Tuesday, May 31, 2011

Bank of Canada holds steady

As expected, the Bank of Canada left it’s key interest rte unchanged stating that they will likely not increase rates until the economy has recovered. Many are not predicting an increase to the prime lending rate until September.

This latest announcement by the Bank of Canada is welcome news to mortgage holders with variable rate or home equity line of credit mortgages.

Monday, May 30, 2011

Canadians love their U.S. properties

For the fourth consecutive year, Canadians led the pack of foreign buyers sweeping up properties in the U.S. Twenty-three percent of foreign buyers were Canadian, with the next-highest group coming from China (9%).

It's easy to understand why Canadians are deciding now is the time to purchase properties south of the border. More than 45% of those properties purchased by all foreign buyers in 2010 had price tags under $200,000. For a vacation property, that's not a price to sneeze at!

If you're thinking about becoming a U.S. property owner, here are a few things to consider:

1. Cash is King.

Very few, if any, U.S. lenders are offering mortgages to foreign buyers right now, so if you're thinking about buying a property, you're best to buy with cash. If you don't have $200,000 in cash on hand, many buyers are opting to take out a line of credit on their Canadian property and using the money to buy a U.S. home flat out.

2. What are others saying?

If you can, talk to as many people you know who have recently purchased a U.S. property. Find out where they purchased the property, what their experience was like, and what tips they have to offer.

3. Avoid buying in a ghost town.

While a super-low price tag may be tempting, make sure it's not the only factor guiding your property-buying decision. Where you buy is equally as important and a ghost town or ghost building, ridden with foreclosures, is likely not where you want to be. Aside from further reducing property values, foreclosed homes are not contributing to local maintenance (or HOA) fees, which means the amenities and maintenance services your building is supposed to offer may not be kept up to snuff.

4. Buy with the long term in mind.

Nobody knows when the bottom of the U.S. housing bust will occur or how long it will last. So it's best to purchase U.S. properties with the long term in mind, rather than the mindset of turning a quick profit.

-courtesy of Axiom Mortgage Partners

Wednesday, May 18, 2011

Condo documents: Why they are important to review in detail

A REALTOR® friend of mine, John Carle with REMAX just posted this great article on his blog regarding purchasing a condo and the importance of reviewing your condo documentation thoroughly....

"If you have purchased a condominium then you will have looked over the documents that describe the unit, building, condo corporation etc…

As a REALTOR®, I have had many clients purchase apartment and townhouse condos in many varied complexes. Usually, one of my many jobs when my clients are looking at the condo is to help them to understand the documents.

Now sometimes they may decide to take the documents to a lawyer for review, or to a company that specializes in condo document review. Any way you choose, it’s yours to decide. The ultimate decision on whether to buy it or not, is yours as the purchaser. You must be satisfied that it is a good place to buy.

The document package should contain a variety of different documents and be as up-to-date as possible. This is very important because, for example:

- it can show you how well the building is managed

- how much is in the Reserve Fund (for maintenance and repairs)

- how much the monthly condo (strata) fees are

- the meeting minutes for the Board of Directors

- the Annual General meeting minutes

- the projected budget for the year

- any anticipated levies or special assessments

- the projected maintenance costs for the next 1 – 5 years (depending on when the Reserve Fund Study was done)

- and many more items.

I will help you to make sure you get all the info you need to make a sound decision on the purchase of an apartment or townhouse condo. Please contact me if you have any questions or if you are interested in the purchase or sale of a condominium or a single-family home."

Monday, May 16, 2011

Home Alone house up for sale

The movie that made Macaulay Culkin famous also made a certain home in Winnetka, Illinois famous as well.
The "Home Alone mansion" - or the home Macaulay Culkin's character, Kevin, had to defend in the 1990 holiday classic - is now up for sale. The price tag is a mere $2.4 million. To check out the inside, and hear some behind-the-scenes tales from its owners, check out this video!

