. And you will be responsible for the cost of moving.

Remember, there will be all kinds of things you'll have to purchase early on - appliances, garden tools, cleaning materials etc. So factor these expenses into your initial costs.

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What should the length of my mortgage term be?
The length of mortgage terms varies widely - from six months right up to 18 years. As a rule of thumb, the shorter the term, the lower the interest rate the longer the term, the higher the rate.

While three to five year mortgages are what most home buyers typically choose, you may consider a short-term mortgage if you have a higher tolerance for risk, if you have time to watch rates or are not prepared to make a long-term commitment right now.

Before selecting your mortgage term, we suggest you answer the following questions:

1. Do you plan to sell your house in the short-term without buying another? If so, a short mortgage term may be the best option.

2. Do you believe that interest rates have bottomed out and are not likely to drop more? If that's the case, a long mortgage term may be the right choice for you. Similarly, if you think rates are currently high, you may want to opt for a short to medium length mortgage term hoping that rates drop by the time your term expires.

3. Are you looking for security as a first-time home buyer? Then you may prefer a longer mortgage term, so that you can budget for and manage your monthly expenses.

4. Are you willing to follow interest rates closely and risk their being increased mortgage payments following a renewal? If that's the case, a short mortgage term may best suit your needs.

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What are the monthly costs of owning a home?
Needless to say, you'll have financial responsibilities as a home owner.

Some of them, like taxes, may not be billed monthly, so do the calculations to break them down into monthly costs. Below you will find a list of these expenses.

The Mortgage Payment

For most home buyers, this is the largest monthly expense. The actual amount of the mortgage payment can vary widely since it is based on a number of variables, such as mortgage term or amortization.

Property Taxes

Property tax can be paid in two ways - remitted directly to the municipality by you, in which case you may be required to periodically show proof of payment to your financial institution; or paid as part of your monthly mortgage payment.

School Taxes

In some municipalities, these taxes are integrated into the property taxes. In others, they are collected separately and are payable in a single lump sum, usually due at the end of the current school year.

Utilities

As a home owner, you'll be responsible for all utility bills including heating, gas, electricity, water, telephone and cable.

Maintenance and Upkeep

You will also have to cover the cost of painting, roof repairs, electrical and plumbing, walks and driveway, lawn care and snow removal. A well-maintained property helps to preserve your home's market value, enhances the neighbourhood and, depending on the kind of renovations you make could add to the worth of your property.

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What is a high-ratio mortgage?
A High-Ratio mortgage is one where the amount to be borrowed by way of a mortgage is greater than 75% of the purchase price, or the appraised value, whichever is less. High-Ratio mortgages generally require Mortgage Loan Insurance provided by either Canada Mortgage and Housing Corporation (CMHC) or Genworth, a private Insurer.

The Mortgage Loan Insurance premium is paid to CMHC or Genworth and protects the Lender in the event the mortgage is not repaid and the bank has to take back the property. The benefit to the borrower is that it allows them to purchase a home with less than 25% down payment. The insurance premium is paid by the borrower and can be added directly onto the mortgage.

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What is a fixed rate mortgage?
The interest rate on a fixed-rate mortgage is set for a pre-determined term - usually between 6 months to 18 years. This offers the security of knowing what you will be paying for the term selected.

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What is a variable rate mortgage?
A mortgage in which payments can be fixed for a period of one to two years although interest rates may fluctuate from month to month depending on market conditions. If interest rates go down, more of the payment goes towards reducing the principal; if rates go up, a larger portion of the monthly payment goes towards covering the interest.

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Can I get a mortgage to purchase a home and make improvements?
Subject to qualification, yes. For high-ratio financing, both Canada Mortgage and Housing Corporation and Genworth, insured mortgages are available to cover the purchase price of a home as well as an amount to pay for immediate major renovations or improvements that the purchaser may wish to make to the property. This option eliminates the need to finance the renovations or improvements separately. Some conditions apply.

Where the improvements are cosmetic, the Mortgage Loan Insurance Premium is unchanged from the standard schedule. Where the improvements are deemed to be structural, the Mortgage Loan Insurance Premium is increased by .50% over the standard schedule.

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What is TIPP, and how does it work?
TIPP is a Tax Instalment Payment Plan that allows property owners to pay their Property Tax in 12 instalments, rather than a single annual payment.

Payments may only be made on the first of each month by automatic withdrawal from a bank account. A monthly payment is calculated by dividing your annual tax levy by 12. The program begins January 1, however, you may join at any time during the year. Your payment amount will be adjusted for June 1 to compensate for changes in taxes as a result of the annual tax levy in May. You will be notified of the total amount of instalments paid to date and the new instalment amount for the remainder of the year.

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What is Jayman Securesell?
Now you can purchase a new Jayman home prior to the sale of your existing home. If you have sufficient equity in your existing home and would prefer to start construction of your new home prior to selling, Jayman’s SecureSell program may fit your needs. By listing your home at market value and placing it on the market as soon as the first stage of construction starts, you will improve your chances of selling quickly and matching the possession dates of you new and existing homes. Under the SecureSell program, you will have the security of knowing that if your home does not sell as quickly as anticipated; the possession date of your new home can be extended. Jayman MasterBUILT will absorb any interest carrying costs for the first 30 days of extension. Jayman Realty guarantees to sell pre-owned home or they will purchase the new home back. (certain conditions, limitations and rules apply) Please contact your Jayman Financial Mortgage Agent to discuss your financing needs.

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What is deposit financing?
Jayman Financial will arrange access to your equity in your existing home at time of listing, at a very favourable cost, allowing you to purchase a new Jayman Home through our SecureSell program. Most builders in general will not start construction of your new home if they have a house to sell and cannot qualify for both. Also, the majority of lending institutes will not provide interim financing unless you have an unconditional sale on your home. Please contact a Jayman Financial Mortgage Agent to day at (877) 974-6843 to discuss this program in detail.

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What would be your advice if I wanted to get ahead faster?
Historically, a variable rate mortgage has averaged out with less interest being paid over the long run. Presently in Canada, about 60% of borrowers are in these types of mortgages. The next most practical choice is a 10-year fixed term, especially when you consider that interest rates are historically very low.

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