Buying a home or someone you know is? 5 BIGGEST mistakes to avoid.

General Angela Calla 16 Feb

Buying a home is a huge investment, so you don’t want to complicate the process with errors. There are many things that can make your first home buying experience feel overwhelming, but learning how to overcome the obstacles will alleviate some stress and headaches. Here are the top five mistakes new home buyers make, and how you can avoid them.

1. Not Becoming Pre-Qualified

Getting pre-qualified for a mortgage allows you to understand the home prices you can afford.  In today’s market it’s a luxury to qualify for a variable rate mortgage which means you will qualify for less house in most cases. Understanding this means you won’t be searching above your means. It also proves that you’re a serious buyer. When you’re pre-qualified, you may place a bid immediately after you find the perfect home. Also, it gives a real estate agent a negotiating edge over other bidders. This involves providing income & down payment confirmation upfront in the application process. It’s important not to change your status in the meantime read: 9 ways to squash your mortgage approval http://angelacalla.ca/m/blog_post.php?id=7733  You STILL have to place subject to financing on your home, as the lender will require to approve the property even if they have approved you as the borrower. Remember they always reserve the right to ask for more information where they deem necessary at any point.

2. Not Understanding the Total Cost of Buying a House

Besides the face value, there are numerous costs associated with buying a home. One of the most expensive is closing costs. Normally, you’ll need up to 2.5 percent of the purchase price. This goes toward land transfer tax, property tax, property insurance and moving costs. Also, there’ll be costs associated with the home itself. Furniture, landscaping, and other renovations will require even more money. The biggest mistake home owners do not consider is strata fees and property taxes will only go up. If you own a detached house, you should still be putting money away each month for maintenance you will need down the road. People often think the mortgage rate is the most important factor when getting a mortgage. Actually it’s the terms the terms that outweigh the rate & lead to the lowest cost of homeownership. An example of costly exit fee’s that clients are not aware of & fall victim for an attractive rate on a 250k example that can really set you back if you deal with the banks directly on your own: http://www.angelacalla.ca/blog_post?id=12610

3. Not Requesting a Home Inspection

It’s extremely important for you to make an offer conditional on a professional home inspection. You certainly don’t want to purchase a home that’s filled with defects. If the results identify problems, you’ll be able to negotiate a lower price to offset repair costs.

4. Not Choosing the Best Payment Schedule

Depending on how much you can afford, it’s best to create a custom mortgage payment schedule. Paying a mortgage off quickly will save on interest. You can save a great deal of money by selecting a shorter amortization time frame. Even increasing the amount placed on a monthly payment will make a big difference in the end. However, longer amortization lowers the payments each month. This allows you more cash flow for fun things. Do not get fooled by an attractive rate, or bundle pricing see: costly mistakes we help you avoid http://www.angelacalla.ca/blog_post?id=8318 & Essential questions for your mortgage provider https://www.youtube.com/watch?v=4akUAZOlufQ )

The standard home mortgage has a 25-year amortization period. To qualify for a longer time period, it will be necessary to make a larger down payment. The maximum time allowed is 30 years.

5. Not Using YOUR OWN Qualified Real Estate Agent

When you’re buying ANY home, it’s essential to consult with a professional real estate agent. One that ONLY has your best interest in mind. The listing agent of a house as well as developers/builders representative is CONTRACTUALLY obligated to work in the benefit of who hired them to get then the highest price. DO NOT BE FOOLED BY NON DISCLOSURE. These experts will work for you and make sure you’re paying a fair price. Also, they offer advice and will be able to locate homes that fill your individual wants and needs. When entering into a contract, real estate agents known what terms are necessary to include. Since they have your interests at heart, they’ll be able to negotiate the best deal. They’re the most important tool when it comes to any home buying. Listen here to Angela Calla & Rob Boies on CKNW The Mortgage Show interview here: http://webcms.dominionintranet.ca/user/uploads/1334/rob_interview_aug_23.mp3 and see more at www.angelacalla.ca/resources

After reviewing the common errors of new home buyers, it’ll be simple to get through the process without problems. You’ll be able to enjoy your dream investment and pay the mortgage without financial stress.

