Randy Miller

Broker Of Record

Urban Avenue Realty Ltd., Brokerage

Whitby & Brooklin Real Estate

Office 905-430-1800

Direct 905-430-9444

Email: randy@randymiller.ca

Categories

Negative Financial Headlines

Canadian mortgages in arrears (homeowners who have gone 3 or more consecutive months without making a payment) have been and are extremely low.   They are historically less than 0.5% (actually Canada’s current average sits at 0.29%, Ontario sits at 0.18%, with Alberta at 0.27%!) Even through the most recent couple of 'financial crises', there was no blip in this number.   

This is a tiny fraction of the US statistic; however, common opinion leads us to believe otherwise.   There are a number of fundamental differences between the two countries'   banking and mortgage lending systems.   One difference is that most mortgages in the US are 'non-recourse', meaning you can walk away from your house and owe nothing beyond that asset's worth.   In Canada, you are liable for the entire debt, and this is a great incentive to do everything possible to make that mortgage payment.    

Canadian mortgage lenders are prudent; their goal is not be stuck with a property. Banks are not in the property ownership and management business, so it is in their best interest to make sure borrowers can make their mortgage payments.  Mortgage default insurance facilitates lenders to make more risk-based decisions, opening up the mortgage lending market to more consumers (including rental property, which is always viewed as more risky since it is assumed an owner will pay for their own housing first before covering the payment on a home they do not reside in). If a consumer falls into temporary financial hardship, there are assistance programs available from the mortgage insurers, with the goal of avoiding a default and lender having to take over the property.

Canadians with mortgages have significant equity in their home, averaging about 74% of the home's value.   In addition to that, a 2014 survey found that 16% of mortgage holders have   increased their mortgage payments, and 16% made an additional lump sum payment in the last year. From the headlines, you would think an epidemic has swept across our country with low-equity home ownership being the norm.   

Canadians, in general, are conservative with their money and the statistics show many are sitting on a healthy amount of wealth.  Naturally, there is the demographic at the beginning stages of their home ownership journey who have lower equity.   However, there a many mortgage regulations in place designed to qualify these applicants accordingly, along with mandatory mortgage default insurance for those with low down payments.   

There is much discussion today about how hard it is for first time homebuyers to qualify for a mortgage, due to these regulations which have become increasingly more strict, so it is plausible the government may realize the effects of their decisions and loosen up the reins in order to maintain balance in the housing market and economy.

Another statistic demonstrating that Canadians, overall, are conservative with their money is that 60% of Canadians pay off their credit card balance in full each month, avoiding credit card and interest payments altogether.   The truth is, no matter how many rules and regulations are implemented,   there will always be financially irresponsible people.   The headlines like to focus on this group, and regulatory decisions appear to be swayed by these sentiments, lumping everyone into the same category, including savvy real estate investors who understand how to manage debt responsibly.   

In conclusion, headlines are designed to sell.    Not everything is perfect and positive all the time, but it certainly isn't the constant doom and gloom we read about.   The messages in the headlines are often inconsistent; one day something is up, and the next day it is down.   A savvy investor knows to look beyond the headlines, not get swept up emotionally, dig deeper, filter out the irrelevant chatter and figure out what really applies to them.
(Reference sources: Canadian Mortgage and Housing Corporation, Canadian Association of Accredited Mortgage Professionals, Canada Bankers Association, Bank of Canada)

If you are planning to buy a house in Whitby or Brooklin or other areas within Durham Region, contact me. I can help you with the buying process and refer you to a mortgage specialist that can explain the products and help you choose the right mortgage product. Let me help you every step of the way!

Randy Miller
Broker of Record

Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800
 

 

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Mortgage News Canada

Bank of Canada holds mortgage rate steady

The Bank of Canada has decided to hold the rate steady. Variable rate mortgages remain unchanged. 2015 could be status quo for the rate,  Bank of Canada now estimates economy reaching and remaining at full capacity around the end of 2016.  

