Ten signs you might need a tune-up

Like your car or your home, your mortgage benefits from a seasonal inspection.  Spring is just around the corner - so it's a great time to make sure your mortgage is in peak form!

Here are ten signs you might need a mortgage tune-up:

1. You are locked in at a higher rate than you could get today - and you want a professional opinion on your options;

2. You're thinking about moving to a new home this year - or considering buying an investment property;

3. You're still carrying way too much post-holiday debt;

4. In fact, you have more than $25,000 owing on high-interest loans or credit cards;

5. You're worried each month about whether your budget will stretch as far as the bills;

6. There's a renovation or home repair project coming up this year - either by choice or necessity;

7. An investment opportunity is available - and you wish you could take advantage;

8. There's a large expense looming - tuition, wedding, new car - and you need to plan ahead;

9. Your income might wobble or take a hit this year - and you want to be prepared just in case; or,

10.  You're planning on retiring in the next five years.
   
If you recognize one of the signs that it's time for a tune-up, give me a call or send an email anytime.  I'm happy to help!


~ Powered by Mortgage Intelligence

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Thinking of buying a fixer-upper? Here's how...

If you've been trying to find that perfect home, but no place you've looked at in your price range seems quite right, here's a way to buy and renovate for the perfect abode.  Think of it as a mortgage for fixer uppers.

It's called a “purchase plus improvements” mortgage.  This type of mortgage covers the sale price of your home, plus any renovations that would increase the value of the property, with as little as 5 per cent down.

Many homebuyers looking at older properties find themselves in the same boat: they’ve found a property that suits them, but it needs some costly and immediate upgrades.

You may be able to add the costs of those immediate renovations into your mortgage, instead of racking up credit card bills, department store or home renovation store cards, or selling investments to pay for the upgrades.    If you’re buying a home but want to add a garage, finish a basement, replace windows or wiring, or redo a kitchen, it can make a lot of sense to add those costs to your mortgage. That way you can spread your payments over the life of the mortgage and have a cost-effective way to get your dream home. You can also use your pre-payment privileges to pay the renovation off faster, when the expenses of the renovation are behind you. 

The process is quite straightforward.  Here are the main steps you will take:

Include a longer "financing clause" in your offer to purchase
Once you have found a home and decide to put in an offer, you should ask for a little extra time to finalize all the financing details for your home purchase - ideally 10 days.   This gives you time to get quotes and get the lender's approval on the improvements you intend to make to your property.

Obtain estimates for the upgrades
At the same time as you submit your purchase for approval with the lender, you also need to provide detailed written quotes from licensed contractors, for the renovations you plan to do.  These quotes should outline the scope of the work, and all costs. 

Get your appraisal
An appraisal with two separate values will be required: first the value of the property "as is" and the estimated value of the property once the improvements are completed.

Renovation costs are included in your mortgage
Your lender will add the estimated costs of the renovation into your mortgage. For example, with a 5% down payment, your mortgage broker would apply for 95% of the “as improved” market value, which will be higher than the actual purchase price. The committed amount of the mortgage will be advanced to your real estate lawyer, who will be instructed to hold back the renovation funds until the work has been completed and inspected.

Complete your upgrades, and receive the remainder of your funds
Once an inspection from an appraiser confirms all work is complete and a copy of the building permit (if applicable) has been received, the balance of the mortgage funds will be released to you to pay for the renovations. There are a few options for carrying your expenditures until the funds can be released. Some major home improvement retailers offer “no payment” options for up to six months. Larger contractors may also be willing to finance the project short-term if they see the documentation for purchase plus improvements financing, and receive a deposit.  Other people are able to get a short term loan from parents or a family member.  What you can't do is get the mortgage funds ahead of time - the lender can't lend you more money than your property is worth, so they have to wait until the property is actually worth the "improved" amount. 

Here is an example of how this works in real life:

Purchase price of home: $400,000
Improvements required: $40,000
Total mortgage: $418,000 (95% of $440,000)
Your down payment: $22,000 (5% of $440,000)

$378,000 will be advanced on your closing date, so that you can take ownership of the home.   At the same time, you will be required to pay your down payment in full.  You then do the improvements.  Once you get an inspection confirming that they have been completed, the remaining $40,000 will be released.  

