2 May

Should I lock in, or stay variable?

Mortgage Interest Rates

Posted by: John Panagakos

You’re in a variable rate and asking yourself should I lock in or stay variable?

If you follow the news closely, there would appear to be a lot of turmoil and uncertainty around interest rates. This past April, the Bank of Canada held the overnight rate at 1.25 per cent.  Suggesting the bank was closely watching both inflation and wage growth.

“The Bank will also continue to monitor the economy’s sensitivity to interest rate movements and the evolution of economic capacity. In this context, Governing Council will remain cautious with respect to future policy adjustments, guided by incoming data,” the BOC said at the time.

The Bank of Canada raised the rates a quarter point twice last year.  Many economists are betting the bank will raise rates before the end of this year.

If you’re a conservative homeowner and have locked into a fixed rate, the speculation of an increase isn’t likely keeping you up at night. You can rest easy for the next few years.  However, if you’re like many Canadians who chose to go variable, this is probably getting you a little nervous. While mortgage brokers don’t have a crystal ball to tell you where rates are going, you can probably assume they are going to increase maybe 50 basis points. There’s all kinds of tea leaves economists trying to read and get a handle on where the rates will go. While that’s what they get paid to do, increases have real world consequences on your bottom line.

So again the question is, should I lock in or stay variable?

And like many financial questions, there’s no easy answer. First, you’ll tend to find first time homebuyers are sceptical with variable anyway.  Someone in their second or third mortgage may have an appetite for a little more risk.

If you’re kept  awake at night in fear of a rate increase, you may want to lock in.  Locking in your rate can give you peace of mind. But it’s also important to look at the big picture. If the rate increases a couple more quarter points, you still need to look at what that variable rate saved you over the term. The rates have been historically so low, there’s a pretty good chance if you’ve been in a variable for a few years, the math will prove you still saved money over the five years, even with an increase.

Depending on your risk appetite and your financial situation, staying in the variable could still payoff in the long run even with a few more increases. Don’t make these decisions alone, come speak to me and I will answer any questions about locking in or not.

25 Apr

CLOSING COSTS

Mortgage Tips

Posted by: John Panagakos

Closing costs are a necessity when it comes to purchasing a home. They are not included in down payments, they are not included in monthly mortgage payments, nor are they included in the purchase price of a home, but you are still responsible for paying them, in full. Knowing they exist is half the battle, and correctly budgeting yourself to pay them when the time comes can be a huge weight off your shoulders, especially when the alternative is finding out a week before you close on the purchase of a home that you still owe thousands of dollars.

Lenders will require you to have 1.5% of a property’s purchase price available in cash to be able to cover closing costs. This amount is on top of the 5% minimum required for a down payment. Closing costs that you may be expected to pay, depending what province you live in, when purchasing a home in are as follows:

  1. Appraisal- determining the value of a home.
  2. Interest Adjustment- amount of interest due between your mortgage start date and the date the first mortgage payment is calculated from.
  3. Property Transfer Tax- a tax paid to the provincial government when a property changes hands.
  4. Legal Fees- costs associated with finalizing the sale or purchase of a property.
  5. Prepaid Property Tax & Utility Adjustments- amount you will owe if the person selling you the home has prepaid any property taxes or utility bills.
  6. Property Survey- legal description of the property you are purchasing including it’s location and dimension.
  7. Sales Taxes- some properties are sales tax exempt (GST and/or PST), and some are not. Always ask before signing an offer.

As you can see, many factors go into determining the size of these costs. That is why it’s so important to pick up the phone and give me a quick call prior to making an offer on a home. Also, some costs may be exempt, such as the property transfer tax for first-time home buyers.  When you are in the early planning stages, another good idea would be to get a pre-approval to see exactly what you can qualify for and we factor in all closing costs in the process. We can discuss all of these things and more before signing anything that could potentially end up costing you.

2 Apr

SPRING INTO ACTION: REFINANCE YOUR MORTGAGE WITH THE HELP OF A MORTGAGE BROKER

Mortgage Tips

Posted by: John Panagakos

We sprung forward earlier this month by changing our clocks one hour ahead. For some, their microwave and oven clocks are once again displaying the correct time since the last time we needed to adjust our clocks (in the Fall). Patience is a virtue – except for when it comes time to refinance a mortgage!

