27 Sep

Avoiding “Sticker Shock

Mortgage Tips

Posted by: Sharlene Scott

AVOIDING “STICKER SHOCK” WHEN IT COMES TO MORTGAGE RENEWAL

Imagine that, a few years from now, the time has come to renew your mortgage.

Several years back, you got a $350,000 at the then great rate of 2.24%. Your mortgage payments are $1522 per month.

Because we are now in what the financial brainboxes call “ an escalating rate environment “ – normal people just say rates are going up – when you open your renewal notice you might encounter the same feeling you get when you look at the price of a car you like.

When you actually do look at the renewal notice, you see that the remaining balance on your mortgage is now $294,662, the new ( very competitive rate ) is 3.25% and that the new payment is $1668, actually $150 dollars a month MORE than you were paying previously. You think “WHAT THE….???”

This type of sticker shock is a new sensation to an entire generation of Canadians. Brokers are fond of talking about the fact that rates had not moved in 7 years but we rarely talk about the fact that rates have been trending down for more than twenty years and chances are, if you’ve had a mortgage for any time during that period, the payment at renewal has always been lower than when you started out.

‘Well, what’s to be done’, you ask? ‘How do I avoid “sticker shock”?

The key to avoiding that sinking feeling is to increase your payment slightly every year. You can find out how much to increase it during your Annual Mortgage Review. By increasing your monthly payment by even 2% a month, you can potentially avoid that sinking feeling – and pay off your mortgage even faster!

But wait; “Annual Mortgage Review? Qu’est-ce que c’est”, you ask.

An annual mortgage review, done with either your mortgage provider’s representative or your own mortgage representative ( i.e. your friendly Mortgage Professional) is just a quick check up to discuss what the current balance is, how things are going and do a quick review of your early payment privileges, increased payment privileges and potential prepayment privileges.

Its best to have these annually because , well, the average human needs to be shown the same information seven times to learn it – save time and start today. If you have any questions, please contact your local Dominion Lending Centres mortgage specialist.

Blog written by Jonathan Barlow,  DLC A Better Way

27 Sep

Bank of Canada Rate Change – Should I Lock In?

Mortgage Tips

Posted by: Sharlene Scott

BANK OF CANADA RATE CHANGE – SHOULD I LOCK IN?

This month, the Bank of Canada increased their lending rate for the 2nd time in as many months. The changes in the Prime Lender Rates means that those with a variable mortgage rates will have seen that their mortgages rates adjusted alongside the changes to Prime Rate. For those of you with variable rates, the first thing that probably crossed your mind was “should I lock in?”

Even though your interest rate may have increased, it does not mean that you should immediately lock into a fixed rate mortgage. An associate from B.C, Dustan Woodhouse had this to share about the increase:

“If your discount from Prime (now 3.20%) is 0.50% or deeper – then the variable rate product remains a really great place to be.

If your discount from Prime is 0.25% or less, then depending on which lender you are with you may consider converting to a fixed rate, BUT…

Keep in mind the penalty to prepay (i.e. refinance or sale of property) a variable early is ~0.50% of the mortgage balance, whereas if in a (4yr/5yr or longer) fixed rate mortgage the penalty can be closer to 4.5% of the mortgage balance ***depending upon which specific lender you are with and how long of a term you lock in for.

It is usually to the lenders greater benefit that you lock into a fixed rate, rarely is it to your own benefit.”

I could not have summarized it any better myself, so I won’t try.

So what should you do?
The first thing that you should be doing is avoiding the immediate draw or feeling of “I need to lock in”. There are several different aspects of your mortgage and personal financial situation that should be considered prior to locking in. There are many questions to ask yourself prior to locking in and most of which the lenders are unlikely to ask you. Your lender is re-active, not pro-active – you need to be pro-active. And sometimes being pro-active results in no action being taken at all.

Simply because the Bank of Canada increased interest rates twice, this does not immediately mean that they will do it again. There are many economic factors outside of their control that will impact their decisions regarding future potential increases.

Presently, the key is not to react quickly. If you have questions about your specific situation and how the increase may impact you, feel free to give Dominion Lending Centres mortgage specialist a call to chat about things in more detail. Allow us the opportunity to ask the questions that need to be asked prior to making a quick switch.

Food for thought…
Back in 2010 rates increased 0.25% three times, and that sat stagnant for nearly five full years before two 0.25% decreases back downward.

In other words the last time Prime was pushed as high as it stands today, it sat there for five full years. And was then cut.

The next Bank of Canada meeting is October 25, 2017.

Blog written by Nathan Lawrence, Dominion Lending Centres

7 Sep

Thinking About Putting In a Firm Offer? Make Sure You Read This First

Mortgage Tips

Posted by: Sharlene Scott

THINKING ABOUT PUTTING IN A FIRM OFFER? MAKE SURE YOU READ THIS FIRST

The market is constantly changing these days, so if you asked me about affordability just a few weeks ago, I would have had a different answer, as the seller’s market has quickly shifted to a buyer’s market – for now, anyway.

This spring, many first-time homebuyers were quickly being priced out of the market due to multiple bidding scenarios that saw houses sell well over their asking prices. This was not an ideal situation for any buyer – let alone first-time buyers on a particularly tight budget.

And while affordability was going by the wayside just a few weeks ago, so too were having a condition of financing and a home inspection included in the purchase offer.

Weighing the no condition of financing risks 

Going in firm (with no conditions) on an offer to purchase is incredibly risky for numerous reasons.

