Should You Use a Mortgage Broker?

What you need to consider when choosing between a mortgage broker and going straight to a financial institution.

Patricia Lovett-Reid



Be it suburban split level, swank downtown condo or rural country manor, when it's the right fit, you know it. But having the keys in hand to the place that best suits you will take plenty of research and leg work — and will likely occupy your dreams at night. And it should. Buying a home is one of the biggest investments you'll make. Just as you wouldn't make a commitment of that size without asking the right questions and sneaking a peek under the rug, it's important to put equal effort into finding the right mortgage.

Generally, there are two ways to obtain mortgage financing in Canada — either indirectly through a mortgage broker, or directly through a financial institution or mortgage lender. The mortgage market is a highly competitive market and the players are standing in line to win your business.

* For more info on buying a house, check out our Home Buyer's Guide

So who are the players?

A mortgage broker does the shopping for you — presenting your information to lenders to find a fit. He or she has access to numerous lenders and can provide you information on various services and loan types, and will shop around for attractive rates and terms for your mortgage. The use of mortgage brokers is very common in the United States and they are growing in popularity in Canada. According to research by the Canadian Association of Accredited Mortgage Professionals (CAAMP), mortgage brokers closed approximately one quarter of all mortgage deals in Canada in 2010.

A mortgage lender in Canada is most likely to be a major bank, trust company, credit union or other finance company. Whether generated by a broker or a bank, chartered banks finance more mortgages than all other lending institutions combined. Most bank advisers or bank mobile specialists strive to provide a holistic solution that is best for you, using their suite of financial products and services. They might, for example, take into consideration all outstanding debt, such as credit cards, loans, or lines of credit as part of an overall solution for your particular needs. They could help improve cash flow and minimize your borrowing costs over the long term. Banks are aware of the highly competitive landscape and offer competitive rates.

So will it be a broker or a bank?

While there are advantages to both, my advice, no matter which route you choose, would be to have the right questions prepared for your mortgage professional. Interest rates are just the beginning. What might the new mortgage rules mean in your situation? Here are some important areas to consider:

Term: Ask your broker or lender to break down the costs of different terms. Do you need a fixed term to better sleep at night, or would a variable term work for you? If you expect to have extra money to pay down your mortgage, perhaps you should consider an open term versus a closed term.

Amortization: Have the bank or broker calculate the difference amortization schedules will make — will you spread the payments out over 25 or 30 years? Or can you do 10?

* For more info on buying a house, check out our Home Buyer's Guide

Prepayment allowance: How much and how often will you be able to pre-pay every year before being charged a penalty?

Frequency of payments: Which payment frequency is most suitable for you — weekly, bi-weekly, rapid bi-weekly? Will the lender allow you to make accelerated payments?

Portability: If you move, can you take your mortgage with you?

Assumability: If you sell, can the buyer, subject to a credit approval, assume your mortgage and rate?

Point of contact: Who can you call if you have a question or a problem? If you use a broker to arrange mortgage financing, will he or she have any involvement once the financing is in place? Are call centres and branches available for inquiries?

The CAAMP survey I mentioned also found mortgage holders reported, on average, that they obtained 1.96 quotes when they signed up for their current mortgages. That indicates that whether indirectly through a broker, or directly through a lender, many Canadians are getting a second opinion when it comes to mortgage financing. The best advice? Do your homework, shop around and be ready to pepper your mortgage professional with questions. Consider your mortgage as carefully as you will the purchase of your dream home.

Http://www.okanaganmortgages.com

Should You Use a Mortgage Broker?

`Why`` am I a Mortgage Broker and `Why`Should You Do Business with Me?

My business coach asked us last week to come up with our “Why”.  He gave us a questionnaire to help us and several questions and then concluded with a Skype call.

A large number of people come to meet with me about their mortgage and they are not really sure why they are there or what they should ask.  Well let me tell you getting a mortgage is a lot more than finding the best rate.  It is important that you find the right broker that will find the right product to suit your needs.  For example what if you need or want to pay down additional money on your principal within the first year or during the term?  Not all lenders allow or have the same prepayment options.   Should you take a variable rate mortgage or fixed?  What are the risks?  What if you are self employed and have a lot of deductions and so your net income doesn’t look so good?  These are just some of the many decisions that I help my clients make every day.

The other day I had the opportunity to assist a client who had a child who was very ill.  The family had taken the child for many surgeries and found them selves unable to make their mortgage payment.  I was devastated for the family and wanted to do something to take the stress off of them so they could concentrate on their family.  I called the lender and had them waive the NSF fee and the late interest and did some investigation and discovered they could capitalize a few payments until they got back on their feet. 

This experience helped me to discover my “why”.  I want to make a difference in every life I touch whether that means helping you get a mortgage to buy your home or helping you to get the best rate with your existing lender, if that makes the most sense given your circumstances.  If I can help you please call me at (250) 469-1611.

http://www.okanaganmortgageteam.com

`Why`` am I a Mortgage Broker and `Why`Should You Do Business with Me?

