Mortgage Specialist - Ask me any question

[Slava]

Originally Posted by Kristi Hyson

Hi,

I agree mortgage holders require insurance, however, I disagree with the information posted "It doesn't offer the same security and bluntly the party that receives the protection in those cases is the financial institution."

Clarification, life insurance offered by financial institutions is not in the financial institutions best interest, the insurance is in the mortgage holder’s best interest. The only insurance requirement the financial institution is concerned about is fire insurance. The property in which the mortgage is registered is the security, if the home is not insured against loss of life, health crisis & disability the property can be foreclosed on in the event of a death or an accident.

Mortgage insurance offered by financial institutions cover the entire mortgage including the penalty. If you take a policy with a third party insurance company for the mortgage amount and do not include provisions for the penalty (in the event of an early payout) the policy will not cover the mortgage in full and will leave an outstanding balance. With the financial institutions policies the mortgage is paid in full inclusive of the penalty.

It is best to review all options and choose the insurance product that best fits and meets the needs of the borrower.

I do agree that reviewing all of the options is the most important, and clearly the point is what is best for the borrower. Here are the reasons that buying a separate insurance policy makes more sense for the vast majority of people:

- The policy is not contingent on staying with one lender. When your term is up you can move your mortgage without needing to requalify for insurance, and won't be affected by medical changes.

- The policy pays the face amount, regardless of the value of your mortgage. This means that if you buy coverage for $500k you get a cheque for $500k to do with as you please. You can pay out the mortgage if you decide to. You don't have to though, and some people don't. A normal mortgage insurance policy pays out the mortgage and thats that.

- Your stand-alone policy is underwritten before you get a policy. A lot of mortgage insurance is underwritten at the time of a claim. What that means is that you know where you stand as far as coverage before you start paying for a policy, whereas with a lot of mortgage insurance you find out at the time of a claim whether the coverage will be paid; hardly a preference for most people and a huge risk that can be avoided.

- Because you determine a face amount for the coverage of a stand-alone policy you also factor other things in such as final expenses, income for a surviving spouse, donations to charity, school or wedding expenses for children, etc. Its a much more comprehensive coverage in that sense.

- The vast majority of people buy a policy each (for a couple) that covers them in the event of a death. This means that they're both insured, and if one does pass away the other still has a policy in force. Mortgage insurance pays the mortgage and its done.

This is all for life insurance, but there are also the same considerations for disability and critical illness coverage. Yes, the mortgage insurance can be useful for some people, but those cases are few and far between. The better route for most people is to get their own policy/policies and then decline the mortgage coverage.

[Cecil Terwilliger]

Originally Posted by Kristi Hyson

Hi,


Clarification, life insurance offered by financial institutions is not in the financial institutions best interest, the insurance is in the mortgage holder’s best interest. The only insurance requirement the financial institution is concerned about is fire insurance. The property in which the mortgage is registered is the security, if the home is not insured against loss of life, health crisis & disability the property can be foreclosed on in the event of a death or an accident.

Isn't it though?

For example, if a married couple has a mortgage and the breadwinner dies it is conceivable that they could go delinquent and eventually the bank might have to foreclose if the surviving spouse can't make ends meet financially.

If the mortgage was paid out with life insurance, even though the bank loses that mortgage on their books, at least they don't have to deal with the cost of foreclosing.

That scenario even works if it is just disability or something like cancer and they are both still living, especially in cases of people who bought right before the housing market went south and selling isn't an option because their mortgage is higher than their property value.

[onetwo_threefour]

^ Maybe banks are supporting the 'pay your mortgage by dying in an "accident"' theory by selling life insurance in a volatile market... How's that for cynicism?

[Kristi Hyson]

Below is a great link to Housing Market Information on Canada Mortgage and Housing Corporation (CMHC) website. CMHC updates their reports quarterly to give a reflection of the Canadian housing market and provides insight on the housing industry. The reports are a worthwhile read.

http://www.cmhc-schl.gc.ca/en/hoficl...main/index.cfm

[troutman]

Originally Posted by onetwo_threefour

^ Maybe banks are supporting the 'pay your mortgage by dying in an "accident"' theory by selling life insurance in a volatile market... How's that for cynicism?

