Ask Angela: Beware your home is not an ATM !!!!!

Beware your home is not an ATM !!!!!

Almost on a weekly basis, I get a call. Usually from a senior, telling me the most heartbreaking story. It is the same story, just different events with different people, with the eventual outcome is loss of family home. So what is the story I get?

I get a call, asking me if I could help them with their big problem.  The story goes, something like this.  About 5 years ago. there was a sickness, accident or loss of spouse. They run into money problems and refinance the family home. They may refinance in another couple of years, to pay the maxed out credit cards and bills, since they haven't solved their original problem of loss of income. They are virtually living on borrowed money. Then retirement happens or more importantly the CPP cheques arrives. Sticker shock hits them because it is less then they would have ever expected.  Mortgages need to be paid and the deeper in debt they go.  By the time they contact me, it is too late for me to do anything. They are over extended with no way to pay.  Sometimes family members can be called upon to help- but most families do not have those resources.

The senior walks away with huge losses, including the family home for which they worked so hard for. The stress, the guilt of losing the family home weighs deeply.

There are good uses for refinancing your home, but while investigating, always look ahead in time. Will you be able to make the payments in a few years? How about 5 years down the road? How about if you should get sick or lose a spouse.  It would be wonderful to have that magic mirror to see your future, but, you still need to do risk management to foresee what you can.

What other options are there instead of refinance?  Living modestly until the hard times passes?  If you are over 55-  a CHIP Reverse Mortgage may be the better option? Sell the home earlier and buy an affordable smaller house or condo, that can be paid outright leaving no mortgage payment?

An Accredited Mortgage Professional, is an excellent person to ask about your options. Ask them to also do a risk management study on all your options. Be informed and make your decisions with your head and not your heart.  Ultimately it will be your decision, be wise.

If you are or know of anyone struggling with these types of scenarios, help them help themselves, give them a contact name of a trusted Accredited Mortgage Professional.

Angela Kroemer Accredited Mortgage Professional
akroemer@mortgagegroup.com
250-650-4182

 

A Canadian Market Overrview- Canadians lost over $41M by not shopping around!

2013 Mortgages: A Canadian Market Overview infographic

  <a href="http://tiny99.com/765848

">Source</a>

 

 

Beautiful Performance

Attraction's performance from the "Britain's Got Talent"

7 Steps to Buying Property Privately

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Angela Kroemer 

Accredited Mortgage Professional
www.KroemerMortgages.com
akroemer@mortgagegroup.com

250-650-4182

7 Steps to buying property privately
If you decide to buy property privately without the help of a real estate agent, you need to understand how the process works. In this concise, but informative, buyer’s guide, we explain each step of the way to reaching your dream – to put you on the right track and hopefully make you realize that buying real estate privately is neither very different from using an agent, nor as complicated as it may seem.

Step 1: Work out the price bracket you can afford
This may sound obvious, but you would be surprised how many people actually overstretch their budget when buying a property, only to find it difficult to keep up with mortgage payments or realize that they have no money left over for any necessary property renovations.

Consult with a Mortgage Professional, they can easily tell you what you qualify for and how much you can afford based on your income, liabilities and credit report. Also how much of a downpayment you will need, as well as closing costs.

By getting pre-approved for a loan, you will know where you stand.

Keep in mind that this total sum will have to cover the purchase price, transaction fees and taxes and any immediate work you will have to do on the property before you can move in.

Step 2: Find out which areas you are interested in

Do some homework on the areas available. Browse the Internet for information on those areas that catch your interest. Also, use the Internet to make a quick search for property for sale online, to get an idea of what properties are available in your price bracket and where they are located.

Eventually, you’ll have to make the trip and visit the areas you are interested in for yourself. It’s best to drive around so that you can get a better feel of the areas and their surroundings. On your way, keep a lookout for services such as shops, schools, medical facilities etc. It is also a good idea to visit at different times of the day and on different days to get a better idea of traffic conditions, weather and so on.

Step 3: Search for properties in your areas of interest

The best – and most convenient – place to start searching for your property is the Internet of course.

