My problem with the internet as it pertains to real estate is this: It’s making consumers lazy which leads to very poor decision making. How? It makes people believe the process is very easy (it isn’t), that cash-back is a bonus that everyone should get (they shouldn’t) and that a couple of clicks here or there and there we go, you found a house (it doesn’t work that way):
One very prominent and web-fancy-shmancy website which I won’t name claims that the Realtors on that site are “top agents” from the “best brokerages”. How can this be? How can Realtors who pay to be on the site, and pay part of their commission back for a purchase made, be “top” agents? Really? It’s that simple? Well heck, then anyone with a pocketbook can be a “top” agent, no? What I like about this site is the wealth of information it…
I love Moneysense magazine because of how clear and concise the writing is. Their real-life examples strike a chord with me as it’s very easy to learn from other people’s mistakes and triumphs. However I take issue with their recent article 5 Things Your Mortgage Broker Isn’t Telling You and would like to take this opportunity to respond point-by-point:
1. Commission Is My Friend.
Well, duh. This is what I do and it’s how I get paid. However when someone asks me how much I make on a deal or how I get paid, I’m always upfront with them as I will be with you.
The longer the term, the more I make.
The lower the rate, the less I make.
That’s about the size of it. I promote lenders not because one pays me .1% more than the…
Hello and Good Polar Vortex Morning,
Even though things have been made tougher, there are still a few ways to get financed for your own purchase, be it a rental OR owner-occupied. Let’s go down the list:
1. The easiest but most expensive way:
Lenders such as Home Trust and Equitable Bank will finance up to 80% (even 85% in extreme/rare cases) of your purchase. Caveat here is: higher rates, tighter appraisals, and higher fees.
Example I recently financed a Realtor at 75%LTV for a condo downtown, 3 year fixed 4.25% with a $750 fee.
Pros: You get the deal done with minimal hassle regarding income.
Cons: Higher rate, fees, and appraisal issues.
2. The second (and one of my most favorite) way:
Credit Unions are becoming more aggressive in the mortgage space. Why? Because they are not subject to mortgage rules like Banks and Lenders. Why…
In this post I want to put on my real estate observer hat and tell you about common mistakes buyers make. You see, I have a different perspective on this because I meet buyers sometimes before, but usually after they’ve made the single biggest purchase of their lives. I can also talk freely because I’m not the one showing them the properties, nor their Realtor, therefore I’m able to give you my observations of mistakes I have seen buyers make and how to avoid them in 2014 (and beyond)
Let’s start with the biggest mistake: Setting A Price.
I oftentimes ask buyers how much they want to spend and I get a range, followed by “but not over $x”. It could be $400,000 or $600,000, but definitely not over $600,000. What I find interesting about this is that setting a price ceiling has never worked to your advantage. First, if…
As mortgage lending becomes tighter in Canada, new rules that came into effect are slowly being applied by lenders that will affect your qualifying ratios if you have student loans. Let’s use three examples of the recent changes to highlight how this will affect your borrowing:
If your loan is $50,000 or less, loan repayments will be based on a 7 year term at 5.34%. Using this metric, the payment per month is $713. Compare this to many student lines of credit where payments are interest-only and at 6% your payment is $250 per month.
If your loan is between $50,000 and $120,000, so let’s say $80,000 (right in the middle), that means you can amortize over a 10 year term or $861 per month vs $400 at interest-only.
If your loan is $120,000 or more, they amortize it over 15 years or $920 per month vs $600 per month…
Since 2008 there have been a flurry of mortgage rule changes in order to taper the continuing rising market. The most recent change last year in 2012 was the elimination of zero-down mortgages. Previously a well-qualified buyer could enter the market with literally just their closing costs. Their mortgage could be financed up to 40-years amortization with absolutely nothing more than land tax and lawyer fees as the required amount. Fast forward today and there still exist three ways around the 5% down payment minimum, and I’ll argue here that each is absolutely crazy.
My motto? If you don’t have at least 5%, you should not be buying a house.
The first crazy way (and I’ll start with the craziest), is to go thru a credit union and go with a 5% cash-back. That 5% cash-back can be used…
Recently I had a repeat client email me about making a move upwards the property ladder, as they are in a small 1 bedroom condo with kids, and things are getting tight. Sure enough school zones are a priority for these buyers as they do not feel they can afford private schooling, therefore after reviewing the EQAO results page and doing some more digging, they identified some areas they’d like to move. Houses in these areas go for upwards of $550,000 to 600,000. They have less than 20% down which means the maximum amortization they can go for is 25 years.
We did the numbers and here is how they look:
Combined income $100,000.
Debt per month: $500
Taxes on new property $3500
Heat per month $75
Total mortgage under today’s rules that they qualify for is $382,000 at the stress-test rate…
Recently I’ve been asked about Assignment purchases with greater frequency, and with the estimated 44,000 units coming “online” or being registered in 2014 I think I’ll see a few more of these questions in the near future. In hopes of educating you the buyer and Realtor, here’s “How To Finance An Assignment”:
First of course, get pre-approved. This is critical before you buy anything, to make sure we’re all good with credit, income, and down payment. That is the financing triangle as I like to call it - you can get financed without one of the three but it’s always good to have all three taken care of and disclosed.
The issue with assignments it that the great majority of lenders only finance the assignment based on the original purchase price. Here’s an example:
Seller, John, paid $290,000 for a 1-bedroom condo in 2009 before the…
Lately I have been in the press talking about everything mortgages.
First we were talking about the state of new construction for condos in Toronto:
Then, the CBC ran with this story and took it to the next level (which was picked up by the Huffington Post and Yahoo!)
And finally today, we were discussing how gifts are a big driving factor when helping first-time buyers buy in this market:
Which lead to an on-air interview with CFRB 1010 NewsTalk radio:
Hope you can check it out!
I like to think I know what I’m doing when I get a potential client. After 10 years in the business and thousands of happy client relationships, I like to think I know how to size up a deal better than most, and provide options. However, when my deal falls into the hands of someone who is either not following the rules of home financing or who thinks that they can decide the fate of a deal based on their feelings of it, and not based on data, then I clearly have very little hope.
Clients of mine are newcomers to Canada, came here in 2011, and just started to establish their credit. There is an amazing newcomer program called, well, would you believe it’s called Newcomer to Canada? You’d be right. Under this program, limited credit is offset by such things as rent payments, insurance payments, car…