16 May

BUILD A PLAN TO MOVE INTO YOUR HOME

General

Posted by: Maria Solverson

There’s nothing quite like stepping into your dream home for the very first time.

You have achieved your goal of homeownership! However, the journey from home seeker to homebuyer can be challenging – unless you have a well-defined plan and guidance from the right professionals. As a mortgage broker, here’s how I will help you reach your objective:

STEP 1 GETTING TO KNOW YOU
In the discovery phase, we will discuss your situation, the essential and “nice to have” qualities you’d like in your new home, and how long you plan to live there. Based on your desired move-in date, we’ll work out a timetable for your home-buying process.

STEP 2 BUILDING A BUDGET
I’ll help you create a monthly budget and then calculate a down payment and mortgage payments that fit into it. Together, we’ll also work through a financial check-up that considers how changes in income and expenses could affect your plan.

STEP 3 CUSTOMIZING THE SOLUTION
There are many different types of mortgages, and it’s important to select one that matches your current needs and preferences. I will ask you a series of questions that should help to reveal your priorities.

STEP 4 TESTING SCENARIOS
Together, we’ll try out different mortgage scenarios, and I’ll show you how changes in income, property taxes, condo fees, loans and other variables affect your maximum mortgage amount and mortgage payments. My goal is to make sure you can comfortably afford your mortgage.

STEP 5 ARRANGING PRE-APPROVAL
It’s a good idea to get pre-approval for a mortgage before you find your dream home and make an offer — that way, you can be confident that financing is available. I’ll walk you through the paperwork and guide
you towards the most suitable lender.

STEP 6 ANSWERING YOUR QUESTIONS
Now it’s time to get serious with a Realtor and view properties that fit your price range. If you have any questions along the way, be sure to give me a call.

STEP 7 SEALING THE DEAL
I’ll work closely with your Realtor & Notary to make sure everything is in place for the closing. That’s the day you pay your down payment and get the keys to your new home.

STEP 8 IT’S TIME TO MOVE IN!
From start to finish, the plan we develop together will see you through the home-buying process. Even after you’ve settled into your dream home, we’ll periodically review your current situation to determine if we need to make any alterations to your original mortgage plan.

Original post by TERRY KILAKOS

Dominion Lending Centres – Accredited Mortgage Professional
Terry is President of North East Mortgages based in Ville Ste-Laurent, QC

10 May

WHAT’S YOUR BEST RATE?

General

Posted by: Maria Solverson

You know at one time I could give you a quote over the phone and not worry that I would be too far out. Today is a totally different story, here are some of the variables that come into play.

1. What’s your credit score? A 700 FICO score is the new 650 for many lenders as their investors demand better quality borrowers.
2. Where is the property located? Rural areas are getting harder to finance.
3. Is it an insured file, are you putting less than 20% down payment?
4. Is it insurable? Are you putting down more than 20% on the purchase but it can qualify under the stress test, currently 5.34%?
5. Is the loan to value going to be 65% or less? You get the same rate as the guy with 5% down and have to qualify with the same criteria.
6. Are you looking to refinance or buy a rental? Sorry both are uninsurable and have to qualify at 5.34% but you have to pay a higher interest rate.
7. So how about your employment; have you been on your job or at least in the same industry for the last 2 or more years?
8. Down payment requires a 90-day statement of where it has been kept, please be sure that it was in a bank as anything else seems to be picked to death. Larger gifts lately have required the giftor to show the money was in their account. God forbid they should have won it at a casino as they will want the print out from the cage boss, especially in B.C.
9. How fast is your deal closing, as there are quick close rates usually for insured deals.
10. While supposedly everyone is to be able to qualify at 44%TDS and 39% GDS, it’s not always the case as CMHC is still in some instances lower than a 680 FICO score and is wanting the client to be qualified at the old standard of 42% and 35%, which again cuts back the qualifying amounts.

