7 Crucial Tips for First Time Home Buyers

Purchasing a home is the biggest financial decision you will ever make. It’s not something to rush into. Here are some tips to help make an informed decision.

1) Talk to a Mortgage Broker

The first step is to find out what you can afford and what you will be qualified to borrow. Talk to a mortgage broker and get a preapproval started and make sure you are on the right track to owning your first home.

2) Find a good Real Estate Agent

Looking online for homes is a good start but often when you find one you like, chances are, everyone else likes it too and it may be gone before you even get a chance to view it. Once you know what you can afford, contact a real estate agent and get that extra set of eyes on the market for you. They often have inside tips on homes coming on the market before the general public does. They will normally ask you to make a list of things that are important to you, like size, condition, location, style and price. This will help them find something close to what you want and help get you in before everyone else.

3) Realize you won’t find the perfect home

This is because the perfect home doesn’t exist.  I often tell my first time buyers that getting into the market may mean sacrificing a few things but it’s a stepping stone. You have to remember that your first home is an opportunity to get into the market and start to build that equity. It’s not likely to be your forever home but it still puts you much further ahead than if you were renting!

4) Seriously Consider a Home inspection

A home inspection is a very common condition on a purchase, especially on older homes. It’s important to know potential concerns. A home inspector will go through the house, write up a report and then go through it with you so you are aware of any potential concerns. They can give you advice on the things they think are urgent and the things that can wait. Knowing potential issues can help you make an informed decision.

5) Pay attention to the little things

When you start to feel pressured to make a decision, either because of a time crunch to move out of your current place or because you feel you’ll never find what you’re looking for, you may decide to over-look things that might cause some regret in the future.

–          Pay attention to how the house smells – a strong odor, especially a musty one, can be an indication of mold

–          Look at small details – if there are cobwebs in the corners, dirty windows, weeds in the lawn and leaves in the gutters, the owners probably didn’t do the best job at keeping it clean. If they didn’t spend the time and money to take care of little things, there is a chance that bigger things, like plumbing or heating/cooling systems may have fallen by the wayside as well.

–          Don’t think because the house needs a few minor repairs or new paint, that it’ll be easy to tackle. It takes a lot more time than you expect to complete some of these small tasks

6) Be ready to negotiate

If there is something you feel needs to be addressed, put it in your offer. If it’s important to you, make sure you can come to an agreement with the current owners. If you want to home owners to replace the hot water tank because it’s on its last leg, that can be negotiated into the purchase price to either be taken care of by them or have them knock down the price so you can take care of it yourself. This is where a real estate agent can really be an asset. They are trained to negotiate for you. Why not have someone like that in your corner.

7) Don’t spend all your money on a down payment

Even if its not your first home, you may need to purchase things like a lawn mower, appliances and possibly furniture. If you use your entire savings on the down payment, how will you take care of these things? My husband and I experienced this when purchasing our second home. Due to poor advice from our bank, we thought we had to come up with 20% down because it was our second home. We drained our savings account completely to avoid CMHC fees which caused us to have use credit cards to buy appliances because they didn’t come with the house.

The interest we had to pay on our credit card probably outweighed what we would have paid in CMHC fees. If you’re not sure about how much to put down, talk to your mortgage broker and they can help you figure it out.

Buying your first house can be overwhelming. That is why there are professionals here to help. With advice from a mortgage broker and a real estate agent, you can alleviate a lot of unnecessary stress and make this purchase as smooth and exciting as it should be.

Naomi 1

 Naomi Hamm, Mortgage Broker

 Office: (204) 727-2177

 Cell: (204) 724-7290

 Email: naomi_hamm@centum.ca

 

 

Rebuilding your credit

Have you declared bankruptcy or had some problems in the past with your credit history?  Your credit score is a number that shows your past financial history including how consistently you pay off you bills and debts.  It is a very important factor when applying for a mortgage. Rebuilding your credit can be a difficult and lengthy task, but not impossible when you have a plan.  Here are some ideas on where to get started:

–        Find out what your credit score is.  Equifax and Transunion are 2 agencies that report credit scores.  For a fee they will provide you a copy of your credit report which will let you know your score, employment history and your financial history, both good and bad.  This will let you know where you are with your credit now and what you should do.