When did the banks make real estate lawyers their insurance salesmen? I find it odd that these products are sometimes down-loaded on us to present the clients. This is awkward in terms of us representing both sides, and not being in a conflict of interest.

[bizaro86]

Originally Posted by troutman

When did the banks make real estate lawyers their insurance salesmen? I find it odd that these products are sometimes down-loaded on us to present the clients. This is awkward in terms of us representing both sides, and not being in a conflict of interest.

I've often signed a waiver saying my lawyer was representing both me and the bank to close the transaction.

I've always understood that was a way for the total mortgage transaction to cost less (1 lawyer instead of two) and an application of the golden rule. (He who is giving out the money makes the other guy pay the fees)

[onetwo_threefour]

^ That's why the first thing I tell people when I pull out the lender's life insurance form is that I am not a salesman, that I am not about to sell them anything, and that I will need a signature waiving the insurance or applying for it in order to get their mortgage funded, but I have no interest one way or the other in which they do. If they have already decided at that point I let them sign (apply or waive), if they ask my opinion, I let them know that I am not an expert, but will give them my understanding of the pros and cons. I tell them that if they want to do their homework, the best option is to take the life insurance, then shop around as soon as possible and cancel if they find something better. My justification for saying that is that if they refuse teh insurance with me, there is no guarantee that they will be able to apply again through the lender later, so they are better off getting the underwriting decision from the insurer before being refused somewhere else.

It adds a couple of minutes to my appointments, and yes I do resent it, but since I am certainly not paid to sell it, I don't really feel a conflict in presenting the form to the client as above. If they flat out ask me if I would take it I say no, but that is based on my own insurance arrangements that I have in place and that shouldn't influence their decision. IMO the most important thing to avoid any conflict of interest is full disclosure and honesty. I don't feel that I'm violating any duty to the lender, because the lender has hired me to prepare and perfect their security. Life insurance is not part of that job IMO. I'm sure it is security for the bank if a borrower takes the insurance, but if I was ever instructed that the mortgage couldn't be funded unless the borrower applied for life insurance when meeting with me I would certainly refuse to act for the Lender.

[Kristi Hyson]

This morning, the Federal Finance Minister announced further changes to Canada's mortgage insurance rules. Four measures were announced, effective July 9, 2012

1. Amortizations reduced to 25 years
2. Refinancing limited to 80%
3. Properties purchased at over $1 million no longer eligible for mortgage insurance
4. GDS and TDS set at 39% and 44%

What do all of these changes mean in the grand scheme of things? It can mean many different things to many different people. If you are looking to buy a home it may mean the difference between qualifying for a lower mortgage amount based on a 25 year amortization instead of a higher amount a 30 year amortization.

Some items to consider prior to the effective date:

· A pre-approval will not hold the amortization period, only the interest rate. A firm purchase agreement will be required to obtain a mortgage insurer approval. Closing can be in the future past July 9th, however no changes to the mortgage in terms of increase can occur past July 9th if a 30 year amortization is required.
· If you are building a new home with a completion mortgage and to qualify you require a 30 year amortization, a final purchase price will need to be completed with the builder and submitted to the lender for approval prior to July 9th to maintain a 30 year amortization.
· If you were considering on refinancing your home and required the funds from your home up to 85% loan to value and 30 year amortization an approval will be required prior to July 9th when the maximum equity take out changes to 80% and the amortization is reduced to 25 years.

Below are excellent links to view the articles surrounding the new regulations and the link to contact Minister Flaherty and your local MP.

To review this morning's Globe and Mail article

http://www.theglobeandmail.com/report-on-business/economy/housing/ottawa-tightening-mortgage-rules-no-more-30-year-amortizations/article4358876/

To review the government press release and backgrounders

http://www.fin.gc.ca/n12/12-070-eng.asp

To contact Minister Flaherty or your local MP

http://www.parl.gc.ca/Parlinfo/Compilations/HouseOfCommons/MemberByPostalCode.aspx?Menu=HOC

[Travis Munroe]

To further on to what Kristi said, CMHC is apparantly pretty backed up because of this change. Simply writing an offer 3 days before the deadline in anticipation of everything being approved in a timely manner is not the way to move forward if you are one of the people looking to buy before the change.

