Tag Archives: how to get ready for a mortgage

In hot real estate markets, realtors are going to make you an offer — whether you want it or not

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Kelowna! Our housing market has officially heated up…..it has begun, the controversial realtor practice of contacting homeowners in the hopes they MAY want to sell.  Now homeowners are left with a choice they may have not even been considering, love it or list it?

My daughter and son in law received a letter recently (from a local realtor we will not disclose) They live in Dilworth, have an income suite and are 10 mins from downtown. They have no intentions of selling, but real estate in Kelowna is heating up and realtors are making sure they have enough properties to show eager house hunters. And lets face it, sale prices are enticing even the most comfortable home owners.

There is nothing illegal about realtors directly approaching you to sell your home privately, but that doesn’t mean all homeowners appreciate the attention. Lets face it our local market is strong  and real estate agents dealing with clients trying to break into the market, the number of unsolicited offers is probably going to just keep growing in hot markets like Toronto and Vancouver.

Many eager house hunters are simply not willing to sit around and wait for product to come to them. While unsolicited offers may pay off for buyers, the real problem, as a seller, is it’s incumbent on you to determine fair market value for you property. The agent making the offer is just not on your side.

Risks aside, there are some advantages to selling directly and bypassing the MLS, which usually requires posting pictures of the inside and outside of your house online and open houses. On the financial front, agents soliciting business usually promise a break on commission too.

Whether this option come knocking or not, potential sellers be wary that this probably isn’t the safest strategy. Sellers really need to do their homework before agreeing to a private transaction — don’t get tricked into a quick timeline and don’t feel shy about requesting a large deposit of as much as 15-20 per cent.

As always, if you have any questions, especially if offers start knocking, never hesitate to get in touch, with me, a realtor, or a lawyer. For most of us the purchase and sale of a home is the biggest and most emotional transaction we will ever make. Everyone searching and selling needs to feel protected, happy and in control 🙂

Ground breaking mortgage changes coming!

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We are 5 days away for yet another change to our mortgage market.

As of the 17th, it’s getting harder to get the amount of money you may want for your mortgage.  Mortgage rules regarding qualification are right around the corner.  Rumor has it that 1 in 5 people will be affected.

Here’s how the rules work: 

For those wanting a short term fixed rate (1 – 4 years) or a variable rate or a line of credit mortgage, you qualify at the Canadian benchmark rate which is currently 4.64%.  You didn’t pay 4.64%, you just qualified at that rate.  The thinking is that if you qualify at this higher rate and the interest rate increases, you should still be able to afford the payment because you’ve qualified for less money.

If you took a 5 year fixed rate (or longer), you qualify at the contract rate; a conservative rate would be 2.49%.  Because you’re qualifying at this rate, you qualify for more money.

We typically think of high ratio insurance for those putting down less than 20% of the home’s value but in fact most lenders buy insurance for all their mortgages; even for conventional mortgages, but the consumer may not be aware of it because the lenders pay for it.

As of Oct 17th, the Canadian benchmark rate will be used for all mortgage qualifications that are backed by either high ratio insurance or low ratio (bulk pooled) insurance . Here are 3 examples of how it will affect clients.

All based on having little ancillary debt, so using 39% of gross income for your mortgage payment, property taxes and heat

Household income $50,000 gross. Old qualification amount =  $299,900

New qualification amount = $239,100

Household income $75,000 gross. Old qualification amount =  $466,500

New qualification amount = $372,000

        House income $100,000 gross. Old qualification amount =  $663,000

New qualification amount = $528,600

In the first example, you will qualify for $60,800 less.  In the second example you will qualify for $94,600 less and in the third example you will qualify for $134,400 less.

While lenders try to make sense of the rules, many are not lending for rental properties, nor doing stated income deals at this time.

New changes can create a little confusion, if you have any questions, never hesitate to give me call. I’m always ready to help.

Expect tougher mortgage rules by November

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Here we are again, more changes to the mortgage industry are heading our way, and soon.

Home buyers may feel the pinch as banks comply to stricter rules, but what will change and when…

How it will impact the Canadian home buyer?

As a federal regulator, OSFI’s requirement will impact banks and lenders across Canada. This means buyers in all markets will feel the impact of these changes, not just home buyers in hot markets, such as Toronto and Vancouver.

Banks and mortgage lenders will pass down the extra costs of these stricter regulations to the end user. This is done by either increasing mortgage rates or implementing tougher lending requirements for those applying for a mortgage.

For the average Canadian home buyer, then, this could mean that as early as November, it will either be:
→ harder to get a mortgage
→ mortgage rates will start to rise (even slightly)
→ or you won’t qualify for as large a mortgage as you would’ve prior to these new rules.

When will tougher rules take affect?

This announcement of the proposed new mortgage guidelines comes after more than six months of private consultations between OSFI and the banking sector. Now the public and other stakeholders have until October 18 to submit comments before any of these new guidelines take effect. Then the implementation of new mortgage rules will be phased in—some lenders, with a fiscal year-end of October 31, will need to enforce these stricter mortgage rules starting November 1, 2016, while lenders with a fiscal year-end of December 31, will enforce the new rules as of January 1, 2017.

