22 Dec

5 House Hunting Mistakes To Avoid

Mortgage Tips

Posted by: Tyler Cowle

Buying a home is one of the largest investments you will ever make! In order to make your home hunting experience the best it can be, there are a few key mistakes to avoid and be aware of before you start your journey:

  1. Not Getting Pre-Approved: One of the most important aspects of buying a home is the mortgage application and approval process. No matter what type of home you are looking for, you will need a mortgage. One of the biggest mistakes when it comes to the home-buying process is NOT getting pre-approved prior to starting your search. Getting pre-approved determines the actual home price you can afford as it requires submission and verification of your financial history to ensure the most accurate budget to fit your needs.
  2. Not Setting or Following a Pre-Determined Budget: Another mistake that people make when home-hunting is not setting, or following, a pre-determined budget. It can be tempting to start looking at the top of your budget, or even slightly over, but when you consider closing costs and the long-term financial responsibility of home ownership, it is best to avoid maxing yourself out. Getting pre-approved will help determine what you can afford, as well as making an appointment with your mortgage broker to determine your financial situation and the best options for you now, and in the future.
  3. Not Hiring a Real Estate Agent: Your mortgage broker and your real estate agent are two of the most important members of your homebuying A-Team! In today’s competitive real estate market, it can be very difficult to acquire property without the help of a realtor. One reason is that realtors can provide access to properties that never even make it to the MLS website! They can also gain access to information about homes that may come onto the market, before a listing is even signed. Most importantly though, a realtor understands the ins-and-outs of the home buying process and can tell you how to be successful in your endeavors to purchase a home by guiding you through the process from the first viewing to having your bid accepted.
  4. Focusing Too Much on Aesthetics: While we understand that bad interior design can really affect the perception of the home, you don’t want to be blindsided by it. At the end of the day, aesthetics can always be updated! Giving up the perfect price or location or size for a few aesthetic details (such as paint color, flooring, or even outdated appliances or light fixtures) is one of the biggest mistakes people make! Most homes have incredible bones that only need some minor tweaks to become your perfect space.
  5. Not Thinking Ahead: What you want and need in a house today, could be very different from what you want and need in a house in the future. It is important to be able to look ahead – are you planning on having children? Are your parents getting older and in need of a retirement space? These are things that are good to take into consideration when buying a new home. Buying a home isn’t a permanent decision as you can always sell your home later on if it doesn’t work for you in the future, but it is almost always easier to plan ahead so you can grow with—and not out of—your home whenever possible.

If you are looking to purchase a new home, whether your first space or a step-up from your current living situation, I would be happy to help! Please don’t hesitate to reach out to set up a virtual appointment and discuss your mortgage options, pre-approvals and everything you need to know BEFORE you get started.

Published by the DLC marketing team!

3 May

Benefits Of Home Ownership

General

Posted by: Tyler Cowle

So, you have decided to utilize your buying power in the Canadian retail market and are looking to purchase a home – congratulations! This is a great step towards ensuring your future.

As a potential homeowner, there are some amazing benefits that we think you should be aware of right out of the gate:

  1. Homeownership is the single largest source of savings for Canadian households.
  2. Your payments build equity (as opposed to renting, where your money goes to the building owner).
  3. Equity you build in your home can be used as security for other loans.
  4. The return on investment is substantial – in fact, the average price of a house for sale on the Canadian real estate market has increased every year since 1998.
  5. While other investments can prove volatile, investing in real estate is a solid use of your hard earned money.

Buying a home is not just about equity and investments, but it is about the future. While it is important to know what a mortgage is and how much you qualify for (and can afford), ensuring your new home is so much more than numbers. In these changing times with the cost of living constantly increasing, having home equity to fall back on can have a huge impact on your quality of life. Not only that, but owning your own home gives you a sense of pride, a feeling of security and the freedom to design the perfect living space for yourself – without having to ask permission from strata or a landlord! Moving into your first apartment or moving on up to your first house is an incredible step in the journey of life!