The Spring is a busy time for mortgage brokers across the country. We welcome this change in season knowing that we are in the best position to give families mortgages that make sense for them.

This is the time of year that banks begin to send out their mortgage renewal notices. Some people will simply sign the documentation sent over from their bank and take on a new mortgage at the rate the bank has suggested. However, this may not be the best rate for which you and your family can qualify.

What is a Mortgage Renewal?

A mortgage renewal is when the current terms of your mortgage come to an end and you sign on for a new mortgage term.

The time is now to spring into action, up to three months ahead of your mortgage renewal deadline. By shopping around for the best mortgage rate for your financial circumstances, you may save yourself thousands of dollars. To do that, you may want to consider working with a seasoned professional – your local mortgage broker.

The benefits of working with a mortgage broker to help find a mortgage solution that works best for you are three-fold.

A mortgage broker gives you a second opinion.
While your current mortgage lender claims to have your best interest at heart, getting a second opinion on your financial situation does not hurt. There may be new options and products available for you that your current lender is forgetting or unable to offer. A second opinion on your changed financials may be able to save you money or highlight some new options that may be better suited to your needs.

A mortgage broker does the work for you, at no cost.
Some people are still concerned that hiring a seasoned professional to look at your finances and find new mortgage rates will cost a lot of money. This is a myth! Mortgage brokers provide their services at no charge (yes, free!) and take a fee from the lending institution, not the client. So, let us look around for the best mortgage rates available to you on your behalf – all at no cost to you.

A mortgage broker does ONE credit check but can check MULTIPLE lenders without lowering your credit score.
One of the biggest advantages to having a mortgage broker shop around on your behalf is having them conduct one credit check and then using that information to shop around among several different lenders. If you wanted to shop around on your own, you would have to allow each institution to run a credit check and, as a result, lower your credit score. Working with a lender also means a lot less paperwork for you, too!

In short, call me and I will do all the legwork on finding the best mortgage rate for you, at no cost and with only one credit check. Don’t delay spring into action this Spring to and get a jump on your mortgage renewal process in the end you’ll be gald you did.

19 Mar

Keep your Credit Score Healthy

Mortgage Tips

Posted by: John Panagakos

I can not stress enough as to how important it is to have a healthy credit score.  When clients walk through my door the first thing I ask them is how’s your credit score?

If you haven’t seen your credit score, you’re not alone.  Many clients don’t know their credit score.

During our initial consultation, we go over your complete credit report with you and as an added bonus, I’ll even teach you how to read it.

So, how can you make sure you have a great credit score?

Here are a few tips to get you started.

  1. You need to have credit. It may be surprising – but your credit score goes up as more credit is available to you. We recommend at least two facilities: a credit card and a line of credit (or 2 credit cards)
  2. You also have to pay your bills when they are due. That goes for your internet, cell phone and even parking tickets.
  3.  It also helps to start as soon as possible. The longer you have a clean record of paying your credit card, loans or other credit facilities, the better your credit becomes.
  4.  Finally, make sure to carry a low balance. One of the least known ways to hurt your credit is to have high utilization.

By having a good/healthy credit score you open doors to various products and ultimately more favourable interest rates.

Contact me today if you’re thinking of buying or refinancing or are concerned about your current financial situation and together we can work to getting you on the right path to financial freedom.

 

5 Mar

4 SIGNS YOU’RE READY FOR HOME OWNERSHIP

Mortgage Tips

Posted by: John Panagakos

While most people know the main things they need to buy a home, such as stable employment and enough money for a down payment, here are 4 signs you’re ready for home ownership.

As a mortgage broker, it is my job to ensure that each one of my clients is getting the best service I can provide.  Part of this means educating as much as possible when it comes to buying a home.

You should have more funds available than the minimum of a down payment

This one may seem obvious, but it’s something that people may not realize until they actually think about it.  It’s very difficult to afford a home if you only have enough money for a down payment and then find yourself scrambling for day-to-day living after that.

If you have enough money saved up (more than the minimum needed for a down payment), you may be ready to start house-hunting.