CMHC and mortgage insurers increase rate premium

In early April 2015, CMHC (Canadian Mortgage and Housing Corporation) announced effective June 1, 2015, the mortgage loan insurance premiums for homebuyers with less than a 10% down payment will increase by approximately 15% . The remaining two private insurers, Genworth and Canada Guaranty, followed suit with the same announcement.   This affects owner-occupied homebuyers, a vast majority being first time homebuyers.  Rental property is not affected by this announcement, as the required down payment is above the 10% threshold (minimum 20%).  

The mortgage insurance premium is added to the mortgage.  The immediate effect is a modest increase in monthly payment, approximately $7 more per month (based 5% down payment on $350K purchase price, 2.79%,  25 year amortization).  The more significant impact is the additional premium increases the mortgage, by approximately $1575 in the example previously mentioned.  

This is yet another rule that hits mostly first time homebuyers ready to enter the market.  Over the last several years, mortgage rules have tightened up, shutting out more prospective homebuyers.  Conservative lending is important to maintain stability, however if too many consumers are shut out, the pendulum may swing a little bit the other way.  For now, these are the new rules, plan accordingly and assume insurers will maintain their conservative approach.

As a consequence of the rule change, there will be a large influx of homebuyers purchasing and submitting application before the June 1st deadline. This happened in prior years when CMHC made a rule change. This means everyone applying for mortgages will be affected due to the large volumes presented to lenders and the insurers.  Take note, and provide yourself enough time for processing financing and also check with your lawyer to make sure they can accommodate your closing date.

If you are planning to buy a house in Whitby, Brooklin or other areas within Durham Region, contact me. I can help you with the buying process and refer you to a mortgage specialist that can explain the products and help you choose the right mortgage product.

Search Homes for Sale in Durham Region

Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800

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credit history

One of the critical steps towards financial responsibility is understanding your credit history.  Did you know that as a consumer you are able get a copy of your credit report, and have the right to correct any errors in the report?  It is not uncommon to see various mistakes on the report, old accounts shown as open or accounts you forgot about showing balances owing.  There may even be issues with identity fraud, so it is prudent to complete the review.  When you request your own copy, it does not affect your credit score, unlike if a lender pulled your report. 

Resolving these issues may take time, especially if means you have to rebuild some history to correct past credit issues.  You do not want to be doing this when you are under a tight timeline with request for financing approval.  Also, it is very helpful to share your credit history with a mortgage broker upfront during the planning stages.  This avoids any surprises or disappointments with financing, and paints you as a more prepared and responsible applicant because your broker is able to explain any issues in the report readily if the lender asks.

Start building up a credit history as soon as possible 

Lending rules are constantly becoming more stringent, not only because of debt management concerns, but also because of fraud, money-laundering and terrorism concerns. Sometimes applicants are unable to qualify due to limited or no credit history. For the most part, in order to count income to qualify, lenders need to see a credit history. Previously it was not so much a problem applying for a mortgage. 

A specific example is a spouse pair, where one person manages the finances and holds all the credit cards and loans.  In the past, the spouse co-applicant with limited history may have been approved, but now lenders are expecting individual histories.  Even joint credit cards and lines of credit are not enough history, lenders want to see ability to handle credit individually. 

Another common example is individuals who live on a cash diet.  Ironically, these people could be one of the most financially responsible people you know, as they limit their spending to what they actually have in savings.  However, cash does not have a paper trail and there no documented history of repayment, which lenders need to see to make their decision whether you are able to repay them. Often this is seen with older individuals, who  have lived during times where approaches to debt and getting approved of a loan were different.

Lastly, individuals new to the country understandably would have no credit history. They should make it a priority to start as soon as possible to building up the credit.

Correcting or building up the credit history takes time. You need to have a plan and an understanding how credit works. A mortgage broker could provide insights and recommendations specific to your situation and discuss with you lender specific solutions that may be available in your current situation. 

There are two main credit report providers in Canada. Equifax is the biggest one. You can get an instant report, which shows an instant score and explains the report in clear language, for under $25 or you can get free Equifax report by mail, which presents the information in less comprehensive format (and no score). Transunion is the other vendor, similar reporting structure, instant report online with payment or free report request by mail.