–        Get a secured credit card and do not let it get more than half full

–        Check your bills every month to ensure there aren’t any mistakes.  If mistakes are found, contact the company to report the error

–        Pay all of your bills on time and in full

–        Contact a financial planner to help put a financial plan in place so you know where you are and where you want to end up

Working on your credit score takes time and patience.  Once you have gotten to a place where you are happy, it is important to remember that you must always stay in control and aware of what is happening to you financially every month.


5 Things Home Buyers May Regret Later

So, you’ve found a house you like, come up with a down payment and gotten preapproved. What could possibly go wrong? Plenty, if you and your agent rush through the deal without doing all the homework.

Here are 5 things that homes buyers might regret when they are all moved in to their new home.

1. Ignoring the maintenance and repair costs

When people see a house they really like, they sometimes don’t see the bumps and bruises the first time they look at it. They may ignore the old heating and cooling system or not factor in the cost of running or replacing it. What about the plumbing system and roof? If a roof is more than 10 years old, you should consider the cost of replacement in your offer.

2. Blowing off a home inspection

Sellers are now required to do a property disclosure statement for potential buyers but those are just outline problems the seller is aware of, not something they may not see. A home inspection can give you a bit more insight into any underlying problems to help you make a more informed decision.

3. Not doing enough research on the condo project they are buying in to

Potential buyers will often inspect the specific unit they plan to buy but don’t always look into the rules and regulations of the condo project itself. Be sure to read all your condo documents, including financials, covenants, conditions and restrictions. It’s good to know if the project is in fact making enough money to fix any necessary repairs that make come up and if they will let your family pet continue to live with you.

4. Not checking out the neighborhood

You may find the perfect house but if you have unruly neighbors or the amenities are sparse, you may end up regretting your decision. If you’re really serious about the house, one good way to find out about your potential neighbors is to knock on their door and talk to them. This can give you a feel for them and help you find out more about the neighborhood.

5. Not calculating the commute

When it comes to Brandon, they saying goes, “you can be anywhere in 15 minutes” but a lot of people are opting to live just outside of town to get more bang for their buck. Although a larger home at a smaller price may be appealing, sometimes you have to consider the price of gas and vehicle maintenance for the drive and whether the convenience of the “big city” is something you want to give up.

Naomi 1

 Naomi Hamm, Mortgage Broker

 Office: (204) 727-2177

 Cell: (204) 724-7290

 Email: naomi_hamm@centum.ca

 

 

Source – MSN Real Estate

Five ways to lower your summer electricity bill

Summer has arrived and as the temperatures begin to soar, many consumers can expect their electric bill to do the same. As the hot weather sets in, air conditioners will be working on full blast effectively sending a reasonable electric bill through the ceiling.

While there are many ways to reduce your electricity usage, from upgrading to energy conserving appliances to selecting premium grade windows, these are not options that a cash-strapped consumer can readily use. There are some easy and affordable ways to reduce your summer energy bill without having to shell out big bucks on home upgrades. Here is a look at how consumers on a budget can lower their high summer electric bill.

1) Use heavy drapes on windows

A method that is frequently used to keep heat in during the winter time, can also effectively keep the chill from the air conditioner in the house during the warm summer months. Hanging heavy drapes in front of windows will help keep the house cool by not letting the glaring sun warm up the house. Depending on how many windows you have in your house, installing heavy drapes can be an effective way of keeping your house cool. If buying drapes for all of the windows in your home is too expensive, you could opt to hang them in the areas of your house that get the most sun exposure.

2) Use energy saver option on air conditioner

When you are not at home, use the energy saver option on your air conditioner rather than turning it off. The energy saver will keep your house at a cool temperature. If you turn off your air conditioner the temperature in your house will rise, and when you turn the unit back on it will need to work harder to cool your house down again, in turn rising your electric bill. Additionally, if your air conditioner has seen better days, it is likely that it is not as energy efficient as some of the newer models on shelves today. If money allows, it may be wise to upgrade your air conditioning unit before next summer arrives.