Now, as excited as you are to get started, you probably have some questions! Let us take you through some of the most important things to know when it comes to home ownership to ensure your experience is as smooth as possible – and provides the best possible outcome for you!

WHAT EXACTLY IS A MORTGAGE?

It is amazing how many people really don’t know what a mortgage is. Maybe you weren’t sure you would be in a position to have one or maybe you just never asked! Never fear – we have the answers.

To keep it simple, a mortgage is a loan that is specific to properties and homes. This type of loan uses the home or land you purchase as security in the event the loan cannot be paid. Mortgages are registered as legal documents and can be obtained through a variety of sources (or lenders) including banks, credit unions and alternative lenders or through the use of a mortgage broker!

MORTGAGE TERMS TO KNOW:

Principal The principal is the amount of the loan that is actually borrowed.
Interest Rates As with any loans (credit cards, lines of credit, etc) interest will be incurred. This is the amount that the lender charges for the privilege of funds borrowed. The amount of your interest payment will depend on the interest rates, which vary depending on terms and conditions of the mortgage and the borrower’s credit history.
Mortgage Payments These can occur monthly, semi-monthly (twice a month), bi-weekly (every other week), accelerated bi-weekly or weekly and are made to the lender. These payments encompass both payments to the principal amount borrowed, as well as interest charges.
Amortization Period This is the number of years it will take to repay the entire mortgage in full and is determined when you are approved. A longer amortization period will result in lower payments but more interest overall as it will take longer to pay off. The typical range is 15 to 30 years.
Term Term is the length of time that a mortgage agreement exists between you and the lender. Rates and payments vary with the length of the term. The most common term is a 5-year, but they can be anywhere from 1 to 10 years. Generally a longer term will come at a higher rate due to the added security. A “Fixed Mortgage” means you are locked in at the interest rate agreed for a longer length of time.A “Variable Mortgage” features an interest rate that is adjusted periodically to reflect market conditions.
Maturity Date The maturity date marks the end of the term. At this time, you can repay the balance of the principle or renegotiate the mortgage at the current rates. Note: If you choose to repay or renegotiate the mortgage before the term is up, penalties may be charged.

HOW MUCH DO I QUALIFY FOR AND WHAT CAN I AFFORD?

One of the biggest factors to purchasing a home is knowing how much you qualify for when it comes to a mortgage – and how much you can afford!

To determine the amount of the mortgage you qualify for, banks will utilize a set of ratios which determine the amount of your income that will be used to pay down the debt. These ratios are Gross Debt Servicing (GDS) and Total Debt Servicing (TDS).

It sounds confusing, but let us help break this down for you!

GROSS DEBT SERVICING (GDS) RATIO

The first ratio, Gross Debt Servicing (GDS) is the percentage of gross income that is required to cover housing costs. If you are looking at getting an insured mortgage (less than 20 percent down payment on the purchase price) the limit is 32% GDS. For uninsured mortgages (20 per cent or more down payment) the limit is 39% GDS.

To calculate this, you would take any home-related expenses (mortgage payments, property taxes, utilities and strata fees when applicable) and divide them by gross monthly income to get your GDS percentage.

Gross Monthly Income $4,500.00
Mortgage Payment $1,000.00
Property Taxes $200.00
Heating Expenses $150.00
Total Expenses $1,350.00
Gross Debt Servicing (GDS) 30%

 

The rate of 30% GDS is well within the requirements and would be approved.

TOTAL DEBT SERVICING (GDS) RATIO

The other ratio banks use is known as Total Debt Servicing (TDS). This is the percentage of your gross income required to cover housing costs (same as with the GDS) but also any other debts. The guidelines for an insured mortgage (less than 20 percent down) has a limit of 40% TDS while an uninsured mortgage (20 per cent or more down) is 44% TDS.

To calculate this, you would take all home-related expenses (mortgage payments, property taxes, utilities and strata fees when applicable) and other debts (credit cards, personal loans, student loans, car payment or a line of credit) and divide them by gross monthly income to get your TDS percentage.