Alberta joins BC in regulating home inspectors

As of September 1, Alberta will become the second province to ensure all home inspectors are licensed and all homeowners who use them are protected. Home inspectors will be required to successfully complete a provincially-approved training program, as well as pass a test inspection.
If you’ve ever watched the show Holmes on Homes, a home renovation show where the majority of troubled homeowners run into problems due to the oversight of a less-than-stellar home inspector it’s a wonder that Alberta is only the second province to enforce these measures. The majority of provinces have associations that offer their own certification and education, but participation is completely voluntary.
B.C. became the first province to licence home inspectors back in 2009. At that time, the government set out to better serve homeowners by assessing the qualifications of, and requiring mandatory licences for, home inspectors; receiving and responding to complaints; and monitoring compliance through inspections and enforcement, with penalties of up to $5,000.
Alberta will take its enforcement a step further by investigating all complaints, and fining businesses in violation of the new rules by as much as $100,000 and/or two years in jail.
There have been rumours that Quebec may be the next province to regulate home inspectors, but no word yet on when that will happen or when other provinces might follow suit.

-Axiom Mortgage Partners

Thursday, May 12, 2011

Buying a piece of the American Dream

We’ve all heard the stories from friends, co-workers and neighbours: they went to the U.S. and purchased an amazing vacation/retirement property at an unbelievable price. Perhaps you’ve been thinking about doing the same for some time. It sounds like a great idea, but, how do you get started?

Below is an extremely informative excerpt from a new book; Buying Real Estate in the US: The Concise Guide for Canadians. If you are toying around with the idea of purchasing property south of the border my suggestion would be that you really do your research before making an offer on a property. This book would be a great place to start!

A Rare Opportunity: Purchasing property in the United States

Monday, May 9, 2011

How much house can you REALLY afford?

Acquiring a mortgage - and acquiring a mortgage you can afford - are two separate things. Often, banks or lenders will approve you for much more than fits comfortably into your lifestyle. That's because they rely on two calculations - Gross Debt Service Ratio (GDS) and Total Debt Service Ratio (TDS) to come up with that magic number.

The problem with those calculations is that, while they take into consideration some household expenses to determine how much mortgage you can afford, they don't take into consideration all of them.

Such expenses as mobile phone bills, cable, entertainment, and groceries, for example, aren't factored into the equation - instead, they focus on the bare necessities such as heat, loan payments and credit card minimum payments. They also base the calculations on your gross household income - not your net (or after-tax) income, which can be a little misleading as well.

So how can you determine how much house you can really afford? Well, there seems to be a few differing "rules of thumb" out there:

1. The price tag of the home shouldn't be more than two to three times your gross household income.
So, if your household is making $100,000 per year, your home's price tag should fall between $200,000 to $300,000. Given today's real estate prices, many believe this adage is outdated.

2. The total mortgage amount shouldn?t be above four and a half or five times your gross family income.
So for the same $100,000 couple, that would take you to a $450,000 or $500,000 mortgage loan. Whatever down payment you've mustered to save will increase the home's price tag accordingly. While the previous example seemed a little low, many believe this number is a little high, and could cause homeowners to over-extend themselves.

3. Find your own magic number.
Depending on your lifestyle and where you choose to spend your money, your idea of home affordability will vary from someone who has completely different spending habits. That's why it's important to find out what number works for you.

Start by tracking your spending - most people underestimate exactly where their money is going. Next, figure out what extras you can do without - and which ones you absolutely can't. If you love dining out, for example, it's better to come to terms with this fact and buy more house than convince yourself that once you own a home you'll eat in every night.

With interest rates continuing to sit at record lows, it might also serve you to see what you can afford at a higher interest rate - say 6%. This can help you ensure that you'll be in a comfortable place both today and when it comes time to renew.

-Axiom Mortgage Partners

Thursday, May 5, 2011

You can't afford a mortgage when...