Your credit score is good

This might seem obvious at first glance, however, if you don’t have a good credit score, chances increase that you could be declined altogether or stuck with a higher interest rate and thus end up paying higher mortgage payments.  If you have a less-than-optimal credit score, working with a mortgage professional can help you get on the the right track in the shortest time possible.  Sometimes a few subtle changes can bump  a credit score from “meh” to “yahoo” in a few short months.

Breaking the bank isn’t in your future plans

Do you plan on buying two new vehicles in the next two years?  Are you thinking of starting a family?  Are you considering going back to school?

Although you may think you can afford to purchase a home right now, it’s extremely important to think about one, two, and five years down the road.  If you know that you aren’t planning on incurring big expenses that you need to factor into your budget anythime soon, then that’s something that may help you decide to buy a home.

You are disciplined

It’s easy to say, “it’s a home, I’m going to have it for a long time so I may as well go all-in!”.  While that would be nice, that’s rearely the case!  

You must have a limit that you’re willing to spend.  Sitting down with a mortgage broker or real estate agent and analyzing your finances is crucial.  It’s important that you know costs associated with buying a home and what the maximum amount is that you can afford without experiencing financial sturggels.  IMPORTANT: This is not the amount that you are told is your max!

This is the amount that you calculate as your max based on your current monthly budget and savings plan.  It’s quite frequent where I have clients tell me that their max budget, is say, $1200 and then when I run the numbers they could actually be approved for much more.  Low and behold suddenly these guys are looking at homes that are hundreds of dollars a month higher than their initial perceived budget.  It is up to  you (with my help or pleading, when necessary) to reel things back in and make sure that your aren’t getting into something that affects the long-term livelihood of a well thought out budget or savings plan.

***This article was written by Shaun Serafini part of DLC Canadian Mortgage Excellence in Lethbridge, AB***

Conclusion

These are just four signs that you may be ready to purchase a home.  If you’re seriously considering buying or selling give me a call today.  As your mortgage broker I’m am here to help out and get you on the right path to a brighter financial future. I have access to many lenders and based on your individual financial situation, I can get you into the proper mortgage to achieve all your financial goals in life.

18 Oct

MORTGAGE RULE CHANGES COMING

Latest News

Posted by: John Panagakos

 

October 2016 the Ministry of Finance passed rules which are still having effect one year later. Higher qualification and new bank capital requirements have split the industry into two segments.  Those who qualify for mortgage insurance and those who don’t.

Mortgages that qualify for mortgage insurance are basically new purchases for borrows who have less than 20% down and qualify at the Bank of Canada Benchmark rate.  The current benchmark rate is 4.89%.  Clients who don’t qualify for mortgage insurance are basically everyone else.  People with more than 20% down payment and people who have built up more than 20% equity in their homes, don’t qualify for mortgage insurance.  It will be clients such as these which will be impacted by the mortgage rule changes coming.

The biggest difference we are seeing is two levels of rate offerings. People who qualify for mortgage insurance by one of the three insurers in Canada (CMHC, Genworth and Canada Guaranty) are being offered the best rates on the market. People who don’t qualify, cost the banks more to offer mortgages due to the new capital requirements and are offered a higher rate to off-set that cost.

But even more alarming, rumblings about another round of mortgage rule changes coming.   People who have been disciplined in saving or building equity will need to qualify at 2.00% higher than what they receive from their lender.

In the first round of changes in 2016 we saw affordability cut by about 20% for insured mortgages.  This new round of changes will have much the same impact on the rest of mortgage borrowers.

The mortgage default rate in Canada is less than 1/3 of a percent. We Canadians simply make our mortgage payments. So where’s the risk?

These new qualification rules are intended to protect us from higher rates when our current terms come to an end.

***This ariticle was written by Kristin Woolard part of DLC National bassed in Port Coquitlam, B.C.

The impact of mortgage rule changes coming  January 1, 2018 will be felt by everyone.   My word of advice to anyone contemplating a refinance to meet current goals or planning on purchasing?  Contact me today to find out what your best options are before your window of opportunity is closed.

