List of Things to Tell Your Realtor at the Beginning of the Home Shopping Process

Bridge Financing London, Ontario Mortgages

Bridge Financing London, Ontario Mortgages

Buying a home is a big deal! It is likely one of the biggest investments you’ll make in your life. Because of this, you’ll want to plan ahead and make sure that all of your needs are considered and expressed to your realtor, so you can find the home that is best for you.

Find a good realtor

First things first, make sure you find a realtor you ‘click’ with. Pick one that you feel best understands your needs, wants, and your overall vision for what you’re searching for in a home. If you have a realtor that you don’t have great chemistry with, you could waste a lot of valuable time.

Price range

What is your price range? Make sure your realtor knows this at the beginning of the home shopping process, so they don’t present you homes that are way out of your price range. You also want to make sure your realtor knows this, so they know the areas for homes to show you. Or if you’re looking for a home in a specific area or neighbourhood, they can make sure to show you only the homes in that area that meet your price range.

Needs and wants

Make a list of what you need to have, would like to have, and cannot have. This will make it much easier for your realtor to help you in your search of finding your ‘perfect’ home. For example, maybe a ‘cannot have’ would be to live on a busy main street since you want to live in quiet neighbourhood. Or, maybe a ‘need to have’ is living a reasonable distance from your work.

Timeline

When do you expect to move into your new home? Are you renting currently? When does your lease end? Are you selling your home currently and looking for a new one? These are all things to tell your realtor at the beginning of the home shopping process. If you don’t they could advise you on a house that will be gone by the time you hope to move in. Make sure you give your realtor as much information as possible such as the date you hope to move in.

Biggest Mistakes First-Time Homebuyers Make

first time home buyer tips

first time home buyer tips

 

Not applying for a mortgage before looking for a home

So you see a home you love, then you apply for a mortgage, and that home you loved just doesn’t work for your budget. How disappointing! This is a common mistake first time homebuyers make. If you want to avoid this and be as organized as possible, apply for a mortgage and meet with a mortgage broker before-hand. This way, you’ll know exactly what to look for and where because you will know what you can feasibly afford.  

Not checking out multiple options for lending

This also a very common mistake. Make sure you don’t just go with the first lender that offers you a mortgage. Another lender might have a better deal for you that fits better with your financial situation and what you’re looking for. Shop around, do some comparisons, and make sure you have the best deal you can find.

Buying a home, you can’t afford

Sometimes new home owners can get too excited about the home shopping process, that they forget to think about the practicalities of buying a home that’s out of their budget. Even if you’re approved for a loan that fits with that expensive home you love, make sure it works with your budget and finances. You don’t want to get into trouble and potentially lose your home if you experience financial issues in the future. Consult with professionals to make sure you are buying a home you can afford now, and in the long run.

Not considering the neighbourhood

Okay so you think you’ve found your perfect home: it’s in your budget, it’s everything you’re looking for in a home, it’s aesthetically pleasing, etc. But, is it in a good neighbourhood? Is the home a reasonable distance from your work or things you need? Are you planning on starting a family soon, or already have a family? Then you will want to consider the neighbourhood – especially if it’s in a safe neighbourhood, in a good school district, and a reasonable distance from daily essentials. The way the house looks won’t be important to you in the future if you start having issues because of the neighbourhood you’re in.

Thinking you will find the absolute ‘perfect home’

If you’re looking for the ‘perfect home,’ you’re really going to be narrowing your options. Perfect homes simply just don’t exist. If you go into the home shopping process with an open mind, you might be surprised on what you fall in love with. Remember, little things you don’t like can always be fixed with a bit of hard work!

Benefits of Buying Vs. Renting

Interest Rates - Bank of Canada London Community Mortgage Movement

house appraisals

 

Here’s a general list of the benefits of buying vs. renting that will be sure to help you in making your big decision when it comes to looking for a new home.

Buying a home is an investment

Buying a home is a great investment. Over time, your home will very likely increase in value. Your equity will also build over time when you make your monthly mortgage payments and will grow more the longer you stay in your home. Simply, renting is not an investment – you’re paying someone else for money you could be using for an investment! Why not pay a mortgage instead that will benefit you in the long run?

