Friday, 15 January 2016

Caulking: When, Where, and Why

Mike Holmes: OK, holiday relaxation is over and it's time to pull out the caulking gun

Caulking is a project most homeowners will do themselves at some point, so it's no surprise I often get questions like "Do I caulk my toilet? What about the sink? Do I caulk around the kitchen cabinets?" Since the number of indoor jobs rise as outdoor temperatures drop, let's talk about what should and shouldn't be…

Monday, 11 January 2016

2015 - Recap

Hey everyone, Happy 2016! I've been taking some time the last week to recap and review how my 2015 went, and to sum it up it was excellent!

Last year saw the culmination of years spent dreaming, reading, researching, and learning turn into a realized goal: become a successful mortgage broker. Changing gears and pointing my career in a new direction has been terrifying at times, but ultimately rewarding in so many ways.

I have my clients to thank for the joy that you give me in doing my job. As with most things in my life, I give 110% when I am here and you support me with your smiles when the job is done and everything goes according to plan. Even when our best-laid plans are derailed I know I can count on that sense of achievement that comes from seeing a file through to completion, whether that be a new home, a refinance of your current home, or an expansion of your real estate investments. These are all substantial parts of your lives and I'm grateful to be a part of them with you!

In my personal life, 2015 brought plenty of great things as well. A great year with my fiance, a new home, and lots of good times spent with family and friends! A ton of hard work and effort behind the scenes went in to making the good happen, and I can't thank my future wife and my friends and family enough for supporting me when it came time to put in work.

2016 will bring many more adventures and I'm eagerly awaiting them all: Our wedding in September(with tropical honeymoon to follow!), and the massive renovation going on in our new home. In amongst all this I look forward to more enjoyable times with family and friends, and specifically to spending more time with my brother who has come back to Kamloops to pursue a new chapter in his own life.

Thanks 2015, you were good to me!
Here's to an even better 2016!

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Tuesday, 29 December 2015

Mobile & Modular Homes

Mobile and modular homes make up a large and steadily growing part of the housing market in Canada. In fact, these pre-fabricated homes made up more than 15% of the new housing created in 2014. That's too large a segment of the market to ignore!

With that in mind, I wanted to give some insight into the benefits and challenges of considering this type of real estate for your next home or investment property. Dollar for dollar, homes which are manufactured off-site may offer greater value for your investment. They can be custom-built to your specifications if desired, and then moved into place and installed at a site of your choosing. If you opt for a mobile home, you may even have the option of moving that home elsewhere later on if you desire. It is for this very reason that these types of properties can be more of a challenge to finance and there are some special considerations.

Due to the risk associated with these types of homes being anything less than permanent(remember, lenders hate risks!), you may expect some challenges when trying to obtain a mortgage. There are consistently fewer lenders who will accept these properties, and some who may charge a premium rate depending on the details. Pre-approvals can pose a challenge as well due to uncontrollables such as pad rent and/or strata fees varying widely from one property to the next. As you can imagine, a mobile or modular on it's own land will be treated differently from one in a park or strata-type community. It's important to have a Mortgage Broker you know and trust to help you navigate this decision.

Some important questions to as are:
  • Does this purchase include freehold land(define Freehold HERE), or is the land leased?
  • What type of foundation is the home on? Is it a concrete pad? Concrete crawlspace/basement? Wooden piers? Steel pilings? 
  • How is the home secured to this particular foundation?
  • Finally, is it truly a "Mobile" or a "Modular" home?(Read on to answer this question...)

Mobile vs. Modular

A mobile home is NOT the same as a modular home, and vice versa. The two types of homes can be best defined by looking at the differences rather than the similarities. Some of the differences are:

Mobile Homes generally:
  • Have a steel frame
  • Use 2x8 floor joists
  • Are built to CSA Standard Z-240(not building code)
  • Can be moved at a later date, after having been originally installed


Modular Homes:
  • Have a wooden frame
  • Use engineered floor trusses
  • Are built to CSA Standard A-277(Canadian national building code)
  • Are also held to BC Building code standards
  • Can NOT usually be moved after having been placed on-site
As you would imagine, lenders find modular homes to be the more preferred option of the two, but this is at the expense of higher initial cost and the inability to move the building later. Modular homes act, look, smell, and think more like a conventional home and if there's one thing mortgage lenders enjoy, it's convention!

While choosing to opt for a mobile or modular home may limit your choice of lenders, a well-trained Mortgage Broker can help you to find a lender who will suit your needs. It is in situations like these that the power of a good Mortgage Broker's lending network can really shine and help you find the best option for your dream property, no matter the construction type. There may be local Credit Unions and specialty lenders who will offer options to suit, or there could be opportunities to shop the big lenders if the property fits their criteria. When you're ready to discuss the options available, give me a call or visit my website to get a secure online mortgage application started!

And most importantly, as always, Ask Questions! Take the time to interview your chosen professionals when making the decision to purchase or refinance your home, it may very well be the single biggest investment of your lifetime. Are they educated in the niche you're interested in? Are they up-to-date? Are they professional, courteous, and ethical?