Angela Calla, Mortgage Expert, AMP of the Year in 2009 and Host of The Mortgage Show on CKNW Saturday’s at 7pm. One of the most influential people in the mortgage industry for her sheer volume of people she helps save money on their mortgage, contributions she makes by consulting with Canadian’s national & regional lenders, insurers and media contributions. She and her Port Coquitlam, Port Moody & Vancouver team are here to help you personally at 604-802-3983 or callateam@dominionlending.ca

 

Testimonials

General Angela Calla 10 Feb

Angela,

What a relief. I can’t thank you enough. I am a single mom with 3 children that has always been a housewife. I didn’t foresee divorce in my future and felt devastated when we separated over the holidays. Things have not been amicable and my head was spinning. Everyone was giving me advise, and finally a friend of mine who you helped Patty, suggested to contact you. You let me know how to protect my credit to the best of my ability through the process and how that played a roll in me getting a mortgage. Then you walked me through a variety of senerios. One how we could come to terms with selling the house and what the equity and potential child and spousal support would allow me to qualify for.

You also educated me on how the terms I selected would play a role in what I qualified for and how we could plan to change that over the next 5 years by taking the right mortgage that doesn’t have high exit fee’s.

Then you came up with a solution I hadn’t considered that could keep the stress of selling and moving out of the picture entirely, pay out my ex, generate revenue and keep everything stable for my children.

All of which I didn’t know about before as everyone had advise that was making my head spin and me very stressed. You brought me empowerment through knowledge with clarity.

You were compassionate, supportive, understanding, the list of gratitude and praise goes on.

You evelvated my life. Things would be very different for me had I not gotten your specific help Angela. I am eternally thankful for your help for me and my children, and if anyone I really care about ever has any mortgage related question or need, I will share my experience and introduce you personally in an email to make sure they get all the benefits I was able to get from working with you and your team personally.

From the bottom of my heart, Thank you.

Jennifer of Maple Ridge

 

Angela,

I am so happy, and want to share our experience! Being a new mom and having a year of mat leave our lives changed. Filled with excitement and new parenthood, we also had of course a decrease in our income and had some debt outside of our mortgage we were stressed and were stretched to the max. You had helped a girlfriend of mine Mellisa and she had introduced us over an email. When I got back to work, things were not the same. They changed my position, put my desk practically in the closet, we were financially strained, stressed I felt belittled and now had a day care expense on top of it. I thought, I am leaving my daughter for this?!

When we contacted you, you were able to redo our mortgage savings us $1675 a month. Enough to change our life completely. I was able to quit my job, stay home with our daughter, we had no more outside debt, so we save money monthly. It even improved our marriage as we are not financially stressed anymore, and get to spend quality time together. It also gave me an opportunity to take a step back and really plan my next career move when that is right again for our family, which is empowering. You taught us all kinds of ways with how the new mortgage plan you set up also has additional security built in and will save us more money down the road in the event of another life change.

We are so happy and thankful my friend ensured we dealt with you directly.

We will make sure to do the same for our friends and family.

Thank you for everything,

Laura and Tyler of Coquitlam.

BOC Decrease & What That Means For Your Mortgage

General Angela Calla 2 Feb

On the heels of headlines forecasting ‘inevitable interest rate hikes’ came (from left field for many journalists, less so for many Mortgage Brokers) the announcement of a 0.25% rate reduction to the Bank of Canada’s overnight lending rate.

The majority of Mortgage Brokers found themselves spending the first two work weeks of 2015 calming clients in the face of multiple headlines forecasting interest rate ‘shocks’ ahead. In turn, the past two weeks were spent explaining to variable-rate clients the subtle, yet important difference between the bank of Canada’s Prime rate and their mortgage lenders’ ‘Prime’ rate.

Lenders base variable-rate mortgages on what is referred to as their own internal Prime rate. Although historically lenders have moved in lockstep with the Bank of Canada decisions, there was some initial reticence to lower effective interest rates on current variable-rate mortgages and after nearly a week without movement Lenders reduced their internal Prime rate from 3.00 to 2.85% sharing some of the Bank of Canada’s reduction with variable rate mortgage and line of credit holders, but not all of the rate reduction.