 

12 Oct

Time To Lock In Your Rate? Make Sure You Have An Exit Strategy

Mortgage Tips

Posted by: John Panagakos

TIME TO LOCK IN YOUR RATE?
MAKE SURE YOU HAVE AN EXIT STRATEGY

Like many of you, I received a call last week, from my mortgage provider, asking whether I wanted to “lock in” a new five-year fixed rate. The rate was a special offer and would only last for the week, so I would need to make a decision quickly, with little time to think about the consequences to my own mortgage strategy.

While it may appear that your financial institution is acting entirely in your best interests, this is only partially the case. While it is true that locking in or switching to a new fixed rate can help you control your costs, they are doing it to manage their own costs, not yours. It’s important to remember that each time a financial institution lends you money, it’s not their own money. Their strategy is to borrow the money from investors, depositors and other corporations in order to lend you the money. The five year fixed rate renewal they sign with you is backed up with a five year investment contract with someone else. Always.

When I started as a broker, the best piece of advice I got was from a former boss who said; “Before you sign up with someone, its always important to have an exit strategy, because things will change, often for the better, and you may need to get out of the agreement. Make sure you make it easy to do so. “

Having an exit strategy is just as important when signing a renewal or early renewal contract. The strategy is not so much about exiting the mortgage entirely, but ensuring you know and can use the existing features to your advantage. There are three specific features (termed ‘privileges’ and ‘penalties’ in the offer) that you should know and understand before signing that new contract;

A) Pre-Payment Privilege
For most of us, there is some time in our lives where a sum of money lands in our laps, perhaps a large bonus, severance, cash settlement or even a small inheritance. Knowing how much you can pay down, should you choose to, is vital. Depending on the lender, you may be limited to a 10 percent prepayment or as much as 20 percent. Some lenders specify the exact day you can make the prepayment, some merely say ‘anytime’.

B) Increased Payment Privilege
Again, at some time in our lives, most of us will leave one job for another that pays significantly more. In those situations we can certainly afford to increase our mortgage payments and should do. Do you know how much you can increase your payment and when? Again, it varies widely from lender to lender, for 10% on a specific day, yearly, to 20% anytime.

C) Early Payout Penalty
This is perhaps the most ignored potential cost in mortgage financing. As with the privileges, no two lenders calculate the penalty the same way. Its important to understand the differences. It can save you thousands.

Most people’s reaction, when we talk about penalties is ‘well I’m never going to pay out early, so it doesn’t matter. ‘ I don’t blame you for thinking that way, because that’s always my reaction too! But let’s walk through a “what if” and I’ll show you why its important to consider.

So… You have an existing mortgage in the amount of $480,000. Your lender’s representative calls you to say that because rates are going up, he’s calling all his clients to let them know that if you wish to early renew, they’re offering a fixed rate that’s actually a minuscule amount lower than you are paying now. Rates are going up and the offer is only guaranteed until the end of the week!

Because it’s actually well before the renewal date, there is a penalty, but they’ll add that on to the mortgage balance, no need to worry. After a couple of moments hesitation, you agree and you go in to sign at the branch. Overall, your experience with the lender has been very good.

Spool forward three years and your life is changing. You’ve become an expert in your field, people are noticing and suddenly, you are offered a dream job in another part of the country.

It’s sad and exciting to have to sell up and move but you’re startled when you realize the payout penalty is $21,000. That’s a LOT of your hard earned equity to lose but you realize that you’ve already actually paid another $37,00 in penalties when you renewed early. Now its $25,000! GULP!

I know you realize that this is a worst case scenario but it can potentially happen to any one of us. The key is not avoiding these costs, but by making informed choices, avoid paying any more than you have to. By being aware and making one simple change, your penalties in our previous scenario could be about $7,500 – a savings of $17,500.

***This article was written by Jonathan Barlow part of DLC A Better Way in Surrey, BC.***

If you’re thinking of locking in your mortgage give me a call. We will sit down and take a look at the best possible solution based on your personal situation and possibly saving you thousands of dollars. As your mortgage broker I am here to get you on the right path to financial freedom. Your business and your referrals are much appreciated, so please feel free to share my contact information with friends and any family members who may need help or advice with the financing of their home.

Thank You,
John Panagakos

7 Jul

BUT I’M ONLY A CO-SIGNER!

Mortgage Tips

Posted by: John Panagakos

You have a family member that doesn’t qualify for a mortgage on their own and needs a co-signor. Since you’re a nice person, and of course would like to see your son/daughter/parent/sibling in a better position, you agree to co-sign for the mortgage.

