Oct
24
What A Mortgage Really Is…
Filed Under Mortgage Minute, Mortgages | Leave a Comment
We had some questions regarding mortgages, and wanted to explain exactly what a mortgage is…
The most important thing you must realize about a mortgage is that what you believe it to be is actually wrong. Often referred to as a mortgage home loan, they are not a loan in the traditional meaning of the word. The mortgage is a legal contract between the mortgagor who is buying the property and the mortgagee, the person supplying the finance and security against the property. However, it is easier to explain it as a legally binding document where the lender is protected from loss by using the property as security for the debt.
Mortgages have in fact changed the face of house buying because they provide the facility for the purchase without the buyer paying the full cost upfront. The way this process works is presented in brief detail during the rest of this article. Being the financier, the mortgagee is the person who lends funds to the mortgagor or borrower. The document itself produces a lien on your property which is not cleared until the debt is paid.
The property you are buying does in fact become collateral for the finance that has been sought to pay for it and is the protection a mortgagee needs if he is going to continue financing house purchases. Records of this are normally kept in the public records section of the county courthouse or a similar establishment. While the property is owned now by the mortgagor, the lien cannot be reversed until the amount specified in the debt is paid off. So how this works is that the mortgagor (you) owns the property completely even though the mortgagee has possession of the mortgage but not the title.
The only right the mortgagee has over the property now is if payments are missed and the property needs to be sold so the mortgagee can recoup his funds. If in the unfortunate event this happens, the process whereby the funds are reclaimed is called foreclosure. This is done in order for it to be considered legal; this type of foreclosure is referred to as a judicial foreclosure. This is the subject in brief and while there is a great deal more to it, perhaps this will help to clear up any ambiguities you may have previously experienced.
Jan
22
The U.S Federal Reserve slashed their prime lending rate a massive 0.75% this morning in an unexpected surprise announcement, making the largest cut in 23 years. The U.S made their announcement one hour before the Bank of Canada announced their rate cut of 0.25%. The Globe and Mail reports the U.S did not give the Bank of Canada any notice of their surprising cut and by that time the official statement had been handed to journalists leaving the Bank of Canada’s hands tied. Immediately after the announcement TD Bank released their take on the situation and predicts the Bank of Canada dropping rates 0.50% in March to match the U.S and then a further 0.25% in April making Canadian Prime at 5.00% before the start of what could be a very busy spring for Real Estate in Canada.
With these recent developments in mind, a variable rate mortgage with a rate of 0.5%-0.6% below prime is looking very attractive. The possibility exists, come April, to have your rate sitting at 4.50% saving thousands of dollars on many mortgages. The U.S Federal Reserve has forced Canada’s hand and we should see very favorable interest rates over the course of the 2008 year. If you are thinking of refinancing, between now and March might be a very good time to do so. Any questions regarding rates or mortgages feel free to contact me with no obligation!
Until next time,
Joshua Taylor
Jan
16
Hello All,
I would like to introduce to you a great mortgage broker that I have been working with, who is going to be making regular posts here on The Calgary Real Estate Blog.com. His name is Joshua Taylor from Centum Mortgage. Josh is a very interesting gentleman, who brings some excellent insights into the mortgage and lending world. He recently sent me this post below to start off his soon to be extraordinary blogging career!
Welcome Josh!
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Hello everyone, I’m very excited to be apart of The Calgary Real Estate Blog.com’s panel of experts. So here we go…
It seems that the bank of Canada is going to usher in the New Year with a second consecutive rate cut in six weeks. Bloomberg reports that the majority of Canadian economists are on board with the expectation that rates will fall from 6.00% to 5.75% when the Bank of Canada meets on January 22, 2008. This seems like a natural move after the made their “unexpected” rate drop on December 4th in a bid to bolster growth. With the sudden slowdown in the US economy, Canada was forced to follow the American lead by lowering interest rates in December and is poised to make the first interest rate move in the New Year.
Merrill Lynch takes this initial rate drop a step further by predicting a 1.25% decrease over the course of 2008. David Wolf, a chief economist for Merrill Lynch, says he is predicting the drop because of weakened US demand combined with cooling inflation. How does this affect me and my mortgage? If the predictions are correct, and you are in an adjustable rate mortgage you could be in line for some low mortgage payments over the course of this year. David Wolf and Merrill Lynch are but one opinion over the long term and things could change but for January 22, 2008 we should expect to see a dip in interest rates once again.
Until Next Time,
Joshua Taylor
The Chamberlain Group