While plenty of individuals live from paycheque to paycheque, most consumers know they should be saving money and reducing debt. The recession has drummed that concept into everyone's head as people have watched their neighbours and friends lose jobs and sometimes their home.

Many people say that money worries keep them awake at night, but that doesn't necessarily translate to imminent bankruptcy. How do you know when you are truly teetering on the edge of a financial disaster versus simply needing to do a little belt-tightening?

Here are nine signs that indicate you are heading for trouble and may be unable to pay your mortgage in upcoming months:

1. Late Fees

If you missed a payment or let your bill go past due because you didn't have the money to pay your mortgage or another bill on time, you need to reevaluate your budget. Not only does this indicate an imbalance between your income and expenditures, but it will also ruin your credit score, potentially causing your creditors to increase your interest rate.

2. You Can't Pay All of Your Bills

Every month, you are forced to decide which bills to pay and which bills to ignore. A lot of people opt to pay their credit card bill to stop harassment from the credit card company and to make sure they have available credit. But it is far more important to pay the bills that protect your home first. Always pay your mortgage first so that you will have a place to live. Next, pay for your car so that you can get to work and keep your job.

3. Making Minimum Payments on Credit Cards

In your mind, paying the minimum due on each bill may mean you are keeping up with your financial commitments, but financial experts know that minimum-only payments are a key indicator of financial distress. While this may mean that you carry too much debt, this also means that all your income is barely covering your spending. Take a careful look at your mortgage payment, other debts and your income to get back on track. Paying only the minimum on credit cards will extend your debt for years and amass expensive interest payments.

4. No Emergency Savings

While amassing six to 12 months of funds to cover you expenses, as many financial planners now recommend, may be a monumental task, every homeowner should have at least one month's worth of expenses in the bank. At the very least, you need to have enough money in a savings account or a money market fund to pay your mortgage for one month if your income drops or disappears. If you cannot save that much money you need to seriously evaluate your overall household budget.

5. You Can't Afford Maintenance

Your home needs to be painted and your dishwasher broke two months ago. If you are ignoring basic maintenance because you cannot afford to buy paint or call a repairman, this is a significant indication that you are in financial trouble. Not only does this show that you don't have any emergency savings or a home maintenance budget, but this will also reduce the value of your home.

6. Reduced Income

Money is already tight and now your work hours have been reduced or you have been laid off. If meeting your monthly budget depends on every dime you earn, then even a small reduction in income can be a disaster. Search for a new job or a second job and, at the same time, start slashing your budget as much as you can.

7. Using Credit or Cash Advances to Pay Bills

You are using your credit cards or, even worse, cash advances on credit cards to pay other bills such as a utility bill or to buy groceries or just to have cash in your pocket. This is a strong indication that your spending is outpacing your income and it is extremely expensive. You need to put yourself on a debt management program or perhaps meet with a credit counselor to straighten out your finances.

8. Using Your Retirement Fund

You have borrowed money from your retirement account for your mortgage payment or other debt. This could seriously jeopardize your future financial security.

9. You're Maxed Out

One or more of your credit card balances has reached or, worse, gone over the limit. If you are transferring your balances to new accounts in order to avoid paying the debt, this is a sign of a financial imbalance. If you are applying for new credit cards because your other cards have reached their limit, you are in serious danger of a financial meltdown. While you may be making your mortgage payments just fine, if you cannot control your use of credit cards it can be an indication that housing payments are too high.

While these financial woes can mean that you cannot afford your home, they may also be a sign that your spending is out of control. For most people, the mortgage payment is the largest monthly bill, so they often assume that the size of their mortgage is the problem. If your housing payment fits into that budget but you are having difficulty making your payment, then the issue may be that you have taken on too much other debt. Whether the problem is your mortgage or your other debt, you need to find a way to reduce your spending and/or boost your income before the situation gets worse.

