As I’m doing my own business planning for 2012, many should also consider what their housing prospects will be for 2012. If you’re thinking about buying your first house or moving to another home, understanding the forecast and the local housing will help you be better prepared.
Thanks to Canada Market and Housing Corporation who has collected housing data for decades in Canada, they have a library of historical information and have a good handle on what may happen in 2012.
A few highlights for Guelph housing in 2012:
2012 will be your opportunity if you do not own a home
Price appreciation in Guelph on average is modest for 2011. That’s great news for individuals who currently do not own a home. With consistently low mortgage rates predicted into 2012, if you’re in the market to buy your first home, it will be an affordable purchase.
I should also mention that the mortgage industry is riddled with bankers and mortgage brokers who have varying levels of experience and motives. If you’re a first-time buyer the best way to find a good mortgage profession to get your mortgage pre-approval is to go through a recommendation or source a company that has an established business and reputation. Remember that a true mortgage broker (one who doesn’t work for the major banks) has several options from many institutions available so that you get the best combination of rates and features to help you achieve your budget goals.
Own a house and moving up? Don’t be surprised at your home’s value
Net appreciation growth in home values in 2011 is expected to be modest in Guelph and throughout 2012. The final appreciation growth number for 2011 in Guelph will be approximately 2%, and less than 1% in 2012.
Guelph will continue to be in an overall balanced home market, which means that there are an equal number of buyers and sellers. This translates into little upward pressure on home prices. If you are moving up into the >$500,000 price range this is certainly an opportunity for you if you’ve done a good job at paying down your existing mortgage.
More to come...stay tuned!
Monday, November 21, 2011
Saturday, October 22, 2011
Be your best, reach your goals...
I'm just returning from The Sales Mastery Conference in Palm Desert, California. The Duncan Group is a company that is commited to helping mortgage professionals be the best that they can be.
Below is a list of some key ideas that will not only help mortgage professionals but anyone who's interested in being their best! I've summarized some key thoughts:
- Own the clock: do one thing at a time, don't multi-task. Do fewer things, more often and get better at them.
- Who do I need to become to achieve the goals that I want and the people that I want to attract?
- Become an expert for my clients and my strategic business partners.
- Think BIG don't be fearful of disrupting the status quo - operate at level 10.
- Seek out failure and embrace it.
- Often the thing that you don't want to do the most, is the thing you should be doing the most.
- Little changes over time create mammoth impacts in the future.
Below is a list of some key ideas that will not only help mortgage professionals but anyone who's interested in being their best! I've summarized some key thoughts:
- Own the clock: do one thing at a time, don't multi-task. Do fewer things, more often and get better at them.
- Who do I need to become to achieve the goals that I want and the people that I want to attract?
- Become an expert for my clients and my strategic business partners.
- Think BIG don't be fearful of disrupting the status quo - operate at level 10.
- Seek out failure and embrace it.
- Often the thing that you don't want to do the most, is the thing you should be doing the most.
- Little changes over time create mammoth impacts in the future.
Monday, September 19, 2011
Divorced/Separated: Avoid going back to renting
When a couple decides to separate, normally their largest asset is their matrimonial home. I have worked with several lawyers who see the value of consulting an experienced mortgage broker for their clients. Why not call a mortgage broker directly and have them review your options, even if your mortgage is through a chartered bank? Mortgage brokers can be a good, unbiased source of information that will help you be financially objective in a time which is often emotional.
If your budget will allow, attempt to make your next move into a house that you purchase instead of resorting to renting. It can be difficult once you begin renting to get back into home ownership. Rent is expensive in Guelph, and if you have a family, you may find yourself paying more money towards rent, that could otherwise go to paying down a mortgage.
Here are some key things to consider if you’re going through a separation or divorce when reviewing how to divide the asset of your matrimonial home:
Understand how much equity you have in the matrimonial home
Getting pre-approved is always a good first step even if you’ve owned a home before your separation. Work with your mortgage professional to help you determine home much equity you have when this asset is divided. In many instances if you’ve owned your home for 10 years, and the equity in your house is divided – after paying out consumer debts there may only be 5 to 10 percent left over to put as a down payment on your next house. I often find that people over-estimate how much equity they actually have. Ensure that you consider the penalty to discharge the current mortgage on your matrimonial home including the legal and the land-transfer tax on your next purchase (in the case you are selling the matrimonial home).
