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Movement Blog is powered by Movement Mortgage, whose mission is to be a Movement of Change in our Industry, Corporate Cultures and Communities.

By Mitch Mitchell

Getting pre-approved for a mortgage means that a lender has evaluated your particular citation and has determined that loaning you a specific amount of money to purchase a home is a low-risk loan and that you’re likely to pay back that loan in full and on time, with interest.

By going through the pre-approval process, you’ll know exactly what you can afford before going house hunting. Not only will it make the home-buying process easier, but it also keeps you from falling in love with properties that are out of your ballpark, saving you time and possible disappointment. 
Also, you’ll be taken more seriously by real estate agents who will want to work with you when they see that you are committed to buying and are pre-qualified to finance a home. 
And when you find a home you are interested in making a bid on, the seller will know that you’ve already got the backing from a bank or mortgage company. That can really help with your ability to negotiate!

Like everything else in life, getting pre-approved takes some effort. Luckily, most of it is done by the lender while you wait. Before a pre-approval is even considered, they’ll check several variables to get a better picture of your current situation. Financial stability is one such variable. Others include:
 
Whether you qualify will depend on their standards and requirements. Every lender is a little different. But if the lender gives a thumbs-up after reviewing the factors in the list above, they’ll provide an amount they’re willing to let you borrow for your house purchase. 

Typically, lenders focus on the following three aspects to help them determine if you are eligible for pre-approval and, if so, what amount they will loan you.

Gross income
To determine how much of a monthly payment you can afford, mortgage lenders will analyze your debts and look at your gross income — not your net take-home pay. Gross income is defined as the sum of all wages, salaries, interest payments and other earnings — before taxes. Why is gross income used instead of net income? Because borrowers are more familiar with how much they make a year than how much they take home every month, especially if they’re paid weekly or bi-weekly.

Debt-to-Income (DTI) ratio
Your DTI is your gross income compared to how much debt you have. That formula will help determine a total monthly mortgage payment that they feel you can afford, including principal, interest and taxes. That figure should be no more than 28% of your gross monthly income. They then take that number and add in all your monthly debts like car loan payments, monthly credit-card minimums and student-loan bills. This new figure should be no more than 36% of your gross monthly income. A DTI on the high side means your debts may impact your ability to make your proposed monthly mortgage payments, and, unfortunately, you probably won’t get the loan (or you’ll have to fall back to  a small amount to borrow.)

Credit score
Once gross income and DTI are figured out, lenders will look at your credit score. Even if you have a high DTI, all is not lost — a favorable credit score may increase your chances of getting pre-approved for a loan because it shows you can handle a higher amount of debt. Remember, every loan and lender has different credit score benchmarks, so if you don’t meet the requirements for one type of mortgage, you might meet those of another.

Once you’re pre-approved for a loan, you’ll know how much you’ll be able to comfortably pay every month. What you may not know is that you can actively influence that outcome.
Here are 4 ways you might be able to lower your monthly mortgage payment. 

Improve your credit score 
With a higher credit score, you increase your chances of being offered a lower interest rate — hence lower payments. To improve your credit score, follow these tips: do your best to pay every bill you get on time, pay off your debt, make payments more than the bare minimum and keep balances low on your credit card accounts. Lastly, closing unused accounts can negatively impact your credit score, so don’t do it until you’ve closed on your new house.

S-t-r-e-t-c-h the mortgage term 
A mortgage term is the time you have to fully repay the loan. For most mortgages, terms are either 15, 20 or 30 years and if your payments are extended over a longer time, they’ll end up being lower. Extending the loan may increase how much interest you end up paying over the long haul, though, but it can reduce your DTI and help you get the loan approved in the first place.

Save up more for your down payment 
Downpayments of 20% of the purchase price used to be commonplace, but these days loans are available to borrowers putting only 5%, and sometimes 0%! If you really want to lower your monthly mortgage payment, put down more cash than you originally planned to. The higher your down payment, the lower your monthly payment will be.

Say goodbye to PMI
When house prices were lower, it used to be the norm for first-time homebuyers to try to save for a 20% down payment. With people putting up less than that, lenders are taking a bigger risk that a borrower may default, and they take out private mortgage insurance, or PMI, to guard against that. Unfortunately, they don’t pay for the insurance; you do — it’s added to your monthly mortgage payment. But by putting 20% down — or by eventually getting to 20% equity through multiple monthly payments, you can get rid of PMI altogether, which will lower your monthly home loan payment.

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Movement Blog is powered by Movement Mortgage, whose mission is to be a Movement of Change in our Industry, Corporate Cultures and Communities.
By Mitch Mitchell

INDIAN LAND, S.C., August 3, 2022 – Movement Mortgage (Movement), the nation’s sixth-largest retail mortgage lender, is expanding its leadership team with the creation of two new positions focused on the growth and development of Movement’s sales team nationwide. Movement welcomes Sarah Middleton as chief growth officer and Kevin McGovern as director of coaching.