Are you planning to buy a house? Shopping for a mortgage can be confusing, the product features vary significantly. Having sold real estate in Whitby and the Durham Region for over 25 years, I can help you with the buying process. If you wish, I can refer you to a mortgage specialist that can explain the products and help you choose the right mortgage product. Try out my Mortgage Calculator and contact me today! 

Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby
905-430-1800


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Mortgage Insurance Premiums going up again

As a result of its annual review of its insurance products and capital requirements Canada’s federal housing agency is raising its mortgage insurance premiums.

Canada Mortgage and Housing Corp. said it is raising premiums on the highest-risk mortgages – borrowers who have down payments of less than 10 per cent – by 15 per cent starting June 1.

The changes come as part of a broader plan by the agency, announced last August, to boost its target capital reserves to 220 per cent above the minimum set by the Office of the Superintendent of Financial Institutions, up from 200 per cent previously.

The increases only apply to new mortgages for borrowers with small down payments. Those who put down more than 10 per cent of the purchase price aren’t affected. Premiums will also remain unchanged on CMHC’s portfolio insurance, which lenders take out on bundles of uninsured mortgages so they can securitize them, as well as the agency’s insurance for apartment buildings.

The effects will be modest for affected borrowers. An average Canadian borrower who can afford to pay the only the minimum 5-per-cent down payment typically takes out a mortgage of $252,000, CMHC said. Premiums for those borrowers would rise $5 a month, or about $1,500 more over the course of a 25-year mortgage.

CMHC predicted the changes would “not have a material impact on housing markets,” suggesting the agency isn’t looking to cool the housing market. Senior vice-president Steven Mennill stressed in a call with reporters that the changes were a “business decision” related to higher capital requirements and “not in any way related to a change in policy or approach.”

One thing is clear: By limiting increases only to borrowers with less than 10-per-cent down payments, the federal corporation is concerned that it was underpricing the risk on the most indebted borrowers.

Mortgages with lower levels of equity are typically more vulnerable to a housing shock and require higher levels of capital reserves to account for potential losses, which means higher premiums for riskier borrowers.

“As we continue to enhance our modelling capabilities, we continue to be more refined in our decision making around that relationship,” said CMHC chief financial officer Brian Naish.

“If the purpose was to ensure that there were adequate reserves against future losses, then this makes sense because their biggest losses will be at the end of the continuum with small amounts of down payment and that’s exactly the category where they increased the premium.” said Ian Lee, a professor with the Sprott School of Business at Carleton University.

It is the second time the organization has boosted insurance premiums. It raised them across the board last May after nearly a decade of silence on the issue. At the time, CMHC promised to review its insurance premiums once a year, which is what sparked the most recent changes.

Source: by TAMSIN MCMAHON,The Globe and Mail, CMHC to boost premiums for high-risk home buyers

If you are planning to buy a house in Whitby, Brooklin or other areas within Durham Region, contact me. I can help you with the buying process and refer you to a mortgage specialist that can explain the products and help you choose the right mortgage product.

Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800

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Roadsign good credit

One of the most important aspects of your financial life is your credit score. Your credit score follows you forever and it will play a huge role in how insurance companies, banks and other lending institutions categorize your worthiness as a customer.

It’s vital that you take steps to improve your credit score, because any credit such as a car loan or mortgage financing may be more expensive (a higher interest rate), or its unobtainable.

What does the Credit Score actually tells you?

The credit score is an assessment of your financial health, at a specific point in time. It indicates the risk you represent for lenders, compared with other consumers. This is done by converting certain aspects of your credit repayment history to a number based on a formula called the “FICO formula”. The result of this is known as a Credit Score.

When you get your Credit Score, you will see a number between 300 and 900 at the top – this is your score. The average score is in the mid-700s at present. You will also receive an interpretation of your score, and this will be more useful to you than the number itself. It will explain why your score is at its current level.

If your scores are above 760, you’re probably already getting the best rates. If they’re anywhere below that mark, though, they could stand some improvement.

Here are the main factors that make your credit score lower:

  • Too much credit. Having too many credit cards can hurt your score. If you have several consumer accounts try to consolidate those balances and close the accounts.
     
  • Your account balances are too high: As a rule of thumb keep your credit card balances below 35% of the available limit. High balances ongoing will negatively affect your credit score.
     
