BrokerBlog

Rules Versus Personal Wants

2012-05-23T13:14:51Z

There is often a personal desire to want things now versus being patient. Let me explain a trend that has occurred most recently. Employees working in the health and education fields are working in a position where they are not guaranteed hours, but seem to be working full time hours. They are making pretty good incomes so they come to me about purchasing. Here is where the dilemma occurs, any lender requires two years history to be used to establish some predictability for income. My small concern is the large number of people that have one or less years of employment and they want to buy, it is not easy telling those people “no, not yet”. If you are working in such a field you must first work a full, or near full, year last year, plus be at least half way through the full second year to possibly qualify.

Remember, get that first year in before seeking mortgage advice or a pre-approval.

Creditor Life Insurance

2012-04-13T15:05:24Z

Broker Blog - Mortgage Life Insurance

Recently I heard a speaker talk about creditor life insurance. If you get a mortgage from a bank, 60% of clients will take the coverage. If you use a broker only 10% take such life insurance coverage. The speaker asked the question why? His explanation seemed to say that the answer to the question was, the broker agent only cares about the “deal’. That means the mortgage itself. I do believe that there are broker agents that do only care about the “deal’. I feel that this speaker’s comments were, however, an over simplification. I would initially contend that the banks position their paper work in such a ways as “to imply” if you don’t take life insurance, you can’t get the mortgage itself. This would suggest that clients don’t ask if they are required to take, they just fear not getting the mortgage, so they accept without challenge. The facts are, you do not need mortgage life insurance to get a mortgage. Does this suggest that I think it is bad or not necessary? My answer to this is, no. But I do like to discuss the topic with clients because this is one more decision a client should consider. You need to review because death and financial obligations are a fact of life. I have personally helped clients through the emotional turmoil of tragedy and the life coverage was a “god send”. If you check things like your current coverage at work, etc., maybe you have plenty. I am just pleased when I know clients are aware and considering everything involved in such a big expenditure. Be smart and know where you stand when considering the future. I feel you only need coverage regardless if it a normal term or whole life policy or creditor life assurance. Call or e-mail if you wish to discuss.

It's All We Do

2012-03-29T14:50:59Z

A major theme of my blogs has involved the challenges we Canadians face. The facts about theeconomy, are just that.. facts. The core fact is, we as consumers, are concerned yet focused on home ownership. When there are barriers to getting what we want, we look for ways to succeed. This is where a Mortgage Broker Agent comes in. All we do is mortgages. At a bank branch, many times you will deal with a Customer Service Rep who does not specialize in mortgages. Rather they help change your address, complete a credit card application or open a line of credit. Mortgages are NOT as simple as a credit card with a $500.00 limit. These times call for creativity and knowledge, best served, in my opinion by Mortgage Broker Agent. As a final note, this is especially true when you are a first time home buyer. My speciality.

Federal Government Proposals

2012-03-16T12:52:45Z

FEDERAL GOVERNMENT PROPOSALS

There are, and rightly so, concerns over debt held by Canadians. The Federal Government is considering dropping the maximum amortization to 25 years from the current 3o years allowable. Also they are considering buyers come up with 10% down payment from the current 5%. I can tell you from a practical point of view that the down payment potential proposal would severely affect the housing market. Just imagine how much you would have to save to buy in Toronto, Oakville, Vancouver, etc. You might consider telling your MP that this possible proposal would change your dreams forever.

Having Foresight

2012-03-12T13:41:34Z

Having Foresight

There are always challenges that we face as human beings. This is no different when it comes to homeownership or even refinancing our mortgage.

So what do I mean? Well, you are so happy to be able to buy a home or consolidate debt. You have received a low rate and the payments are very manageable. Problem is the rate today can be a nightmare 5 years from now. If the rates increase, as is predicted, that low payment today could be a higher rate in 5 years. The question becomes, what if the rate does rise 1 or 2 per cent. Will the payments be affordable and will this still make you happy. I think I have a solution. Take advantage of the low interest rates and lower payments and pre-pay your mortgage or increase your payment today to save in 5 years. Want to discuss, just contact.

Just a note about refinancing. When you consolidate, you do not actually pay down your debt. You put into one payment, however low, to reduce payment amount. Use the low rates to more rapidly reduce debts by increasing the payment or making lump sum payments like mentioned above. Looking ahead is good.

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2012-02-28T14:50:40Z

Confusion

I have watched the advertisement by Manulife, entitled Manu One, with great interest and frustration. There are two conflicting messages I take from the ad. Firstly, if you can consolidate all debts under your mortgage and the rate is prime or prime plus maybe point one, you will save money. Credit cards and loans have rates in excess of those of secured lines of credit like the Manu One. By the way, you do not eliminate debt. If you had a mortgage, car loan, 3 credit cards and a line of credit totally $200,000.00, the consolidated total is still $200,000.00. However, and more important, there are at least two negatives to consider. If you include a car loan like the ad suggests you will or may be paying that particular car loan for up to 25 more years. In the mean time you may have purchased 3, 4 or even 5 cars over the next 25 years. The second negative point is, this is a great idea if you close out your credit cards and lines of credit. Trouble is we don’t and then we build them up and in time are no further ahead. Unfortunately life is not perfect and we will continue to use credit cards. Unfortunately the good news is, we can add onto the Manu One type product and step backwards in total debt. To me a normal mortgage does not allow us to easily access credit therefore we think before acting. This is never bad. The Manulife type products can be for some but bad for most, in my opinion. I have such products available to me, so drop by and discuss. (moving March 1^st to 65 Queensway E. - west of Jim’ of Simcoe)

Nasty Reality

2012-02-02T17:49:24Z

One of the most discouraging parts of the mortgage business is the ingredients that we use as a measure of success run counter. When all is good with your life which includes managing money well, paying bills on time and generally enjoying your life, you don’t necessarily need banks, financing, etc.

