CREDIT UNIONS – AN ALTERNATIVE LENDER

Mortgage Tips Darick Battaglia 31 Jan

Credit Unions are often overlooked as a choice for your mortgage lender – but there are reasons why considering a Credit Union might be well worth your while.

One of the primary attractions for Credit Unions is that they are regulated provincially, so they are not restricted by the Federal regulations that banks and monoline lenders have to adhere to*.

*When purchases have down payments of less than 20%, all mortgage loans are required to have mortgage default insurance and therefore are still subject to federal guidelines of CMHC and other insurers.

In most cases Credit Unions have the advantage of not being federally regulated which has implemented strict guidelines for loans that includes rules loan documentation, income documentation and tight debt services ratios (how much you can afford).

Mind The Gap

The gap between federal and provincial rules do allow credit unions to compete on some products the banks are unable to provide. Credit Unions are able to offer competitively low interest rates for files that a bank or monoline lender would not be able to fund. In many cases, these files would go to private lenders whose interest rates are sometimes double those of the credit unions’.

An additional benefit of Credit Unions is that they have the ability to share in the dividends with their clients – which can ultimately lower your effective mortgage rate because you are getting cash back.

The Drawbacks
There are some cons when dealing with a Credit Union…often they don’t offer mortgages outside their lending areas so if you are with a smaller Credit Union you may not be able to port your mortgage (bring your mortgage to a new property) if you decide to move. This is a very important consideration. Life situations do change, and if you have to move before your mortgage term is up, you run the risk of having to pay some hefty penalties.

You may also be obligated to open an account at the Credit Union and in some cases maintain a balance where the mortgage amount is withdrawn from, which is a possible deterrent for some people. There are often additional conditions they sometimes require in order to obtain their very best rates.

Another Reason to Contact Your Mortgage Broker
As always, my advice is to contact your Dominion Lending Centres mortgage broker – to discuss all mortgage lender choices and find a lender that is the right fit for your personal needs. As a source of experienced and unbiased information about all types of lenders, your broker is the gateway to your perfect home mortgage.

Courtesy of Eitan Pinksy – AMP – DLC Origin Mortgages based in Vancouver, BC.

PRE-APPROVALS & PRE-QUALIFICATIONS

Mortgage Tips Darick Battaglia 30 Jan

Throughout the mortgage and home buying process, there are many steps and many checkpoints a buyer will need to complete before they can move on to the next one. A buyer will not be able to close on a purchase if they do not have a lawyer. Financing conditions need to be lifted after confirmation from a mortgage broker that a file is broker complete. A buyer should never write an offer on a home until they have a realtor working for them. Most importantly, a buyer should never be looking at property they are considering buying until they have been pre-qualified and pre-approved.

Now, one thing we need to make clear- pre-qualified and pre-approved are two different things. Pre-qualified is when someone completes a mortgage application with a mortgage broker or a bank representative and is told how much they can afford. Pre-approved is when someone has written confirmation from a lender stating they are willing to lend based on what is stated in an application and the applicant’s current credit history.

The difference?

Pre-qualifications are based solely on the knowledge and experience (sometimes even opinion) of a broker or bank rep. A pre-approval on the other hand is backed by the lender actually willing to give you the money. When someone says they are pre-qualified, that means they have taken an application with a mortgage broker or bank and in broker or bank rep’s opinion, they can afford “x” amount on a home. A pre-approval is a written letter from a lender stating based on applicants current credit history, declared income on application and current assets, we will lend “x” amount pending confirmation everything stated in the application is verifiable and the property meets all lender requirements.

As you can probably tell, one can be more reliable than the other, especially if you are working with a mortgage broker or bank rep that is inexperienced in the industry. Pre-approvals also usually come with a rate hold. What a rate hold does is guarantee you the interest rates that lender is offering today for a certain amount of time (usually 120 days), and if you put an offer on a place within that time period, they will give you that previous rate even if they went up. If rates go down, they will allow you to access the lower interest rate as well.

You must always get yourself pre-qualified before you begin looking at homes so you know what you can afford. Once you have and you are actively looking, it is very important you try and get a pre-approval before you write an offer. It will give you that extra confirmation your application is acceptable, and protect you against interest rate increases while you look.

Courtesy of Ryan Oake – AMP – DLC Producers West Financial based in Langley, BC.

WINTER IS HERE! GET A WORRY FREE MORTGAGE!

General Darick Battaglia 25 Jan

This time of year, there are a few less mortgage’s being done- not many people want to move into a new home in the snow. But if you want to get a worry free mortgage, this is a great time to be shopping.

Scope out those potential neighborhoods – how many snow shovels?

Will my new neighbors shovel their driveways?
Are there any super nice people on the street willing to snow-blow my sidewalk?
Can I walk around safely?
Are they using salt, sand or kitty litter to de-ice the walk?
How far is this house located from a bus route or major traffic route that will get plowed first when we have a lot of snow?
My top tip? Scope out that neighborhood right after it snows – compare early morning snow levels to slightly after work snow levels. In some neighborhoods you can drive around and count how many people have shovels ready near their front door.