  • You have late payments, or are behind on making minimum payments
     
  • Legal judgements for non-payment of bills, child support, etc.
     
  • Bankruptcy or consumer proposals

  • There is not enough recent revolving account information on your credit report. Using your credit cards regularly and paying them on time builds your score higher.


So you’ve had a few problems getting the bills paid lately, and you’re wondering what you can do to repair the damage to your credit. Or maybe your credit is OK, but you’d like to make it better. After all, the better your credit, the less you pay in interest and, typically, for insurance.

Here are some tips on how to improve your credit score:

  • Get a credit card if you don’t have one: Don’t fall for the myth that you have to carry a balance to have good scores. Having and using a credit card or two can really build your scores. If you can’t qualify for a regular credit card, consider a secured credit card, where the issuing bank gives you a credit line equal to the deposit you make. Look for a card that reports to all three credit bureaus.
     
  • Add an installment loan to the mix: You’ll get the fastest improvement in your scores if you show you’re responsible with both major kinds of credit: revolving (credit cards) and installment (personal loans, auto, mortgages and student loans). If you don’t already have an installment loan on your credit reports, consider adding a small personal loan that you can pay back over time. Again, you’ll want the loan to be reported to all three bureaus, and you’ll probably get the best deal from a community bank or credit union.
     
  • Always pay your bills on time. Although the payment of your utility bills, such as phone, cable and electricity, is not recorded in your credit report, some cell phone companies may report late payments to the credit-reporting agencies, which could affect your score.
     
  • Try to pay your bills in full by the due date. If you aren't able to do this, pay at least the required minimum amount shown on your monthly credit card statement.
     
  • Try to pay your debts as quickly as possible.
     
  • Don't go over the credit limit on your credit card. Try to keep your balance well below the limit. The higher your balance, the more impact it has on your credit score. You often can increase your scores by limiting your charges to 30% or less of a card’s limit; 10% is even better. If you regularly use more than half your limit on a card, consider using other cards to ease the load or try making a payment before the statement closing date to reduce the balance that’s reported to the bureaus. Just be sure to make a second payment between the closing date and the due date, so you don’t get reported as late.
     
  • Reduce the number of credit applications you make. If too many potential lenders ask about your credit in a short period of time, this may have a negative effect on your score. However, your score does not change when you ask for information about your own credit report.
     
  • Make sure you have a credit history. You may have a low score because you do not have a record of owing money and paying it back. You can build a credit history by using a credit card. The older your credit history, the better. But if you stop using your oldest cards, the issuers may decide to close the accounts or stop updating them to the credit bureaus. The accounts may still appear, but they won’t be given as much weight in the credit-scoring formula as your active accounts.
     
  • If you’ve been a good customer, a lender might agree to simply erase that one late payment from your credit history. You usually have to make the request in writing, and your chances for a “goodwill adjustment” improve the better your record with the company (and the better your credit in general). But it can’t hurt to ask.


Following these steps should help you improve your credit score within months. Once you establish good credit habits, though, and follow them consistently, you will be able to improve your credit score, and then maintain this higher score. You’ll get access to better financial products and services, and even save money over time.

To find out more about credit scores and reports, you can also visit the Financial Consumer Agency of Canada website and download or request a free copy of their guide, Understanding Your Credit Report and Credit Score. This guide provides practical, straightforward information on how to obtain and understand your credit report and score, as well as how to build and maintain a good credit history.

To find out your credit score, contact Canada's two most popular credit-reporting agencies: Equifax Canada and TransUnion Canada. These agencies can provide you with an online copy of your credit score as well as a credit report - a detailed summary of your credit history, employment history and personal financial information. (You can request your credit report by mail for free but your score is not included. If you request your credit report online a fee is charged and your credit score is included.) 

Are you planning to buy a house? Shopping for a mortgage can be confusing, the product features vary significantly. Having sold real estate in Whitby and the Durham Region for over 25 years, I can help you with the buying process. If you wish, I can refer you to a mortgage specialist that can explain the products and help you choose the right mortgage product. Try out my Mortgage Calculator and contact me today! 