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Wednesday, 2 December 2015

RBC Posts Record Profits...

Congratulations(I think...) to one of Canada's largest financial institutions(I won't name names here...) on achieving "Record Profits" in 2015!

Considering this has been a particularly uncertain year economically, they've somehow managed to buck the trend and keep right on growing. It's no surprise given their aggressive marketing tactics and their STEEP incentives(Read: IRD calculation HERE) to retain loyal customers. In their defense, they also have an extremely diverse portfolio of businesses and assets to manage, which allows them to minimize their exposure and risk to the more volatile markets in Canada.

Now I'm not going to dumb this dialogue down to "We are getting ripped off by the banks" as @UncommonSenses so eloquently put it in the CBC News comments section, but is it not worth considering that if your bank is posting record profits then are they really your best deal?

As one of the major players in consumer finances and mortgages, this bank plays a role in setting the standards and should act as healthy competition to the other banks, credit unions, and lenders. This role is particularly crucial given their massive marketing power, and their influence over their existing clients. I keep track of their mortgage offers quite closely and while on the surface they may seem to provide competitive rates, there is always a dark side(Star Wars pun intended, 18 days to go!).

A great discussion of the drawbacks of a mortgage with the larger institutions can be found in This Article. What you need to know is that although the rates might be competitive, the terms and penalties are most likely not. And with a large number of homeowners considering moving or refinancing within their original mortgage term, the reality is that you need to consider the penalties. This could mean the difference of thousands or even tens of thousands of dollars later.

When you're ready to discuss whether or not your bank is a good fit for your mortgage, take Yoda's advice and give me a call. Let's start the discussion. Or visit my website today to fill out a secure online mortgage application to get started right now. There are plenty of alternatives to consider that will save you money!

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Wednesday, 18 November 2015

Different Calculations, Different Payments...

Have you seen the movie Office Space? You know the one, where the guys devise a plan to 'skim' the extra decimal points off all of the bank transactions. If you haven't seen it, go watch it now! It's a personal favourite of mine, and if you must pick only one scene watch the one with the fax machine...enough said.

Anyway, getting back on track here. The point is, the extra decimal points seem unimportant and like they wouldn't add up to much. In reality, if you add enough of those decimals together over time, they can become a huge amount of money!

Did you know some banks might be doing the same thing with your mortgage payments???

Now, it's not like they're taking your money and absconding(word-of-the-day) with it, but it is something fundamental about your mortgage payment that you should understand and be aware of. If your mortgage professional can't explain this to you in great detail, then it might be worth considering their level of education and/or experience.

Depending on your lender, they may choose to either calculate your semi-monthly payment "correctly", or they may choose to simply divide the regular monthly payment in half. The issue with dividing your payment in half is that you are making a larger payment, vs. actually calculating the interest owed with each payment.

Here's an example:

Assume a $300,000 mortgage at 2.79% interest, amortized over 25 years.

Your regular monthly payment would be: $1387.61
By simply dividing that payment in half, your semi-monthly payment would be: $693.81

This calculation actually costs you more, because it assumes you should be charged the interest for an entire month.

The correct calculation takes into account that you actually make your payments twice per month, meaning your interest paid is lower. It looks like this:

Semi-monthly, with interest calculated each payment period: $693.40

Take Back Control!

Now you might say to me "Ryan, why should I care about this 41 cents???", and I would say to you "Mr./Mrs. Client, I care because it's YOUR 41 cents and YOU should decide where it goes and how you use it. Over the average 5-year mortgage term, that adds up to $49.20 in extra payments, and an extra $246.00 over your 25 year amortization. And while your lender should be adding this extra in as a prepayment(thus reducing your amortization by about a month, woohoo!), wouldn't you rather be in control of where and when you choose to put that extra money???

Going back to what I said earlier, I understand that this may not be a game-changer for everyone. Having said that I also want to make sure my clients best interests are always first and foremost, and knowing the ins and outs of your mortgage interest calculations is not only my responsibility, but also something I take great pride in.

So next time someone asks you how you'd like to make your payments, be sure to ask them when and how they calculate those payments and the interest owed. If they can't explain it, give me a call and I will!

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Friday, 30 October 2015

5 Simple Fall Maintenance Tips

Hello again everyone! With winter coming on strong and temperatures dropping more quickly than I'd like to admit, I thought it was time that I share a few Fall Home Maintenance Tips.

Even things as simple as these minor maintenance tasks can save you from expensive repairs and big headaches over the next few months. Don't make the mistake of overlooking the little things, they become bigger over time!