Gross Monthly Income $4,500.00
Mortgage Payment $1,000.00
Property Taxes $200.00
Heating Expenses $150.00
Student Loan Payment $100.00
Car Payment $300.00
Total Expenses $1,750.00
Total Debt Servicing (TDS) 39%

The rate of 39% TDS is well within the requirements and would be approved.

DECLARING YOUR INCOME

In order to get approved for the mortgage, you need to declare your income so the bank can compare it to your expenses and determine the ratios noted above.

If you are employed with a company, you would provide an employee statement declaring minimum guaranteed gross wage OR last two-year average if there were bonuses or commissions that put your income above your guaranteed wages. If the most recent year was lower, that year will be used instead of the average.

If you are self-employed, you would provide the average of your last two years of income based on line 150 of your tax returns. It is important to know that there are programs available for self-employed borrowers in cases where the two-year average does not qualify them for a mortgage. Just ask your mortgage broker!

BE SMART!

There are many cases where buyers will qualify for more than they intend on spending – but don’t get greedy! It is vastly more important, especially for your first home, to stay within a budget that you can afford each month instead of overextending yourself simply because it is available to you. The most important aspect is that your payments are reasonable and affordable. There are always options to move to a larger home in the future!

Published by the DLC Marketing Team!

14 Mar

Mortgage Monday – New To Canada Mortgage!

New To Canada

Posted by: Tyler Cowle

Immigrating to a new country is a big step with many challenges that one must go through before starting their new life there.  For this reason; many Canadian Banks, Lenders and Insurers have introduced New To Canada Mortgage Programs; aimed at assisting new immigrants through the home ownership journey here in Canada!

Many of the New To Canada Programs are offered to those who have immigrated to Canada within the last 5 years and have obtained a valid Work Permit or Permanent Residency.  Depending on the lender or insurer there may be limits on the type of property allowed under the program (Owner Occupied with 1 rental unit); maximum mortgage amount or amortization limits.  Each lender will have their own terms and conditions for their specific products; as do the mortgage insurers – CMHC;  Sagen; and Canada Guaranty.

The New To Canada Mortgage Programs are more lenient in some aspects of the application process; in order to make home ownership possible for those with limited Canadian credit history; or work history here in Canada.

When it comes to employment; many New To Canada Programs will look for a minimum of 3 months employment history with their new employer here; which is similar to traditional mortgage requirements; however, the standard 2 years of income in the field does not always apply.  Even if a new immigrant is employed with an International company and is transferred to a Canadian location; verification of the employment may present challenges; so, leniency in this requirement can help with the approval process.

In terms of credit history; traditional approval requirements look for a minimum of 2 years credit bureau history (Equifax or Trans-Union) with at least 2 trade lines displaying responsible use of credit.  Someone New To Canada may not have this history; therefore, many programs offer the option of providing either an International Credit Report or alternative sources of credit demonstrating timely payments and no arrears or NSFs.  Some alternative sources that may be applicable would be

 

  • Rent Payments
  • Utility Bills (Cell Phone, Heat, Hydro, Insurance etc.)
  • Letter of reference from the applicants bank

 

When it comes to down payment; the process is quite similar to a traditional mortgage; the applicant can have as little as 5% down and it can come from traditional sources like personal savings and sale of property.  Non-repayable gifts from an immediate family member can also be used for down payments of more than 5% (5% must be from the applicants own resources)

Applicants for the New To Canada Mortgage Programs would also be eligible to the same First Time Home Buyer Programs and rebates offered on a traditional mortgage product or home purchase; like using the RRSP Home Buyers Program and the Land Transfer Tax Rebate; which can be calculated on Tyler’s Mortgage Toolbox App!

 Check in next week for our next topic!

Published by Tyler Cowle

23 Feb

5 Reasons to Invest in a Home Inspection.

First Time Homebuyer

Posted by: Tyler Cowle

While home inspections might not be the most exciting part of your home buying journey, they are extremely important and can save you money and a major headache in the long run.