But don’t expect changes in the mortgage or residential real estate market to stop here. This week, it was mentioned that additional measures may be needed to manage the risks associated with the “highly charged” Vancouver and Toronto housing markets.

Unfortunately hot markets cause change, if your contemplating buying, refinancing or renewing lets rock, I’m here to help answer any questions & help you into the best mortgage for YOUR needs 🙂

Mortgage Brokers vs. Bankers

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It is a mortgage tale as old as time… and one of the biggest choices that mortgage shoppers face when getting into the market is where to go….. broker or bank?

It can be a tough choice, many of us have been with our banks for years and it just seems easier to meet with the specialist there. Our parents went to the banks, your friend got a “great rate” at the bank and well, it just seems like the traditional thing to do.

Word is on the street that our society is taking a turn back towards “traditional” ways but before you make an appointment at your nearest financial institution, here are the top 5 reasons why mortgage brokers are just plain GREAT!

We offer mortgage plans that a banker does not have access to: Part of being an independent mortgage broker is that I am able to “shop around”! Banks only have typically about 3 products to offer, I can take your application to over 50 lenders and without a doubt find you the best rate and plan to suit YOUR needs.

We don’t turn our noses up at those with bad credit:  Mortgage brokers have flexibility and can often find a lender who will work with you.  Unfortunately, bankers have to adhere to their bank policies often placing restrictions on available options.

Flexible hours: Not a 8-5 person? No worries, I’m not either!! Now granted, if you call at 3 am you might have to give me a minute to fire up the Keurig but other than that, meeting outside regular business hours or at a location of your choice is not a problem!

Worried that you’re self employed? Don’t worry so am I: Banks can often times remind me of the government, there is not a lot of room for “grey area” black and white or nothing… If you are receiving your income from a non-conventional source ex: self employment, long term disability, alimony etc.  than have no fear. Brokers love the “grey area” in fact, we thrive in it. We keep ourselves up to date on the rules and the trends of the lending industry, knowledge is power and we will deliver your application to a lender who will happy to work with you!

We work for YOU: We offer a unbiased, free service to clients that helps them properly asses and understand the mortgage process. We love what we do and we like saving you money. We get down in the trenches, negotiate, shop around and provide options!

If I haven’t convinced you, feel free to give me call and get ready to be surprised.

Kelowna MortgageDave ~ Kelowna mortgage broker 🙂

Summer lovin, happened so fast! How you can make it last.

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Summer is officially in its final countdown, stores are geared up for “back to school” and I even dare to say I saw a Christmas decorations being added to the isles at Costco (insert eye roll)!

If you are one of the lucky ones, you have manged to take some time and get away and enjoy some fun in the sun. Whether you call it a cottage, a cabin or a camp, when the temperature begins to rise, the dreams of sitting on the dock at a place of your own start this time of year….. If your wondering how to make your dream a reality this post is for you.

Well…. lets talk truths, if you don’t have the cash on hand to buy one outright, you’ll have to borrow the money, (enter me) I can help with that, and while the basic process of applying for and qualifying for a mortgage are the same, lenders will look at many more variables when assessing a property before lending money to buy a cottage.

As always, if you have questions never hesitate to get in touch. I’m here to help you turn that summer real estate lovin into more than just a one night stand 🙂

What is crowdfunding?

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For those looking to get into the real estate game without becoming a landlord, one alternative to the traditional bricks and mortar is mortgage investing.

Crowdfunding is no longer a buzzword reserved for start-ups and tech entrepreneurs. Today, crowdfunding is a well-established vehicle for entrepreneurs to leverage the power of the “crowd” while enabling the crowd to participate in exciting and/or lucrative projects.

Real estate crowdfunding allows individuals to invest in existing apartment buildings or in buildings under development — an opportunity that currently is available only to wealthy individuals or institutions.

Equity crowdfunding allows small and medium-size businesses to raise capital without the time and expense of issuing detailed financial reports and offering shares for sale on the stock market. It is viewed as a low-cost alternative to taking a company public by issuing shares in an initial public offering. Equity crowdfunding would allow a large number of investments from individuals to be pooled in exchange for securities.
Continue reading here…. story via Canadian Real Estate Wealth

They haven’t been built yet but Kelowna homes are being snapped up

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The current housing market in the country is a hot topic, and nowhere is it hotter than in British Columbia, so it might be surprising to hear that real estate is being snapped up and sold out within a matter of hours after hitting the market.

There is more than enough data to show that the real estate market in the Okanagan is unaffordable for most, prompting developers to come up with unique ideas. Micro suites, eco-friendly buildings, and ranchers are just some of the new developments popping up in places such Kelowna and Penticton and they are selling out faster than anyone expected.

Continue reading here…… story via Kelowna Now

I’m Going to Buy A House. What Do I Do!?

