Buying a Home in Winter

Most people don't want to buy real estate in the dead of winter.  There are many people who are going to buy "in the spring".  This attitude makes May the busiest month in real estate.  As a buyer you really want to avoid the time when everybody else wants to buy!

Consider buying in the winter! 

Winter in the Vancouver area is dark and wet!  If you like a home in the middle of dreary January, then it is almost guaranteed you will like that home even more in the pretty month of May.

Here are some advantages:

1.  Home sellers in January are likely serious sellers.  Many realtors advise their clients to sell in the brisk spring market to attract top dollar.  Therefore, the sellers that insist on selling in winter are very serious sellers. Not only might they be more flexible on price but they might also be more flexible on other terms of the sale such as possession date or subject removal date.

2.   There is a reduced chance of a buyer competing in a multiple offer situation during the slow months on the year.

3.  Often prices rise in the spring.

4.  The process of getting a full approval from a mortgage lender will be quicker in January when business is slower.  This reduces a buyer's stress.

5.  Your realtor might be less busy and be able spend more time with you.

One bit of advice about looking for a home in the wet and cold winter months:  wear shoes or boots that easily slip on and off.  It will make the process of viewing homes all the more enjoyable.

Your first step in the real estate process is to get pre-qualified for a mortgage.  Even if you don't end up buying until the spring, a pre-qualification will have you good and ready for the competitive spring market.  Give me a call and we can discuss the best rates for you.

Bah Humbug to Black Friday!

Over the holiday season, many Canadians feel pressure to spend money.  However, it is not uncommon for people these days to be under financial stress.  Instead of waiting until January to face reality, I would love to see people take charge now. 

On this Black Friday when our consumer society encourages us to spend more money, I say “Bah Humbug!!"

Give yourself a different kind of Christmas gift – the gift of some peace of mind.

Problems to address include:

Paying off Canada Revenue Agency!  It would be good to get them off your back!
High balances on credit cards
Collectors after you
Bruised credit.
A feeling of being overwhelmed with financial stress

The first steps in debt payment plans will be different for everybody.

1. If you have some bad spending habits but are not too far into debt, you are in a good position.  Take charge now.  If you need a money coach, that might be money well spent. 
2. If your situation is more serious and you own your home, you might be able to refinance, or get a second mortgage.  There are different ways to structure a refinance.  It is not something that you should navigate on your own.  An independent mortgage broker can strategize with you and look at options from different lenders.  Your objectives of saving money, increasing your cash flow and minimizing your stress will be part of the plan.  A broker can often overcome bruised credit as well.
3. Another option is to see a debt consultant.  I interviewed a friend of mine who is a debt consultant.  He explained that as an independent debt consultant he works entirely on his client’s behalf.  He does not work on behalf of a financial institution.  As a mortgage broker I completely agree that clients are best served by independent advisors who are not affiliated with one company or another.

Knowing your options and addressing the problems of debt is a great way to spend the holiday season.  Sounds like Scrooge, but what the heck!

Now is the time to seek professional advice.  And remember to say "Bah Humbug to Black Friday!".

Call now to find out your options.  And then decide.

What's Your Best Mortgage Rate?

Please do ask me "What is your best rate?".  Of course you want to know the best rate that a mortgage broker can offer.  You want to save money!

It is an interesting question these days, partly because a mortgage broker can refer to different lenders who have slightly different rates.  But there are many more things that affect the best rate you can get.  Think of a mortgage rate as an individualized rate tailored to you.

List of things that may affect your mortgage interest rate:

The size of your down payment
How well you can prove your income (for example are you self employed or do you get bonuses?)
Whether your mortgage is for an investment property or for a property that you will live in
Whether you are purchasing a home or refinancing a home
Your credit score
Whether you want to have a line of credit attached to your mortgage
The terms for paying down your mortgage early
The size of your mortgage
The length of your amortization
The condition of your property (is it a former grow-op?....before you bought it of course)
The weather (well not that one....yet)

You are best served by having a thorough discussion with a qualified mortgage broker to find out what is your best rate.