Freedom

Have you ever had those landlords who never let you make the place you’re living in, your own? You had to keep the walls a pale white, or had to deal with an old bathroom or kitchen that barely does its job? As a homeowner, you can fix these things and make the home truly your own. You won’t have to worry about what colours you’re allowed to paint the walls or having to get permission to make changes to that old kitchen or bathroom.  

Generally over time, buying costs less than renting

Have you ever experienced a landlord increasing your rent each year? With paying a mortgage, you won’t have to deal with that if you opt for a fixed mortgage rate! This makes it easier to budget since it will stabilize your monthly finances. Also, your home will increase in value for your benefit, and each payment you make impacts your equity. With renting, there is no chance for money to be made. Also, when you’ve paid off your mortgage, guess what that means? No more mortgage payments – the house is all yours!

Family stability and being part of a community

Do you remember growing up in your family home and how special that home was to you and your family? If you’re planning on starting a family or thinking of moving to a new home to make life better for your family, buying a home will create a space that will be more important to you and your family than any investment. Without getting too cheesy, owning a family home is really something special: you can watch your kids grow up and make family memories that you’ll never forget.

Also, when you pick a great neighbourhood to live in, you’re sure to build a sense of community with your neighbours and foster a great environment for your children to grow up in.

Make sure to talk to your mortgage broker for more information on how buying is the right choice for you.

Bank of Canada reveals latest interest rate decision

Interest Rates - Bank of Canada London Community Mortgage Movement

The Bank of Canada has raised its benchmark interest rate by a quarter of a point. This is the fifth time since last summer that the Bank of Canada has pushed up the cost of borrowing for Canadians.

The central bank’s target for the overnight rate is now set at 1.75 per cent.

The cost of loans linked to the big bank prime rates are headed higher in the wake of the Bank of Canada’s decision to raise its key interest rate target by a quarter of a percentage point. The Canadian banks each raised their prime lending rates to 3.95 per cent from 3.70 per cent, effective Thursday, October 25, 2018.

The increase followed governor Stephen Poloz’s first policy meeting since Canada agreed with the United States and Mexico earlier this month on an updated North American free trade deal. It was the bank’s first rate decision since Canada agreed with the United States and Mexico earlier this month on an updated North American free trade deal.

So far, the Bank of Canada has stated that Canadians have been making spending adjustments in response to earlier rate hikes and stricter mortgage policies — and credit growth continues to moderate. Household vulnerabilities — while still elevated — have edged down as a result.

Consumer spending is expected to continue expanding at a “healthy pace,” thanks in large part to the steady rise of incomes and the strength of consumer confidence. It projects exports to keep growing at a moderate clip, even though they will face limitations from several factors — including transportation capacity constraints, global trade uncertainty and stiff competition, particularly from the U.S.

Known as the target for the overnight rate, the benchmark is what Canada’s big banks charge each other for short-term loans. It filters down to consumers, because it affects the rates the banks offer their customers for things like variable rate mortgages and savings accounts.

The bank says households have already made spending adjustments in response to earlier rate hikes and stricter mortgage policies _ and credit growth continues to moderate.

Why Use a Real Estate Broker?

Why You should Use a Real Estate Broker

Plan on buying a home soon? Did you know that there are plenty of ways that a real estate broker can help you achieve your goal by finding the best home that meets your needs, all while ensuring your peace of mind?

Below you find some of the main tasks a real estate broker performs for their clients that will be a buying a home:

 

Evaluate Your Needs

This will include the type of property you are looking for, what type of area or neighbourhood you want to live in, if you want a new home or one that might require some renovations be made to it, how many bathrooms and bedrooms you might want to have. Your real estate broker will help you identify which essential elements should be included in your future home.

 

With their in-depth knowledge of the market, your broker will help to ensure that your budget corresponds to the type of property you’re looking for and the neighbourhood you’re interested in. Your broker will also encourage you to get a pre-approved loan from your bank, this helps to speed up the buying process and makes you credible with sellers.

 

Give You Choices

Your broker will present you with properties that match what you are looking for. They help organize visits to these potential properties, as well as give you an honest opinion about each property. They can also provide you with various options that have not been considered. When you finally find a real winner, your broker will advise you on the strategy for submitting the promise to purchase.

 

Ask Questions For You

The broker will also attend the inspection of the home, ask questions and help you understand the inspection report on the property. Your broker will also follow-up on the fulfilment of conditions and act as an intermediary for the delivery of various documents, these can include bank drafts, etc.

