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Coming out on top. Improve your chances, and reduce your stress, in a multiple offer situation.

As seen in the Metro Vancouver New Home Guide   .

Whether you are a first time buyer, looking at buying a bigger house or downsizing, if you are looking at buying an investment property it is important to be prepared. This spring a sellers’ market is in full swing, which is more noticeable in certain areas of the Lower Mainland. With historically low interest rates, buyers are making the jump into homeownership, because for many, their mortgage payments will be less than what they are paying in rent. It is certainly a great time to get into the market. However, in a sellers’ market buyers find themselves in competition with other buyers to purchase a home.

House in the hands of the man on a background of blue skyBuying a home can be exciting but having to compete for a home can add a bit more stress. In this case, a property’s asking price and what the property will sell for is quite different, and in most cases the selling price will be well above and beyond the listed price.

When a homebuyer goes into a multiple offer situation, they are less in control. As a buyer, you need to prepare yourself in doing work upfront and with the understanding that you might not get the property in the end.

During multiple offer situations, the seller is not obligated to negotiate or accept any of the offers. The seller has the liberty to choose the best offer to negotiate and they will accept the offer that best reflects their needs. While price is important, that will not be the only factor they consider. They will also look at things such as subject conditions, completion and possession dates.

Here are some things you can consider and help you feel more in control of the situation when going into multiple offer situations:

  • Get pre-qualified by a Mortgage Expert – One of the most imortgage_pre_approval_300mportant aspects of buying a home is knowing how much you qualify for. You will know what you are comfortable paying on a monthly basis but also what is the highest amount you can offer. While you might have been qualified, the lender still have to approve the property you are buying.
  • Prepare and have all your documentation ready – It is important that you provide your Mortgage Expert will all the documentation the lender is going to require upfront. Especially since time will be of essence, you don’t want the added stress of getting documentation when you are in the middle of negotiations and during the subject condition period.
  • Having the right real estate agent – It is critical that you have an agent that has your best interest in mind. As a buyer it is not your job to seal the deal, it’s your agent’s responsibility to know what is your limit and respect that. Don’t let your agent try to upsell you on the price and encourage you to go above your budget. It’s their job to research comparable properties in the area and advise you, but you are the one that makes the final decision. After all, it’s your money.
  • Set your boundaries – Onhome & calclatorce you set your budget, stick to it. Determine how exactly how much you can go over if you end up in multiple offers. Don’t get sucked in by emotion and peer pressure because in the end it can end up costing you a lot more money.
  • Consider doing a home inspection ahead of time – The buyer could consider your offer more readily if it doesn’t include a “subject to inspection” clause.
  • Be flexible – Winning a multiple offer situation might be as easy as agreeing to the seller’s conditions such as closing dates, buying the property “as is” or even tightening the subject removal dates. This is important if the seller has already bought another property and is anxious to moving on. By agreeing to make the transaction as easy as possible could mean winning over a more generous offer. When buying a property “as is” and limiting the subject conditions (such as requesting that a missing knob or floor tile be replaced) might work in your favour too. If your agent is aware of any information about the seller’s situation and if you can be flexible in any way, take advantage of this opportunity that might help you get your offer accepted.
  • first_time_buyers_480Write it down – Perhaps you might want to write a quick letter to the seller explaining who you are and why you want to buy their home so much. Buying and selling a home is an emotional time for everyone, especially if the seller has lived in that home for a long time and raised their family there. Sometimes, it’s not about the highest offer but it can certainly also be about an emotional connection. Even though your offer might be lower than the others, some sellers might feel a strong connection to your story and decide that it’s not about the money but about someone who will really appreciate a great home!
  • Know when it is time to walk away – Multiple offer situations can be stressful and sometimes listing agents strategically set the price of the home below market value to start a multiple offer situation. Make sure you stand firm.

Buying your home is about a great investment and you have to be smart about it. In the end, it’s about being comfortable on what you are paying a month and happy with the decisions you make. After all it’s about finding a home that will be a great place to start building equity and creating memories.