In a state of panic during multiple bidding scenarios, many homebuyers opt to take the no conditions route in the hopes that it lands them the home of their dreams. What it often does instead, however, is land them in hot water. Once a firm offer has been accepted by the seller, the purchaser is bound to that contract, which means they can end up in a lot of legal trouble if they can’t secure financing on that property by the agreed upon closing date.

On the flip side, if a purchaser places a condition of financing within the purchase offer, they have time after the offer is accepted to arrange the mortgage. If they’re unable to arrange financing by a specific date noted in the contract, they can simply walk away from the deal with no repercussion.

It’s important to note that lenders loan money based on appraised values, not on the selling price.

What happens if I forego a home inspection? 

When things go wrong with a house, they can prove extremely expensive – especially when pertaining to the home’s structural integrity. After all, a home inspection looks at much more than the mere cosmetics of a property that can be seen through an amateur’s eye.

Home inspectors are professionals who look at homes every day and know the ins and outs of pretty much anything that could go wrong with things such as the roof, foundation, electrical, plumbing and so much more.

And, on the financing side, foregoing an inspection can also prove risky. What you may not know is that lenders don’t only lend based on the borrower’s financial situation, but also based on the conditions of the property that you want to purchase. It’s part of a lender’s due diligence to ensure the property is livable and worth the amount of money that you’re willing to spend.

The safest move is to consult with a Dominion Lending Centres mortgage professional before making any offers to ensure your bases are covered and you’re not bound to a contract you simply can’t fulfill.

Blog written by Tracy Valko, Dominion Lending Centres

7 Sep

10 Steps to Home Sweet Home

General

Posted by: Sharlene Scott

10 STEPS TO HOME SWEET HOME

Congratulations – you are moving into your new home! Whether you are starting with a plain new build or an older resale home, there’s no better way to make it yours than by putting your stamp on it. Invest a weekend or two into warming up a featureless space or refreshing someone else’s old homestead. It’s easy with our 10 steps to home sweet home.

Step 1: Change the locks
Secure your home by changing the locks as soon as you take possession.
Even DIY beginners can change a deadbolt lock. A replacement deadbolt set can be installed in place of the current lock – no drilling required.

Another alternative is to rekey the lock. Purchase a rekeying set from the same manufacturer as the existing door lock, and reset it for a new key.

Step 2: Get a professional deep cleaning
Hire professional cleaners to deep-clean and detail your home before you move your possessions in. Without any furniture to work around, they’ll have access to every nook and cranny. Yes, you’ll have to clean again after moving day, but the heavy lifting (scouring, scrubbing and scraping) will have already been done!

Step 3: Clean the guts of your home
Years of dust, pet dander and detritus collect in the mechanicals of any home. One of the most effective ways to refresh a resale home is to get right into the guts of it: the mechanicals. Have your ducts, furnace and air conditioning unit professionally cleaned. Change the filters as required to maintain that clean, fresh air.

Step 4: Apply a fresh coat of paint
Painting provides the most bang for your home improvement buck. Whether the walls of your home are dingy or you’re simply not feeling the magic of “beige,” it takes just hours to repaint your space with a colour that makes your heart sing.

Step 5: Freshen up the floors
Worn out floors can put a damper on that new-home buzz.
If your hardwood has seen better days, hire pros to refinish it, or tackle the project yourself by renting a floor sander and varnishing over a weekend.

Steam-clean wall-to-wall carpet and clean laminate flooring with special laminate floor cleaners, although if either is too far gone, you may want to replace it.
Personalize your space while protecting your floors by adding area rugs and runners throughout your new home.

Step 6: Neutralize any odours
Resale homes, particularly fixer-uppers, can come with lingering smells. Steps 2, 3, 4 and 5 will dramatically reduce any unpleasant odours. Stubborn odours require spot treatments, such as the following:

• Put dishes of activated charcoal, also called activated carbon (available from aquarium stores), in musty, damp basements. Run a dehumidifier during the spring and summer.
• Place a sock filled with dry coffee grounds or baking soda in closets, refrigerators or freezers to absorb stale odours.
• Pour white vinegar down a stinky drain.

Step 7: Give your windows a new view
Dirty windows and screens can make rooms feel dingy. A thorough cleaning will have your windows shining, and your indoors will feel brighter and fresher, too.

If your home came with the previous owner’s window coverings, be sure to clean or launder them (it’ll remove allergens as well as reduce any lingering odours). Or consider replacements more specific to your design tastes.

Step 8: Brighten your lights
A well-lit home feels inviting and warm. If your rooms feel dim, replace the existing bulbs with bright, energy-saving CFL bulbs. Dated lighting fixtures can foil your redecorating efforts, so consider replacing them. You can donate them to a Habitat for Humanity ReStore shop – after all, your taste may be urban-contemporary, but someone else may be looking for the perfect retro pendant!

Step 9: Replace the switch plates
A screwdriver is all it takes to swap out lighting switch plates. This easy change gives an instant lift to any room. With a little DIY expertise, screwdrivers, pliers and a voltage tester, you can install energy-saving dimmer switches, instead.

Step 10: Display your art
Finally, dress up your walls with your favourite artwork and family photos. Get your kids’ kindergarten masterpieces onto the fridge, and deck out your mantel with family photos.

There’s a reason why we remove personal photos and mementos when selling a house: it’s so potential buyers see a clean slate. Now that you’re in your own home, go wild and make it yours! And if you have any questions, please contact your local Dominion Lending Centres mortgage specialist.

Posted by: Marc Shendale
Genworth Canada – Vice President Business Development