Monday, December 15, 2008

Save Thousands on Your Existing Mortgage

Save Thousands on Your Existing Mortgage

A family was recently referred to me because they wanted to reduce the interest they were paying on thier mortgage. When they took out his mortgage a couple of years ago his rate was reasonably competitive but with the recent drop in rates he thought he may be able to do a little better. In this particular circumstance my clients weren't concerned about lowering the monthly payment but reducing his total interest paid over the next 5 years. On my clients $240,000 mortgage if they kept the monthly payment the same but took the new lower mortgage rate they saved over $8,000 and as an added bonus reduced the mortgage amortization. The difference between the existing mortgage rate and the new rate was only .75% (3/4 of a percent) and it SAVED them $8000. This was all done no charge to my clients and as always, I was happy to walk the clients through the entire process to make it as painless as possible. If you would like, contact me and I would be happy to do a mortgage analysis to see if I can save you thousands as well.

I'm a fully qualified mortgage broker with Dominion Lending Centres. I spend 100% of my time giving you world class service...guaranteed! I will give you such extraordinary service that you would gladly refer your friends, family neighbors and coworkers to me for their home loan needs. With your help I am able to build strong, lifelong relationships, one person at a time. My goal is to be your mortgage lender for life! Please contact me with any comments or to see how much you can save.

Friday, December 5, 2008

Making sense of today’s housing market

Making sense of today’s housing market

In recent months, economists have had the unenviable task of trying to calculate the direction the housing market is likely to take, factoring in things like unemployment rates, population and immigration figures, economic growth, mortgage rates, and that most nebulous of criteria: consumer confidence.

They agree that the decrease in housing sales and prices bears little relation to the economic indicators in BC. What has changed is public perception of our financial security, triggered by the troubled global financial markets.

As realtors, people are asking us to help make sense of the housing market.

Sellers are asking if the market value of their home is decreasing. Buyers want to know if they should wait for further price reductions. Homeowners not in the market to buy or sell want to understand the impact on their equity, which may affect decisions like plans for renovations.

Investors are asking about short-term impact – is it a good time to buy, renovate, and re-sell for a profit? And long-term impact – is quality real estate now available at lower prices?

First-time buyers want to know how much they need for a down-payment, whether they can afford the monthly mortgage payment, and if they can get financing in these uncertain times.

There are no easy answers. Around the Lower Mainland’s kitchen tables, realtors are helping people assess their individual situations.

Circumstances cause each of us to make decisions despite uncertainties related to global economies and politics. Someone gets a job in another city. A family must consider estate planning for a parent. A young couple wants to start investing in their own home, rather than renting.

Our MLS® statistics and Housing Price Index (HPI) tell us that, since May, residential home sales and prices have been decreasing. After five years of unprecedented growth in home values in the Lower Mainland, that’s not particularly surprising or necessarily unwelcome.

Between 2003 and 2008, the HPI benchmark price of a detached home in Greater Vancouver increased nearly 70 per cent to $761,000 from $449,000. Condominiums over the same period increased 82 per cent to $387,000 from $213,000. Left unchecked at this rate, by 2013 the benchmark price of a detached home would top $1.2 million and condos more than $700,000.

Current trends offer moderation to a market where affordability, for much of this decade, was eroding, making home ownership unattainable to an expanding segment of our community.

Since May, residential home prices have declined 12.8 per cent, resulting in an 8.3 per cent year-to-date price reduction for detached, attached and apartment properties across Greater Vancouver.

These moderating home prices should not be confused with the U.S. housing downturn. Since 2005, prices in the U.S. have been edging downward due in large part to imprudent ‘sub-prime’ lending practices. Mortgages in Canada are tightly regulated and underpinned by a solid banking structure. The World Economic Forum recently identified Canada as having the world's “soundest” banking system.

The local real estate market is not immune to global economic challenges; however, Canada’s disciplined lending structure has kept the mortgage landscape steady in these uncertain times.

While the current rate of foreclosures in the U.S. is nearly five per cent, only 0.28 per cent of mortgages in Canada are in arrears, a proportion that is not only low but steady, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP).

Low prices are not the concern as much as the view that prices are falling. Buyers are waiting to see of the real estate market has hit bottom.

Identifying the “bottom” of a market is difficult, given that certain variables must remain constant to attain real savings. For example, interest rates must remain low and that perfect house must remain available at an acceptable price.

Most of us sell a home and buy a home within the same market; while we may be selling at a lower price, we’re also buying within that lower-priced market.

Deciding to buy or sell a home should be a milestone moment based on your financial and personal circumstances, and the market conditions within your neighbourhood of choice. For those whose finances allow it, there are excellent opportunities in today’s housing market. This is a good market for long-term investors.

The Real Estate Board of Greater Vancouver has existed for nearly 90 years and witnessed numerous market cycles. Sales increase and decrease. Prices go up and down. Historically, the values at the peak of the next cycle inevitably surpass the ones before.

(Dave Watt, president of the Real Estate Board of Greater Vancouver)

I hope you found the above article informative. I'm a mortgage broker located in Vancouver BC working with one of Canada's largest brokerage houses Dominion Lending Centres.

Tuesday, December 2, 2008

5 Key Ways to Help Improve Your Credit Score

5 Key Ways to Help Improve Your Credit Score

Leading up to the holidays is the perfect time to think about things like improving your credit score and consolidating debt. After all, the holidays are a joyous time that should not be overshadowed by financial woes. And even if your credit score is good, these tips may make it even better. After all, the better your credit score, the fewer hurdles you’ll have to overcome when looking to renew or refinance your existing mortgage, or obtain a new one. Nowadays having good credit is as important as ever. Very few lenders are interested in making exceptions for people that have had credit challenges.