Child support can be used if there is a 6 month history
Explain to your mortgage professional what child support you’re entitled to receive as noted in your separation agreement. If the separation is recent, you may not be able to use child support as a supplement to your income to help you qualify for a new mortgage. That’s because most financial institutions require a six-month history of the child support payments. However, if you are required to pay child support, this will immediately count as a liability which will limit the new amount you can qualify for in a mortgage.
Mortgage brokers have more options than your bank
Don’t be discouraged if you initially went to your own bank and they told you could be pre-approved for a mortgage significantly less than what your own living expectations are. Banks aren’t flexible in their mortgage-lending criteria. True mortgage brokers who have access to mortgage products outside of chartered banks can give you options. Your mortgage broker can help you work through scenarios because they have good, cost-effective options that will help you buy your next home after a separation or divorce.
If your budget will allow, attempt to make your next move into a house that you purchase instead of resorting to renting. It can be difficult once you begin renting to get back into home ownership. Rent is expensive in Guelph, and if you have a family, you may find yourself paying more money towards rent, that could otherwise go to paying down a mortgage.
Here are some key things to consider if you’re going through a separation or divorce when reviewing how to divide the asset of your matrimonial home:
Understand how much equity you have in the matrimonial home
Getting pre-approved is always a good first step even if you’ve owned a home before your separation. Work with your mortgage professional to help you determine home much equity you have when this asset is divided. In many instances if you’ve owned your home for 10 years, and the equity in your house is divided – after paying out consumer debts there may only be 5 to 10 percent left over to put as a down payment on your next house. I often find that people over-estimate how much equity they actually have. Ensure that you consider the penalty to discharge the current mortgage on your matrimonial home including the legal and the land-transfer tax on your next purchase (in the case you are selling the matrimonial home).
Child support can be used if there is a 6 month history
Explain to your mortgage professional what child support you’re entitled to receive as noted in your separation agreement. If the separation is recent, you may not be able to use child support as a supplement to your income to help you qualify for a new mortgage. That’s because most financial institutions require a six-month history of the child support payments. However, if you are required to pay child support, this will immediately count as a liability which will limit the new amount you can qualify for in a mortgage.
Mortgage brokers have more options than your bank
Don’t be discouraged if you initially went to your own bank and they told you could be pre-approved for a mortgage significantly less than what your own living expectations are. Banks aren’t flexible in their mortgage-lending criteria. True mortgage brokers who have access to mortgage products outside of chartered banks can give you options. Your mortgage broker can help you work through scenarios because they have good, cost-effective options that will help you buy your next home after a separation or divorce.
Friday, July 15, 2011
If you want to pay off your mortgage faster – read this article
If you got a new mortgage before 2008, you may have a mortgage that has an extended amortization of 35 or 40 years. In 2008, many first-time home buyers where keen to choose longer amortizations to keep monthly mortgage payments low. Although longer amortizations can keep mortgage payments affordable, it also means that it takes longer to pay down the principal on the mortgage.
I normally recommend going with as short of an amortization as your budget can afford. There is considerable interest cost savings on shorter amortizations.
Here are a few tips to help you pay down your mortgage faster…
Know the difference between bi-weekly and bi-weekly accelerated payments
There is a difference between bi-weekly and bi-weekly accelerated payments. The difference lies in how the payments are calculated, which make them accelerated. Here is an example of a $200,000 at 4% based on a 25 year amortization. Look at the savings!
Principal Interest Total payment Real amortization Balance 5 years
Bi-weekly $180.24 $304.89 $485.13 25 years $174,107.21
Bi-weekly $221.1 $304.89 $526.03 21 years, 11 mnths $168,231.61
Accelerated
I’ve have clients bring their mortgage statements to my office looking for mortgage advice and had no idea that they were not paying accelerated payments, which was their originally request.
