Approving Your Home: ValueMags
Home approval and mortgage approval can be a stressful process, especially if your credit score is not reliable explains summarizes one of ValueMags business magazines. The marketing agency for magazine publishers has come across many cases of individuals that cannot get the house they desired because of poor credit scores or poor financing. For this reason, ValueMags is seeking an investment tips and tricks magazine publisher to market for. Ideally, the company would like to offer magazines to every type of reader to help them similar to Parents magazine and Bridal Guide Magazine.
The pre-approval letter is the beacon and credit score of the client. That will show the bank proof that the client knows how to use credit. Credit scores are between 0-900 but if the client has a score below 600 then practically no banks will lend them money. If that is the case, then the client will get a consumer proposal which means that they will have to pay x-amount of dollars to get a loan. After someone is bankrupt they cannot get a loan for the next 7-8 years. After checking the credit and beacon the bank will then ask the client how they are going to pay the down payment and with what percentage. The minimum down payment that someone can do is 5%, if the client deposits less than 20% but more than 5% they will be getting an insured mortgage explained the magazine article. An insured mortgage is when the client has to pay a premium of $10,000 over the next 5 years. The amortization for an insured mortgage is payed over 25 years unless if the client puts down 20% then it can be payed over 30 years says ValueMags executives. Usually first time buyers go with amortization over 30 years since it is less each month. When the bank deals with first home buyers 1/30 of the clients will collect the 20% down payment for the home on their own, 20/30 will only have 5% and 9/30 will have a gift letter for their down payment.
After all of that is established the buyer then chooses whether they would like a fixed or variable interest rate. The options per years is 1, 2, 3, 4, 5, 8 and 10, but 10 is not advised. Usually a variable interest rate is 3 or 5 years, with variable interest rates the interest rate fluctuates. The rate varies on the prime but if you get a discount no matter what the prime rate changes to the discount will be added onto it. For a fixed interest rate on the other hand the rate never changes over the duration of your mortgage rate. If the buyer breaks the mortgage term, there will be a penalty and depending on whether it was fixed or not there are different consequences. There are 2 possibilities for fixed interest rates the first being, you must pay 3 months of interest on all of the money that you are borrowing says ValueMags as an elaboration of the business and investment magazine article. The second option is RID, the interest rate differential, this option could be $10,000-$16,000 or $20,000. One of the two choices will be chosen for the buyer by the bank. By breaking the mortgage term that means that you are switching from fixed to variable, you are essentially changing the contract. When choosing variable interest rates the consequence for changing the contract is always 3 months’ interest. It is not recommended to shop for the best rate. That is because if it is quite a bit lower than any other bank chances are there are a lot of strings attached. That could mean that you cannot cancel your mortgage if you are relocated to another country and still have a mortgage in your current residence. They could be maxing out your rate so you have no extra money besides paying your mortgage, if you have a very prosperous month and want to put more money down sometimes they will not let you. Those places sometimes sign you up for mortgage insurance without you knowing which will make you pay more as well as they will make you open a credit card with them.
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