In a competitive housing market, there can sometimes be pressure to make an offer right away without conditions. However, no matter how competitive a market may be, you should never skip out on things designed for buyer protection – such as a home inspection.

You may have a good eye for décor and love the layout of your potential new home, but what is under the surface is typically where headaches can lie. We have all heard the expression “don’t judge a book by its cover” so why would you make the most important purchase in your life without checking it out?

In fact, there are five reasons that a home inspection might just be the best $300-$500 you ever spend.

It provides an “out”

When buying a new house, it is always best to avoid taking chances. While a house may look great on the surface, hidden structural issues such as cracked foundation or roof damage can easily turn into expensive repairs. A home inspection can help reveal any large and/or hidden issues, which can often provide an ‘out’ for the buyer.

If you find something that will cost a considerable amount to replace or repair you can go back to the seller’s agent and ask for a reduction in the price. A leaky roof may cost a few thousand to replace. Perhaps the seller would split the cost with you? It’s worth asking. If the price cannot be re-negotiated if issues come to light, then it is best to just walk away on the basis that the home will cost you too much in the long run.

Confirms safety and structural integrity

Another benefit of having a home inspection is not only to find issues, but also to confirm structural integrity. During an inspection, the inspector will review everything from the attic to the furthest reaches of the basement and will look for things like mold, holes in the chimney, saggy beams or improper wiring.

Reveal illegal additions or installations

Similarly to determining any safety and structural issues, home inspections can also reveal hidden additions or DIY installations that may cause trouble down the road. If the seller wired the house improperly or used substandard materials, it not only could cost you big in the future but it could even null and void your home insurance should something happen!

Forecast future costs

A home is an ongoing expense, much like a car. Unless it is brand new, there will be regular maintenance and updates required to replace things when they become old and inefficient. For instance, water heaters typically last for 6-10 years, the life of a good roof is around 20 years, while furnaces can last up to 25 years. The home inspection report will include an estimate on the remaining life for each of these big-ticket items, which will give you a heads up on future expected costs and provide you time to save for their eventual replacement.

Peace of mind

Finally and perhaps most importantly, getting a home inspection is important for your own peace of mind. A home is a huge investment, and one that you will be paying off for 20 or 30 years. It is much easier to feel good about your investment after you have gone through a home inspection and you know that the house is safe and that you won’t run into any surprise problems down the road. While a home inspection isn’t free, peace of mind is priceless and a few hundred bucks is worth it!

Published by the DLC Marketing Team

25 Jan

Renting Vs. Buying: What You Need to Know!.

General

Posted by: Tyler Cowle

When it comes to the Canadian housing market, there are lots of options for where to live! From renting an apartment to owning a single-family home, it all comes down to where you see yourself living and what you can afford! The beauty is, there is no right or wrong answer when it comes to renting versus buying but let’s break down the pros and cons of both and hopefully help you to decide which is best for you!

Why do people rent?

One of the most common answers to this question is affordability. Most people rent because they believe it is cheaper than owning a home. This can be true in some cases, but there are also times when monthly rent costs are higher than monthly mortgage payments. Of course, there are also cases where rent is far more affordable than buying, especially when you factor in the cost of a down payment and maintenance on a home you own, rather than one you rent. Affordability is fairly dependent on an individual’s situation, but it is not the only decision factor for choosing to rent.

Another reason individuals may choose to rent is that they simply aren’t sure where they want to live, or maybe they cannot find a place that fits their needs. If you are new to an area, you may want to rent in the meantime so you can get to know the neighbourhoods and determine which area is the right fit for you. In some cases, you simply may be unable to find a home that is affordable to buy in the area you want or within a reasonable commute from your work.

For individuals who travel a lot for work or like to be free-floating, renting can be the perfect option but if you simply believe buying a home to be out of the question, it is time to take a hard look at your options because it may not be so far fetched!

Pros and cons of renting:

To help you decide if renting is right for you, we have put together a little list of pros versus cons to help you see if it is the right fit.