If you think this might be a good option for getting you the perfect home, please contact your mortgage professional to discuss the ins and outs.  There are lots of aspects to this type of mortgage that you can take advantage of - for example, some lenders will also allow you to get a portion of funds advanced to you at certain stages of completion, rather than requiring you to wait until full completion.  As well, some lenders require that the work be completed in a certain period of time after your closing date, while others are more flexible.  Depending on your specific situation, we can find you a lender and product that will help you achieve your goals.

Happy house-hunting!




~ Powered by Mortgage Intelligence

Photo credit: [c] Sean Farrell for openphoto.net

Top Ten for 2012!

Everyone loves to make forecasts for the New Year. With that in mind, we’ve put together a glimpse into the year ahead for Canadian homeowners – so you can plan for some great opportunities!

1. Low rates early in the year! So many financial experts were wrong last year when they predicted we’d see a rise in mortgage rates. But their loss is your gain. We are beginning 2012 once again at historically low mortgage rates.

2. “Green” money available until the end of March. The popular Eco-Energy Retrofit Grant is still available until March 31, 2012. You can access up to $5000 for improvements for energy-saving renovations to your home, but you’ll need to act fast. Before you begin work, you must arrange for an NRCan-licensed energy advisor to perform a residential energy assessment of your home. After the work is complete, a post-retrofit evaluation must be done by March 31, 2012. Full details are available at www.oee.nrcan.gc.ca. To register, go to www.oee.nrcan.gc.ca/register.

3. The wealth train is leaving the station! At some point rates will begin to rise to more normal levels of 5 or 6 per cent, and it’s possible the trend upward might start in 2012. If you are carrying household debt outside your mortgage, you have a great opportunity right now to board the “wealth train”. Roll your high-interest debt into a low-rate mortgage. Start spending sensibly, saving smart, and you’ll be well on your way to slashing your debt and building your wealth. When interest rates begin to rise, debt derails even the best financial plan. Do it now.

4. Never renew with your eyes closed. When your mortgage comes up for renewal your lender sends out a note suggesting you renew at their current offer. Never renew your mortgage with your eyes closed! This is your moment of opportunity to negotiate the best possible deal. Who knows if the same lender is the best choice? If a renewal is in your financial future this year, bring us your renewal notice. There are some great options out there; we’ll help you look around.

5. Check out the re-advanceable mortgage.  This is a terrific mortgage concept for those who want to pay down their mortgage and have flexibility should an unexpected opportunity or expense arise. The re-advanceable mortgage is the perfect solution. If an emergency comes up, an unexpected investment opportunity, or a special renovation project, you can access your equity without a fuss. It may be the “last mortgage you’ll ever need”.

6. Time to build an income buffer? It’s a bit ironic, but it’s always hardest to get money at the very time that you need it. If there is even a chance that your household income could take a hit this year, then talk to us about building a financial buffer using today’s low mortgage rates. Maybe you won’t need it. But if you do, you’ll be grateful you made the arrangements when you did. With the European debt crisis still wreaking economic havoc worldwide, unemployment and income fluctuations are still a risk.

7. Speed up your mortgage pay-down. Before rates rise, take the opportunity to beat down your mortgage principal. Build a plan to take advantage of your lender’s prepayment privileges! Consider changing from monthly payments to weekly or bi-weekly payments, and take some or all of your tax refund and put it against your mortgage principal. Your interest costs will go down with every dollar you’ve reduced on your principal amount.

8. Build a financial cushion. Your high-interest credit card should never be your emergency fund. This year, build a financial cushion: get in the habit of putting a small sum from every paycheque into a special emergency fund. A nice plump emergency fund is smart saving.

9. Staying put? Instead of moving to get the home you want, consider the many benefits of staying put. The right renovation – an addition, a new family room, a fresh kitchen – might be all it takes to turn the house you’re in, into the home of your dreams. It is almost always less expensive to renovate than to relocate – if an upgrade to your lifestyle is what you’re after!

10. Get your annual mortgage checkup. It’s your financial “medical”; early detection of problems can save your financial life! We like to know how your mortgage is working for you – and look for opportunities to make the most of your greatest budgeting asset! Book a mortgage review and make sure your plan incorporates what may be ahead in 2012: it could pay big dividends in the year ahead!

~ Powered by Mortgage Intelligence

Photo credit: [c] Gábor Suhajda for stock.xchng
 

Renewing your mortgage? Read this first!