 

Remember that if you do have any questions, your broker will answer them during the buying process. If you’re buying a condo, for example, they will analyze the essential documents with you, such as the minutes of condo meetings, the condo’s financial statements, etc.

When all the conditions have been met, your broker will accompany you to the notary for the signing of the documents that formalize the transaction.

As you can see from the above that your broker is involved at almost every step of the home buying process, why would you miss out on their guidance and expertise?

Unknown Benefits of Opting for a Home Refinance

Home Refinance

If you own a home, there’s a good chance you’ll do a mortgage refinance at some point. Few borrowers stay with their original home loan for a full 30 years; most either refinance or sell the property long before the full term runs its course.

When the borrower on a home loan has reached a stage where the terms of the first home loan are unsatisfactory, or costlier than they need to be, given the current economy and monetary condition, the borrower at times goes for a home refinance loan. When this happens the first loan is paid off and the same loan is supplanted with a refinance loan, though the terms can either be similar or different.

Smaller Repayments

When it comes to a refinance home loan, you may have the capacity to structure the loan in such a way that you may only have to pay a smaller amount of money at regular intervals. This could be extremely useful if your situation is a little tight due to monetary constraints.

Longer Time to Repay

Another advantage of home refinancing is that you can spread out a loan over more years by customizing the time to reimburse the loan. Spreading out a similar size loan over more years implies that the interest paid will be more, yet the repayment made will be more reasonable in size for the loan holder.

Fixed Amount of Payment

One of the other advantages when it comes to refinancing your home with a fixed rate is that the repayment sum will continue to be the same. Once the loan amount is set, the installment sum continues to be the same throughout the course of the mortgage.

Pay Off Old Debts

When you get cash as part of the home refinance deal, you can use some of that money to pay off old debt (especially those with high interest rates). A refinance can also help you pay off future costs as well. An example of this might be taking care of the cost of education for yourself or relatives. This money can also help with doing repairs towards the house.

Things Not To Do Before Closing

Things not to do before closing a sale

You have worked to secure financing for your mortgage, you have a great rate and terms for it. Everything is good, all you must do is wait for advancement of funds.

Sometimes you might suffer a lapse in judgement when it comes to the closing the sale of your home. It is sometimes a stressful time when it comes to these types of events, especially if it is your first time purchasing a home.

A mortgage lender might suggest a simple course of action, however sometimes this is misinterpreted by the buyer. Here is a list of things you should NEVER do in the time between your financing complete date (when everything is setup and looks good) and your closing date (the day the lender advances funds).

Don’t do anything that would reduce your income

When it comes to your employment don’t do anything that would jeopardize your employment or income with your existing employer. Getting a raise is fine but dropping from Full Time to Part Time status is not a good idea. The reduced income will change your debt service ratios on your application and you might not qualify.

Do not close any credit accounts

Even if you realize that you never use a certain credit card, for example, cut it up if you must, but do not cancel that line of credit while you are waiting to close the purchase of your home.

Don’t apply for new credit

if you find yourself at shopping for new furniture and they want you to finance your purchase right now… don’t. By applying for new credit and taking out new credit, you can jeopardize your mortgage. It is best to wait until everything is finalized before going out and buying new furniture for the house.

Do not buy anything with your closing cost. Nothing.

This means not one thing. Yes, you might need a washer and dryer, but wait until you close to order it. Don’t take a salesperson’s word that they’ll just write it up and hold it for you, because somebody will enter it into the store’s computer by mistake. Typically, the lender wants to see you with 1.5% saved up to cover closing costs… this money is used to cover the expense of closing your mortgage.

Should you get a shorter-term mortgage, make extra payments or something else?

Mortgages London Ontario

When getting a home mortgage, if you can afford higher payments, often there is an option for a 15-year loan instead of one of 30-years. This can be very enticing, since you will be free of a mortgage in half the time and pay a lot less in interest.

Let’s use a $200,000 mortgage as an example the payment (P&I, Principal, and Interest, not including escrow for taxes and insurance) is approximately $955 at a 4% mortgage interest rate.  You’d pay a total of $343,739 over that 30 years. Using the same rate, a $200,000 mortgage over 15 years would require a P&I payment of $1,479 at the same interest rate, and you’d pay a total of $266,288 over the life of the loan.