Pros of Renting Cons of Renting
Less maintenance
Fewer repairs
Lower upfront costs
Short-term commitment for people unsure of where they want to plant roots
Protection from potential decrease in property values		 Monthly payments may increase
Potential for being evicted / lease renewal not being approved
Paying to someone else’s mortgage instead of building your own equity
Requiring permission to paint or remodel

Why do people buy?

According to the most recent data, Canada boasts an overall homeownership rate of 67.8%. Even for those Canadians aged 35 and under, more than 40% of households own their own homes. This is quite an impressive statistic! So, let’s look at why people choose to buy.

One of the main reasons that people choose to buy a home is to have the stability and peace of mind of owning the place you live. This means you are not at risk of being put in a situation where the landlord wants to move their parents into the basement suite and you have to leave or having to deal with increased costs if you go to renew a lease agreement.

For others, the benefit to buying comes in building up equity and ensuring that nest egg for your future. When you choose to rent, you are paying into someone else’s mortgage and into their future but when you work towards buying your own home, suddenly all that money you invested is going to your future instead. This is an extremely important aspect to consider in today’s age when many are having trouble with the idea of saving for retirement.

Now I get it, you may be thinking “if I can’t afford to retire, how can I afford to buy a house” but if you can afford to pay the high cost of rent in today’s market, then home ownership isn’t as far out of reach as you think. This is especially true if you buy a two-story home and rent out the basement, giving you ample living space upstairs but also additional income to pay your mortgage.

Pros and cons of buying:

To further show the benefits and costs to buying, we have broken down some pros and cons to help you to determine if this is the right path for you.

Pros of Buying Cons of Buying
Freedom to renovate or modify your home as you wish
You are building up equity in a safe, secure investment as you pay down your mortgage
Potential for additional income if you have a rental suite
Stability and peace of mind from being in control of your investment and owning the place where you live		 The risk of losing your home value when you sell
Responsibility for all ongoing costs, including mortgage principal and interest, property taxes, insurance and maintenance
Monthly payments can increase if interest rates go up at renewal time
Possibility of unexpected and potentially costly repairs

To rent or buy, that is the question!

Did you know? 4 in 10 households spend more than 30 per cent of their pre-tax income on rent, which is above the commonly accepted affordability threshold.

The latest National Bank report revealed that monthly mortgage costs for median-priced condos was higher than the average monthly rent for a similar unit in Toronto, Montreal, Vancouver, Victoria and Hamilton. At the same time, monthly mortgage payments were lower than rents in Calgary, Edmonton, Quebec City, Winnipeg and Ottawa. While this data does not include suburbs, it shows a staggering difference between mortgage payments and rent payments.

If someone can rent for $900 a month or pay a mortgage of $1200 a month, it may seem like a no brainer but it is important to remember that paying rent does not build equity! However, if you are unsure of where you want to live or cannot find a suitable and affordable home with a close enough commute to work, renting may be your only option. This is where checking listings and discussing with a real estate agent may open doors and where a mortgage broker can come in handy to help you determine if purchasing a home is viable in your near future.

Yes, you can buy!

The reality is that in the long run, homeowners often fare financially better than renters because homeownership enables forced savings that accumulate over the years, growing into a sizeable nest egg.

If you are unhappy renting or really prefer the idea of owning your own home, you CAN. It is time to stop assuming you cannot make the leap from renting to buying – all you need is the right information and the right preparation!

To determine if you are able to purchase a home, a good place to start is the My Mortgage Toolbox app from Dominion Lending Centers. This app is perfect for seeing what you can afford. Using the app to calculate minimum down payments and monthly mortgage costs can help you to get a good picture of the financial landscape and your options. Looking at your budget and evaluating your current rent costs and other monthly expenses can also help you to determine your affordability bracket.

Some other things to consider before buying include:

  • Your credit score – do you have good financial standing to be approved for a mortgage?
  • Your savings – do you have any money put away for a downpayment? If not, do you have wiggle room in your budget to start saving?
  • Your time – do you have the resources to maintain a home from the yard to any necessary repairs?