If I had a dollar for anytime I’ve heard the phrase “but I’m only co-signing right, they can’t come after me for the money or touch my house?” I’d be rich!

There are many common myths around co-signing. Here’s only a few and the truths associated with each one…

  • I’m only co-signing for my family member to get the mortgage and that I won’t have to ever make payments. False: You are equally responsible for making the payment on the mortgage. If the borrowers default, you will be required to pay.
  • I can’t be sued for non-payment since it’s not my mortgage. False: The lender has all legal collection methods available to them to collect payment from you, including obtaining judgment in court and possible garnishment of wages and bank accounts.
  • The bank can’t take my house if the borrower loses theirs. False: As per the second myth above, judgment action can also involve seizure and sale of any of your assets including and not limited to your own home.
  • I’m only a co-signor or a guarantor so I’m protected from not having to pay. False: Whether you are the borrower, co-signor, or guarantor, you are fully responsible for the debt.
  • Co-signing on this debt won’t affect my ability to obtain credit in the future. False: Not only will you legally have to declare the co-signed debt when you apply for credit, but also most lenders in Canada are now reporting to the credit bureau and it will appear when you apply. Either way, the mortgage payment must be factored into your debt service ratio.
  • Since this is only a five-year term, I am automatically released from this mortgage in five years. False: Regardless of term, you remain on the mortgage until it is paid in full or released only with approval from the lender.

Here’s a few tips and questions to ask before agreeing to co-sign on a mortgage…

  • Know the borrowers’ situation. What is there credit like? Are they drowning in debt? Why exactly is a co-signor required?
  • Is there an exit strategy to have your name released and how long will that take?
  • Add your name to title of the property so that the borrower cannot add a second mortgage to it. This is an asset that you have an interest in and therefore should protect it.
  • Get independent legal advice about your obligations as a consignor.
  • Be prepared to make the mortgage payments of the borrower doesn’t.
  • Don’t be afraid to say no to co-signing if it doesn’t feel right.

***This article was written by Sean Binkley part of DLC Key Mortgage Partners based in Kingston, ON***

Knowledge of the borrowers situation, your obligations, and potential ways to protect yourself (and of course setting emotions aside) is the best advice for anyone co-signing. If you are thinking of co-signing please call me and we can go over all your obligations and come up  with the best solution for both you as a co-signer and the borrowers.

 

21 Apr

WHY YOU SHOULD SPEAK TO YOUR MORTGAGE BROKER BEFORE YOU SELL YOUR HOME

Mortgage Tips

Posted by: John Panagakos

 

WHY YOU SHOULD SPEAK TO YOUR MORTGAGE BROKER BEFORE YOU SELL YOUR HOME

Why You Should Speak To Your Mortgage Broker Before You Sell Your Home

 While many people will speak to a mortgage broker before buying a home, few people call a mortgage broker before selling a home. Calling could save you thousands of dollars and many sleepless nights.

Why? Brokers understand mortgages and ask the right questions. How long do you have remaining in your present mortgage? Do you know if it’s portable to a new property? Have you heard of increase and blend? A mortgage broker can help you to anticipate a penalty to break your present mortgage and see if porting or taking your mortgage to your new property is a good idea. Need more money? Blend and Increase will allow you to increase your mortgage amount and blend the old rate with the present day rate and save you thousands in penalties.

If you are at the stage in life where you have children leaving for university and you are down-sizing, perhaps a line of credit might be useful for helping to pay tuition and dorm fees.

While you may like your home it may need a new roof. Most home buyers do not want a fixer-upper and will discount your selling price to account for this. It may be easier to get the price you want and sell faster if you replace the roof, furnace or whatever is old yourself. The problem is that you are saving money for a down payment. Your mortgage broker can come to the rescue with a line of credit, either secured or unsecured which can be paid out with the home sale. In short, “we’ve got a mortgage for that!”.

**This article was written by David Cooke who is part of DLC Westcor based in Calgary, AB.

Calling me before you buy is a no-brainer but call me before you sell, after all, as your mortgage broker I am here to help put you on the right path to financial freedom and save you money.