Moral of the story:  Pick up the phone and ask "What is the best rate for my circumstances?". 

6 Reasons to Get a Pre-Approval

There are a few good reasons why a pre-approval is an excellent first step when looking for a home.

1.  Know your financial limits.  Buying a home requires both your head and your heart.  You might qualify for  more money than you should be spending.  For example, if you have high daycare costs, then it is prudent not to buy the maximum loan amount that you qualify for.  By getting your per-approval done BEFORE falling in love with a  home, you will more likely stay within your budget. 

2.  Going through the process of a pre-approval begins your education process.  You don't want to be overwhelmed by buying a home.  If you approach the financial side of things first, you are breaking the process into manageable pieces.  Mortgage options can be complex and you want to consider your options without the emotions that happen after looking at homes.

3.  A pre-approval might help you get your financial house in order.  For example, the process might reveal a mistake on your credit report.  You are better off dealing with that upfront.  You might also be trying to decide between paying off a car loan versus putting the money towards the down payment.  By going through the pre-approval process the better choice will become clear.

4.  Nobody likes paper work - well except Revenue Canada!  In the pre-approval process you will be required to get your papers in order.  Often the most onerous set of papers includes proof of the source of down payment.  It is best to get this sorted beforehand and avoid stress later on.

5.  The pre-approval sets up the relationship with the mortgage broker, realtor and possibly the lawyer/notary.  To ensure a smooth home buying process you want to have your team assembled and working together on your behalf.  The truth is that most realtors won't go to the next step until you have a pre-approval anyway.

6.  A pre-approval holds an interest rate for you.  If rates go up, you are still safe with the lower rate.  If rates go down, then you can get the lower rate.  You can only win with a pre-approval.

5 Rules to a Successful Refinance for Debt Consolidation

Life happens and sometimes debt is unavoidable.  And at other times we make mistakes and place ourselves in debt - with regret.  Regardless of how you got into debt, the important thing is to not ignore the problem.  Managing your situation is very important.

A few rules to follow:

1.  When you can't cover all of your expenses, prioritize your mortgage payments if possible.  It will matter when you try to refinance later on.

2.  Pay the minimum payments on your credit card if you can, even if you can't pay the full balance.

2.  If your debts are piling up due to a marital break down, protect yourself by creating separate accounts if possible.  For example, sharing a line of credit could lead to trouble.  Contact your lender to change the terms of a line of credit.

4.  If you have equity in your home, speak with a mortgage broker about a refinance sooner rather than later.  You can choose to not refinance, but know your options first. If you wait until things get really bad before asking for help, you may find yourself facing a mortgage rate well about competitive interest rates.  Sadly I see this too often.

5.  Knowledge is power.  Be aware that there are a variety of options in a debt consolidation plan if you have equity in your home.  I have seen people who have fallen into the trap of believing that there is only one mortgage product available to them.  This can result in them getting into an unnecessarily expensive or restrictive product.    And a mortgage broker is the person with access to the different options from different types of lenders.  2nd mortgage?  Total refinance?  CHIP Mortgage?  Private Mortgage?  You might be surprised on which option is best for you.

Real client story:

 For a few reasons, the best way to consolidate debt for a recent client was to get a second mortgage.   I consulted with a variety of lenders.  Second mortgage are more expensive than first mortgages.  Rates ranged from 8.5% to 14%.  My client was relieved to have me shop around for him to ensure the lowest rate possible.

Don't Renew! Renegotiate!

Everybody wants to save money on their mortgage! 

A new home buyer is especially diligent when shopping for the best mortgage. 

They make the effort to:

• find out the options
• compare rates and costs
• compare flexibility

This home buyer then moves into their new home and their mortgage becomes something they don’t think about very often.  They might have a growing family and an ambitious career.  In the meantime, the mortgage payments are happening on automatic pilot.