Randy Miller
Broker of Record

Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-430-1800

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 Mortgage Rate War

The Globe and Mail reported this week that less than a month after the Bank of Canada’s surprise interest-rate cut, a renewed mortgage-rate war is in full swing. But, this time, it’s being driven by an unlikely source: smaller lenders.

Even as Canada’s big banks have cut rates to near three-year lows, small credit unions and mortgage brokers are going a step further, sacrificing profits in a fierce bid for new business.

Only weeks after the country’s banks began offering eye-popping specials such as 2.84-per-cent five-year fixed mortgages, the average discounted five-year rate offered by the Big Six banks now sits around 2.79 per cent, driving the spread between the bank’s posted rates and the rates that customers actually pay to levels not seen since 2012.

But in a cutthroat move to grow their share of mortgage originations, many smaller lenders and brokers are offering deep discounts off the banks’ already low rates. Several online brokerages are offering variable mortgages with rates below 2 per cent and five-year fixed mortgages as low as 2.39 per cent.

The battle for customers comes after the central bank dropped its benchmark rate last month to 0.75 per cent – and amid speculation of deeper cuts in the months ahead.

Concerns are mounting that low mortgage rates will add fuel to an overheated housing market and add pressure to an economy struggling with rising household debt. Earlier this month, North Peace Savings and Credit Union, a small credit union in extreme northeastern B.C., began advertising a seven-year fixed mortgage at 2.99 per cent, well below comparable offerings from major lenders for the same mortgage term.

The credit union can afford to offer such an attractive long-term rate in part because few people actually take seven-year mortgages and the company’s primary business is commercial lending to the region’s natural gas industry, North Peace chief executive Mitchel Chilcott said.

But the company, whose mortgages are entirely self-funded through deposits from its 12,000 customers, also opts to earn less profit and pay out fewer dividends in order to drive rates down.

In the past, members received cheques for $1,000 roughly 14 months after the start of every fiscal year. But about five years ago the company gradually began shifting toward boosting the rates on its high-interest savings accounts and lowering them on its mortgages.

“For most homeowners, having a $90 or $100 lower mortgage payment a month was a lot more meaningful and impactful than maybe getting money back 14 months later,” Mr. Chilcott said.

Other credit unions have followed a similar model, which has helped them grab more market share away from the banks. Banks lost more than 2 per cent of their share of the mortgage business last year, according to banking industry consultant David McVay, with some of that going to credit unions thanks to increased price competition.

The rate war is even more intense among mortgage brokers, many of whom are shifting away from the traditional full-service model that saw brokers spending hours working with clients to select the best mortgage and earning hefty commissions. These days, more borrowers are turning to online and “self-service” brokerages that compete on volume, offering less personalized service and sacrificing some of the commissions they earn from lenders in order to discount rates even further.

Not everyone is a fan of the model. Some are worried that with interest rates already so low, brokers are having to dig deep into their commissions to offer meaningful discounts, a model that some brokers argue could threaten the industry as a whole.

“The majority of people don’t like what we’re doing and it’s a troublesome thing for us to digest because ultimately it’s the best for the consumer,” said Jeff Mark, co-founder of Spin Mortgage, an 18-month-old online brokerage that is advertising a five-year fixed rate at 2.49 per cent, well below the typical bank rate, by sacrificing some of its commissions. “We make less money per deal. I don’t know how that isn’t a good thing for the market.”

Brokers would have to give up roughly 40 per cent of their commission from a typical five-year fixed rate mortgage just to offer a discount of 10 basis points, equal to a tenth of a percentage point, off the interest rate, writes broker Mark Kerzner in Canada Mortgage Trends. That’s a huge sacrifice to offer borrowers a small savings.

“It’s becoming hypercompetitive and there is only so much you can discount a rate before you make nothing,” said Robert McLister, founder intelliMortgageInc, a low-rate online DIY brokerage. “We’re rapidly, in my opinion, approaching a point where at the very deep-discount end of the market there’s not much left to give if you’re a mortgage originator and you’re considering giving up your commission to offer a better rate.”