[albertGQ]

^^^
CMHC is taking forever to underwrite deals. Just send them to Genworth or CG instead.

[ranchlandsselling]

So are you an In Branch specialist? I'm looking to send some clients back to Scotia but they're not keen on their "in branh person". Can you be that person?

[Kristi Hyson]

Hi,

My apologies for the late reply, I was on holidays. I am a mobile mortgage specialist with Scotiabank and would be more than happy and capable of assisting the customers. Please let me know if you have any additional questions.

[Kristi Hyson]

I have been having excellent success with CG if the deal is good.

Originally Posted by albertGQ

^^^
CMHC is taking forever to underwrite deals. Just send them to Genworth or CG instead.

[ranchlandsselling]

Originally Posted by Kristi Hyson

Hi,

My apologies for the late reply, I was on holidays. I am a mobile mortgage specialist with Scotiabank and would be more than happy and capable of assisting the customers. Please let me know if you have any additional questions.

Just wanted to comment on some excellent service provided by Kristi. While I'm not always complementary on the service from various levels of Bank Branches there are plenty of people who are good at their jobs and provide excellent service. Kristi is one of them.

Thanks!

[Travis Munroe]

Originally Posted by ranchlandsselling

Just wanted to comment on some excellent service provided by Kristi. While I'm not always complementary on the service from various levels of Bank Branches there are plenty of people who are good at their jobs and provide excellent service. Kristi is one of them.

Thanks!

X2 - She became my go to mortgage specialist for numerous reasons....
My mortgage was done through Kristi. Her knowledge mixed with people skills mixed with a passion for the industry was more than I could ask for. Not to mention having her come to you to look at your finances and give suggestions on furthering yourself was just a bonus.

[bizaro86]

Can you modify existing scotia mortgages? Ie. blend and extends.

What are your current best 5/10 year fixed rates?

[Table 5]

I know it's a crystal ball situation, but for those who are in the know (and I'm clearly not one of them) would you advise going into a 5 or 10 year mortgage at the moment? I was offered 5 at 3.09% and 10 at 3.99%, 25 year amortization period.

Everyone keeps talking of rates going up eventually, but how far do you think they will go? and how long will it take?

Also, are those fairly decent rates at the moment?

[Cecil Terwilliger]

Originally Posted by Table 5

I know it's a crystal ball situation, but for those who are in the know (and I'm clearly not one of them) would you advise going into a 5 or 10 year mortgage at the moment? I was offered 5 at 3.09% and 10 at 3.99%, 25 year amortization period.

Everyone keeps talking of rates going up eventually, but how far do you think they will go? and how long will it take?

Also, are those fairly decent rates at the moment?

Depending on other factors like prepayment options I'd say those are good rates.

Thing about the 10 year is how many people stay for 10 years? I've heard numerous times that the average length of a term is something like 36 months. Meaming most people end up paying the penalty.

Personally I'd go with the 10 year because it provides a lot of stability, that's a personal preference based on my own situation though. Based on what I know about you (you are likely more financially stable than me) I might look at a variable rate mortgage.

If you're reasonably sure this is your last house ever, again I'd take the 10 year. If there's any chance you'll move 5 year is probably better.

Just my 2 cents.

[Table 5]

There's actually a very strong chance I will only live in this place for about 2-3 years, and then use it as a rental/income property while we move to something a little more spacious.

Btw, what penalty are you talking about? Sorry, I'm still new to all this stuff, so trying to learn.

[albertGQ]

I like that 5 year term. 3.09% is sweet!

The thing with the 10 year term is that after 5 years, if you do decide to move to another lender (or refinance or just break your contract or whatever), according to the Bank Act, your payout penalty is only 3 months interest. You won't have to worry abot IRD. That will soften the blow significantly if you ever wanted to break your mortgage.