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Northwood Mortgage Frequently Asked Questions

Thinking of a mortgage? Feeling a tad overwhelmed? Well, don’t worry – mortgages are a complex form of loan, coming in many shapes, sizes and with different options and features.

We here at Northwood Mortgage get a lot of questions about mortgages. And we’re more than happy to provide answers in person or on the phone. But to further help guide you through the world of mortgages we’ve compiled an FAQ of common queries about mortgage financing.

If I’m turned down, can my spouse still get coverage?

Yes they can. Many policies have insurability and underwriting guidelines that are broad and liberal. However, some applicants may be declined. If that happens, you and your spouse may apply for separate policies

Just who can get a mortgage?

Simple: Anyone who qualifies.Those seeking a high loan-to-home-value ratio can receive mortgage insurance for loans that cover not only the home’s cost but also the cost of any renovation work that is to be done immediately after the purchase is wrapped up. For those with more straightforward goals – buying a home and moving in with no major reno work – can qualify for a mortgage with as little as a 5 percent down payment on the total purchase price.

(For what’s termed a conventional mortgage, however, the down payment will be at a minimum 20 percent and the loan-to-price ratio will be at 80 percent maximum. Good news – these loans don’t normally by law require mortgage insurance.)

There is a slight wiggle here, but not one that will automatically end mortgage viability – bankruptcy. But if you’re worried that having declared bankruptcy will make any attempt at landing a mortgage null and void, don’t be, as mortgages can still be possible depending on the details of the bankruptcy.

Does the Mortgage Insurance premium increase as the mortgagor ages?

With many of our programs, the premiums stay the same as you get older.

What Exactly is a Down Payment?

For those approaching the topic of mortgages for the first time, there can be some confusion about down payments. Simply put, when obtaining a mortgage to buy a home you will need to offer up some funding to cover a percentage of the home purchase price. You can’t get a mortgage without putting some of your own financial skin into the process. Remember, when you get a mortgage you are entering into a major (likely the single biggest) financial arrangement of your life – and it’s one that will in most cases last for a long amount of time.

The down payment is your equity stake in a new home. Depending on the mortgage situation and home value, it can be as low as 5 percent up-front, or higher. And before you begin looking for houses, you should have a crystal clear sense of just how much in a down payment you can afford.

But also remember that a down payment isn’t just your entry price into the process of getting a mortgage and a home. It will also determine just how much you pay for that home over the life of the mortgage. This is because that the more you take out in a mortgage, the higher your resulting interest cost will be. So the more money you can put towards the down payment, the more dollar-for-dollar value you’ll get on the loan – and given the lengthy time span of many mortgages, this can be a major amount of money saved.

How do Mortgage Insurance premiums get paid?

Northwood Mortgage Life offers many payment options and our agents will explain them to you in detail. They may include credit card, electronic deposits or other suitable methods

What are Some Considerations if you make a Low Down Payment?

Paying a 5 percent down payment is an option that many mortgage lenders are willing to give you. This payment possibility is a slice of the normal 20 percent down payment required for a conventional mortgage.

But unlike conventional mortgages, low down payment loans require insurance to protect the lender from the risk of default. And with insurance comes insurance premiums, which will make the carrying costs of a 5 percent down loan higher than mortgages with higher down payment amounts.All told, the added costs to a low down payment mortgage include fees for appraisal and legal services; the fee to apply for mortgage insurance; and additional payments that go to covering the insurance premiums.

And a low 5 percent down payment must be paid in cash, or from a family gift of money.

When does Mortgage Insurance coverage become effective?

With Mortgage Insurance in most cases, right away, but your Northwood Mortgage Life Insurance agent always makes sure you understand any special conditions that apply.

Conditional Receipt: A receipt given for premium payment accompanying an application for insurance. If the application is approved as applied for, the coverage is effective on the later of the date of prepayment or the date on which the last of the underwriting requirements, such as medical examination, has been received by the insurance company. A conditional receipt for premiums paid upon application may protect the proposed insured from changes in health occurring after the application and funds have been submitted to the insurance company.


Can I Use Funding Help from my Family to Help Pay Down a Mortgage?

In many instances, relatives of a home seeker offer to help pitch in some money for the big purchase. And, from the perspective of landing a mortgage, these funds are fair game for use as a down payment.

Some minor conditions apply here: the federal mortgage insurance CMHC needs the gift money to have been transferred to the buyer prior to an insurance application being sent off to them, and a formal letter about the gift verifying it is indeed a gift and not a loan can be required.

When does Mortgage disability insurance coverage terminate?

Mortgage Insurance coverage remains in force until the policy term ends or until you reach age 65. (If your spouse is also covered and is younger than 65, your spouse coverage remains in effect until he/she turns 65.) %p All Mortgage Insurance coverage stops if you discontinue premium payments or if you request termination of your policy.

Can I use RRSPs to Pay for a Mortgage?

Down payments on a mortgage don’t have to be paid entirely in cash – they can also come from RRSP savings. Many new mortgage recipients use this option, which under federal rules allow an individual to use up to $25,000 in RRSPs ($50,000 for couples) towards a mortgage down payment.

The conditions for RRSPs are that the funds must be kept on deposit for a minimum of three months, and to free the RRSP money requires a signed agreement for the purchase of a home.

Why do this? Aside from giving you flexibility to use more than cash, an RRSP contribution will be counted as a tax deduction, letting you use the resulting tax rebate to help cover expenses. But using RRSPs towards a mortgage may have implications when it comes to financial growth protected from taxes, so it’s best to speak with a financial planner before going this route.

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