Inspiring Thought by Colin Dreyer

Inspiring Thought by Colin Dreyer

Is this really worth reading?
That is a good question……each month when I sit down to write these I ask myself if anyone is reading them and are they getting any value from my comments or observations in life.
The answer is yes…..one, I like writing them as it continues to motivate me and helps me reflect on the positives in life and two, any opportunity to make a positive change in your life or someone else’s is an opportunity you have to take.
So, now you know the theme for this month……take opportunity not only when it is available but when it is not available you need to go out and create it.
Here are a couple of thoughts to keep you motivated and energized…
-       Learn from older people  – knowledge is always the key to success and what better way to learn from those that have gone thru the highs and lows of life and are willing to share that information with you to help put your thoughts in context and also to help you eliminate some of the pitfalls that you may be subjected to in your journey.
-       Pursue a mentor – as above we can learn for everyone, regardless of age but sometimes we need someone who can understand our goals and be a constant resource to help us to get where we want to go and keep us on track……so pick a mentor and let them help guide you…..no one said you have to climb every mountain yourself.
-       Do not fear competition – there is always competition, understand it, learn from it but work on your own game….winners are defined by their strengths.
-       Network for value – being seen and knowing as many people as you can is important to personal and business growth but you need to also decide the highest and best use of your time……be strategic, you do not need to be everywhere all the time
-       Listen well – you learn and grow in the quiet moments….by reading and listening not by hearing yourself talk……be in the moment, listen to people, give them your full attention when they are talking……if people believe that you care for them then they will care for you.
Again, simple steps with large results. Stay motivated, stay energized….this is your moment…..enjoy it!
All the very best,
Colin

www.okananganmortgages.com

Inspiring Thought by Colin Dreyer

Create Value in Your Home

How do I increase the value of my property? That’s the question on
every homeowners mind. There are two key survival strategies. The first is to
think long term, have a plan and stick to it. History shows that this plan of
action can pay off.
The second tactic is to outperform the market. This means ensuring your
property increases in value at a greater rate than those in your surrounding
market. One way to do that is through renovations – but not all projects are
created equal when it comes to generating a return on investment (ROI).
Here are the top four “renos for ROI”:
1. Building an income suite (also knows as a rental suite)
This is by far the most profitable reno a homeowner can undertake.
Income suites typically have a 150% to 250% ROI.
2. Painting
This is an inexpensive way to freshen up a property. Picking neutral tones
and doing a good job are key. This simple reno project gives 100% ROI.
3. Renovating Kitchens and bathrooms
Kitchens should be bright and spacious with a smart layout. Replacing old
appliances with inexpensive and more efficient newer ones also adds a lot
of appeal. Bathrooms are equally important. The more you have, the
better the ROI. This delivers about 75% to 100% ROI.
4. New Flooring
This has a dramatic impact and hard surfaces are the way to go. Laminate
flooring is inexpensive, easy to lay, durable and looks great. With modern
styles and improved design, it has become the flooring of choice for real
estate investors. New flooring can generate an avg. of 70% to 90% ROI.
(Source: HGTV.ca)

http://www.okanaganmortgages.com

Create Value in Your Home

The Home Buyers' Tax Credit (HBTC)

Today's focus is on the Home Buyers' Tax Credit (HBTC).

What is this credit?

The Federal Budget 2009 proposed a tax credit for First Time Home Buyers as an action to provide support for Home Ownership. This proposal was thought to assist first-time home buyers with the costs associated with the purchase of a home (i.e. legal fees, disbursements and land transfer taxes).

For 2009 and subsequent years, the budget proposes to introduce a new non-refundable income tax credit, based on the amount of $5000 for first time home buyers who plan to purchase after January 27, 2009. For an eligible individual, the credit will provide up to $750 in federal tax
relief starting in 2009.

How is the new HBTC calculated?

It is calculated based by multiplying the lower personal income tax rate for the year (15% in 2009) by $5000. So that means, for 2009, the credit will be $750.

Who qualifies for the HBTC?

The individual must meet the below criteria:

# They acquire a qualifying home.
# Neither the individual or spouse/common-law partner has owned and lived in another home in the year of purchase or any of the 4 preceding years.
# A person with a disability or are buying a house for a related person with a disability, you DO NOT have to be a first time home buyer. The home must enable the person with a disability to live in a more accessible dwelling.

Who is considered a person with disability?

An individual who is eligible for the Disability Tax Credit (DTC).

What is a qualifying home?

# The home must be located in Canada.
# This includes existing and new construction. Single-family homes, semi-detached homes, townhouses, mobile homes, condominium units, apartments in duplexes, triplexes, fourplexes or apartment buildings all qualify.
# A share in a co-operative housing corporation that entitles you to possess and gives you an equity interest in a housing unit located in Canada also qualifies. (BUT a share that only provides you with a right to tenancy in the housing does NOT qualify).
# You or the related person with a disability must intend to occupy the home as a principal residence no later than ONE year of purchase.

Can my spouse/common-law/friend claim the HBTC?

Either person can claim the credit or you can share it. BUT the total of both claims cannot exceed $750.

If you are purchasing a home with a friend, and you both meet the conditions for the HBTC, either one of you may claim the credit or share it. BUT the total cannot exceed $750.

Does the home have to be registered under the applicable land registration system?

Yes. The home must be registered in accordance with the applicable land registration system.

How do I claim the HBTC?

Beginning with the 2009 personal income tax return, a new line will be incorporated for you to claim the credit.

Do I have to submit any supporting documents with my income tax?

No. But make sure that the information is available just in case CRA requests for it.

Is the HBTC connected to the Home Buyer’s Plan?

No. Some of the conditions for the HBTC and Home Buyer’s Plan are similar but they are not connected. Eligibility for the HBTC will not change if you participate in the Home Buyer’s Plan.

For more information on the First-Time Home Buyers’ Tax Credit, click on Department of Finance’s Budget 2009 (Page 128).

Please refer to Canada Revenue Agency’s website for up-to-date details on the HBTC.
 
http://www.cra-arc.gc.ca/nwsrm/fctshts/2010/m01/fs100121-eng.html

www.okanaganmortgages.com

The Home Buyers' Tax Credit (HBTC)