3) Recall the fire safety warning “Heat Rises”

As children, we are taught that heat rises. If you have an air conditioning unit running on the first floor of your home, you could help keep your house cooler by shutting all of the doors on the second floor. The less space your air conditioner needs to cool, the quicker and easier it will do so. By stopping the airflow to certain areas of your house, you are helping to reduce your electric bill in a big way.

4) Ceiling and window fans go a long way

When you’re trying to save money on your electric bill during the summer, it is wise to limit the use of the air conditioner to extremely hot days. Fortunately, ceiling fans and window fans do not use nearly as much electricity as an air conditioning unit does. Well placed fans can keep cool air circulating in the house, and keep your home from feeling like a sauna. If you do not already have them installed in your home, consider purchasing ceiling fan units. Install a unit in each of the bedrooms to keep air circulating as you sleep.

5) Lights off during the day time

A simple way to conserve energy and lower your electric bill is to turn off all of the lights during the day. If the weather permits, open the windows and allow natural light to shine in, instead of keeping artificial lights on all day long. This move will help reduce your electric bill significantly by reducing your electric use during the day, and keeping your home cool in case you need to turn on your air conditioner later.

The bottom line

Saving money on your electric bill is easy when you know where to make cuts. There are some simple and cost-effective ways to reduce your energy use during the summer months. You can drastically reduce your energy bill during the hot summer months by limiting your air conditioner use, installing thermal drapes and using fans to maximize the ventilation in your home. A high electric bill can be a source of great stress for many struggling consumers. This summer, don’t fret over a costly energy bill and find ways to reduce your bill instead.

IMG_2894 Chris Turcotte, Owner/Broker

 Office: (204) 727-2177

 Cell: (204) 720-4002

 Email: chris@christurcotte.ca

 

Source: Globe and Mail

Becoming a Guarantor or Co-signer

Thinking about becoming a co-signer or guarantor to help someone get a house?  Here are some points to consider:

Guarantor

Co-signer

–     Does not have their name on the property title

–     Completes the mortgage application as well as the primary applicant

–     Personally guarantees that payments will be made if the original applicant defaults

–     Can be used if the primary applicant qualifies with their income, but may have credit problems

–     Lenders may offer early release policies that allow the guarantor to remove their name if the original applicant can qualify on their own for the mortgage. 

 

–          Become a co-owner of the property as their name will be on the property title

–          Completes the mortgage application as well as the primary applicant

–          Is accountable for missed mortgage payments, though it is understood that they are not the going to make payments. 

–          Helps the primary applicant if they do not qualify income wise

–          Need to see a lawyer to remove their name from the property title.  Original applicant must be able to qualify on their own for the mortgage

When deciding to become a guarantor or a co-signer it is important to realize, that in either case, it may be a lengthy time commitment and should feel confident in the person they are assisting.

If you have any questions about this or any other mortgage details, please contact us. It’s important to have all the proper information before committing to a mortgage.


 

Why Use a Mortgage Broker instead of the Bank?

  • Mortgage Brokers work for YOU, not the lender.
  • Mortgage financing that best suits your individual needs. By not being affiliated with any one lender, we give the client options by having access to numerous lenders.
  • We are available to meet with clients based on their schedule.
  • We educate you through the mortgage process. We are a resource of     information, ensuring our clients know exactly what is happening, every step of the way.
  • Mortgage Brokers provide CHOICE.
  • We save the client the legwork of shopping around for the best mortgage.
  • We only need to pull ONE credit report for all of our lenders.
  • Banks can only access and offer you their own rates and products that they have available within their branch.
  • You are responsible for negotiating your own terms, conditions and rates.
  • If you have to shop around to multiple banks, multiple credit reports will be pulled.

Not considering all the options available for your mortgage financing is like looking at only one house and buying without considering what else is available on the market.

Unlike staff at the bank, Mortgage Brokers do one thing only and do it well – Mortgages!

What is Mortgage Insurance?