As you can see what’s your best rate has a lot of things come into play today and anyone who gives you a rate over the phone has hopefully asked you at least some of these questions. The best rate today is more about what fits your situation but the old adage of who, what, where and how still apply. Once we have asked the questions, we have to audit the answers to make sure it’s the best fit for your situation. If you have any questions, contact a Dominion Lending Centres mortgage professional near you.

 

LEN LANE

Dominion Lending Centres – Mortgage Professional
Len is the owner and founder f DLC Brokers For Life based in Edmonton, AB.

25 Apr

Should a buyer wait until the fall because of the new Shared Equity Program from CMHC?

General

Posted by: Maria Solverson

In the March Federal Budget, the government introduced a few changes that impact the housing and mortgage markets. One of the changes, a Shared Equity Participation Mortgage with CMHC as a partner with the homeowner will not be implemented until the fall. At this time, we do not know the full details of the program. We have had some clients wonder if they should wait until the fall to buy a house.

What we do know;

  • Maximum family income of $120,000.
  • Maximum mortgage is 4 times the income.
  • Maximum shared equity loan 5% for existing houses.
  • Maximum shared equity loan 10% for new homes.
  • Must be an insured mortgage.  ( we think )
  • We know that 4 times income is a smaller amount than what home buyers qualify for under current rules.

What we do not know;

  • What will be the terms of the Shared Equity Mortgage with CMHC?  Will the homeowner be able to renovate their home without government approval? Will the homeowner be able to refinance the mortgage without government approval? What happens if the homeowner misses a payment?  When the home is sold, what are the terms of repayment? If there is a spousal break up, what happens with the responsibility for the shared mortgage? Will the government have a claim against the profits if there are any?  How will the CMHC Premium be calculated? Who pays the extra cost of registering the Equity Mortgage?

What we can guess;

  • Depending upon the purchase price, and whether there is no interest and no equity claw back and whether the home is an existing home or a new home, the home-buyer could save approximately $500 to $700 per year on an existing home and perhaps double that on a new home. A claw back would sure take the fun out of it. The government telling you how to manage your equity would also take the fun out of it.
  • Five year fixed interest rates have taken a dip this spring from rates available late last year. We can guess this is a spring dip and not a long-term trend, so rates may well be higher in the fall.

Is it reasonable to put off a purchase, hoping the program does not have too many warts, hoping that interest rates will remain low, hoping the house that is currently available and a current bargain is still on the market at the same good price in the fall?

Calgary homes are currently on sale. We suggest if you or your buyers find the ideal home, and it is at a good price and the payments fit the budget, buy now. Do not wait for a program that may or may not be helpful.

Take advantage of a sale when it is happening.

For some more reading on this please see this article from Dr. Sherry Cooper.

Croft Axsen – Jencor Mortgage

29 Mar

THE #1 MISCONCEPTION ABOUT MORTGAGE FINANCING!

General

Posted by: Maria Solverson

It is a reoccurring but common misconception that you will qualify for a mortgage in the future because you have qualified for a mortgage in the past.

This is not accurate!

Do. Not. Assume. Anything.

Even if your financial situation has remained the same or has improved, securing mortgage financing is more difficult now than it has in recent years.
The latest changes to mortgage qualification by the federal government has left Canadians qualifying 20-25% less. On top of that, guidelines that lenders would use in determining your suitability have been replaced with non-negotiable rules and declarations.

As mortgage professionals, we keep up to date with the latest trends going on in the mortgage world by understanding lender products and staying attentive to evolving changes.

From experience, we can tell you that having a plan is crucial to a successful mortgage application. Making assumptions about your qualification or just “winging it” is a recipe for disaster. Here are a few points on why a mortgage broker is a must for the first time home-buyer.

1. We have access to over 40 different lenders, not just one
2. We work for you, not for the lender
3. We will guide you through the application process
4. We save you valuable time by shopping for you
5. We pull your credit once — if you go to multiple banks, you will have multiple credit pulls

If you are thinking about buying a property, please feel free to contact a Dominion Lending Centres mortgage professional where we can help you devise a full-proof plan!