If you don’t find what you are looking for online, you could check the classified adverts in local newspapers or even drive around the area looking out for ‘For Sale’ signs.

There are several companies that have For Sale By Owners. As you can see there are no shortages in For Sale By Owner advertising.

http://comoxvalley.en.craigslist.ca/reo/

http://propertyguys.com/search/?k=courtenay%2C+BC

http://bcforsalebyowner.com/city/Courtenay

http://www.forsalebyowner.ca/listing/house-for-sale-courtenay-BC/123592

http://www.bcislandhomes.com/

http://comoxvalley.kijiji.ca/f-real-estate-houses-for-sale-W0QQCatIdZ35

http://www.usedcourtenaycomox.com/classifieds/house-for-sale

http://www.homesbyowner.com/courtenay

http://comfree.com/homes-for-sale-courtenay


Step 4: Schedule viewing appointments with the property owners
Once you have identified one or more interesting properties, call the owners and get as much information about the property as possible over the phone. Choose the ones you want to visit and arrange a time with the owners for a viewing. Before your property inspection visit, you should come up with a checklist of points to look out for. This property inspection checklist I have prepared is a good place to start.

When you visit a property in the presence of its owner, it is common to feel like you are intruding into someones life, especially if the property is being lived in. However, remember that as a buyer it is your job to inspect the property thoroughly and that the owner actually expects you to do this. Naturally, politeness and common courtesy will go along way in this situation.

Most importantly, don’t shy away from asking the owner any questions you may have. Be sure to find out:
the age of the property
how long the seller has owned it
why the house is being put up for sale
how much condo or strata fees are (if applicable)
the location of and distance to nearby services
which furniture or fittings will be sold with the house (though remember you are buying a house, so don’t be swayed by fancy extras)

Step 5: Get an independent evaluation of the property (optional)
Although this is really an optional step, it is highly recommended that once you are very interested in a property, you have it inspected by a qualified Home Inspector or have an Appraisal done. This will give you an objective appraisal of the property, tell you if the property is overpriced, and even point out any important things you might have missed.

If you are mortgaging the Property, you might want to coordinate with your mortgage professional as most private sales will need an appraisal done, by the Lender, usually paid by you. So, unless you want to pay twice, ask your mortgage professional about the Appraisal. A Home inspection can be done beforehand, by you or a qualified home inspector, for your piece of mind.

Step 6: Negotiate the price and terms of the sale

There is no reason to shy away from negotiating when you buy property. If the owner already has the home as low as they will go ask for other items like property taxes paid till end of year, home professionally cleaned upon your move in, lawnmower and outside tools (if needed).

How much you can negotiate price-wise will largely depend on three things:
how long the property has been on the market
how urgently the seller wants to sell
and how much interest the property is attracting from prospective buyers
if the home inspection discovers problems with the house
most private sales, are at the lower dollar figure, so low balling on the offer will not work

Keep in mind that by selling privately, the seller is saving thousands of dollars in real estate agent fees, so, in a private sale, check to see if the discount is already there. The seller may also be more willing to drop the price a bit if they have demanding sales terms that you can accommodate (for example either a very short or more drawn out transaction period).

Once you have agreed upon a price and upon a date when the sale will take place, you will sign a Promise of Purchase and Sale Agreement with the seller before a Lawyer or notary, laying out all the terms of the sale, and pay the seller a deposit on the property. This will guarantee you the right to buy the property at the agreed price for a limited time (usually around 3 months) while your lawyer reviews the transaction and you make the necessary financial arrangements.

Step 7: Always have different lawyers to conclude the sale

Once your lawyer has made the necessary research about the property and gives the all clear for the sale to go ahead, have your lawyer send the documents to the sellers lawyer, to be signed. All mortgage documents should also have been sent to your Lawyer.

Ask Angela- Basics of Getting Your Home Ready To Sell

Ask Angela
Question: We are selling our home. How do we get our home ready to sell?

Answer: Depending on the condition of the home there could be several things you should do. For starters:

- walk through your house as if you were going to buy it today. Have paper and pen ready and jot down any flaws or blemishes you see.