The Bottom Line

Handling financial problems is never easy, but the first step is always to know what you owe. Solutions can only become clear once you have every bill written down with the amount owed, the monthly payment and the interest rate you are being charged. Pencil and paper work just fine, or you can create a spreadsheet or invest in some personal finance software. The important thing is to know where you stand so you can create a plan that will get your money under control.

Nine signs you can't afford a mortgage
Michele Lerner
Published Monday, May. 02, 2011 6:56AM EDTLast updated Monday, May. 02, 2011 10:11AM EDTcomments

Tuesday, May 3, 2011

Insiders tips on purchasing real estate

Luke Quach, from REMAX explains why working with your Realtor’s approved mortgage broker is beneficial for you! Please note that while the majority of points made in this article are very realistic and true, some of the nitty gritty details are written with an American perspective and do not apply to Canadian real estate transactions (mainly the last point about line item loan fees).

Thanks Luke for posting such a great article!

Stage Two: Getting Pre-Approved.
Insider Secret: Working with a mortgage broker referred by your real estate broker or agent may save you money.
Why: Bolstered by the real-life stories of a couple of bad apples, TV pundits and some consumer advocates have spun the tale of a real estate industry cartel, whereby sinister agents hook unsuspecting buyers up with shady mortgage brokers, who place them in crappy loans and kick back some bucks to the agent. I’m here to tell you, in my experience, the opposite is true the vast majority of the time.
When you work with a mortgage broker who has a strong track record of helping your real estate agent’s clients out, you end up in a best of all worlds situation, nine times out of ten. First off, your agent will take you much more seriously once a mortgage broker they know and trust has run your credit, checked your income and approved you for a loan, as well as communicated with your real estate pro about your qualifications and what you can afford. Secondly, your agent can help you communicate with your mortgage broker, sometimes helping get past appraisal glitches or facilitating other workarounds, as they come up. Third, you get the assurance of working with a mortgage pro who has been vetted and vouched for by someone you not only trust, but someone who can verify that the mortgage broker has the ability to get transactions closed in the timely manner required of today’s real estate sales contract. Otherwise, you may end up working with a competent mortgage broker who has a great track record when it comes to refinancing, but can’t keep up with the pace and common obstacles to getting a home financed in the context of a sale.
On top of that, sometimes the relationship can help you negotiate out of a couple of line item loan fees (if your particular mortgage rep has the power to get them down at all), if push comes to shove and cash is tight to close the deal. Assuming you are working with a real estate pro you really trust, working with a mortgage broker they trust can save you, rather than cost you, money.

Monday, May 2, 2011

Get talking about your finances

While chatter about mortgages, debt, savings and retirement planning isn't likely to put one in a romantic mood, it's an important aspect of any marriage or co-habitational relationship.

Unfortunately, talking about money is typically the last thing anyone wants to do during their personal time. When you don't have enough of it - or when the debt is quickly piling up - it's much less enjoyable. But with financial matters being one of the top cited reasons for divorce, it should be an important aspect of every relationship. Below are a few strategies to take the fear out of your finances:

1. Know where you stand.
Dealing with your own finances is quite different than dealing with a couple's. Make sure you're both aware of your entire financial picture - money coming in, money going out, and all outstanding debts. You'd be surprised at how financial awareness - and a strategy to tackle any worries you may have - can quickly erode any fear you have about financial matters.

2. Get both members involved.
While one person may be more financially savvy than the other, it's important that both members of a couple are involved in the financial decisions. So when it comes time to renew that mortgage, for example, both members should meet with your mortgage broker and understand the pros and cons of the different products before selecting. In the same sense, you should periodically go through your expenses together and brainstorm ways to slash costs, and revisit your investment portfolio.

3. Arrange a financial "date night".
Even if you're not afraid to talk about money, it can be difficult to find the time to do so. For this reason, consider arranging a monthly financial date night. Open a bottle of wine, order some take-out, and take an hour or two to look at your monthly expenditures, the debt you've tackled and any other financial-related topics you've been thinking about.

-article courtesy of Axiom Mortgage Partners