What I am referring to is the person who is experiencing employment challenges, personal problems like sickness to self or others, which puts a strain on finances. Adding to this, is the recognition that in tougher times, just when problems seem to rise, the whole issue of property value and equity become a problem. If property values are down, then the equity you might have thought you had, is not there. This, then, does not become a solution to debt load. Unfortunately banks are businesses, driven to succeed by profits. Investing in risky ventures is not part of their mission. As a human, telling people this and NOT being able to help plain old “sucks”. If I could hope for one thing it would be that you have a supportive relative that might co-sign. Asking is hard, the stress of debt is harder.

You Sneaky Bank... Maybe Not the Lowest Rates

2012-01-10T19:37:15Z

For many years now, I believe banks focus on efficiency and gain rather than ensuring customer knowledge. Recently, it has come to my attention that TD Canada Trust instituted a change to their mortgage program. When you get a mortgage from them it is called a collateral charge. It has positive and negative points:

On the positive side, if in 2011 you bought a home for $200,000.00 and put 5% down, your mortgage was registered for an amount of about $195,000.00. If 15 years later, you owe $100,000.00 and you want to refinance to consolidate debt, you can. You do not need to see a lawyer for a new mortgage as long as the amount consolidated remains below the original $195,000.00. This can save you $750.00 to $1000.00 in legal fees.

On the negative side, there is a loss of flexibility and dependence. A client was offered, on renewal, a 5 year closed term rate of 4.49%. Meanwhile, I get clients 3.29% for the same term. I see this as a way for TD to get clients to take a higher interest rate by reminding clients they would probably like to avoid legal fees if they change mortgage lenders. However, let’s calculate the numbers: take 4.49% over 25 year amortization, against a rate of 3.29% over the same amortization, it will give you a savings of $87.00 per month; over 5 years, that saves you $5220.00. This makes the legal fee small in comparison.

Overall, I want you to know that I can’t prove that TD planned to use this type of mortgage to retain clients. But, the loss of flexibility and increased work placed on a client to get the best deal comes into play. For the record, be advised that these types of mortgages are available to TD Canada Trust, Scotiabank and soon to be offered by ING.

In my opinion, this is just one good reason talking to a mortgage broker agent like me is in your best interest.

What You Don't Know About Mortgage Agents

2011-12-16T15:28:00Z

I discussed mortgages with a friend this week and he made the comment that he believes many people don’t really know what mortgage brokers and agents do. I hope to clear this up for you.

When you deal with a bank, you are dealing with one mortgage lender. Your bank has specific rules and policies, and if some aspect of your mortgage profile does not fit into their strict package, you will be denied, the deal becomes dead. However, if you seek out a mortgage agent, you will find that we have access to over 40 different lenders, each with a variety of rates, programs, and different types of deals to benefit you, the client.

In many cases, when a person is declined by the bank, they come to me, and usually, I can help. Interestingly, if your first stop is a mortgage agent, then you will only have to access your credit bureau once—if your credit is checked too many times, this sometimes negatively effects your credit score. See a broker, and you will avoid any added problems, like too many bureau “hits.”

Furthermore, this happens to be an opportune time of year to discuss why mortgage agents are a valuable resource to clients. Each year, the government requires mortgage agents (some are Accredited Mortgage Professionals or AMPs) to upgrade our Broker/Agent License. This means mortgage agents are educated about everything to do with the mortgage industry, including rules, regulations, laws, etc.

This education process is to protect clients. No one else in the mortgage business has to do this—your bank does not do this.

Honestly, by choosing a mortgage agent, especially an AMP, you are choosing a person who has an up-to-date education, knowledge of and access to a multitude of lenders; ultimately, this will benefit you and get you the best mortgage possible.

Bah Humbug: Refinancing, Debt & Bankruptcy

2011-11-28T18:55:02Z

I cannot remember a worse week in my mortgage business. For all the bad news I will reference below, I hope you can find a valuable lesson. These clients have forced themselves into difficult financial situations—overwhelming and multiple debts, including tax arrears, collections, and more. When we are employed, paid well, and live accordingly, there should be no serious financial problems. However, what if a job ends unexpectedly, or some other unforeseen issue occurs? In all cases, the key is to continue to “live accordingly,” which may include adjusting your lifestyle.

Generally, when in trouble, people look to the equity in their current home for a financial solution. It sounds easy: consolidate debt, lower payments, and suddenly, you can afford to pay off your debts, and maybe even live a little.

The gap in the above scenario is our weak economy; by association, the drop in real estate values. A refinance is only possible when there is enough value in the property to pay off a large sum of your debts plus other incurring fees. This week, I have had four clients declined a mortgage because their debts have so severely outweighed the property value; therefore, the only advice I can give is to either try and sell, ask for help from family members, or go bankrupt. The latter is an especially dark and dismal option that I hate to offer up, but unfortunately, may be the only way to escape from a world consumed by debt.