Originally posted by:

CHRIS CABEL

Dominion Lending Centres – Accredited Mortgage Professional
Chris is part of DLC HomeHow Mortgage based in Calgary, AB.

22 Mar

Nuts and Bolts of the Federal 2019 Budget. What you REALLY need to know!

General

Posted by: Maria Solverson

On March 19, the Federal Government announced the official 2019 budget. One major topic on the discussion table was the discussion of affordable housing in Canada. So just what happened on “Budget Day?” Here are the highlights of the 2019 Federal Budget:

MORTGAGE INDUSTRY RELATED:

CMHC First Time Home Buyers Incentive Plan

  • This would give first time home buyers the ability to share the cost of buying a home with CMHC
  • For existing homes – the incentive would provide up to 5% (funding/equity sharing) of the PURCHASE PRICE
  • For newly constructed homes the incentive would provide up to 10% (funding/equity sharing) of the PURCHASE PRICE
  • Funding/Equity sharing means that CMHC would cover a percentage of the purchase price

Example:

  • 400K purchase price, 5% down payment (20K), AND 5% CHMC shared equity mortgage (20K), the size of the insured mortgage would be reduced from 380K down to 360K, which would lower the monthly payment amount for the first time home buyer

To qualify for the program:

  • 120K max household income
  • Cannot borrow more than 4x their annual household income – making max purchase price approx. 505K
  • 100k household income would mean max 400K mortgage in order to use this program.

HOME BUYERS PLAN RRSP INCREASE

An increase of the previous $25,000 for RRSP withdrawal amount through the Home Buyers Plan to $35,000

These were the only two key changes that came out of the Federal Budget (so far). It provides minimal assistance for First Time Home Buyers, especially in a market like Vancouver and the Fraser Valley, who have home prices well above the 505k purchase price limit. However, it could provide assistance to those looking to purchase condos or townhomes ore in more rural areas. One area that will remain the same for the mortgage industry is the continued B-20 stress testing measures (which have recently come under fire)

The predicted start time is Fall 2019 for these guidelines. We will keep you updated on any new additions or changes as the information becomes available. If you have any mortgage related questions, contact a Dominion Lending Centres mortgage professional near you.

 

Originally Published by:

GEOFF LEE

Dominion Lending Centres – Accredited Mortgage Professional
Geoff is part of DLC GLM Mortgage Group based in Vancouver, BC.

1 Mar

First-time home Buyer Tax Credit

General

Posted by: Maria Solverson

***To all my First Time Home Buyers in 2018***

The Home Buyers Tax Credit is a non-refundable credit that allows first-time purchasers of homes to claim a tax refund of up to $750 in the year when they purchase a home.
To claim the credit, enter the amount of $5000 on Schedule 1 line 369 of your tax return. You can divide the credit between your return and your spouse or common-law partner’s return, but the combined total claimed cannot be greater than $5000.
In order to be eligible for the HBTC, you must meet two criteria:

  •  You or your spouse or common-law partner purchased a qualifying home; and
  •  You are a first-time home buyer, which means that you did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years.

Please talk to your accountant when filing your 2018 Personal Income Tax returns for more details.

22 Feb

Understanding your Credit Report

General

Posted by: Maria Solverson

Understanding your credit report is an important step in taking ownership of your financial success. It would help if you thought of your report as a tool to prove to lenders, service providers and in some cases employers, that you are financially stable and responsible. It basically lets other people know they can trust you with their money. Here are some reasons for checking your credit report a couple of times a year is important.

Many of us still believe the misconception that checking your credit report will have a negative impact on your score. On the contrary, checking your own credit report does not count as a hit against your score and is important to help against the following reasons.

In Canada, we have two reporting agencies (Equifax and TransUnion) that report all credit you have extended. It is important to check to verify the information they both have on your file, sometimes items get reported incorrectly. By finding the errors in your report first, you will avoid running into any discrepancies when we request your report. Having errors on your report can bring down your score and take many months to fix.

