Ask the Mortgage Expert

With Historically low interest rates and the current buyer’s market it may just be the right time to purchase your first home.

Fixed Rates have

NEVER BEEN LOWER!

You can lock in now and guarantee yourself for the next 3-5 years, the lowest rates ever offered in Canada. With a preapproval you have four months to find a house and move in so you have time to look around until you find the home that is just right for you. With a good realtor you should be able to find  your first home in the area of the city you desire. There are more listings now that are not being sold quickly which increases your ability to negotiate the best possible price.

Down Payment

The typical down payment is 5% of the purchase price although there are options with 2% or even zero down. With the less than 5% down payment, the rates go up a little to accommodate the risk the bank or lender is taking.

Owning Versus Renting

With a mortgage of $300,000 your monthly payment would only be $1260 and a portion of that would be paying off the principal amount of the mortgage. If you are renting, of course the entire payment goes to pay down the landlord’s mortgage.

If you would like to discuss owning your own home, please feel free to call us and we can answer your questions and determine if now is the right time for you.

 

September 2011 Article

Converting your Current Home into a Rental Property

Summer is over and the hot weather along with current economic conditions has heated up the interest rate market. Fixed rates and variable rates are very, very low and the housing market is still lower than expected in Calgary since the recovery began many months ago.

While it may not be the right time to sell, it may be the right time to purchase and so this month’s article is for those who may want to convert their current home into a rental property and purchase their new dream home while the prices are right

So, you’re ready to move out of your starter home and into a larger residence. The thing is, your first home is so well-located that you’d love to hold onto it for a little longer until the price is right to sell it – and maybe use it as a tool to launch you into the rental market. Before you make the commitment, however, here are a few things to consider:

1. Will you need to refinance?

Chances are, in the time you’ve owned your primary residence, you’ve had an opportunity to build up equity. The question is, will you need some of this equity to use towards a down payment on a second home – or do you have a separate down payment fund saved up?

If you need to tap into your home’s equity, you can refinance your current home up to 85% of the its value. These funds then can be used as your down payment on the new home purchase. Ideally you will want to have 20% down payment on your new home to avoid the CMHC fees if you can.

2. Ensuring positive cash flow.

If you have to pull out some equity in your home for a second down payment, your mortgage payments are going to increase on your current residence. For a rental property to make sense, you’re going to have to make sure that you have positive cash flow – which means the going rental rate can cover your mortgage payments, property taxes and maintenance costs. Check out similar rental properties in your area either through rentfaster.ca viewit.ca, craigslist.com or kijiji.ca.

To keep your costs as low as possible, it’s best to go with the longest amortization you can get your hands on – and the lowest mortgage rate which of course we can assist you with.

3. Tax implications.

If you need some advice on the tax implications of purchasing a rental property, call your accountant and he or she can help you set up your new venture properly to get the best tax savings. Ask them about all the deductions you will have as a landlord that you don’t have as a current home owner.

4. Are you really ready to be a landlord?

Becoming a landlord brings on its own new set of responsibilities – and potential late-night emergencies. Before you pull the trigger, really think about if you’re ready to take care of the maintenance needs of two residences – and if you’re prepared to carry the costs of two residences if you can’t rent your first one out for a month or two.

 

August 2011 Article

Mortgages are easy as long as the banks don’t make them complicated. In this first issue of The Experts I wanted to discuss what it is that a mortgage broker does and why using a mortgage broker can save you thousands of dollars versus going to a bank.

I also wanted to briefly discuss the mortgage basics for those who are first time home buyers and try to make things as uncomplicated as possible.

 

Mortgage Broker vs the Banks

A mortgage broker is an individual that is licensed with the Real Estate Council of Alberta. Rather than working with just one bank, most banks, mortgage companies, and trust companies are part of the mortgage broker network and we can access each of their mortgage products whereas a bank can only offer their own in branch mortgages. If you don’t fit a particular banks lending program, you need to start all over again at another bank. By working with a Mortgage Broker, we can have your application reviewed within 24 hours by multiple banks and mortgage companies and provide options for you that fit your individual circumstances.

Better Interest Rates than your Bank

In most cases a mortgage broker can also get you a better interest rate than what a bank branch will offer you and that can save you thousands of dollars and provide you with a lower monthly payment as well. How do we do that? Simply, the banks offer us better rates than they offer to their in branch customers because they want us to send our business to them and they don’t have to pay our business expenses.

How do We get Paid?

The banks will pay us a finder’s fee once the mortgage has closed and because they do this, we do not have to charge you a fee for our services. Only on 2nd mortgages or private mortgages is a fee a possibility and we will always disclose a fee up front if the lender needs to charge one.

We Work for You, Not the Banks

So our role is to find you the best interest rate and mortgage that fits your individual circumstances. If we can do that, the bank will pay us a finder’s fee and you receive the best possible service without having to pay for it.

Our role is also to make sure that you know what is going on at all times and answer any questions that you may have so that you can feel comfortable about the entire process.

When the Banks say No, Come to Us

Often clients of ours have gone to their bank first and are told they cannot qualify for a mortgage. Don’t be discouraged. There are many cases that we can still get a mortgage for a client even when the banks have said NO. Give us a call and we will do our best to find the funds you need.