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Fraud Alert #2: How Title Fraud Works – and How to Protect Against It

In the second of a two-part series on fraud, we explain real estate title fraud and how to protect your home. As seen in REW.ca

Last time, we discussed mortgage fraud and “straw buyer” schemes and the red flags that come up when they happen. This time we are taking a look at an even more insidious type of fraud, where the red flags are hard or even impossible to spot until it’s too late.

identity theft 2Title Fraud

When you purchase a home, you purchase the title to the property. Your solicitor registers you as the owner of the property in the provincial land title office.

Unlike with mortgage fraud, during title fraud, you haven’t been approached or offered anything – this is a form of identity theft.

This occurs when your personal information is collected and used by someone identifying themselves as you. There are several ways criminals can steal your identity without your knowledge, which includes:

  • dumpster diving;
  • mail box theft;
  • phishing; and
  • computer hacking.

Sadly, the only red flag for title fraud occurs when your mortgage mysteriously goes into default and the lender begins foreclosure proceedings. Even worse, as the homeowner, you are the one hurt by title fraud, rather than the lender, as is often the case with mortgage fraud.

Here’s what happens with title fraud. A criminal – using false identification to pose as you – registers forged documents transferring your property to his/her name, then registers a forced discharge of your existing mortgage and gets a new mortgage against your property. Then the fraudster makes off with the new home loan money without making mortgage payments. The bank thinks you are the one defaulting – and your economic downfall begins.

The following are widentity-theftays you can protect yourself from identity theft:

  • Ensure you keep personal information confidential when on the internet or phone until you know who are dealing with, how it will be used and if it will be shared with anyone.
  • Only carry minimal information and identification in your wallet, don’t have your social insurance card with you.
  • Check your credit report regularly. You can get them free when you request them from the Equifax and Transunion when they mail them to your home. If you notice anything suspicious, contact the credit bureau right away.
  • Check your financial, bank and credit card statements regularly for any inconsistencies and unknown charges.
  • Consider obtaining a title insurance policy, as title insurance protects against many title risks associated with real estate transactions.
  • Check your mailbox for mail on regularly, if not every day.
  • Shred and destroy any financial and personal identification documents, as well as any unsolicited credit card applications rather than just simply throwing them away.
  • If you don’t receive your bills or other mail, follow up with your creditors.
  • If you receive credit cards that you didn’t apply for or if you did apply for them and didn’t receive them.
  • Contact your mortgage lender first if you are having difficulty making your mortgage payments.

ACE_Identity-Theft-Prevention2014_webThe following are ways to protect yourself from title fraud when purchasing or refinancing a home:

  • Make sure you work with a licensed real estate agent who is familiar with the area you are interested in buying. Select to work with someone that can provide trusted referrals and check on them.
  • Check listings in the community where the property is located – compare features, size and location to establish if the asking price seems reasonable.
  • Always view the property you are purchasing in person – don’t buy without seeing it first.
  • Beware of a real estate agent or mortgage broker who has a financial interest in the transaction.
  • Ask for a copy of the land title or go to a registry office and request a historical title search.
  • In the offer to purchase, include the option to have the property inspected and appraised.
  • When giving a deposit when purchasing a property ensure the funds will be held “in trust” with a solicitor or a real estate agency and not directly with the seller.
  • Insist on a home inspection to guard against buying a home that has been cosmetically renovated or formerly used as a grow house or meth lab.
  • Ask to see receipts and permits for recent renovations.
  • Consider the purchase of title insurance.
  • Review and make sure you are comfortable with the terms and conditions with the mortgage commitment letter or approval.
  • Review the “cost of borrowing disclosure statement” and be aware of any additional fees or charges. Ask questions if you are not sure.
  • Know and understand what you are signing. If you have questions, ask. If you are not comfortable or something is not right, do not sign the documents.
  • You might want to consider using your own solicitor for legal advice if you are asked to use the same lawyer as the seller.


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Frequently asked questions when buying a home

As seen in the Metro Vancouver New Home Guide.

What do lenders look at when qualifying me for a mortgage?

Most lenders look at the following factors when determining whether you qualify for a mortgage:

  • Income
  • Debts
  • Employment History
  • Credit history
  • Value and marketability of the property you wish to purchase.

How much can I qualify for when buying a home?