One important point is that the Bank of Canada’s Prime rate is specifically NOT used to qualify clients for mortgages. In other words, Canadians do not currently qualify for any more mortgage debt today than they did the day before the rate reduction announcement. Accordingly this reduction in interest rates does not directly strengthen purchasing power for home buyers, and thus should do little to add more fuel to real estate values.

It is further worth noting that, historically, as lenders reduce their own Prime lending rate on variable-rate products, the discounts offered on these products—mortgages, lines of credit, etc.—tend to be adjusted upward, negating

  

any potential gains for new mortgage applicants. Existing closed variable-rate discounts will of course continue to be honoured until the end of the client’s mortgage term.

In short, although this rate reduction may bode well for clients currently in a variable-rate mortgage, it may not be of significant net benefit for clients applying for a variable-rate product in the coming weeks. Although today we have both deep discounts on variable rate products, and the new lower 2.85% Lender Prime rate. New applicants may have their cake and eat it too.

Fixed rates, although largely dictated by the bond market, have been edging downward since Jan 5. Despite this material and documented decline, there had not been a major headline noting this. Rather headlines were largely promoting the opposite of what was occurring in reality. The day that the Bank of Canada announced the cut of 0.25%, the bond market saw a (then) record low of 0.83% and has since dipped below 0.60%.

This has created significant increases in lenders’ fixed-rate profit margins, and arguably calls for further rate reductions to fixed-rate products, in particular the five-year fixed-rate mortgage. However, as with the cut to Prime, lenders have thus far been slow to respond. Offering 0.05% and 0.010% reductions and reaping the increased profits. Lenders remain unlikely to make any significant moves until one breaks ranks. With strong property values coupled with strong sales activity in most major markets, there seems little incentive—or fundamental desire—on the part of lenders to reduce rates further.

What is evident at this time is that variable-rate clients will continue to be the big winners into the foreseeable future, and those clients who prefer a fixed-rate product will also continue to benefit from historic lows as well. It should be a very busy Spring market!

The Angela Calla Mortgage Team is always here to help you personally with the best mortgage contact us 604-802-3983 or callateam@dominionlending.ca

Property Assesments As A Measure Of Value

General Angela Calla 2 Feb

When homeowners receive provincial Property Assessment notices, some will smile and have a bit more spring in their step, feeling the assessed value is accurate or perhaps even overly positive. Others will wilt and lament a modest gain or even a decrease in the assessed value over the previous year or period. Reactions will of course vary factoring in the potential increase in property taxes that tends to come along with stronger assessments.  The reality, setting aside taxation concerns, is that neither parties’ emotions should be tied to the ‘value’ printed on these notices. 

A provincial property assessment is an approximate value based on the (broadly) estimated market value as of the previous years. There is a lag time between the estimation of valuation and delivery of the envelope. It also fails to involve a formal site visit or viewing of the inside of the home to consider either significant upgrades or significant deterioration.

To put this in perspective, few lenders will work with a detailed official appraisal report that is even 90 days old.  Most prefer a report

  

completed with 30 days, as markets can move significantly month over month.

For these reasons, among others, a provincial property assessment should not be relied upon as a totally concrete indicator of value for the purposes of either purchase, sale, or financing.

Always enlist a licensed professional, or perhaps even two or three, in order to get a timely and detailed appraisal of current market value. This will provide a much more accurate reflection of current market values reflecting recent comparable sales, value for zoning, renovations and/or other unique features to the property.  An appraiser is an educated, licensed, and heavily regulated third party offering an unbiased valuation of the property in question.

Think of your provincial property assessment as something akin to a weather forecast spanning far larger and more diverse areas than the unique ecosystem that is your neighbourhood, street, and specific property.

The forecast may call for rain in your city, yet you might have a ray of sunshine radiating upon your street specifically.

Angela Calla Mortgage Team 604-802-3983

callateam@dominionlending.ca

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