Following are five steps to a speedy credit score boost:

1) Pay down your credit cards. The number one way to increase your score is to pay down your cards to 30% of their limits. Revolving credit like credit cards seems to have a more significant impact on your score than car loans, lines of credit, and so on. Lenders will often use the term credit utilization.

By paying down your cards to 30%, you are leaving a big gap between what your limit is and what you owe – a move that is very favourable to increasing your credit score.

2) Limit the use of your cards. Racking up a large amount and then paying it off in monthly instalments can hurt your credit score. If there is a balance at the end of the month, this affects your score – credit formulas don’t take into account the fact that you paid it all off the next month.

By being more accountable of your spending on a daily or weekly basis through the use of a budget, you can keep those cards below the magic 30% mark.

3) Check your limits. If your lender is slow to report your monthly transactions, this can have a big impact on how another lender may view your file. Make sure everything is up to date. Old bills that have been paid can come back to haunt you.

Some financial institutions don’t even report your maximum limits. As such, the credit bureau is left to only use the balance that’s on hand. The problem is, if you consistently charge the same amount each month – say $1,000 to $1,500 – it may appear to the credit-scoring formula that you’re regularly maxing out that card.

You could go on a wild spending spree to raise the limit, but a more sensible solution would simply be to pay your balance down or off before your statement period closes.

When making payments online, do so about a week before the period closing date printed on your latest statement to ensure the payment is received on time – it can take up to five business days for a payment to be received. This won’t raise your reported limit, but it will widen the gap between your limit and your closing balance, which should boost your score.

4) Keep your old cards. Older credit is better credit. If you stop using those older credit cards, the issuers may stop updating your accounts. As such, they will lose their weight in the credit formula and, therefore, may not be as valuable – even though you have had the card for a long time. Use these cards periodically and then pay them off.

5) Don’t let mistakes build up. Dispute any mistakes or situations that may harm your score. If, for instance, your 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.

As always, if you want to talk about your credit score or consolidating debt, I’m here to help. I'm a mortgage broker located in Vancouver BC working for Dominion Lending Centres.

Monday, December 1, 2008

3 Tips to Compare Adjustable Rate Mortgages for the Best Deal Possible

3 Tips to Compare Adjustable Rate
Mortgages for the Best Deal Possible

In the last couple of years, adjustable (or variable) rate mortgages have become more popular in Canada, as well as with our neighbors down south in the United States. An adjustable rate mortgage can be a wonderful money-saving option. However, comparing multiple loans to each other can be a bit complicated to do.

While a traditional fixed-rate mortgage can easily be compared to another fixed-rate mortgage, the process becomes a bit trickier when you are dealing with multiple adjustable rate mortgages. Adjustable rate mortgages (ARMs) came in many forms and with many different options. The choice you have to make between ARM mortgage options can make for a very large difference in the quality, and cost, of the loan which you ultimately accept. So, it is important to be able to compare them to each other to make the best decision you possibly can. .

Most people have two basic issues when they try to compare two ARMs; the math to calculate the effective prime discount is not simple, and understanding what all of the various different options mean. No matter which lenders you are working with, there are three things you should first understand and keep in mind throughout the process. They are:

Understand Low Introductory “Teaser” Rates and Mortgage Costs.

The first thing you need to understand is how much a particular loan will cost you between the time you sign on the dotted line, and the time when the mortgage becomes open or renews.

To easily determine the cost of a mortgage until it becomes open or renews, you can multiply the introductory rate of the loan by the number or months it will be effective. Then multiply the interest rate of the loan after the introductory period by the number of months until the mortgage opens or renews. Add these two numbers together and divide by the total number of months the mortgage will be in effect before it opens or renews. This gives you a weighted average calculation and allows you to easily compare one ARM to another.

Understand Rate Discounts and Conversion Options.

Many people go into an adjustable rate mortgage assuming that they can easily convert to a closed term mortgage without any penalty, whenever they choose to. However, it is vitally important that you know exactly what the rate discount will be if you choose to convert. You may find that it costs you more than three month’s worth of interest to switch lenders and forces you to stay with the lender you currently have. If this is the case, then you will not be able to change lenders until your mortgage becomes open or renews without significant cost.

Understand How Interest Rate Changes Will Affect Your Payments.

There are currently two popular options with ARMs. The first type of ARM has payments which adjust as the prime interest rate moves up and down. This means that your amount due each month is constantly changing with the prime rate. This can be a good deal if rates drop and you can stomach the constant change. However, if you need stability in your payments from month-to-month, then this is probably not the best option for you to choose.

The second type of ARM keeps the payments the same each month but changes the amount applied to principle and interest based on the prime rate. For example, when the prime rate goes up then your payment applies more to interest than to principle. This means it could ultimately take longer to pay off your mortgage because you are paying less on principle each month if the prime rate is high.

Adjustable rate mortgages can be great alternatives to traditional closed-term mortgages. However, when you are evaluating your choices in an adjustable rate mortgages it makes a lot of sense to take the time to learn about, and understand, introductory teaser rates, discounts and conversion rates, and how the prime rate will affect your mortgage payments and ultimate payoff time. Once you fully understand what ARMs are all about, and which options best suit your situation.

As a mortgage broker I can help you get the best adjustable rate available. I work with one of Canada's largest mortgage brokerage firms Dominion Lending Centres Leading Edge.