Eventually their lender sends them a letter to let them know that their mortgage is coming up for term renewal.  That borrower is faced with some decisions to sort out.

1.        Should they do things the “easy” way and sign the offer from their current lender?

2.       Should they ask their lender for a better rate?

3.       Should they move their mortgage to another lender?

The answer?  You guessed it!   Don’t Renew! Renegotiate!

1.       Call your lender and ask them for their best offer and ask them to send it to you in writing.

2.       Work with a broker who has access to many different lenders so you can better assess your options.  Even if that broker has not worked with you before, they can still help you sort out your renewal.

3.       Have the broker compare options for you including the option from your current lender.  This analysis will include any possible costs for moving the mortgage and list possible advantages to moving to another lender.

4.       Then decide.  It will cost you nothing to ask and it could save you thousands of dollars.

Remember the effort when you first bought your home?  Well you only need a small fraction of that effort to ensure you get the best mortgage when renewing your mortgage term. 

It is not unheard of to have a mortgage renewal offer of a whopping 1% higher than competitive rates.  On a mortgage of $400 000 that would cost approximately $4000 extra per year!  I have also seen decent renewal offers where it was clear that the client was fine to stay where they were. 

No matter what your final decision, it pays to consult with a mortgage broker before you sign the "easy "offer from your current lender.  Go ahead and make that call.

Borrowed Down Payment

Scenario of a  Buyer who did not have enough down payment:

A client recently got a job promotion and is earning considerably more than she was last year.  Her increased income prompted her interest in buying her first apartment.  Living in the Vancouver Lower Mainland, she did not want to wait another year to save up for more down payment because she was concerned about rising real estate prices.  Plus she wanted to start building equity as soon as possible!

This client had saved up $8000 but she needed at least $18 750 down payment (5% of $375 000) plus some money for closing costs.

Solution:  She got a line of credit for $15 000 from her bank.  With that line of credit, she had enough down payment to purchase her first home plus some money left over.

She is paying 6% on her line of credit, and therefore she wants to pay it off quickly.  Her mortgage interest rate is only 2.49%.  With discipline she  will pay off her line of credit by the beginning of June 2017.  In the meantime she will have already built up over $12 000 of equity in her apartment by paying mortgage rather than rent!

Borrowing a down payment worked well for this first time buyer.  This will work well for many others, but it is not the best strategy for everyone.  Some borrowers are better off to save up their down payment in cash.  They will qualify for more mortgage money in that situation. It is also important to have a solid repayment plan in place if you borrow your down payment.

It always important to have a thorough discussion about your options with a qualified mortgage broker. 

The Best Mortgage in a Multiple Offer Situation

We have all heard Vancouver real estate stories where there are 10 offers on one property.  This intense real estate market makes it difficult for the average working family to compete when buying a home.  There are ways you can make yourself more competitive.  If you are one of those people – keep heart and read on!

I encourage home buyers to think about the speed of a particular mortgage lender.  It is easy to focus entirely on the best interest rate, but a good strategy takes all factors into consideration.

All mortgage lenders have different strengths and go through cycles.  As a mortgage broker I know which lenders are particularly speedy at a given time.

Imagine a seller who is considering offers after a weekend open house.  All offers are being viewed on the immediate Tuesday.  That seller has 2 offers in hand:

1. Subject to finance, subject to be removed in 10 days
2. Subject to finance, subject to be removed on the immediate Friday (the mortgage application is processed in 3 days).  The key is that the subject is to be removed before the upcoming weekend.

It is obvious that a short turn-around time is more attractive to the seller!

This strategy will strengthen your application.  No one can guarantee the speed of 3 days.  It will depend upon your application.  Thorough preparation in advance will maximize the possibility of success.

Take heart, and apply this strategy.  Give me a call and we can set you up for success!