Prior to joining Movement as chief growth officer, Middleton served as president of sales development and recruiting at Fairway Independent Mortgage and chief executive officer of Fairway’s internal coaching platform, Fairway Ignite. A 34-year veteran of the mortgage industry, Middleton held leadership roles including senior vice president at Guild Mortgage Company and Liberty Financial Group prior to joining Fairway in 2013. In her new role, Middleton will lead Movement’s efforts to attract, onboard and develop sales leaders across the country.

“I’m thrilled to join Movement to help the organization grow. I’m here to do more and give more, and to live a life of significance,” said Middleton. “My passion is to love on loan officers and sales leaders, and to help them dream bigger and achieve their personal and professional goals.”

“We hold a deep respect for what Sarah and Steve Jacobson built at Fairway,” said Movement CEO Casey Crawford. “Sarah exemplifies everything we look for in a leader at Movement; excellence in our profession with an unrivaled passion for loving and serving people. Our entire community is better today with Sarah on our team.”

Kevin McGovern joins Movement as director of coaching after serving as executive vice president for Fairway Independent Mortgage and chief operations officer for Fairway Ignite. McGovern has more than 30 years of sales and mortgage experience, including 16 years as a full-time coach. In 2011 McGovern founded his own coaching company, Making Better Happen, and in 2015 he joined Fairway to launch its internal coaching platform, Fairway Ignite, which grew to 175 coaches and over 4,000 clients served.

McGovern brings to Movement a wealth of knowledge in helping others define and achieve success, professionally and personally. As director of coaching, McGovern will lead Movement’s coaching team and develop a best-in-class coaching platform. Throughout his career he’s worked alongside his wife, Debbie McGovern, who will join Kevin at Movement.

“This industry has changed the total trajectory of my life,” McGovern shared. “I feel called to give back and develop others, and I’m grateful to join a company whose mission and values align so closely with mine. I saw an opportunity at Movement to build upon something special, and I’m excited to play a role in the growth that’s to come.”

“We could not be more thrilled to welcome Sarah and Kevin to the Movement team,” said Movement President Mike Brennan. “They are both powerhouses within the industry, and just what we need to take Movement to the next level. Their collective experience and knowledge of the mortgage industry and coaching will make an exponential impact not just within our company, but in the lives of our teammates as well, for years to come.”

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Canada’s national average home prices fell for the fifth consecutive month in July, and is now down 23% since reaching a peak in February.

The average price stands at $629,971, down 1.7% from June and 5% compared to a year ago, according to new data released by the Canadian Real Estate Association (CREA).
National home sales were also down, posting a 5.3% month-over-month decline and a 29.3% drop year-over-year.

“July saw a continuation of the trends we’ve been watching unfold for a few months now; sales winding down and prices easing in some relatively more expensive parts of the country as well as places where prices rose most over the past two years,” said Jill Oudil, Chair of CREA. “…some buyers will likely stay on the sidelines until they see what happens with borrowing costs and prices. As they re-enter the market, they’ll find a bit more selection, but not as much as might be expected.”

Importantly, new listings were down by 5.3% compared to June, meaning “some sellers are also playing the waiting game,” said CREA senior economist Shaun Cathcart.
While inventory levels improved further in July, they still remain historically low, Cathcart noted.

Months of inventory rose to 3.4 months, up from the record-low of 1.6, but still below the long-term average of five.
On a seasonally adjusted basis, the MLS Home Price Index, which strips out month-to-month volatility, fell for the fourth consecutive month. It was down 1.7% month-over-month, but remains 10.9% higher compared to last year.

Regionally, Ontario and British Columbia are seeing the brunt of the price declines, as they were also the provinces that saw the largest gains over the past year.

Prices remained flat in the Prairies, while Quebec posted its second monthly decline. Meanwhile in Atlantic Canada, prices in many markets are continuing to rise, “albeit at a much slower pace,” CREA noted.
Removing the high-priced markets of the Greater Toronto and Vancouver areas, the average price stands at $525,971, which is down 0.7% from a year ago.

Here’s a look at select provincial and municipal average house prices as of July, with their annual and monthly changes, as well as the total decline since the national average price peaked in February 2022.
Economists, including RBC senior economist Robert Hogue, noted that a bottom in housing is “likely many months away” given that further rate hikes are still expected from the Bank of Canada.
“The pandemic may not be over, but the pandemic-era housing market boom certainly is,” Hogue wrote in a note. “With the balance of power having dramatically shifted in their favour, buyers will be in a position to continue extracting price concessions from sellers for some time to come.”

