Divorce and Your Home

There are many questions you might be asking at this time, particularly surrounding your home. We are here to help. Let's break down some the the basics.

Q "I think I want to stay in my home...what do I need to keep in mind?"

First, take into consideration the size of the home, utilities, payments, family needs. Does staying in the home truly make sense? You will likely now be entirely responsible for the house payment, taxes, insurance, upkeep, maintenance and other related bills. Your household income may be decreasing, and your overall expenses may be increasing if you are subject to a court order for support, so it is important that you are aware and thorough in determining what your actual expenses will be in keeping and maintaining the home on your own.

Q " My spouse is entitled to share in the equity we have in our home...how is this handled?"

The division of family assets including the equity in your home, is a complicated matter that should be discussed with your lawyer. However, the equity in your home needs to be determined by an appraiser- call us if you need a recommendation and referral. The appraised value less the eventual costs of selling (commissions and seller closing costs) equals the equity to be split between the parties.

You are often able to come to an agreement with the assistance of your legal advisor as to the amount of equity to be paid to your spouse or there may be a court ordered mandate for distribution of the equity, possibly including interest on that amount. This means that you will likely have a specified amount of time to obtain the funds needed to give the ex-spouse their portion of the equity. . This can be done by cashing out the equity in the home with a new mortgage, selling the home or by using other assets you have to "buy out" their stake in the home.

If you choose to stay in the home, you have two financing options to pay your ex-spouse. You can either refinance your home to get cash out, or you can obtain a new second mortgage or home equity loan. This is where you will want the advice of a trusted mortgage professional.

Even though you may now be qualifying for the loan without a spouse's income - with your own good credit and income, you can usually quality on your own. Often, child support and alimony is viewed as stable income, it it has been received for three months and is likely to continue for at least three years.

Q "What if I am the one leaving the home?"

It is important to know that even though you may have agreed to leave the home or the divorce order awarded the home to your spouse, you are still obligated for the mortgage debt in the eyes of the mortgage company.

Q " I think I want to stay in my home...what do I need to keep in mind?"

Unfortunately for many, divorce is a time of great financial hardship and credit challenges. Because you are obligated on the mortgage until it is paid in full or refinanced, it is imperative that the person responsible for the payment remains current. One possibility you have to remove your name from obligation is to contact the company which currently holds your mortgage, and ask to do a "Qualifying Assumption". This process will leave the existing loan in place, but would relieve the non-occupying spouse from their obligation on the loan. Another option ideally is for the spouse remaining in the home to qualify for a new mortgage and release you from the existing obligation. Give us a call, and we can explain more about this process, or help you determine if a refinance may make more sense instead.


Q If I want to go buy another home - am I going to be out of luck while I am still listed on the old mortgage?

A although it is difficult and not usually advised to purchase another home until your divorce is final,we are happy to look over how you expect the financial situation to be finalized, and help you get ideas as to what you will qualify for. Remember that in most situations, child support and alimony must have been received for three months, and be likely to continue for at least three years in order to use this income for qualifying. even if you are still listed as a co-borrower on the mortgage for the prior home, if the separation agreement sates that you are not obligated for the mortgage, many mortgage programs will allow you to be qualified without this obligation. However, any late payment issues on the mortgage held by your ex-spouse will impact your credit scores, as the mortgage is still a joint liability in the eyes of the credit bureaus until you are removed via a refinance, sale or other method as described above.

Q What is I do want to purchase another home before the divorce is final?

A This may be possible, but be aware that your spouse may have a marital interest in your new property, and it will need to be handled by your attorney. You will also have to qualify with the full debt from the current home, because there would not yet be a final separation agreement assigning ownership. Be very careful with this situation, especially as the financial situation you expect...may not be the final result, once the divorce is finalized.

Taking the time to talk with us during this process and before you decide to start looking at a new home can help eliminate many of the concerns or questions that ofter surface in these situations. We understand this may be a very difficult time, and you have many decisions to make. We can provide you with a free financial consultation, credit check, an mortgage strategy review - so that you have the answers and information you need to make good decisions.


We will help you sort out the options and strategies you have at hand, and help you at this time...and down the road. We understand that it's not just a house - it's your home.

www.okanaganmortgages.com

Divorce and Your Home

Bank of Canada maintains overnight rate target at 1 per cent

OTTAWA –The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

As anticipated in the January Monetary Policy Report (MPR), the global economic recovery is becoming more firmly entrenched and is expected to continue at a steady pace. In the United States, growth is solidifying, although consolidation of household and ultimately government balance sheets will limit the pace of the expansion. European growth has strengthened, despite ongoing sovereign debt and banking challenges in the periphery. The disasters that struck Japan in March will severely affect its economic activity in the first half of this year and create short-term disruptions to supply chains in advanced economies. Robust demand from emerging-market economies is driving the underlying strength in commodity prices, which is being further reinforced by supply shocks arising from recent geopolitical events. These price increases, combined with persistent excess demand conditions in major emerging-market economies, are contributing to the emergence of broader global inflationary pressures. Despite the significant challenges that weigh on the global outlook, global financial conditions remain very stimulative and investors have become noticeably less risk averse.

Although recent economic activity in Canada has been stronger than the Bank had anticipated, the profile is largely consistent with the underlying dynamics outlined in the January MPR. Aggregate demand is rebalancing toward business investment and net exports, and away from government and household expenditures. As in January, the Bank expects business investment to continue to rise rapidly and the growth of consumer spending to evolve broadly in line with that of personal disposable income, although higher terms of trade and wealth are likely to support a slightly stronger profile for household expenditures than previously projected. In contrast, the improvement in net exports is expected to be further restrained by ongoing competitiveness challenges, which have been reinforced by the recent strength of the Canadian dollar.

Overall, the Bank projects that the economy will expand by 2.9 per cent in 2011 and 2.6 per cent in 2012. Growth in 2013 is expected to equal that of potential output, at 2.1 per cent. The Bank expects that the economy will return to capacity in the middle of 2012, two quarters earlier than had been projected in the January MPR.

While underlying inflation is subdued, a number of temporary factors will boost total CPI inflation to around 3 per cent in the second quarter of 2011 before total CPI inflation converges to the 2 per cent target by the middle of 2012. This short-term volatility reflects the impact of recent sharp increases in energy prices and the ongoing boost from changes in provincial indirect taxes. Core inflation has fallen further in recent months, in part due to temporary factors. It is expected to rise gradually to 2 per cent by the middle of 2012 as excess supply in the economy is slowly absorbed, labour compensation growth stays modest, productivity recovers and inflation expectations remain well-anchored.

The persistent strength of the Canadian dollar could create even greater headwinds for the Canadian economy, putting additional downward pressure on inflation through weaker-than-expected net exports and larger declines in import prices.

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. This leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in an environment of material excess supply in Canada. Any further reduction in monetary policy stimulus would need to be carefully considered.

Information note:

A full update of the Bank’s outlook for the economy and inflation, including risks to the projection, will be published in the MPR on 13 April 2011. The next scheduled date for announcing the overnight rate target is 31 May 2011.

Bank of Canada maintains overnight rate target at 1 per cent

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)