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Buying a home means finally being able to call a place yours, and making your decorating dreams a reality. But, before you can start moving in sofas and painting the walls, you have to actually purchase the home! And what a huge commitment that is, requiring you to research neighbourhoods, tour different properties, send in mortgage applications and file what seems like mountains of paperwork.

But, there is light at the end of the tunnel, and that is finally owning a home that you can use as an investment. Need some help preparing for this? Take a look at the tips below, which I’ve gathered through extensive research watching way too many home improvement shows.

Step 1: Figure out your Budget

You have to create a budget that is realistic for your income and the expenses you already have. If you don’t set this, then you could easily end up looking at dream homes that you could afford, if you’re willing to live without things like food… or heat… or electricity.

So, set your budget by taking into account your income each month. Then, subtract all your normal expenses (yes, add in dining out, gas, heat, etc.). Next, subtract your anticipated monthly mortgage payment along with taxes and insurance. You should have an idea of what you can afford when you do this, but be honest with yourself so you get the most accurate results.

Step 2: Set up Savings

How much money do you have set aside for a rainy day? You need an emergency fund, and that’s even more true when you own a home. You need to have money set aside for plumbing emergencies, a new roof, living expenses if you were to lose your job and other things that could happen (even though you don’t want them to). A good rule of thumb is to save half a year of living expenses.

Step 3: Figure out What You Want

Before buying a home, you need to think about what your priorities are with the actual home. For example, would you rather buy one that’s move-in ready, or one that is going to require some repairs? You should also think about the location, whether or not you will have to move in the near future (if you’re going to have kids), if you would want to do renovations and other things that impact your enjoyment with a home.

Step 4: Do Your Own Research

Your real estate agent will help you with finding a great home when you’re ready, but you can still research homes yourself to get an idea of what you really want. Take some time to look up information on different neighbourhoods, layouts of homes you might want and other things that will make the searching process easier in the future. Don’t rush yourself and remember that this is one of the biggest investments you’ll ever make, so you sure you’re satisfied with it.

Story via www.joesamson.com

Are you the right fit for a hybrid mortgage?

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“… Divide your investments among many places, for you do not know what risks might lie ahead.”– Ecclesiastes 11:2

That passage was written before 900 BC. That’s how long people have been talking about the benefits of diversification. Yet, three millennia later, 96 per cent of mortgage borrowers still put all of their eggs in one basket. They pick only one term and go with it.

Maybe its time to put your eggs in two baskets? Enter the “hybrid mortgage”.

A hybrid mortgage lets you split your borrowing into two or more rates. The most common example is the 50/50 mortgage, in which you put half your mortgage in a fixed rate and half in a variable rate.

Some hybrids let you mix the terms (contract lengths) as well. You might put one-third in a short fixed term, for example, and two-thirds in a long term. With certain lenders, such as Bank of Nova Scotia, National Bank, Royal Bank of Canada, HSBC Bank Canada and many credit unions, you can mix and match rates and terms in almost infinite combinations.

The point of a hybrid mortgage is to reduce your exposure to unexpected adverse interest-rate movements. If variable rates shoot up and you have half your borrowing in a long-term fixed rate, you’ll feel less pain than if you had your entire mortgage in a variable or shorter term. Conversely, if rates drop, you still enjoy part of the benefit.

Hybrid mortgages can fit the bill for folks who:

  • Are torn between a fixed and variable rate;
  • Think rates should stay low but who can’t bear the thought (or cost) of them soaring;
  • Want a lower penalty if they break their mortgage early (big penalties are a common curse of longer-term fixed rates);
  • Have a spouse who has the opposite risk tolerance.

So why, then, is only one in 25 borrowers choosing hybrids, a number that hasn’t changed much in years?

Well, for one thing, hybrids are misunderstood. They’re also insufficiently promoted, entail more closing costs and (often) have uncompetitive rates. But not always.

Continue reading here…..

Which mortgage term will save you money over the next five years?

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A significant “negative shock” to the economy: That’s what it’s going to take to lower interest rates again, says Canada’s most powerful banker.

And Bank of Canada head Stephen Poloz isn’t betting on that happening any time soon. Neither are bond traders, the big guns that bet billions of dollars every day on the direction of interest rates.

So let’s suppose – just for fun – that they’re right (since we all know how often markets and economists aren’t right). If we are actually near a bottom in rates for a few years, what’s the best way to play your mortgage?

Well, it just so happens that there’s an app for that. It’s called a spreadsheet and I’ve taken the liberty (well actually the Globe & Mail has) of putting mine through its paces and model out which mortgage term (or combination of terms) yields the lowest hypothetical cost of borrowing over the next five years.

Keep in mind that what I’m about to tell you doesn’t apply to everyone. It presupposes that you:

  • Are a borrower who qualifies for the best advertised rates in the market;
  • Can handle higher interest rates and rising payments;
  • Are comfortable with making a five-year fixed mortgage payment.

But if any of the above listed points sound like you, lets read on…. (story via The Globe & Mail) 

As always if you have any mortgage questions THIS Kelowna mortgage broker is always ready to help 🙂