Conceptual image - percent growth

Conceptual image – percent growth

In order to determine the amount for which you will qualify, there are two calculations that are used. The first is your Gross Debt Service (GDS) ratio. GDS looks at your proposed new housing costs (mortgage payments, taxes, heating costs and strata/condo fees, if applicable). Generally speaking, this amount should not be more than 35% – 39% of your gross monthly income. For example, if your gross monthly income is $4,400, you should not be spending more than $1,716 in monthly housing expenses. Second, your Total Debt Service (TDS) ratio is calculated. The TDS ratio measures your total debt obligations (including housing costs, loans, car payments and credit card bills). Generally speaking, your TDS ratio should be no more than 42% – 44% of your gross monthly income. The GDS and TDS will depend on your credit. Keep in mind that these numbers are prescribed maximums and that you should strive for lower ratios for a more affordable lifestyle. Before falling in love with a potential new home, you may want to get pre-qualified by a Mortgage Expert. This will help you stay within your price range and spend your time looking at homes you can reasonably afford.

How much money do I need for a down payment?

The minimum down payment required is 5% of the purchase price of the home when you are an employee. When you are self-employed it will depend if you are qualifying based on what you are declaring on your income tax then it will be 5% and at least 10% down payment when you are self-employed and qualifying with an “estimated” gross income instead of the incoming showing on your income tax return. In order to avoid paying mortgage default insurance, you need to have at least a 20% down payment

If I86809937 don’t have the full down payment amount, what can I do?

There are programs available that enable you to use other forms of down payment, such as from your RRSPs, or a gift from a parent, child or siblings. Also, you can borrow the down payment from a line of credit, loan or credit cards. However, in order to qualify you still have to be within the TDS ratios as mentioned above.

What else do I have to pay to purchase a home?

You will have to pay for the closing costs. The lenders require you to have in your bank account at least 1.5% of the purchase price (in addition to the down payment) strictly to cover closing costs. You must have this amount but it doesn’t mean you are going to spend it. The following are some of the closing costs:

  • Legal costs
  • Property tax adjustments
  • Strata/ condo fee adjustments (if applicable)
  • Cost to register property in land title office, etc.

What would be my mortgage payments?

Monthly mortgage payments vary based on several factors, including: the size of your mortgage; whether you are paying mortgage default insurance; your mortgage amortization; your interest rate; and your frequency of making mortgage payments.

What is better a fixed or variable rate mortgage?Discount

The answer to this question depends on your personal risk tolerance. For instance, you are a first-time homebuyer and/or you have a set budget that you can comfortably spend on your mortgage, it’s smart to lock into a fixed mortgage with predictable payments over a specific period of time. If your financial situation can handle the fluctuations of a variable rate mortgage, this may save you some money over the long run.

What is the best interest rate that I can get?

Your credit score plays a big part in the interest rate for which you will qualify,as the riskier you appear as a borrower, the higher your rate will be. Rate is definitely not the most important aspect of a mortgage, however, as many rock-bottom rates often come from no frills mortgage products. In other words, even if you qualify for the lowest rate, you often have to give up other things such as pre-payments and portability privileges when opting for the lowest-rate product. Remember not to focus on the lowest interest rate but on finding the best mortgage with the most favorable terms and rate. While you might end up having a lower rate, it can end up costing you thousands of dollars of unnecessary costs in the long run.

What credit score do I need to qualify?

Generally speaking, you are a prime candidate for a mortgage if your credit score is 680 and above. The higher you score the better, as you will have more options and advantages. These days almost anyone can obtain a mortgage, but the key for those with lower credit scores their options will be more limited and interest rates could be higher. But don’t worry consult a Mortgage Expert to see how they can help you in obtaining a mortgage.

What happens if my credit score isn’t great?