Set lifestyle priorities that include making extra payments on your mortgage
I did a mortgage earlier this year for a client who became angry that the option of a bi-weekly payment was not available to her, instead of only a bi-weekly accelerated payment. The difference in payment between the two options was about $40 per payment higher on the accelerated option. The bi-weekly accelerated payments on a 30 year amortization also allowed her to shave three years off of her mortgage. When I asked why the accelerated option was problematic, she stated that she had a certain material lifestyle she wanted to lead and that extra money would help with that lifestyle.
In times of economic and financial instability, setting priorities that include debt pay down, such as mortgage principal pay down is crucial. Your home is virtually the most valuable financial asset you have. By paying down your mortgage it will place you in a better financial position, now and in the future.
I normally recommend going with as short of an amortization as your budget can afford. There is considerable interest cost savings on shorter amortizations.
Here are a few tips to help you pay down your mortgage faster…
Know the difference between bi-weekly and bi-weekly accelerated payments
There is a difference between bi-weekly and bi-weekly accelerated payments. The difference lies in how the payments are calculated, which make them accelerated. Here is an example of a $200,000 at 4% based on a 25 year amortization. Look at the savings!
Principal Interest Total payment Real amortization Balance 5 years
Bi-weekly $180.24 $304.89 $485.13 25 years $174,107.21
Bi-weekly $221.1 $304.89 $526.03 21 years, 11 mnths $168,231.61
Accelerated
I’ve have clients bring their mortgage statements to my office looking for mortgage advice and had no idea that they were not paying accelerated payments, which was their originally request.
Set lifestyle priorities that include making extra payments on your mortgage
I did a mortgage earlier this year for a client who became angry that the option of a bi-weekly payment was not available to her, instead of only a bi-weekly accelerated payment. The difference in payment between the two options was about $40 per payment higher on the accelerated option. The bi-weekly accelerated payments on a 30 year amortization also allowed her to shave three years off of her mortgage. When I asked why the accelerated option was problematic, she stated that she had a certain material lifestyle she wanted to lead and that extra money would help with that lifestyle.
In times of economic and financial instability, setting priorities that include debt pay down, such as mortgage principal pay down is crucial. Your home is virtually the most valuable financial asset you have. By paying down your mortgage it will place you in a better financial position, now and in the future.
Saturday, June 18, 2011
No problem? Get it in writing...
This past week I've worked with two separate clients and in each case things where tight with their mortgage approvals. And both of these borrowers owned homes and where not first time home buyers.
In both cases each client was told that their financing would be "no problem" but weren't given anything in writing. In both cases neither client understood how much equity they had available in their house. This is always the first step in looking at home-financing, especially if you already own a house.
Here's one scenario:
These borrowers where selling their home for $275,000 and wanted to move up to a $420,000 house. They had two good incomes but last year they refinanced their home to consolidate debt so their current mortgage on their home was about $225,000. When I took into account the real estate commission plus the legal and land transfer tax on the purchase of their new home of $420,000 there was barely 5% to put down on the purchase of $420,000.
Up until now they had worked with their own bank and I recommended that they get something in writing from their bank regarding their pre-approval. Their banker had previously recommended paying out some more debt from the equity in their home, but it was obvious through the first calculations that there would not be enough equity to pay out any debt.
When they finally did get an answer from their banker the bank told them they couldn't guarantee the pre-approval because "CMHC doesn't do pre-approvals". This is absolutely true, but CMHC (the company that insures mortgages against default for banks - this is normally required if you have less than 20% as a down payment), their guidelines are clear. They're even posted on the CMHC web site! It was obvious after pulling their credit history that they wouldn't fall under some of the requirements of CMHC. Nonetheless through a little maneuvering I was able to get them a pre-approval, but this was not a mortgage pre-approval that was "no problem".
The moral of the story - work with someone who has the experience to help you. Get it in writing.
In both cases each client was told that their financing would be "no problem" but weren't given anything in writing. In both cases neither client understood how much equity they had available in their house. This is always the first step in looking at home-financing, especially if you already own a house.