By reviewing your report, you also protect yourself against identity theft. If your information is compromised and credit was extended without your authorisation, seeing your report first hand would allow you to catch any errors possibly before being contacted by a third-party agency. If you do see any information on your credit report, you believe shows someone is taking out credit in your name, please contact your municipal or provincial law enforcement right away.

Having a strong credit report will help get better rates when applying for a mortgage. The banks look at the overall report and how you manage borrowing and debt when they are deciding to lend money. They look at the score, the balance to limit ratio, any late payments and if you have had difficulty managing credit in the past.

Checking and understanding your report is very important to know and where you stand in the lending world. Your score is among the most important steps towards building a better financial future. It shows where you can start working to build or rebuild your credit. It doesn’t hurt you to pull your report if you use the links below. These links are a soft inquiry and wont negatively impact your score.

Here is how to obtain your FREE credit report with Equifax and TransUnion:

https://www.consumer.equifax.ca/personal/education/credit-report/how-to-get-a-free-credit-report/

https://transunion.ca/product/consumer-disclosure

I am always here for advice on how to build a strong report and explain how the banks use this information when approving loans.

1 Feb

What is the Home Buyer’s Plan (HBP)?

General

Posted by: Maria Solverson

The Home Buyers Plan (HBP) is a federal government program that allows you to withdraw up to $25,000 from your registered retirement savings plans (RRSPs) to buy or build a qualifying home using the funds for a down payment and other cost associated with purchasing.

If you buy the qualifying home together with your spouse or common-law partner, or other individuals, each of you can withdraw up to $25,000 tax-free.

Do you meet the HBP eligibility conditions? (according to Canada.ca)

Or

  • You must have a written agreement to buy or build a qualifying home for a related person with a disability or to help a related person with a disability buy or build a qualifying home (obtaining a pre-approved mortgage does not satisfy this condition).
  • You must intend to occupy in the qualifying home as your principal place of residence within one year after buying or building it. If you buy or build a qualifying home for a related person with a disability, or help a related person with a disability buy or build a qualifying home, you must intend that that person occupies the qualifying home as his or her principal place of residence.
  • Do you meet the RRSP withdrawal conditions?

The funds you use for the HBP program must be repaid back into your RRSPs within 15 years. Otherwise, if you do not repay the amount due for a year, 1/15th of the amount you withdrew will be included in your income for that year. It’s a really good idea to set up automatic withdrawals every month so you don’t have to worry about making sure you contribute enough at tax time.

The funds must be in your RRSP for at least 90 days before they can be withdrawn for a down payment. Make sure you plan accordingly so the funds are in the RRSP for the allotted time.

Following is a complete guide that contains all the information you will need.  Also included is the application form.

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html

https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t1036.html

 

17 Jan

What is a Monoline lender?

General

Posted by: Maria Solverson

What is a Monoline lender?

A Monoline lender, by definition, is a mortgage lender that focuses on just mortgages.  They do not have any other products that can be cross-sold and most Monolines securitize their mortgages, instead of keeping them on their balance sheet.  Monolines are secure, follow the same rules as all Canadian Banks and they deal exclusively with Mortgage Advisors on their clients’ behalf.

Advantages of a Monoline lender

  • They focus on one thing: mortgages.  For you, that also means they do not try to cross-sell you into credit cards, investments or insurance.
  • Monolines have a much lower IRD (Interest Rate Differential) pre-payment penalty calculation, which is important if you are required to get out of your mortgage before the end of your term. In my own personal experience, the Monoline penalties are up to 2/3 less than those of the big-six banks.
  • They often have products that specialize in a range of solutions aimed at borrowers with lower credit scores and those with self-employed income sources.
  • No storefronts mean lower overhead which in turn they pass along to you in the form of lower interest rates.
  • Monolines are heavily regulated and follow the same lending guidelines as all the major banks in Canada
  • Pre-payment options are often greater than the big-six banks offer.
  • Online access to your mortgage and customer service departments is excellent – it has to be – they don’t have branches.