Think of your mortgage renewal as a valuable opportunity. It's a chance not only to take advantage of today's great rates, but also get a mortgage product that better fits your current needs.

When you receive a renewal notice from your current lender, don't simply sign it without knowing all your options. If you do so, you could be paying a higher rate than you need to, and end up with a mortgage that might not be best suited to your requirements.

Often, by the time your mortgage comes up for renewal, you are most likely in a different financial position than when you first obtained it. As our financial and life circumstances change, so does the mortgage product that is best for our needs and goals. For example, you may wish to access your home's equity to consolidate other debts (especially high interest credit card debt), or perhaps help pay for a renovation or investment property.

So make sure to review your options thoroughly. Feel free to call me to discuss your situation. We can discuss your interest rate options, and help you with a customized mortgage strategy.

At renewal time, take the time to ensure you get the most from your financing. We can speak to any concerns you may have about interest rate trends and advise you on what to do as your mortgage renewal approaches.





- powered by Mortgage Intelligence


Photo credit: Thanh for openphoto.net

Five Steps to Making Your Dream Renovation a Reality

The lure of a stunning gourmet kitchen or sparkling spa-style bathroom may have you chomping at the bit to begin a home renovation. But if you heed the advice of experienced renovators, pre-planning and advanced preparation are the secrets to renovation success.

Here’s a helpful checklist to get your renovation started on the right track:

1. DECIDE WHAT YOU WANT TO DO

For most people, this is the fun part – flipping through magazines and watching home decorating shows to get inspired. But it is also one of the most critical phases in any home renovation.

2. PREPARE A REALISTIC BUDGET

Determine how much you are prepared to spend on your renovation. Remember to boost your budget by at least 10% for unexpected costs.

3. ARRANGE FOR FINANCING

Get financing in place early so that you can plan your renovation with confidence. Leveraging the equity in your home is often a good option. With a secured loan, you can usually obtain an attractive interest rate with flexible repayments. Other alternatives include refinancing your existing mortgage or arranging for a second mortgage on your home.

An independent mortgage broker can help by negotiatiating competitive financing with a number of competing lending institutions.

4. SELECT THE RIGHT TEAM

You’ll want to entrust your project to people known for their quality of work. Ask for recommendations from friends and family, interview prospective candidates, and I strongly recommend that you check references.

5. STICK WITH YOUR PLAN

Your contractor, who does the construction or subcontracts it to other trades people, will work with you or your designer to implement your plan. With a sound plan, reasonable budget, financing in place and a team that you trust, your renovation can get off on the right track.

What renovations are on your wish list?

Mortgage and homebuying tools - free for the taking!

If you do a quick google search you will find that there is an overwhelming amount of information available for new homebuyers.  Save yourself some time and check out one of the best sites out there:  the CMHC website.  It contains literally thousands of articles on everything from homebuying to mortgages to renting and dealing with home ownership issues.  And it's not just in English; translations are available in French and eight other languages.

Check out this first time homebuyer video, then spend some time looking at the homebuyer guides, easy-to-use calculators, and of course, information about CMHC mortgage insurance.

I'm a big believer in getting educated.  Since a home purchase is the biggest financial investment most of us will ever undertake, it is worth knowing about a resource that gives you so much unbiased, high quality information about home buying.

Let me know what you think!

$25,000 Giveaway Contest!

This year at Mortgage Intelligence we are celebrating our 500,000th mortgage client with our biggest giveaway ever!

We invite you to enter for a chance to win $25,000.  You can use it for a down payment, home improvements, or just about anything. 

Click here to fill out a ballot on my website.   Good luck!

Spring Into Great Home Renovations

If your spring home renovation plans involve larger projects, it can make sense to refinance your mortgage, which allows you to get the very best borrowing rates by using the equity in your home.  A mortgage refinance will allow you to spread your payments over a longer period of time than with a line of credit.  You may also be able to consolidate a range of higher interest borrowings (credit cards and car payments, for example) at the time of your mortgage refinancing.  I can look carefully at your financing needs and advise on how best to secure additional mortgage funding. 

If you take the time now to establish a clear idea of the improvements to your home and how you will pay for them, you could be putting those plans into action by the time warmer weather finally arrives.  Ideally, a well-planned renovation can boost both your enjoyment of your home and its equity. 

Photo credit: [c] James Jones for openphoto.net