But others, like Scotiabank’s Farah Omran, believe price declines will soon reach a floor.

“The housing market is currently reacting to a slew of factors—which seems alarming given the speed of the slowdown, but as [those] factors play out, we can expect the housing market to settle into a more comfortable pace of adjustment,” Omran wrote. “In the longer term, we expect demand fundamentals, including an acceleration in immigration and challenges to increasing available supply, to put a floor on prices and sales.”

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Home prices continued their downward decline in most of the country’s major metro areas in July, alongside falling sales.

In the Greater Toronto Area, for example, the average selling price fell 6.2% from June to $1,074,754. That still remains 10.3% higher compared to a year ago. The Home Price Index Composite Benchmark, which removes seasonal volatility, remains 12.9% above year-ago levels.

In Vancouver, the average price slid 2.3% from a month earlier, and is up 10.3% compared to July 2021. In Calgary’s housing market, which has so far proven more resilient compared to others, the benchmark price posted a 0.7% month-over-month decline.

“With significant increases to lending rates in a short period, there has been a shift in consumer sentiment, not market fundamentals,” noted Keven Crigger, President of the Toronto Regional Real Estate Board (TRREB).
TRREB added there is currently uncertainty among buyers over where the market is heading and is calling on “all levels of government to reassess and clarify policies related to mortgage lending and housing development.”
In a recent research note, RBC economist Robert Hogue suggested buyers in Ontario and B.C., who are “especially sensitive to interest rates,” will “struggle the most in the period ahead.”
“Our forecast has home resales in British Columbia and Ontario cumulatively sagging 45% and 38%, respectively, in 2022 and 2023, setting the stage for a home price index drop exceeding 14% from quarterly peak to trough in both provinces,” he wrote.

“While we project resale activity to cumulatively decline more than 20% in every other province (from all-round record levels) this year and next, we think prices will be more resilient in the more affordable regions of the country.”
Here’s a look at the July statistics from some of the country’s largest regional real estate boards:

Sales: 4,912
Average price: $1,074,754
New listings: 12,046
Active listings: 16,093

“The Greater Toronto Area (GTA) population continues to grow and tight labour market conditions will drive this growth moving forward. Despite more balanced market conditions resulting from rapidly increasing mortgage rates, policymakers must continue to take action to boost housing supply to account for long-term population growth,” said TRREB Chief Market Analyst Jason Mercer. “With savings high and the unemployment rate still low, home buyers will eventually account for higher borrowing costs. When they do, we want to have an adequate pipeline of supply in place or market conditions will tighten up again.”
Source: Toronto Regional Real Estate Board (TRREB)

Sales: 1,887
Average price for all property types: $1,207,400
New listings: 3,960
Active listings: 10,288

“Home buyers are exercising more caution in today’s market in response to rising interest rates and inflationary concerns,” said Daniel John, chair of the Real Estate Board of Greater Vancouver. “This allowed the selection of homes for sale to increase and prices to edge down in the region over the last three months.”
Source: Real Estate Board of Greater Vancouver (REBGV)

Home Sales: 3,080
Median Price (single-family detached): $550,000
Average Price (condo): $391,500
New listings: 4,901
Active listings: 12,668

“In the Montreal CMA…home prices are showing signs of slowing down, clearly affected by the rapid rise in financing costs, putting an end to a frenzied rise in prices and helping to change the mindset of buyers and sellers regarding market developments,” said Charles Brant, Director of the QPAREB’s Market Analysis Department. “This is explained by the first increase in active listings since 2015, across all time periods. This foreshadows a shift in the market’s direction for the metropolis, which is further ahead in the residential real estate cycle than most other regions in Quebec…”
Source: Quebec Professional Association of Real Estate Brokers (QPAREB)

Sales: 2,254
Benchmark Price (all housing types): $540,000
New listings: 3,174
Active listings: 5,338

“Rising lending rates are causing shifts within the market and, as a result, new listings for higher-priced products are on the rise relative to sales activity,” said CREB Chief Economist Ann-Marie Lurie. “Meanwhile, there continues to be a lack of supply for lower-priced detached and semi-detached product. This is driving consumers who are looking for affordable homes to purchase apartment-and row-style properties.”
Source: Calgary Real Estate Board (CREB)

Sales: 1,110
Average Price (residential property): $716,354
Average Price (condominium): $425,694
New Listings: 2,338
“We are seeing the housing stock increasing with residential inventory up 19% and condominium supply 23% higher than 2020,” said Ottawa Real Estate Board President Debra Wright. “Although there were 700 fewer listings than in June, the number of properties that entered the market in July is over the five-year average by approximately 114 units. Along with the price stabilizations, we hope this may indicate that Ottawa’s resale market is moving towards a more balanced state, which would be good for everyone.”
Source: Ottawa Real Estate Board (OREB)

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