If buying a home to live in is out of the question due to the availability in your area or cost of homes close to work, another option is to consider an investment opportunity. Maybe you cannot afford to buy in the area you want so you rent in order to keep your commute short and be in a neighbourhood you love. However, you can still reap the equity benefits by investing in a vacation or rental property which would give you the necessary nest egg and help you feel more secure about your future financial situation. You could keep the investment property as long as you want! If you end up finding the perfect home in your area down the line, you could always sell your investment property and take the earnings for a down payment on the right home – or keep it as an extra security blanket!

Regardless of whether you choose to continue renting or make the leap to owning your own home, the most important factor is your financial security. What works for your friend or your parents may not work for you – and that is okay! However, educating yourself and looking into all the options will ensure that, at the end of the day, you are in the best situation for yourself.

19 Jan

First-Time Home Buyer.

First Time Homebuyer

Posted by: Tyler Cowle

Being on the path to purchasing your first home is one of the most exciting and most rewarding moments in life! While people don’t always dream of the perfect mortgage, we do grow up thinking of a white picket fence and our dream home. Even if you imagined your dream home as a 6-bedroom mansion, we all have to start somewhere!

Regardless of whether you’re buying an apartment, townhouse, rancher or two-story family house, there is nothing quite like your first home. Not only is it an amazing accomplishment and a great sense of freedom and security, but buying your first home is also a great step into the real estate market and can provide you equity and a leg-up towards future expansion.

Are you ready to own a home?

Before you jump on in, there are some things you should ask yourself. As amazing as it is to be a first-time home buyer, it is important to remember that this is likely the largest financial decision you will ever make. There are a few questions you can ask yourself to make sure you’re ready to take this incredible leap!

  1. Are you financially stable?
  2. Do you have the financial management skills and discipline to handle this large of a purchase?
  3. Are you ready to devote the time to regular home maintenance?
  4. Are you aware of all the costs and responsibilities that come with being a homeowner? Let’s find out!

COSTS OF HOME OWNERSHIP:

There are two major costs of home ownership – let’s make sure you’re ready to take it on!

Upfront Costs: The initial amount of money you need to buy a home, including down payment, closing costs and any applicable taxes.

Ongoing Costs: The continued cost of living in a home you own, including mortgage payments, property taxes, insurance, utility bills, condominium fees (if applicable) and routine repairs and maintenance. It is also important to keep in mind potential major repairs, such as roof replacement or foundation repair, that may be needed now or in the future. In addition, if you choose a property that is not hooked up to municipal services (such as water or sewer) there may be additional maintenance costs to consider.

Buying your first home

If you’ve decided to take the plunge, you now need to start by figuring out what you can afford. Fortunately, there are all kinds of calculators and tools available. A great place to start is my free My Mortgage Toolbox app which can help you find a mortgage broker in your area. A mortgage broker is a great alternative to traditional banks and can help you find the best rate in the market, as well as save you time by doing the leg work for you!

Regardless of whether you choose a mortgage broker or traditional bank, the first step begins with your down payment.

SECURING YOUR DOWN PAYMENT

If you are ready to get your first mortgage, you will need a down payment. The minimum down payment on any mortgage in Canada is 5 percent but putting down more is beneficial whenever possible as it will lower the amount being borrowed. However, if you can only afford the minimum that is perfectly okay! Just remember, if you are putting down less than 20 per cent to purchase your home, default insurance will be mandatory to protect the investment.

Ideally, individuals looking to purchase their first home will have built up a nest egg of savings that they can apply towards a down payment. However, we know this is not possible for everyone so if you don’t have it all saved, don’t worry! Besides being a vital savings plan for retirement, RRSPs can be a great resource for first-time home buyers and can be cashed in up to $25,000 individually towards a down payment. In fact, most mortgage brokers will tell you nearly half of all first-time buyers use their RRSPs to help with the payment. Those first buyers who choose this option will have 15 years to pay it back and can defer these payments for up to two years if necessary. Always remember though, deferring a payment can increase the time to pay off the loan and you will still owe the full amount!

