Here are some important considerations when you enter the housing market in Winnipeg:
1) You will face competitive offers. No matter how much you say you won’t bid large or write unconditional offers, many still do. The supply of homes in the first time home buyer range up to $250,000 are in demand so be prepared. No matter how much you prepare, when you are out there looking and have missed out on offers on other homes all logic and rationale will go out the window unless you are very patient. Having the right realtor is something that you have control over so take the time in the selection. Here are some great questions you can ask your realtor.
2) Land Transfer Tax, the hidden surprise. Imagine buying your first home for $250,000 only to find out when you meet with the lawyer a week before your possesion date that you need $2720. for land transfer tax. This money goes directly to the Province of Manitoba to transfer the title from one name(s) to another. If this seems like a bit of a tax grab, you are right!
3) While we are on taxes, in 2012 the Province of Manitoba introduced provincial sales tax on any mortgage default insurance premium. On a $250,000 home with a 5% down payment you can expect to pay $452.38 in sales tax. So first time buyers, the province is your pocket for $3172.38 and you haven’t even moved in yet. We continue to be one of the most heavily taxed provinces when it comes to purchasing a home, how are you feeling now?
4) Property Disclosure Statements. If you don’t feel that you need to know more about the property, here is an example of a home owner in Winnipeg who had a major surprise. This happened on Christie Road in Winnipeg so it can happen anywhere. Here is an example of a homeowner in Saskatoon who was able to legally go after losses relating to a basement that had water. The Property Disclosure Statements were brought in to protect would be homeowners on any potential known problems with a home.
In the end, get professional well qualified advice to help make your first home buying experience the best possible.
As the leaves change color, October weather teases us with the last taste of summer or abruptly knocks us in the gut to remind us of the changing seasons, life sometimes treats us exactly the same way.
Cancer and financial literacy really don’t have much in common, in fact one is all to prevalent in our lives while the other needs to be more prevalent.
After watching NFL football on Monday night, there was the common pink theme among both teams. If two teams battling each other so violently can come together on one common ground, surely I can make a small difference. As I sat pondering my blog update next day, I had 4 cards to be signed and delivered to clients. Normally I would send a gift card of some sort to accompany the card as a token of my appreciation. Then it hit me like a thundering tackle in a football game, I am going Pink for October. With every funded mortgage during the month, a donation will be made to the Canadian Cancer Society. These clients will receive an acknowledgement in their honour.
November is Financial Literacy Month. In preparation for financial literacy month, there a couple of contests open for individuals to enter. The first is a contest eligible for youth ages 13 to 19. It’s an easy contest to enter all you need to do is create a You Tube video and tell everyone why you are reaching for a financial goal.
In addition there is another contest open for post secondary students who could win up to $2500 for creating a 2 to 4 minute video. Let’s some youth creativity to come up with some winners in Winnipeg.
In the spirit of financial literacy, I will be providing tips and tools through my Facebook page, twitter and Google+. All you need to do is click on one of these links to get “hooked” up with all this timely info. For every Winnipeg like on this facebook page during the month of October, I will donate an additional $2. I’m starting at 55 so the rest is up to you.
Cancer and Financial Literacy, let’s kick some butt on both of these fronts.
After 6 weeks of renovations we have a functional kitchen, dining room and living room. The challenge now is get to the final items which need to be done (backsplash, stairs, and doors painted) Baseboards and casings are now complete with the front doors painted. Home Depot has an interesting product which allows you to insert a window without replacing your whole door. These inserts can be purchased in various styles, we decided to go with blinds inside the window to match the patio doors at the back of the house. These inserts come in a standard size of 22″ x 36″ and there are several varieties of looks.
We also purchased and installed the Delta Touch faucet. No need to turn the taps, just touch the tap anywhere and it will turn on and off. With messy hands this is really nice to work with.
The other interesting product we purchased is a table which will expand from 60″ to 132″. There are 3 table leaves which can be added to create 4 different sizes depending on the size of your social or family gathering. We purchased this from Dufresne Furniture and love the way this table can expand.
Here is the latest video and as our friends say, our home has a grown up look now.
Since interest rates are at historic lows many consumers are asking questions about 10 year mortgage rates. This short video gives you an understanding of what you need to understand to ensure you get the best odds on your bet, a 10 year mortgage is like placing a bet.
Here are few other keys points about 10 year mortgages:
1) After the first 5 years of a 10 year mortgage, Canadian law states that the maximum penalty is 3 months interest payment and not Interest Rate Differential (IRD) like 1 – 5 year mortgages.
2) Before you commit, have an Accredited Mortgage Professional assist you in the calculation in the video. This will help you understand what your break even interest rate is in 5 years time.
3) 10 year mortgage rates are not very competitive in today’s environment, a mortgage broker can be a huge advantage for you, your bank or credit union may not be able to be very competitive.
It’s the time of the year where everyone has made New Years resolutions and set goals for 2012. As Canadians we have been fortunate in 2011 with our economy when other parts of the world like Europe and USA have faltered. We must be more diligent and focused in reducing high interest debt (personal loans, lines of credit and more notably credit card debt).
If you own a home and have a mortgage you will want to check out this video titled New Years Mortgage Strategies to make the most out of your financial position in 2012.
All the best in 2012 for your goals, remember the difference between a dream and a goal is taking action, I would be delighted to help you with that.
Please email/text/tweet/message me if you would like a budgeting tool or a form to increase your mortgage payments.
A recent situation arose where a client was preapproved for a new home purchase by their bank. Great, right?, not necessarily, they owned an existing home and were told by the bank representative that they should sell their home first and then purchase a new one. They were moving down in price so the client assumed this was a no brainer. The bank representative did not do the diligence in exploring their current situation.
