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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Friday, 9 October 2015

The 'Free' Mortgage Switch

When is free not really free?

Every day for the last month or so, I've been walking past a major bank branch who has been advertising a 'Free Mortgage Switch'. When I saw the offer, I couldn't help but remember the old saying: "If it sounds too good to be true, it probably is!".

With that in mind, I spent some time researching the program and thought it was worth clarifying the small print that goes along with offers like this. Several of the lenders I work with offer a similar program, and almost all of them have some limitations that you should be aware of.

Rule #1: The Fee Cap

Even if the offer includes transfer of some fees, there will be a cap(Usually of $1000-$1500) beyond which you will be responsible for paying the difference. This keeps your new lender from accepting the risk of a transfer that comes with exorbitant fees from your current lender. Always ask questions about the cost of leaving your lender, before assuming that those fees will be paid for.

Rule #2: Collateral Charges 

A collateral charge mortgage is registered against your property differently from a standard mortgage, and is often unable to be transferred to a new lender(For more info, click here). While there are some programs to allow a collateral switch, most times you will be required to pay the fees to discharge your old mortgage, and register a new one with your new lender.  This discharge/registration process can be expensive and will require the services of a lawyer or notary to complete.

Rule #3: The Cash-Back 'Free Switch'

There are now some big banks offering up big cash-back incentives when you switch to their institution, and while this could help offset some of the extra fees that might not be covered, it comes at a price. Cash-back mortgage options come with a hefty interest premium, and could wind up costing you a lot more money than you would expect. Carefully compare how badly you might need that cash now, vs. how much the increase in interest will cost you over your mortgage term.

Rule #4: Where Has This Thing Been? 

Your new lender will also have a specific set of guidelines describing who they will accept mortgages from, and under what circumstances. If your mortgage is currently with a lender that isn't on the list, then you guessed it! You're going to have to discharge the old and register the new(i.e. there will be legal costs)

Today's message is simply this: Always read the fine print, it's rare that a deal which sounds too good to be true actually is. There are plenty of lenders who will gladly transfer your mortgage in at no cost, but you are going to have to meet the criteria they set out in advance. This generally means no collateral charges, very low fees/penalties, and only from a lender with whom they are comfortable dealing.

When you're thinking about switching or transferring your mortgage elsewhere, come see me first for a no-cost review of your situation and some good advice about where and when to make the switch. It will not only make the process easier, but could save you a lot of money!

Contact me HERE for more info!

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Thursday, 8 October 2015

Switch Up Your Payments

www.gotcredit.comWhen was the last time you were thinking about your mortgage? Don't worry, I always am! Did you know that carefully choosing the right payment schedule for your mortgage could save you hundreds, or even thousands of dollars? Read on to learn more!

My mission today is to guide you through the myriad of options available for making your mortgage payments. This info might also come in handy next time you're considering a car loan, or any other debt with installment-type payments.

Monthly Payments

When most people think of installment payments, they usually think of monthly periodic payments. This is a great option for people who have income periods that coincide with this schedule, and it is usually the default option for most loans.

I would recommend this option if you are paid once monthly or semi-monthly, and like the way this fits into your budget.

Semi-Monthly Payments

This option simply takes the regular monthly payments that have been calculated and divides this amount in half. Two payments per month are then debited, usually one near the beginning of the month, and again at mid-month. The payment dates are sometimes flexible and should be discussed with your mortgage broker.

This would be a great choice for those who have a regular paycheque arriving twice monthly, as opposed to every two weeks. Which brings us to...

Bi-Weekly Payments

Bi-weekly simply means that a payment is made every two weeks, like clockwork. Standard bi-weekly payments are calculated according to this schedule, and will be a lower amount than semi-monthly, as you will be making more payments each year.

For those who are paid every two weeks, this is an excellent solution vs. trying to save and wait for a monthly payment to come out of your account. It automates your payment schedule, and if you accelerate it, can even have your mortgage paid off faster. Read on below for more about acceleration...

Weekly Payments

I think by this point you can pretty much figure out how weekly payments are withdrawn and calculated. Your payment will come out once every week, and will be calculated based on 52 payments per year.

Similar to bi-weekly, this is an option that can work if your pay periods correspond to this schedule, and makes your payments simple and automatic at the same time every week.

Accelerated Payments

http://ryanwsmith.ca/mortgage-calculators
Accelerating your payments is done by changing the calculation performed for your mortgage application. Accelerated payments are derived by calculating the standard monthly payment, and then dividing that amount by your desired payment frequency.

For example:

$200,000 Mortgage, Amortized over 25 years @ 2.69% =
 
Monthly Payment of $914.97
NON-Aceelerated(Standard) Bi-weekly Payment of $422.04
Accelerated Bi-weekly payment of $457.48(1/2 of the monthly payment)

As you can see the bi-weekly vs. accelerated payment difference is not dramatic, but you'd be surprised how much it can save you in the long run. Over just 5 years of payments, choosing the accelerated bi-weekly option would save you $319.34 in interest and leave you owing $4926.54 less at the end of a 5-year term.

Look at that over the 25 year life of your mortgage and it could save you $8586.04 in interest, using those same figures. This means your mortgage costs you less and gets paid off sooner!

Why Do I Care About This?

The bottom line is that I am here to help you make the best decisions possible about your mortgage. Something like choosing the right payment schedule for you is important, and it could save you a lot of money!

For more info and tips
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