Another option for securing your down payment is a gift from a family member, typically a parent. All that is required for this is a signed Gift Letter from the parent (or family member providing the funds) which states that the money does not have to be repaid and a snapshot showing that the gifted funds have been transferred.

MORTGAGE PRE-QUALIFICATION

The first step to realizing the dream of owning your first home is pre-qualification. This process provides you with an estimate of how much you can afford based on your own report of your financial situation. The benefit of this is that it sets the baseline for a realistic price range and allows you to start looking for that perfect home within your means! Now this process is not a mortgage approval, or even a pre-approval but it helps to establish your budget. You must supply an overview of your financial history (income, assets, debt and credit score) but the real requirements come with the pre-approval process where you submit your actual documentation.

MORTGAGE PRE-APPROVAL

This is the meat of the pre-purchase process and determines the actual home price you can afford. The difference between this and pre-qualification is that pre-approval requires submission and verification of your financial history to ensure the most accurate budget to fit your needs.

Pre-Approval can help determine:

  • The maximum amount you can afford to spend
  • The monthly mortgage payment associated with your purchase price range
  • The mortgage rate for your first term

Not only does getting pre-approved make the search easier for you, but helps your real estate agent find the best home in your price range. Temptation will always be to start looking at the very top of your budget, but it is important to remember that there will be fees, such as mandatory closing costs, which can range from 1 to 4% of the purchase price. Factoring these into your maximum budget can help you narrow down a home that is entirely affordable and ensure future financial stability and security.

While getting pre-approved doesn’t commit you to a single lender, but it does guarantee the rate offered to you will be locked in from 90 to 120 days which helps if interest rates rise while you are still shopping. If interest rates actually decrease, you would still be offered the lower rate. Another benefit to pre-approval is that, when it comes time to purchase, pre-approval lets the seller know that securing financing should not be an issue. This is extremely beneficial in competitive markets where lots of offers may be coming in.

PROTECTING YOUR PRE-APPROVAL

  • Refrain from having additional credit reports pulled once you have been pre-approved
  • Refrain from applying for new credit, closing off credit accounts or making large purchases until after the sale is complete
  • Be prepared to show a paper trail – any unusual deposits in your bank account may require explanation. Also if your down payment comes from savings, the bank will want 90 days of statements to ensure the funds are accounted for.

FINANCING APPROVAL

You’re almost there! Financial approval is the last step to getting your mortgage and buying your first home! You will need to keep in mind that just because you are pre-approved, it doesn’t guarantee that the final mortgage application is approved. Being entirely candid with your home-buying team throughout the process will be vital as hidden debt or buying a big ticket item during your 90-120 day pre-approval can change the amount you are able to borrow. It is best to refrain from any major purchases (such as a new car) or life changes (such as changing jobs) until after closing and you have the keys to your new home!

In some cases, pre-approval may not be guaranteed for reasons outside of your control. For instance, if the home was appraised below the purchase price, is a heritage home or has safety issues like asbestos, the lender may deny financing. Find a realtor that will be your advocate while showing you homes and always utilize an appraisal and inspection from foundation to roof to ensure that you do not encounter any hidden roadblocks!

CLOSING DAY

Phew, you made it. Closing day is one of the most exciting moments where all the house hunting and paperwork really pays off! It is on this day that you will want to make use of your lawyer or a notary.

To complete the process of closing the sale, your lender gives your lawyer the mortgage money. You would then pay out the down payment (minus the deposit) and the closing costs (typically 1 to 4% of the purchase price). From there, the lawyer or notary then pays the seller, registers the home in your name and gives you the deed and the keys!

Congratulations, you are now a home owner!!

Published by the DLC Marketing Team

15 Dec

Millennials vs Gen X’ers.

First Time Homebuyer

Posted by: Tyler Cowle

Are millennials better or worse off than Gen-Xers at the same age?

