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Case Study 13

Purpose Applicant purchased a new construction home for $400,000 in December 2017 and wants to capitalize on lift in value  Property Contract to purchase with a $25,000 deposit was entered into in Dec. 2017 $500,000 current appraised value 3 comparables in a highly marketable prime lending area with DOM under 90 Credit 575 FICO score Excellent mortgage repayment history Income and Debt Servicing Salaried income earning $89,000K annually Employment verified by employment letter, pay stub, and verbal confirmation by employer GDS/TDS is 36/36% with stressed TDS of 43% using the mortgage rate plus 200bps Mortgage Details LTV 80% Pre-Construction Property Value (Dec. 2017) $400,000 Current Market Value (2018) $500,000 Loan Amount $400,000 GDS/TDS Calculation Salaried Income  100% $89,000 GDS/TDS 36/36% Stressed TDS 43% Deal Rationale: Client got a 1 year mortgage for $400,000 (which is 80% LTV of current market value for the home and also doesn't exceed 100% of the original purchase price). The client was able to get his $25,000 deposit back. Did you know? This scenario can help anyone with Rent-to-Owns and Pre-sales contracts. For more information, don't hesitate to contact us. MoneyValue www.moneyvalue.va e: contact@moneyvalue.ca T: 416 822 5886

Case Study 11

The applicant is a sole proprietor of a salon.  He has accumulated $65K in debt, spanned across multiple credit sources, from renovating his apartment. His applied for a one year mortgage at 80% LTV and provided the following documents to qualify the $90K BFS income: Documentation Provided: 6 months business bank statements 6 recent contracts/invoices Copy of business licence Statutory declaration from the lawyer showing no taxes owing HST/GST number He submitted a signed Income Declaration Form which calculated the client's qualifying income:    A) Gross Revenue Annualized Bank Statements $193K B) Annual Expenses Salaries and Wages (minus client's own salary/drawings) $35K Lease for office/store space (if applicable) $25K Other Annual Expenses: Cost of goods/materials $33K Phone $10K Total Annual Expenses $103K C) Qualifying Income (A - B) = C $90K Deal Rationale: The client's GDS/TDS was 36/36% with stressed debt service ratio of 43%. The client qualified for a one year mortgage at 80% LTV to consolidate debts with $1.2K in monthly savings. After paying off $65K in debt, the client had enough leftover equity to purchase a new grooming station for the salon and expand its operational capacity. TELL US YOUR STORY MoneyValue t: 416 822 5886 e: contact@moneyvalue.ca www.moneyvalue.ca

Case Study 7

Purpose

• Applicant wants to purchase home while away from work on maternity/paternity leave
• Recently seperated from spouse and currently renting apartment

Income and Debt Servicing

• Stable salaried positions earning $55,000
• Employment verified by employment letter, pay stub, and verbal confirmation by employer
• $1.5K in monthly child and alimony support
• $541 in monthly Canada Child Benefits
• GDS/TDS is 39/39% with a stressed TDS of 46% using the mortgage rate plus 200bps

Mortgage Details
LTV	80%
Property Value	$400,000

GDS/TDS Calculation Salaried Income (Maternity/Paternity Leave) 100% $55,000 Additional Income Sources Child and Alimony Support 100% $18,000 Canada Child Benefits 100%  $6,492  $79,492 GDS/TDS 39/39% Stressed TDS 46%

Credit

• 550 Beacon
• Payments and bills were missed during the difficult period leading up to the applicant's divorce
• Excellent mortgage repayment history on previous home

Property

• $400,000 property value
• Good condition, well maintained property in suburban area

Down Payment

• $20K down payment from client's own savings
• $60K from the seperation settlement 

Deal Rationale:

Client was offered a 1 year mortgage at 80% LTV. The client was able to purchase a new home to raise their child in. 

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Tips, Tricks, and Financial Hacks for House Hunters!

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Do you feel like you need a few tricks up your sleeve to buy a home? Good news! You don’t need to work magic to purchase a property. Shed that sensation with these terrific, under-recognized financial hacks for homebuyers.

Increase Your Credit Score

When it comes to buying a house, your credit score is a pivotal piece of information. As explained by SmartAsset, your credit score has a three-pronged, direct impact on your home loan. It affects the amount of your loan, your interest rate, and the kind of loan you can get. Your credit score is a snapshot of your financial health, and the better your rating, the better your loan will be. Therefore, it’s in your best interest (literally!) to increase your credit score. Before you begin the homebuying process, you should request a credit report and review all the data on it to identify room for improvement. You can improve your credit rating in several different ways:

●     Dispute errors in your credit history, such as accounts you never opened. 

●     Pay down your debt. 

●     Increase your credit limits, as the margin between what is available and what you owe can appear to be problematic.

●     Reconcile dings by asking for forgiveness on late payments.

●     Negotiate removal of mistakes on your part, such as unpaid debts.

●     Dispute other negative marks; sometimes lenders will let go of issues if they are small or if their records are inconclusive.

Stow for Your Down Payment

Sometimes we do things we don’t want to do because it’s a healthy choice. The typical down payment lenders require is 20 percent(min 5% on insured mortgages), and on a $200,000 home, that means coughing up $40,000. Saving up cash for a bigger down payment is a great way to get a better home loan, but as Benzinga notes, it may mean making choices that are uncomfortable. For instance, you can save your rent payment by housing with a close friend or relative for a while or sell your car and take public transportation or carpool. You should also research what the average down payment is for homes in your target area, or the percentage of homes that sell under their listed price. Saving up will help ensure you have sufficient funds ready to negotiate your sale.

Besides your down payment and mortgage, there are other home expenses to consider, including utilities and routine maintenance. It’s a good idea to use a home cost calculator to get an idea of the real cost of owning a home.

Find Relisted Properties

Do some sleuthing! Look for homes that were pulled off the market and relisted. As time drags on, the seller will often accept a lower offer. When you’re examining listings, pay attention to the continuous days on market (CDOM). That number tells you the number of days since the property was initially listed.

Look for Good Bones

As the Chicago Tribune points out, you can often stretch your dollars by buying an ugly home. It’s also a great way to get into a neighborhood you couldn’t otherwise afford. Finding a home in good repair but out-of-date style-wise means you might be able to score a diamond in the rough. Outdated appliances, flooring, paint, light fixtures, and other cosmetics may not be easy on the eye, but they are often easy on the wallet. Make sure the property’s roof, plumbing, foundation, and electrical structures are healthy; you can work on making the place suit your style after you move in. 

Winter Can Work

Winter is when the housing market can slow significantly. Some experts note that between weather, the holidays, and being in the midst of the school year, many potential homebuyers put things on hold. That means you can take advantage of the season, and you might just have your pick of homes -- with less competition and better bargaining power to boot.

Hacks That Work for You

While it may be a challenge, you don’t need to be a magician to become a homeowner.  Make wise decisions and incorporate smart financial hacks into your bag of tricks. You’ll be a homeowner in no time!

Sara Bailey