The attached video is a chat I had a few weeks back with Elizabeth Wilson, Editor of REW.ca. We covered the basics about what’s been pushing up rates lately, the fixed vs. variable decision and why rate holds are so important.
On that last point, it’s worth noting that pre-approval/rate holds are often 10+ basis points more expensive than rates on “live deals” (i.e., applications with firm closing dates). But that’s no reason not to get a pre-approval. If there’s a chance you’ll close a mortgage within 180 days, you always need to protect yourself from adverse rate moves. Furthermore, pre-approvals never bind you to a lender, so it’s like a free option.
Rob McLister, CMT
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Last modified: July 19, 2013
If all first time buyers are required to pass a course and a test for Mortgage basics, the Big banks will loose 85% of their “blind” clients.
Hi
How long do banks usually guarantee rates on pre approvals of variable mortgages?
Thanks!
90 days is typical.
120 days for standard rates and 90 for promo rates.
please spell check before submitting it is lose not loose
Thanks for the interview, Rob. You’re great at helping people understand the ins and outs of mortgages.
Its called spell check, not grammar check. The word was spelt correctly. Stop focusing on grammatical erros and try to comprehend the message behind it.
I think Rob hit the nail on the head. As a buyer you need to perform your own stress test and determine what you can handle. Don’t let the bank or CMHC determine what you can afford as they seem to be over optimistic. GDS/TDS ratios are calculations made before tax and in my opinion are not good measures compared to net pay. You need to add up your total expenses then subtract that from your net. Determine your mortgage costs with at least a 6% interest rate. Make sure to include prop tax, utilities and your phone/internet/tv costs, they will be important factors. If you can add and subtract with a calculator in addition to using a mortgage calculator there no excuse for not knowing your price range.
you obviously wanted to use the word “lose” but misspelled it. Because you make a mistake and it happens to become another word does not make it a grammatical mistake. And the message, that is also wrong
Rob I really appreciate this video! I’m in the situation of the last point you made. I have a VRm at -.65 I guess I am able to withstand a rate increase better than other VRM’s. Thank so much for the advice and help throughout the year. I’m on here at least three times a week! Great work!
Thanks Chris, Elizabeth and Frank.
It’s tough to beat 2.35%, Chris. If a VRM holder converted that to a 5-year fixed today, the rate would be a point higher. And, they’d lose all the benefit of faster principal paydown (which results from setting payments on that 2.35% mortgage to match a 3.35% mortgage, for example).
Cheers…