Millennials are now the largest generation of people in Canada. They’re the most educated and diverse generation, but they face unique challenges…

  1. Millennials had higher after-tax household incomes than young Gen-Xers. Median after-tax household income between 25 and 34 years old
    • Millennials in 2016 $66,500
    • Young Gen-Xers in 1999 $51,000
  2. Millennials had higher assets and net worth than young Gen-Xers, but they also carried more debt.
    • Homeownership, living in Toronto or Vancouver, and having a higher education were three factors associated with higher net worth.
  3. Millennials are relatively more indebted… Debt-to-after-tax income ratio
    • 216% Millennials in 2016
    • 125% Young Gen-Xers in 1999
  4. Though millennials are entering the housing market at similar rates as previous younger generations, they are taking on larger mortgages.
  • Though their median net worth is higher, there are greater differences in economic well-being among millennials. Millennials in the top 10% held 55% of all total net worth accumulated by their generation.

Notes: Unless otherwise notes, millennials represent those between 25 and 34 years old in 2016, and young Gen X-ers indicate those between 25 and 34 years old in 1999.

Results are presented in 2016 current dollars and adjusted for inflation to allow a comparison over time. Statistics provided refer to the age and generation of the major income earner in the household or family.

ASSETS VS. LIABILITIES

Assets are what you own:

  • Cash
  • The value of your residence
  • Artwork
  • Automobile
  • Checking account
  • Collectibles
  • Electronics
  • Jewelry
  • Investment accounts
  • Retirement account
  • Savings account

Liabilities are what you owe:

  • Unsecured debts
  • Car loan
  • Mortgage
  • Student loans
  • Accounts payable
  • Income taxes payable
  • Bills payable
  • Bank account overdrafts
  • Accrued expenses
  • Short-term loans

Published by the DLC Marketing Team!

3 Sep

Renting vs. Buying: Pros and Cons

Home Buyer

Posted by: Tyler Cowle

Trying to decide if renting or buying is for you?

Start by finding out average home prices where you want to live.  Next, make a list of the pros and cons of owning vs renting to see which option is best for you; the following are some examples.

RENTING PROS

  • Less maintenance and repairs
  • Lower monthly upfront costs
  • Shorter-term commitment, making it easier to move to a new home, neighbourhood or city
  • Protection from decrease in property values
  • Possibility to free up cash to invest or to save a larger down payment for a house

RENTING CONS

  • Monthly payments may increase year after year
  • The risk that your lease won’t be renewed
  • You are paying someone else’s mortgage rather than building equity of your own
  • You can’t paint or remodel without the landlords permission

BUYING PROS

  • Freedom to renovate or modify your home as you wish
  • You are building up equity in a safe, secure investment as you pay down your mortgage
  • Potential for rental income if you include a secondary suite
  • Stability and peace of mind that comes from being in control of your investment and owning the place where you live

BUYING CONS

  • The risk of financial loss if your home has lost value when you sell
  • Responsibility for all ongoing costs including mortgage principal and interest, property taxes, insurance and maintenance
  • Monthly payments can increase significantly if interest rates go up at renewal time
  • Possibility of unexpected and potentially costly repairs

There are advantages to both renting and owning a home. Make sure you understand the benefits and responsibilities of each before you decide what’s right for you.

2 Sep

Is Home Ownership Right For You?

Mortgage Tips

Posted by: Tyler Cowle

Buying a home is one of the biggest decisions you will ever make.  To ensure that you make the best choice, ask yourself a few questions.  What do you really want in a home?  What is your current financial situation?  What are your financial and lifestyle needs?

As a first-time buyer; you might not be aware of all the costs associated with home ownership and it’s a good idea to review them all and factor them into your decision.

Upfront costs: The initial amount of money you will need to buy a home, including the down payment, the closing costs and any applicable taxes.

Ongoing costs: The continued cost of living in a home you own, including mortgage payments, property taxes, insurance, utility bills, condominium fees (if applicable) and routine repairs and maintenance.

Major repairs: Large and expensive repairs and renovations your home will eventually need, such as roof replacement or foundation repair.

If you choose a property that is not hooked up to municipal services such as water and sewer, there may be additional costs to consider as well.

Click here to read tips like this and others in my Home Buyers Guide