Even so, the industry seems to be moving toward more discounting. Rising house prices mean borrowers have become hypersensitive to low rates and the advent of online rate comparison sites has only heightened

By TAMSIN MCMAHON - The Globe and Mail

Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby
905-430-1800  

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Buyers Beware

 

 

When residential properties are for sale and the seller is shown to be a bank, this usually indicates that the owner could not make their mortgage payments and the lender is selling the property to recover the mortgage amount owing. If you are considering making an offer on one of these homes, here are 5 things you need to know: 

1.    The process that most lenders will follow in Ontario is Power of Sale, and not Foreclosure. The main reason is that a Power of Sale can be completed much faster than a Foreclosure. Powers of Sale can be completed generally in 3-4 months, while the Foreclosure process will typically take up to a year to complete. Banks also prefer this method as it permits them to get bad loans off their books quickly and if there is any shortfall, they can immediately sue the original borrower for the deficiency.

2.    Lenders are supposed to try and get fair market value for the property that is sold, so it is not automatic that you will be able to buy the property at a substantial discount. Use a professional buyer agent to make sure you know what this property is worth before making any offer.

3.    The lender will usually contain special clauses in this contract that will be important to any buyer. For example, all appliances will be sold on an "as is" basis, with no warranty, meaning you are out of luck if the appliances are not working when you close. No warranty will be given regarding the room sizes or even the lot size for the property. If there is a tenant on the property, no guarantees are given about the length of any lease or how much the tenant may be paying in rent. If HST is payable, for example if the property had a business running in it before the lender took over, or if it had been substantially renovated, then this extra HST has to be paid by the buyer on closing. Finally, if the original owner comes up with the money before closing to pay off the mortgage, then the deal is over.

4.    In order to deal with the above clauses, buyers should make sure that any purchase is conditional upon a detailed home inspection condition so that everything can be verified, including the condition of the home, the room and lot sizes, and whether there was any business, such as a day care, operating in the home before closing. This could involve discussions with the neighbours as well as well as any tenant that the buyer will be assuming after closing. Regarding the lot size, ask the bank's real estate agent if the bank has any survey relating to the property and if not, check at www.landsurveyrecords.com  or www.protectyourboundaries.ca as there are over 1.5 million surveys available for purchase through these websites to assist you when the boundaries are not certain.

5.    Buyers should attempt to close the deal quickly, once they have satisfied themselves as to all conditions, to avoid having the original owners come back and pay off the mortgage before closing, thus ending the deal.

When you understand what is involved in buying a home from the bank, you should not have any unwelcome surprises either before or after closing.

Story provided by Mark Weisleder BA., LLB

Research, professional knowledge and advice make for good decision-making. Knowledge is power and helps the buyer make the best decisions possible for his family. So it’s important to find the right agent that has experience with sale-of-power properties. Contact me today! I will be working for you every step of the way to make sure that you get what you want.


Randy Miller
Broker of Record
Royal Heritage Realty Ltd.
Offices in Pickering and in Whitby

905-831-2222

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Mortgage Application


You are excited to buy your first home!  But where to start? Your mortgage financing is one of the most critical aspects of your first purchase. And you want to get it right. But with so many choices, brands and products  on the market, it can be a tough ride to homeownership. I have listed some mortgage mistakes you should avoid when trying to secure financing for your home.  Avoiding them will also save you time and money.


Mistake #1: Not shopping around.


Try to choose the best product for you and your situation. If you don’t take the time to compare different loan products you’re doing yourself a major disservice. Make sure you find the right bank to work with and snag the best deal. Mortgages are complex and you don’t want to just take whatever product or term the bank is pushing.


There are many different types of loans out there. There are fixed- and variable-rate products, hybrid and no-frills mortgages, lines of credit, term options, amortization choices, and more. All have their pros and cons, and should be carefully considered before applying for a mortgage.  Keep in mind, that there is no product that fits everybody. So if a certain product works for your neighbour, it does not necessarily mean that it works for you too.


The key is to get expert advice. Always explain your current situation and future goals in detail so that you get a product that best meets both your current and longer-term needs.