This article by financial writer Rob Carrick was published in the Globe and Mail comparing Scotiabank to ING regarding their vast differences in penalty calculations.  As much as we try to explain what a Monoline differs from a bank, an article from a third party drives it home.

Even when the rates are the same between banks and the Monoline borrowers should always factor the potential IRD into their decision making as one never knows what will happen in the future

To summarize, Monoline lenders tend to provide better rates over the big banks, have favourable penalty calculations, and foster relationships with brokers to ensure the business comes back to them (including having a renewal model to reduce churn).

 

Article originally posted by: Garth Chapman, Mortgage Advisor – Jencor Mortgage Corporation

6 Dec

Why You Should Buy Now

General

Posted by: Maria Solverson

Why you should consider buying now and getting ahead of the market correction:

Rates are going up. Fast. Why?

5 year fixed rates are up about 1.25% since last year this time.

The Federal Government. They have taken steps in an attempt to regulate our housing market in the last few years. Toronto and Vancouver housing markets have grown beyond economic norms due to a variety of factors. The government began its steps to manage this by implementing new mortgage guidelines and rules nation-wide. Many of these are direct to the consumer, such as the benchmark qualifying rules, restrictions on rental and investment mortgages, and foreign investor restrictions/taxes. In addition, there have been new rules that are indirect to the consumer, and unfortunately not as publicized. Intense OSFI regulations have affected all lenders, including the major banks, monoline lenders, trust companies, credit unions and private lenders. Perhaps most notable, is the drastically increased capital reserve requirements for mortgage lenders. The government mandated a 3-year time window for mortgage lenders to fund these capital reserve requirements. Much of this is being funded by increased mortgage rates for the consumer. In addition, there have been regulations implemented regarding back-end insurance for conventional borrowers. The cost for this is also funded by the consumer in the form of higher interest rates.

Canadian Bond Yields. Bond yields determine the discounted 5-year fixed rate. They have been trending upwards, especially in the last 18 months.

US Economics. (Aside from social-political views of course) the Trump administration has grown the US economy, and they are incurring the longest expansion in US history. Basic economics will tell us that a recession is due soon. When that occurs, it will likely drive our interest rates downward. The timing for this is difficult to predict, and I am by no means an economist.

Most Canadian Economists predict that 5 year fixed rates will rise another 0.5% by this spring, and another 0.50% through 2019. Mortgage holders and prospective buyers should expect rates to be around 5% in the next 2 years, at which point we predict a further stagnation in the market and then rates dropping again.

Why Should I buy now, with all of this market correction business going on? I’m waiting for prices to drop.

Now is an opportunity to get ahead of the housing market with a 5 year fixed rate.
For example:

If the monthly payment is your concern:

• Buy a home at $400,000 today with 5% down @ 3.69% and your payment will be $2012.96
• If you wait for a year, and rates are 4.69% and you want to have that same payment, you’ll have to buy a house for $361,000. You would be looking at a monthly payment of $2229.26 on a $400,000 purchase
• This is a huge range in the Calgary market. Depending on the area you’re looking at, this can be the difference between condo or freehold, or attached or detached. Housing prices are not going to drop that quickly, these things take time. Also, if you work with us on a pre-approval, we can hold your rate for 120 days while you shop.

If longer-term interest savings is your concern:

• Buy a home today at $400,00 with 5% down. 3.69% and monthly payment at $2012.96
• After 5 years your principal paydown will be $53,045.00
• Buy a home next year at $400,000 with 5% down. 4.69% and monthly payment at $2229.26
• After 5 years your principal paydown less payment differential will be: $34,168.00
• That’s $18,877.00

If qualifying is your concern:

• If your annual household income is $92,000 today, you would qualify for the above loan scenario ($400,000 with 5% down) assuming you have good credit and do not have excessive loans/debts.
• If rates are 1% higher next year, with 5% down, you would only qualify to buy at $366,000.

Whatever your scenario may be, you can feel free to call me for mortgage advice.