If you can make those higher payments, you would be saving around $80,000 over the life of the mortgage of 15 years. There is also another option when it comes mortgage payments. You can cut your mortgage time by five or more years if you have your lender set up bi-weekly automated payments. This means that you would be paying every two weeks instead of one monthly payment. Since some months may have 5 weeks instead of 4, you end up paying an equivalent of an extra payment each year. This is an easy way to help save money while paying off your mortgage sooner.

Something Else

This is looking at your other debt, especially credit cards, store credit or signature loans. There is an average of $6,500 to over $9,000 for average credit card debt per household. Along with that, multiple sources report the average credit card interest rate rose to 15.59% in 2018.

Going back to the comparison between the 15 and 30-year mortgages, the difference between the two payments is around $500. One plan might be to pay off that credit card debt using this money. This could help get rid of credit card debt in around a year and then you could start working towards making extra payments toward your mortgage.

While you could be paying off your short-term higher rate debt, then using that money towards paying off your mortgage.

 

Mortgages and Entrepreneurs

Mortgages and Entrepreneurs London Ontario

When we are talking about mortgages, most of us assume it is about families and having a stable income that can pay off the mortgage after a certain time. What is rarely talked about is mortgages and entrepreneurs and their plans; as we know being self-employed means your salary can vary monthly, versus being an employee at a company with stable pay.

Back in July of this year, the CMHC announced the implementation of new mortgage lending rules designed to help the self-employed secure mortgages and maintain their position in Canada’s housing market. This will all take effect on the 1st of October this calendar year!

Self-employed Canadians have faced many obstacles when trying to obtain loans, primarily due to their variability of incomes. Since those that are self-employed are not on a payroll, lenders required a more rigorous proof of income, including but not limited to requiring at least two years of proof of income, audited financial statements, a good credit history, regular and stable patterns of income, and a large deposit for the home they are seeking to purchase. Sounds complicated, right?

One of the most difficult barriers to overcome in securing a mortgage is the very reasonable inclination of a small business owner (and their accountant) to do everything legally possible to reduce taxable income to reduce the amount of tax paid by the self-employed. In the case of obtaining a mortgage, the self-employed ideally needs to demonstrate the largest possible income to help to secure a loan. The two purposes are conflicting, with no clear solution.

To address the inequities and difficulties faced by the self-employed, the CMHC has proposed the introduction of several new, more flexible factors that can be used by lenders to assess the mortgage application of a self-employed person. Lending institutions will now be able to include factors such as enough cash reserves, the acquisition of an established business, and their training, education, and previous employment experience, including for businesses that have been operating for less than two years.

With these new changes, these will greatly assist not only self-employed Canadians, who according to the CMHC represent 15 percent of the workforce, also young entrepreneurs seeking to enter the housing market for the first time.

Bridge Financing, What Is It?

Bridge Financing London, Ontario Mortgages

What is Bridge Financing?

It is a useful tool made available to borrowers when the closing date of the home they are purchasing is before the closing date of the home they are selling. This is generally common in a seller’s market, buyers often explore the idea of making a firm offer without conditions, even if they have their own house to sell.

Bridge Financing means that the lender is comfortable making an interim loan between the closing date of the new purchase and the closing date of the buyer’s own firm sale. Basically, it is closing the gap between the two firm closing dates that do not coincide.

Bridge financing is not the same as being able to carry two separate properties.

However, bridge financing is not applicable if your home is not sold firm, you are talking about carrying two properties (owning two homes). Carrying is when the buyer owns two homes simultaneously for any length of time. They are also qualified to carry the total sum of the two mortgages.

So, what is required to set up bridge financing? Your lender will ask you for a copy of your firm purchase agreement and firm sale agreement.

This is a great stress reliever and helps with leaving a buffer of time for the buyers to get settled into their new home before their own purchasers will show up on their previous home’s doorstep looking for a clean and empty property. This also give the buyer some flexibility when it comes to accepting an offer on their own home, that firms

Bridge financing is quite common and a wonderful option but its a conditional on your own home have a firm offer in place.

When it comes down to it, you should make it clear with your lender whether you are looking to mortgage two homes or bridge the gap between 2 firm sales before you firm up your financing.