Mortgage insurance can be both a confusing term and concept to consider when you are looking at your financing options.

I explain it this way to my clients: Anytime someone goes into a house purchase with less than 20% down payment, one of these insurance companies (Canada Mortgage & Housing Corp; Genworth or Canada Guarantee) get involved in the transaction.  The only difference between these companies is that CMHC (Canada Mortgage & Housing Corp) is a government run agency – while the other 2 are private run companies. In essence they do the same thing and for that, I will combine the three of these into the term “CMHC” for ease of explaining. Note: the minimum down payment needed for most purchases (unless you are self employed) is 5% of the purchase price.

Now without these insurance companies, we would approach the lender and ask that they finance 95% of your purchase. Lender would then say – NO – they don’t like the risk, not happening. OK, so if the lender wants minimum 20% payment to consider your mortgage application and you only have 5%. What happens now?

Well we get the insurance companies involved in the transaction like this:  “CMHC” steps in and says to the big bank: “You know what big bank? We will get involved in this transaction and we will then give you a “money back” guarantee should these clients not be able to make their mortgage payments for whatever legitimate reason. Bank is happy now as they have NO risk any more so bank is good with all this. However for you, the insurance company says to you: “We will get you into your house with as little as 5% down payment; and since we charge you a fee to do this – we will add this fee onto your mortgage so you do not need to pay this out of pocket.  Win-win so far for all parties.

Now things you need to be aware of with the insurance companies, the more down payment you have, then the less their insurance premium (risk) is. Meaning if you put 5% down payment from your own resources, “CMHC” will charge you 2.75% of the balance needed to finance.  If you put 10% down payment, they reduce their fee to 2%.  If you put 15% down payment, their fee is reduced to 1.75% as their risk is much less and if you have 20% down payment, then “CMHC” will say “Hey you don’t need us anymore as you an deal directly with your bank”.

Now these insurance companies might have a few more conditions to meet in order to have your financing approved or be a little stricter in proving down payment etc., but these don’t usually cause any real additional issues. And besides, since you will be gathering paperwork together anyway, it is easier to come up with additional documents versus saving up for 20% down payment (in my opinion).

Some of this additional documentation may refer to “closing costs” that are charged by your lawyer’s office; however that is for another chapter.

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Hellen Burnell, Mortgage Broker Hellen Burnell, Mortgage Broker

 Office: (204) 727-2177

 Cell: (204) 761-5741

 Email: hellen_burnell@centum.ca

Myth of the Zero Down Payment

Remember when lenders used to offer the Zero down mortgage? Then just like that, they took it away. Well, there are still options, they are just a bit different.

The Zero down mortgage meant the lender would finance the entire purchase price. This would allow home buyers that were not able to save up a down payment the opportunity to get into home ownership. Sounds too good to be true? Well, maybe it is. This zero down payment did come at a cost. When others were putting their minimum 5% down payment and getting rates in the low 3% (just over a year ago), this option would give you a rate of around 5% as the lender seemed to be doing you a favor but in fact, they were just looking at still collecting the down payment from you in the form of interest. So instead of having 5% equity in your home at the start of your purchase, you took longer to build that equity which really minimized your options when you go to buy your second home.

Although that option may be gone, there are still options for people that maybe haven’t been able to save up their down payment. It’s like a zero down payment but the down payment comes from borrowed credit, like a credit card or personal line of credit. This program is only available if you have good credit and are able to fit the payment of that borrowed money into your debt and still meet guidelines. This is perfect for someone who has a good paying job but no savings. The advantage to this is you start with that 5% equity in your home, you get the lowest available interest rate and you can pay off that credit card or line of credit as quickly as you want to without penalty, saving yourself a lot of money in interest.

If you have been thinking of buying a home but don’t have a down payment, contact me to see if you might qualify for this program . Stop wasting your money on rent and start building equity in a home of your own.