They proceed to sell their home, agree on a price and then go out looking for a home. They would have some equity to purchase a home however, were hoping to buy a new home with 5% down payment as pre approved by the bank. The only catch in this situation is that in Canada an insurer(a 2nd step in the approval) needs to approve the mortgage with less than a 20% down payment. The clients were not made aware of this and their application was not approved with 5% down payment. Instead the insurer requested 10% down payment with some conditions that the client had to meet before the bank could get it approved. The clients are now scrambling to look at options so they can own a home rather than rent.
The moral of this story is as follows:
1) Get a second opinion after meeting with your bank. The experience and knowledge of the bank representative may not be as good as you think. Ask about their experience in mortgages and how many times they have handled a situation like yours. A mortgage broker with the Accredited Mortgage Professional (AMP) designation is committed to ongoing education and professional development, a great first step in identifying someone who is committed to the consumer.
2) Speak to your realtor about your options. A professional realtor will review the options with you and team up with your mortgage advisor to assist you in a smooth transaction. Making an offer, “subject to sale of your existing home”, may offer you the necessary security to ensure your new home and fianancing is approved before you sell your existing home.
Good advice from a team of professionals acting in your best interest is the key.
Have you ever fallen in love only to be disappointed? This week a family was looking to purchase a home. They were pre-approved by a mobile mortgage specialist at a major bank for up to $235,000. The real estate agent and family continually stayed in touch with the mobile mortgage specialist to make sure everything was okay as they had made 7 offers on homes. They finally had an offer accepted on the 8th home they offered. It was accepted by the seller and they had 48 hours to arrange their financing, but they were pre-approved – so what could go wrong?
In actual fact they weren’t pre-approved, based on credit history and obtaining proper employment information up front. They could have been steered in a path to strengthen their position or look for a smaller home. Imagine the realtor’s disappointment when they found they couldn’t get an approval. They had just spent hours upon hours with this family, not only wasting their time and the family’s time but also the time of other realtors and sellers of homes.
My advice to realtors is this:
1 Be confident in asking the purchasers if the bank, mortgage professional, or mortgage broker actually reviewed their credit score and credit history with them.
2 Did they also ask for their employment letters, pay stubs?
3 Did they verify the down payment? (some down payments don’t qualify)
If they didn’t ask for this information, your purchasers may fall in love only to have their heart broken. Don’t let it happen, make sure they are really pre-approved.
The first question of a prospective clients mouth is “What is your best rate?”. This always leads to a discussion and I never really answer the question right off the hop because I’m not wired that way. I saw a recent stat that says 10% of consumers shop based on rate and 90% shop based on value, I need to hang out more at Starbucks because those consumers are looking for value, it’s definitely not price.
When I entered this business I came into it because I want to make a difference in people’s lives through education and communication of my previous experience and knowledge. To me it’s not about the transaction of a mortgage it’s the life long relationship of purchasing a home and future homes, thereby fulfilling goals and dreams, I love this business. I see many people advertise on a rate that seems unreasonable only to deliver no value, just a product. If that’s what you as a consumer want, I’m not your guy, it’s the way I am wired.
I conducted my first Mortgage University course last night because it’s what I love to do, educate and inform consumers. The best sense of accomplishment I get is when a consumer has had no surprises through the whole process. So many consumers come to me with inaccurate information from family, friends, etc, that the best way to help them is educate them. I plan to continue my focus on education so that I can “Make a Difference”.
I would like to thank a friend of mine who recommended a specific website that awakened and help me understand “why I do what I do”. This website has a video which he recommended I watch. He gave me enough teaser information to peak my interest. This video is Anthony Robbins whom many people know. I have seen him in person and never left with much information, I was unimpressed as he just seemed to try to motivate. This presentation and video Anthony gave is the most relevant piece of work of his to me. I hope you have the same takeaway.
Thanks Darren Sawchuk, a friend is someone who knows you better than you know yourself, for that I am grateful!
FIXED OR VARIABLE? This is a question that comes up increasingly in conversations with new or existing homeowners. My answer is always that it depends on their circumstances. There are 4 main factors to consider:
1. What is my risk tolerance? If you don’t like to take risk and want the sure thing, fixed rates offer you the comfort and security of knowing your payments for the next 3-10 years. Sometimes I refer to this as the sleep factor, does it keep me awake at night, if it does consider a fixed rate.
2. What is my current debt load? If you have tight cash flow and are concerned where you might be able to squeeze out more money for higher payments, you may want to consider a fixed rate. The other factor that can affect your debt load is job loss, reduced income, adding children to your family plus other factors. The opposite can be true if you are well educated and the prospects for your career and profession has a good future. Variable rate mortgages can save you money now if you are in this situation.
3. Do I know what is happening with rates? If you read the business section of the paper daily chances are that you know what is going on with interest rates. If you have a mortgage broker that communicates with you regularly, you have the advantage of being on top of this. I provide regular emails with rate updates and Bank of Canada announcements to keep consumers informed. Ultimately, it is their decision if and when they decide to lock in if they so choose.
4. Consumers with equity in their home may feel more comfortable in choosing a variable rate mortgage. If you have less equity and you get caught with rates increasing, you may end up with less equity. This will be explained in a later post.
If you have been in a variable rate mortgage over the last century, you have fared better than someone in a fixed rate mortgage with your savings in interest. At some point this economic cycle will end and those with fixed rates below 5% will be seen and having made a good decision. The question is when is this time. In the investment world, market timing has never been viewed as a strategy to live by, the same is true in mortgages. If you wish to receive rate updates regularly, please let me know.