When renewal time rolls around you may feel an allegiance with the current financial institution that holds your loan. But they may not be able to offer you the best choices. Always shop the market for your best available option. That’s how you get the best mortgage rate and end up with terms customized to your unique situation.


Mistake #2: Not Reading Your Mortgage Documents


These are important documents to review and read as they contain all of the terms and conditions of the mortgage including your obligations, costs and privileges. Never sign documents without reading them. Make sure you understand everything. If you’re unsure about something, always ask for clarification. You need to understand and agree with that commitment, when signing the documents.


Mistake #3: Having a bad credit score


Make sure that your credit balances are in your favour when it comes to your mortgage application. Lenders are looking for an appropriate debt-to-income ratio. In other words, you need to have more income than you have debt. Avoid running up a balance on your credit cards and pay down existing debts as much as possible.

Regularly review your credit report to ensure there are no surprises long before you begin the mortgage process. A low credit score will lead to a much higher mortgage rate, and even disqualification if it drives your monthly mortgage payment high enough.


Don’t open new credit cards, take out new loans or use more of any existing credit lines before and during the application process. This can hurt your credit score, increase your debt load and could finally lead to disqualification.


Mortgage Application Denied


Mistake #4: Not thinking about the future


Do get your credit report and score months before you apply for a mortgage so you can fix anything that might affect your loan approval!


Don’t make any purchases on your credit cards that you can’t pay off and if you carry a balance on your credit cards, start paying them down. You shouldn’t even make large purchases with cash, because lenders want to see that you have enough savings to keep paying your mortgage in an emergency. You can buy your new leather couch and big-screen TV once the loan is funded and closed.


Avoid job hopping. Lenders are looking for income stability and consistency. They want to see you in consistent employment. You must prove that you will continue to make the money you are currently making to obtain the mortgage. Lenders will verify it just before closing.


 

If you are planning to buy a house in Whitby, Brooklin or other areas within Durham Region, contact me. I can help you with the buying process and refer you to a mortgage specialist that can explain the products and help you choose the right mortgage product.


                                                         

Randy Miller

Broker  

Re/Max Rouge River Realty Ltd., Brokerage

905-668-1800 or 905-427-1400

                                                           

 

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The sizzling summer real estate market appears set to remain hot right through the fall.

 

John Andrew, a professor at Queen’s University, is watching with interest for the August numbers that the Canadian Real Estate Association will report in the coming days.

 

Low mortgage rates fuelled property sales in cities across Canada, with Toronto, Vancouver and Calgary seeing the most action, he says.

 

Prof. Andrew, who is the director of the executive seminars on corporate and investment real estate at Queen’s, predicts September and October will bring more of the same.

 

“I don’t think we’re going to see a significant downturn in sales until we see an uptick in mortgage rates.”


And when he says an uptick, he’s not referring to a month or two of gently rising rates – he’s talking about a sustained upward trend.

 

The Toronto Real Estate Board reported that sales rose 2.8 per cent in the Greater Toronto Area in August from a year earlier, while the average selling price rose 8.9 per cent. Prof. Andrew says the increase in sales in August came on a drop in listings. Sales in Durham Region, including Whitby and Brooklin have produced similar rising sales figures.

 

The market is still fairly balanced, he says, but it could tip over to a sellers’ market. He wonders if that, in turn, will encourage more homeowners to list their properties for sale. “As soon as people realize it’s a sellers’ market, they say ‘maybe it’s a good time to sell our house.”

 

Prof. Andrew notes the contrast between this year and last, when a sudden shift in the market came right after Labour Day. Last summer, mortgage rates edged up between June and September. Many people hadn’t been paying attention and that led to a sudden burst of buying in September when people were spurred on by the fear that rates would climb even higher.

 

Fluctuating bond yields have brought about the movement in mortgage rates over the past year.

 

The professor also points out that he used to make a note in his calendar of the days when the Bank of Canada’s interest rate committee was set to meet. He could expect a lot of calls from media on those days. More recently, those meetings have become a non-event, he says, because no one expects the central bank to make a change.


The low mortgage rates expected for the remainder of 2014 create an opportunity for all participants including first time buyers, move up buyers, investors, or by simply allowing people with existing mortgages to pay them off sooner.