Naomi 1

 Naomi Hamm, Mortgage Broker

 Office: (204) 727-2177

 Cell: (204) 724-7290

 Email: naomi_hamm@centum.ca

Canadians Losing Money on their Mortgages

For most Canadians, when shopping for a mortgage the simple solution is to walk through the doors of your local bank or credit union branch.  It seems to be that old saying “better the devil you know” is true.  We believe that the bank, trust company or credit union that we have been dealing with for years is the best place to be.

In fact in 2012 a whopping 72% of people did just that when they were looking for a mortgage.  The result?

Canadians lost over 41 Million Dollars by simply not shopping around for the best mortgage product for their needs.

As consumers, people typically believe that if they get the lowest rate they will save the most money, and that is largely true, but you will notice that we did not mention rate in the above statement.  Why?  Well contrary to what most people might believe, rate is not the single all important item to consider when looking at getting financing for your home.  Things like term, prepayment options, amortization, and payment schedule (to name just a few things) can have a dramatic impact on the true cost of the mortgage you are obtaining.

Canadians are very web savvy consumers when it come to getting a mortgage, in fact 2 in 3 of us will research our mortgage online before we make a decision.  What is not talked about typically is what we are researching and there are two very key items, rate and mortgage calculators.

Rate is pretty self explanatory – we want to find the lowest possible.  Mortgage calculators help us to figure out what we qualify for, what our payment will be, etc.  What we do not do is research what different product options are available, and how those options can impact us – for good or bad.  If you try to find that information you soon discover that it is not so easy, and when you do find some it is very complicated to understand.  It is because of the complexity of mortgages that the majority of people simply put their faith in the banks and are resigned to the fact that taking 25 years and at the end paying almost twice the value of the home is normal.

Mortgage brokers offer Canadians a solution to the stress of shopping around, and they typically do it at no charge.  Their role is to do the work for you and find the right mortgage to suit your financial and home ownership goals.

At Centum Mortgage Choice we believe that all Canadians should have the opportunity to achieve their financial goals and dreams.  It’s why we do not just offer mortgages, rather we offer Home Ownership Solutions.

If you want to discover how you can stop losing money on your mortgage, contact a Centum Mortgage Choice broker today.


IMG_2894 Chris Turcotte, Owner/Broker

 Office: (204) 727-2177

 Cell: (204) 720-4002

 Email: chris@christurcotte.ca

 

 

Two Rules of Thumb When Considering Purchasing Income Property

In the world of purchasing income producing properties, looking at financial statements can be a daunting task.

Here are 2 rules to consider whether a property could be profitable for you…simple guidelines to consider when deciding to purchase or not.

1. The 1% Rule

When purchasing a property for investment purposes, it requires a thorough analysis of future rents compared to cost of owning the property. Property owners want to maintain a cash greater than it’s costs

The 1% rule is a quick calculation that can help determine if the property you are considering investing in could be profitable.

eg. Investor looking to purchase $200,000 property with 20% down payment leaving a mortgage of $160,000. The 1% rule says that the home would have to be rented for no less than $1600/month.

If the property can not generate somewhere in the neighbourhood of this amount, chances are the property will not be profitable.

This rule is used for a quick estimate, it is a starting point to determining the profitability of the property.

2. Debt Coverage Ratio (DCR)

This is used to determine the ability of the property to cover payments on its debts. It also provides lenders information on the extent the income properties net operating income (NOI) covers the debt service. It helps the lender determine whether the property generates enough cash to cover debts.

For every dollar ($) paid out in expenses, the lender likes to see a minimum of a $1.20 generated in income or DCR minimum of 1.2. Showing the current rental property is showing a profit. The higher the DCR, the more profitable the investment will be.

eg. Determine Net Operating Income (gross income minus all operating expenses = NOI)

Rental income of $150,000 minus $72,500 (expenses) = $77,500                           $77,500 divided by 12 months = $6458/month NOI                                                  Monthly income of $6458 divided by 1.2 (DCR) = $5382

This example indicates that based on these numbers, the monthly mortgage payment can not exceed $5382 per month in order to have the DCR at 1.2.

Every property is different and has its pros and cons to determine profitability. These are quick references to help you in your search for a profitable investment property.

If you have any questions on how one of these items may affect you, please call us. It is important to get it right!