  1. Take care of your hoses and faucets: Disconnect your hoses before the freezing temperatures arrive, because they can cause water to back up in your faucets—and eventually cause the plumbing to crack. Then, if possible, shut off the valves for your exterior faucets.
  2. Winterize your lawn mower: Either run the mower dry, or use a fuel stabilizer to prevent the gas in your mower from degrading and damaging the engine.
  3. Clean out the gutters/eaves: Twigs and leaves will build up in your gutters throughout the fall. Make sure to clean the gutters before there’s heavy snow, because the weight of both the leaves and the melting snow could cause the gutters to break away from the house. Fixing this later is always more expensive than cleaning them today.
  4. Get the furnace ready: Your best bet is to call in a professional to give the furnace a tune up, but at the very least you should change the filters. Your furnace is a very sensitive, finely-tuned appliance and your energy bill will thank you later for maintaining it. 
  5. Inspect the roof: As snow accumulates and melts from your roof, it can cause major water damage if the roof isn’t in good shape. Look for loose shingles, rust, moss—anything that could lead to decay or water damage. It’s best to be proactive with your roof—repairs can be extremely expensive—so don’t hesitate to call a roofing professional if necessary. It’s worth it in the long run! 
Stay tuned for more as I continue my ever-expanding list of most recommended maintenance and repairs before we bunker down for winter!


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Friday, 16 October 2015

Top 5 Reasons Your Pre-Approved Mortgage Could Be Declined

Quite a while ago, I wrote about the differences between a mortgage pre-qualification and pre-approval.(Hint: It's ALL about the documents...) While it covered a few of the things to consider, I thought it was worth explaining some of the reasons why even a pre-approved mortgage can be declined. Although I hold myself to an exceptionally high standard, there will always be some things which could cause an decline and which are beyond my control as your mortgage broker.

I just recently had clients call me to inquire why their previous mortgage broker was unable to follow through on their pre-approval(from approx. 4 months ago). I reviewed their application and was quickly able to spot the changes in their situation which made it much more difficult to approve than they had originally anticipated. If their broker had taken the time to explain this to them, they could have not only made the client happy but even worked through it and obtained final approval. Here are some things worth watching out for:

1) Property/Appraisal Problems

It can be very difficult to predict when problems of this type will come up, but I always suggest letting your mortgage broker know about any properties you are considering. Our training allows us to look for details about a property which could be detrimental to your approval, including:

  • A low appraisal, vs. your purchase price(For more on Appraisals, check this out)
  • Rural properties, or properties outside a lender's service area
  • Non-typical homes (Mobile, modular, straw, anything out of the ordinary)
If we take all the potential factors into consideration for a particular property, it becomes much easier to understand if or when a lender may decline, based on your choice of property.

2) Changes To Your Credit

Credit blemishes happen all the time, and can often be overcome when applying for a mortgage. The problem here happens when surprises show up late in the approval process. Some of the potential roadblocks could include:

  • Missed payments
  • Increased balances
  • Accounts which have recently gone to collections
For the most part, these things can be overcome with some planning so my best advice is to let your mortgage broker or lender know in advance if you are anticipating any major changes or surprises. It's understandable that things sometimes change between pre-approval and writing an offer to purchase, but it's easier to explain when we are given the information ahead of time.

3) Employment/Career Changes

I think this one pretty well explains itself. If you change your job between your pre-approval and the time of your approval, it could cause some problems. Here are some tips to remember:



  • Same industry/Type of job = Probably OK, ask your mortgage broker
  • New industry/Different career = Could be OK, ask your mortgage broker
  • Go from employee to self-employed = Probably NOT OK, check with your broker
Mortgage applications are all about trying to tell your story to the lender. If your story makes sense, i.e. you got a great new job in a similar industry, then it should be straightforward to explain this to your lender. If you become self-employed however, almost all lenders will require you to have 2 years of business under your belt before they will give you an approval. Just something to consider when buying or refinancing your home, and considering some job changes at the same time.

4)Increased/New debts or Liabilities

Your monthly payment obligations all count towards what is called your Total Debt Service Ratio(or TDS, See HERE for more info). As your payments increase, your monthly ability to service your mortgage decreases proportionally. Things like:

  • Buying a new car
  • Going on a shopping spree
  • Increasing your payments on an existing loan
Can all affect your approval amount, so consider calling your mortgage broker before driving that new car off the lot!

5) Guideline Changes

If there's one thing to be learned by those in the real estate industry, it is this: The rules are constantly changing. With changes being made by everyone from FICOM to CMHC to the various lenders, the only constant is the changing rules. Some of the guidelines that could change during the course of your pre-approval might be:

  • Debt servicing requirements (See GDS/TDS article for more info)
  • Minimum down payments (See this article for more)
  • Required documentation (For income, down payment, property, etc.)
If either the regulators, the mortgage insurers, or your chosen lender decide to change their policies, then there is always a possibility that it could affect your application. Always put your trust in your mortgage broker, knowing that is it our job to keep you up-to-date on changes like this as they happen.

Are you thinking about getting pre-approved for your next mortgage? Give me a call anytime and I would be happy to sit down with your for a Free Consultation to discuss your needs. Visit my website at www.ryanwsmith.ca for more info, or to fill out an easy, quick online application!

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