-fresh paint is essential if you have not painted in the last 2 years. Keep the colors neutral, now is not the time to experiment with color. If you have previously painted and all the rooms are a different color, you may want to repaint to make all rooms the same.

-get in a cleaning team and wash everything down. Dead bugs in the ceiling lights are not attractive and can turn a buyer off.

-potential buyers will look in your cupboards, under sinks, closets, clean and tidy those areas.

-declutter your home even if it means renting a storage unit for awhile.

-change out any nasty rugs. If they are old replace them.

-if the potential buyers are serious they will hire a home inspector, that will find the obvious flaws, so address those flaws before hand. (leaky plumbing, saggy floors, roof leaking)

-your yard. Make sure all plants and trees are well pruned, alive and healthy. Grass needs to be cut and edges weed whacked. Hire a yard maintenance service to tame your yard and to cut it weekly.

 When you think your house is ready to sell, get a neighbour, friend or family member to walk though your house. Tell them to be brutally honest, they should be able to pick up a few more flaws, and you will thank them when your house gets sold fast.

　
Questions or comments  akroemer@mortgagegroup.com 

Ask Angela- Use of UCCB and CCTB as Income Qualifying For Mortgage

 

 

Ask Angela

Question: I am told that we can use the Universal Child Tax Benefit and the Canada Child Tax Benefit as income to help qualify for a mortgage. Is this true?

Answer: Yes, this is true, and it does help families purchase their homes as the amount can be substantial, but there are a few rules to follow.

For the following calculations, I will use the 5 year fixed term, as this is one of the most popular terms used in today's mortgages.
Any questions or comments? akroemer@mortgagegroup.com

UCCB- Universal Child Tax Benefit is for children under the age of 6 years and is paid in installments of $100 per month per child.
To be able to use this payment, there must be 5 years of payments left, since many mortgages are a 5 year term. If the child is under 1 years of age then we can use this payment.

CCTB - Canada Child Tax Benefit
- is a tax-free monthly payment made to eligible families to help them with the cost of raising children under age 18.
This follows the same rules as the UCCB, needing 5 years of payments remaining. So any child under the age of 13 in your family we can use their part of the payment.


What is the purpose of Private Lenders?

Ask Angela

Question: What is the purpose of Private Lenders, if you already have Banks and what you call Mono Lenders?

Answer: Private Lenders are becoming more important in the mortgage world, as the Finance Minister tightens mortgage rules.

Here is a break down of the functions of various mortgage lending institutions:

Banks:  some banks will give mortgage brokers lower interest rates for the clients. They have a limited amount of options and products. Clients have to exactly fit with their products. The Bank can only offer their own products, options and services.  The bonus when dealing with a bank is that you can have all your banking in one place, ie credit cards, bank accounts, car loans and mortgages. Very Secure

Mono Lenders:  Usually on line and limited amounts of offices. Only product is mortgages. Pays commissions to brokers for clients.  Low over head.  Competition among the many Mono Lenders, keeps interest rates low. Each have their own niche. One may accept lower credit scores while another may have better prepayment options.
Governed by the same rules that all Canadian Banks must follow. Very secure.

Credit Unions:  They are community based, so may finance a project that no one else will if they can see the value in improving the community.  Credit Unions are based in the community, they will look at funding a mortgage, because they know the community and believe it is non risk, while other lenders in major cities have no idea what the community is like. There motto is 'if it makes sense they will finance it'  Great for small town lending, where the other bigger lenders will not lend because of the population limits.  Very Secure.

Private Lenders: More and more Canadians are not fitting in with the strict rules for mortgages. Private Lenders are becoming more popular.
There are a multitude of reasons why borrowers seek to obtain financing from private lenders.
These include:

• greater restrictions on traditional bank and trust company lending requirements, such as loans based on land value rather than borrower income;
• borrower’s that have a non-salaried income and do not therefore satisfy financial institutions’ structured lending guidelines;
• urgency to complete a transaction; and
• borrower’s with poor or no credit history rates
• construction loans

Private lenders vary from individuals loaning small amounts of money, either directly or through their RSP plan, to mortgage investment corporations that not only lend to individuals for personal borrowing, but also finance land acquisition and pre-development phases of residential construction projects.