There are several things you can do to boost your credit fairly quickly. Following are five steps you can use to help attain a speedy credit score boost:

  1. Pay down credit cards. The number one way to increase your credit score is to pay down your credit cards so they are below 50% of your limits.
  2. Limit the use of credit cards. Racking up a large amount and then paying it off in monthly installments can hurt your credit score. If there is a balance at the end of the month, this affects your score.
  3. Check credit limits. If your creditor is slower at reporting monthly transactions, this can have a significant impact on how other lenders view your application.
  4. Keep old cards. Older credit is better credit. If you stop using older credit cards, the issuers may stop updating your accounts. Use these cards periodically and then pay them off.
  5. Don’t let mistakes build up. Always dispute any mistakes or situations that may harm your score. If, for instance, a cell phone bill is incorrect and the company will not amend it, you can dispute this by making the credit bureau aware of the situation.

To get more details about these and other questions you might have, give us a call and we will be able to analyze your personal situation and provide you with more information so you can make an informed decision on buying your home.


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How to select a Mortgage Expert for your renovation needs!

Money Matters: How to select a Mortgage Expert for your renovation needs!

As seen in Metro Vancouver Home Decor & Renovations.

Although many Mortgage Experts (including banks) offer only basic services, there are others that will analyze your entire financial requirements to develop a strategy to help you qualify for the right mortgage, using all their resources.

Mortgages for construction or renovations.

When you are looking for a construction or renovation renovations_pageloan you need to work with someone that understands the construction process and has extensive real estate experience. It is important they are going to be there to oversee the funding from the start to the end of the project to ensure the draws are paid on a timely manner and they are in constant contact with the lender throughout the project. There are different options to finance a renovation such as mortgage financing, home equity lines of credit, purchase/ refinance plus improvement programs, alternative lending and other non-banking solutions. Sometimes the client thinks that because of their long term relationship with their bank, they will get the best financing options. That’s not the case!

Before you engage the services of a Mortgage Expert.

As Mortgage & Leasing Experts, we know all the information the client provides is personal and confidential and we strongly recommend for the client to always verify the identification of the person they are going to work with. This can be achieved by doing the following:

  • Visit their web site and co101-a-helping-handnfirm the services they offer.
  • Ensure the Mortgage Expert works for a reputable company.
  • Verify that they have an active license and are registered with the government of BC (For verification click here and click under sub-brokers).
  • Confirm that the location of their office where they work.
  • Read testimonials from their clients on their web site.
  • Unless someone referred you to the Mortgage Expert, make an appointment to meet them in person before you give them any confidential information, this will give you peace of mind and you will know how this person will handle your personal information. It is important to meet the Mortgage Expert in person and that they don’t deal with you only via phone. Even though it might be more convenient.

From the initial contact, the client will realize the type of service the Mortgage Expert is going to provide. Remember this person is going to be a guide and support for obtaining the financing to purchase the greatest investments of their life.


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Mortgage insurance rates are raising

If you are planning to buy a property with less than 10% down payment expect to pay a bit more. As seen in Metro Vancouver New Home Guide.

CMHC and Genworth have announced that starting June 1st, all homebuyers that are putting less than ten per cent will be paying a higher mortgage default insurance. This is commonly referred to as simple “mortgage insurance”.

The mortgage default insurance increases the opportunities for homeownership with a low down payment as saving for a 20 per cent down payment can be difficult in today’s housing market. There are two types of mortgage options; conventional mortgages which are loans with a minimum 20 per cent down payment and high ratio mortgages are loans with less than 20 per cent down payment.

bankAs per the Bank Act, mortgage insurance is required on all high-ratio mortgages. The insurance protects the mortgage lender only against a loss caused by non-payment of the mortgage by the borrower and it is not a protection for the homeowner. However, mortgage insurance enables borrowers to purchase a home with a minimum down payment of five per cent.

Mortgage default insurance is provided by insurers such as Canada Mortgage and Housing Corporation (CMHC), Genworth Financial Canada and Canada Guaranty. Each mortgage insurer has its own criteria for evaluating the borrower and the property and it decides whether or not a mortgage can be insured. The lender and not the borrower selects the mortgage insurer. It is possible that the mortgage application can be approved by the lender but might not be approved by the insurer.

The mortgage default insurance premium is a one-time charge and it is paid by the borrower to the lender. The premium can be paid in a single lump sum at the time of closing or it can be added to the mortgage amount and repaid over the amortization period (or the life of the mortgage). The cost of default insurance is calculated by multiplying the amount of the funds that are being borrowed by the default insurance premium, which typically varies between 0.5 per cent and 6.0 per cent. Premiums vary depending on the amortization period of the mortgage, the loan to value ratio, the size of the down payment and the product.