Here's one scenario:
These borrowers where selling their home for $275,000 and wanted to move up to a $420,000 house. They had two good incomes but last year they refinanced their home to consolidate debt so their current mortgage on their home was about $225,000. When I took into account the real estate commission plus the legal and land transfer tax on the purchase of their new home of $420,000 there was barely 5% to put down on the purchase of $420,000.
Up until now they had worked with their own bank and I recommended that they get something in writing from their bank regarding their pre-approval. Their banker had previously recommended paying out some more debt from the equity in their home, but it was obvious through the first calculations that there would not be enough equity to pay out any debt.
When they finally did get an answer from their banker the bank told them they couldn't guarantee the pre-approval because "CMHC doesn't do pre-approvals". This is absolutely true, but CMHC (the company that insures mortgages against default for banks - this is normally required if you have less than 20% as a down payment), their guidelines are clear. They're even posted on the CMHC web site! It was obvious after pulling their credit history that they wouldn't fall under some of the requirements of CMHC. Nonetheless through a little maneuvering I was able to get them a pre-approval, but this was not a mortgage pre-approval that was "no problem".
The moral of the story - work with someone who has the experience to help you. Get it in writing.
Friday, June 3, 2011
Should you buy a house even if you have consumer debt or student loans to pay?
In the last week, I've see three clients in similar situations. All three clients had good paying jobs, where in their late 30's and had over $20,000 of consumer debt outside of traditional car loans. Should they be considering buying a home? Here's my opinion...if you have any comments on this topic, please share them on my blog!
A home is one of the only appreciating assets you'll own. The trouble with these particular clients is that they have kept waiting to pay off their debt and are now almost 40 years old and still do not own a home. My recommendation would be to review their family budget with them and find a monthly mortgage payment that will help them get into a house, while also developing a plan to pay down their debt.
If they had savings to put as a down payment they could also look at paying their debt down with their savings and getting a cashback mortgage, which gives them the money for the down payment. Remember that you can withdraw up to $25,000 from an RRSP the year you buy a home under the RRSP Home Buyer's Plan. That money does not need to go to the down payment, it could go to paying off debt. Now that's a good idea!
A home is one of the only appreciating assets you'll own. The trouble with these particular clients is that they have kept waiting to pay off their debt and are now almost 40 years old and still do not own a home. My recommendation would be to review their family budget with them and find a monthly mortgage payment that will help them get into a house, while also developing a plan to pay down their debt.
If they had savings to put as a down payment they could also look at paying their debt down with their savings and getting a cashback mortgage, which gives them the money for the down payment. Remember that you can withdraw up to $25,000 from an RRSP the year you buy a home under the RRSP Home Buyer's Plan. That money does not need to go to the down payment, it could go to paying off debt. Now that's a good idea!
Monday, May 30, 2011
Will your variable rate mortgage increase in rate tomorrow?
It's safe to say that the Bank of Canada (BofC) will eventually lift interest rates. But what's less clear is when. We can expect that the BofC will maintain the current interest rates, with no rise in tomorrow's interest rate announcement. That means if you have a Variable Rate Mortgage (VRM), your rate will remain the same.
If you own a house in Guelph or the Tri-City area you know that our housing market has been strong and steady. On the mortgage front, one area of concern is the mortgages choices I'm seeing. A VRM is a great option if you're looking at paying down your mortgage in the next few years. Accelerating the payments while rates are low will help you pay down your mortgage principal. If however you're choosing a VRM just to keep the payments low to help with your budget - then you may want to reconsider a fixed-rate mortgage.
Your mortgage broker can get you a five-year fixed rate mortgage now for under 4% which is a great option.
If you own a house in Guelph or the Tri-City area you know that our housing market has been strong and steady. On the mortgage front, one area of concern is the mortgages choices I'm seeing. A VRM is a great option if you're looking at paying down your mortgage in the next few years. Accelerating the payments while rates are low will help you pay down your mortgage principal. If however you're choosing a VRM just to keep the payments low to help with your budget - then you may want to reconsider a fixed-rate mortgage.
Your mortgage broker can get you a five-year fixed rate mortgage now for under 4% which is a great option.
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