As you can see there are many choices to choose from and your mortgage broker narrows down the list, to get you a well planned mortgage that will be truly unique and in the best interests for you.

Always, call a mortgage professional, to get a free no obligation quote.  It can only save you money.

Questions or comments-- akroemer@mortgagegroup.com
                                           250-650-4182

Ask Angela- Pre Approvals

Ask Angela- Pre Approvals

Question: I am so stressed out right now. Two months ago my husband and I, received a pre-approval to buy a home. We found one in our price range and went to our mortgage person. Our application was denied because we bought a brand new car a month ago and have payments on the car. What can we do?

Answer: When you get a pre approval it is for that moment, if your finances stay the same or get better (income raise), the pre approval should be good in most cases.
Pre approvals are just a estimate of what you can afford and whether or not you could qualify for a mortgage, based on the information you have disclosed. But, when you change your financial picture, as you did when you took on car payments,your application needs to be updated with the new information and sent in for another pre approval. With the new pre approval, you will find out how much you can spend on a house.
Unfortunately, you will have to search for a new house, less in value, or increase your down payment or pay off the car, to put you back where you were.

OTHER REASONS WHY YOUR APPROVAL WILL GET DENIED:

Looking at the main causes of home buyers going from pre-approved to declined during the mortgage underwriting process, you will find a number of reasons, it can fall apart. Disclose everything to your mortgage broker and when the lenders come back with questions, be prepared to show paper work and a full explanation. There is a fine line between not disclosing and fraud and since the Lenders do not know you personally, it may be hard for them to tell what your intentions were. Mortgage fraud is expensive to the lenders and they want to make sure they are not taking on any undue risk.

Follow these steps for disclosure and your pre approval should get approved:

- owing back income taxes to the government, most people do not disclose this to tier mortgage broker, because they never think about it.

- shopping for additional credit during the mortgage loan process. Many borrowers believe that once they've obtained the initial pre-approval, they are all good, their credit will not be checked again, leaving them free to take on new debts. Well, 99% of lenders today will recheck your credit the day before closing, looking for new debts that could cause you to no longer qualify for the home. Mortgage brokers should be telling their clients not to take on any more debt until the purchase of the home is done.

-undisclosed family relationship with your employer. They're different rules for home buyers who work for a family member. When you work for a family member, there's a higher chance of fraud because that family member may be more willing to lie about how much you earn or your role in the company. Always disclose this to your broker, especially if you are paid more because of family ties, The lenders may look at the average wage in your occupation and if yours is substantially higher they will look deeper or because it was not disclosed, they may not want to do business with you. Too much risk.

- having a relationship with the seller of the home. When a home buyer and seller have a relationship, there's more room for side deals when it comes to down payment and inflating the value of the home. This makes lenders nervous. You see, lenders rely on an arm's length transaction, where the buyer and seller do not know each other, to make sure the buyer has done their due diligence in shopping for the home.

-making large undocumented deposits into your bank accounts. Most mortgage loans require 90 days worth of Bank Statements. So, if Uncle Fred gives you a large amount of money for your down payment because you are his favourite niece or nephew, get him to sign a gift letter to give to your broker, there must always be a paper trail for your deposited funds.

-a drastic change in your employment. This could include changing positions, changing employers, having your compensation structure change, or losing your job altogether. Changing jobs while you're in the middle of the mortgage process can make things more complicated and ultimately affect the credit decision. The lenders are looking for employment stability.

- Owing property taxes on any other property you own.

-not disclosing mortgages that are owed to private individuals.

-failing to disclose child support or alimony payments you're required to make

-failing to disclose or attempting to hide any other pertinent information.

- always be transparent with the lender through your mortgage broker. If you have forgotten a payment, like Dell or Easy home make sure you tell your broker, so they can update your application.

For questions or comments email akroemer@mortgagegroup.com