In May 2014, CMHC increased the mortgage default premium for all high-ratio mortgages regardless of the loan to value. However, this new increase will be the second increase for buyers that are putting less than 10 per cent down payment which is more than 56 per cent of CMHC insured borrowers. History has shown that once CMHC increased their premium, Genworth and Canada Guaranty follow suit.

The new rate for a loan to value up to 95 per cent will increase to 3.60 per cent from the current 3.15 per cent. This will mean an approximate increase of $450 of mortgage default insurance for every $100,000 of a mortgage. In addition, a non-traditional down payment (where you borrow the down payment with a loan, unsecured line of credit or a cash back program), the premium will increase to 3.85 per cent from 3.35 per cent. This increase will not impact any homeowners that are currently insured. This increase will have an impact for anyone that is buying a property.

What does this mean in dollar and cents?CMHC increase in premium

What does this mean to me?

  • If you are putting less than 10% down payment and your lender has submitted your application to the insurer before June 1st you will be paying the current premium rate. It doesn’t matter if your completion date (when your mortgage closes) is after June 1st.
  • If you have been pre-approved or pre-qualified and you don’t have an accepted offer and approved by the insurer you will have to pay the new premium.

If you are pre-approved, pre-qualified or are looking at purchasing a property, talk to a Mortgage Expert so they can explore your options based on your individual needs.


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How Much Does Mortgage Rate Really Matter?

A great discounted rate on your mortgage is worth nothing if it’s going to cost you thousands in penalties down the line. As seen in REW.ca.

More often than not, 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 the mere rates and look into the bigger picture surrounding what is significant when it comes to your specific mortgage needs. It is important to compare apples with apples.

If we dollarize the difference between 2.99 per cent and 3.04 per cent, 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 per cent 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 – for example, 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 pre-payment privileges including lump-sum payments and increase your mortgage payments between 15 and 20 per cent without penalties.

imagesQ8W8929HOther things to consider is whether you are getting into a collateral mortgage or a conventional mortgage. Unfortunately, many people don’t realize they have a collateral mortgage until it comes time to renew and they don’t have the flexibility they need.

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 children, change careers, separate from your spouse, etc. Five years is a long time to be anchored to something.

Many people won’t sign a cell phone contract for longer than two 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 save money. 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 will 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 are there to make money. That’s why it is 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. As mortgage experts will help you find that balance by finding the best mortgage for you.


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Difference between pre-qualified and pre-approved? – part 1

Determining how much house you can afford involves plenty of number crunching. Jorge and Alisa Aragon explain two stages on the road to mortgage approval – As seen in REW.ca 

Q: What is the difference between pre-qualification and pre-approval for a mortgage?

A: Pre-qualification is a relatively simple process where the mortgage broker or bank estimates both your borrowing power and the maximum amount of mortgage you can carry. This is done by providing information about your financial situation, such as your income, assets and debts. This easy and quick step doesn’t take into account your creditworthiness or involve a thorough analysis of your financial situation. It’s simply a place to start to estimate the price range of homes that you could qualify for. As mortgage experts, we do this during our initial meeting to give you a rough idea how much you will be able to qualify for. Pre-approval is a more in-depth analysis of your financial situation, as you will complete an application and provide consent for the lender to obtain your credit report. At this point, the lender has more detailed information on your income, assets and liabilities, and your information has been checked and verified. Your credit report has been pulled to learn about your credit score, history and credit worthiness. Based on this information, the lender will issue a pre-approval letter letting you know what you are likely to be approved for a mortgage and the amount you may be approved for. The pre-approvals can also guarantee current mortgage rates for up to 120 days. It is important to acknowledge that you are not guaranteed to get a mortgage if you are pre-qualified or pre-approved. Many things can happen during the process, and some lenders may give a pre-approval letter without actually verifying your information. Talk to a mortgage expert to get the pre-qualification/pre-approval process started and get you on the road to homeownership.