 

For opportunities in Whitby and Brooklin and throughout Durham Region, contact me.


 

Randy Miller

Broker  

Re/Max Rouge River Realty Ltd., Brokerage

905-668-1800 or 905-427-1400

 



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Your credit history is one of the most important parts of your application when applying for a mortgage. Bad credit or a low credit score will compromise your ability to get a mortgage, because lenders will consider you at risk of defaulting on your loan.

 

When you’re self-employed, you have the challenge of proving you have the capacity to repay your mortgage. Though self-employed individuals will need to supply a lot more paperwork to qualify for a mortgage.

 

Watch > Money Monitor: Getting a mortgage in tough circumstances

 

As you can see, the road to homeownership is a lot more difficult one if you’re self-employed or your credit history is imperfect. But it is still possible to get a mortgage and buy a home. Contact me, I can help you and refer you to a mortgage specialist that can explain the products and help you choose the right mortgage product.


 

Randy Miller

Sales Representative

Re/Max Rouge River Realty Ltd., Brokerage

905-668-1800 or 905-427-1400


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mortgage rates


Often times, borrowers are fixated on their mortgage rate because it's the one aspect of their home financing they know to ask about. But, it's important to look beyond mere rates into the bigger picture surrounding what's significant when it comes to your specific mortgage needs.

 

If we dollarize the difference between 2.99% and 3.04%, for instance, it works out to an additional $2.66 in your monthly payment per $100,000 of your mortgage. Over the course of a five-year term, this culminates into just $159.60 per $100,000.

 

While "no-frills" mortgage products typically offer a lower - or more discounted - interest rate (like the 2.99% used in the example above), when compared with many other available products, the lower rate is really their only perk.

The biggest problem with looking at rate alone is that you may end up paying thousands of dollars in early payout penalties if you opt for a five-year fixed-rate mortgage, for instance, and then decide to move before the five years is up.

 

No-frills mortgage products won't let you take your mortgage with you if you purchase another property before your mortgage term is up - ie, portability is not an option with this product. Portability is an important option that could save you money over the long term if the home of your dreams is within your reach before your mortgage term is up and rates have risen, which they have a tendency to do over a five-year period.

 

This type of product is only plausible for those who have minimal plans to take advantage of benefits that will help pay off your mortgage faster - such as prepayment privileges including lump-sum payments.

 

Essentially, this product is only ideal for: first-time homebuyers who want fixed payments and have limited opportunities to make lump-sum payments during the first five years of their mortgage; and property investors who need a low fixed rate and aren't concerned with making lump-sum payments.

 

It's understandable why these products may seem appealing. After all, not everyone feels they have the extra cash to put down a huge lump-sum payment. And who needs a portable mortgage if you're not planning on moving any time soon?

 

But it's important to remember that a lot can change over the course of five years - or whatever term you choose for your mortgage. You could get transferred, find a bigger house, have babies, change careers, etc. Five years is a long time to be anchored to something.

 

Many people won't sign a cell phone contract for longer than three years that they can't get out of, so why would they then sign a mortgage for five years that they can't get out of?

 

The thing is, you can still obtain great mortgage savings without giving up the perks of traditional mortgages. For starters, many lenders are willing to offer significant discounts if you opt for a 30-day "quick close".

 

And there are many other ways to earn your own discounts. For instance, by switching to weekly or bi-weekly mortgage payments, or by obtaining a variable-rate mortgage but increasing your payments to match those of the going five-year fixed rate, you'll be ahead of the typical discount of a no-frills product before you know it - and you won't have to give up on options.

 

Banks don't give anything away for free - they're there to make money. That's why it's essential to discuss the full details surrounding the small print behind the low rates. It's also important to take into account your longer-term goals and ensure your mortgage meets your unique needs now and into the future.

 

If you are planning to buy a house in Whitby, Brooklin or other areas within Durham Region, contact me. I can help you with the buying process and refer you to a mortgage specialist that can explain the products and help you choose the right mortgage product. Let me help you every step of the way!

 

Randy Miller

Sales Representative

Re/Max Rouge River Realty Ltd., Brokerage

905-668-1800 or 905-427-1400

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