And if you closely examine sidewalks, try looking right between two homes – this can tell you if two people shoveled at different times – or if that super nice multiple driveway shoveler exists in this neighborhood! That’s what I call a worry free mortgage!

What? You need more than just good neighbors with shovel’s to have a worry free mortgage?
You want the best interest rate, or to confirm that you’ve got a mortgage that let’s you pay it off faster? Well, a Dominion Lending Centres mortgage broker will help with that.

Courtesy of Jillian Napen – DLC HT Mortgage Group based in Grand Prairie, AB.

A NEW YEAR AND A NEW OPPORTUNITY FOR YOU

General Darick Battaglia 24 Jan

If you have been reading the news lately, you will know that the new stricter mortgage rules have resulted in more people than ever postponing purchasing homes. Sales have dropped across the country.

As a result of these events, the rental market is booming with rents going up everywhere. The average rent in Toronto now is $2300. This has created an opportunity for Canadians who want to buy a home and for those who already own but are concerned about qualifying when their present mortgage comes up for renewal.

Secondary suites are being encouraged in Calgary, Toronto and Vancouver. In Calgary, the city council has investigated basement suites and now wants to encourage higher density to prevent urban sprawl by allowing more other housing options like carriage homes. Carriage homes are suites built above or beside a detached garage. There are companies like Calgary Carriage Homes who specialize in building these units.

Being able to add the rental income from a suite to your income may allow you to purchase a home this year when prices are depressed rather than waiting another year or two or longer to get into your own home. You can either buy a home with a secondary suite already in place or build one. The program for building a suite is called Purchase Plus Improvements. It is available through multiple lenders and mortgage insurers.
If you are presently a homeowner and interested in increasing your income, the program you need is called Refinance Plus Improvements. The rules for these programs can be explained to you by your Dominion Lending Centres Mortgage Broker.

The rules on zoning, and building suites can be found on your city government website.

Courtesy of David Cooke – AMP – DLC Jencor Mortgages in Calgary, AB.

BUYING YOUR FIRST HOME? – THESE TIPS WILL SAVE YOUR LIFE

General Darick Battaglia 23 Jan

So you’re wanting to buy a new home? That is some very exciting news. First question, are you prepared?!
We all know big-item purchases are scary. It’s expensive, you are fully committing to this household – there is no turn backing without that pricey consequence. We totally get it.
The ultimate first-step is to do your research. You are going to want to find out the essentials before you start hunting for those pretty houses listed on Pinterest!
Let’s start here.

Credit History
• How many credit cards do you currently have under your name?
• Do you pay your bills on time?
• How many loans do you currently have?
If you own a credit card or have a loan with an established bank, you have credit history. This information is then transferred into a financial summary known as a credit report.

Credit Report
Your credit report states these vital pieces of personal information (DO NOT let other people in on your personal finances. This should be a give-in by now!)
• first and last name
• home address
• social security number (SIN)
• credit cards
• loans
• how much money you owe
• whether or not you pay your bills on time
All this ‘credit’ talk is important because it allows lenders to determine IF they will lend you money. Your lender, whoever you choose to go with, will be on your credit situation right away. The sooner you know what is on your credit, the better!
As for your credit score, it’s best to only have it checked once as having multiple credit check by different lender can cause it to change. Let us know. We’d be happy to help here.

Employment
It is important to have a steady income and also proof of employment for the last two years. Any changes to your employment have to be explicitly explained. Gathering these documents a head of time can save headaches later.

Down payment
In Canada, you need to show a 90-day history of the down payment to prove you have not borrowed the money. We will need to see any movement of that money within the 90 days so its best not to move it around. You are allowed to get a gift from family for the down payment but this money must not be repayable and we will need a letter from that gift giver explaining that!

Consult Your Wish List
It’s good to know what you want in a home if you can do it realistically. Buying a house for two? Thinking of expanding your family? You need to consider what life will look like down the road before you commit and sign that paper. Nothing would be worse than to move into a house that eventually ends up being too small because a couple of kids came into the picture or in a similar situation those grown-up kids come back home from college, university – you get the picture.
It’s also reasonable to think about factors in your dream home such as maintenance, renovations, the longevity of your stay, etc. Cover all bases, it is way better to be safe than sorry.

Finding a Broker
Who should you use to find the best mortgage for you? We think a Broker (like us), especially if you’re a first-time home buyer. There are many lenders in Canada and a broker will be able to sort through all your options.

Finding a Realtor
When it comes to a realtor, you want someone reliable. Makes sense right? A couple ways you can find out whether or not a certain realtor is legit is by doing some online research:
• Do they have a website/social media accounts? Go check it out!
• Double-check if their licence is registered and legitimate
• Look up their client feedback/disciplinary comments against them
• Check out their current listings – price range, are they a busy/relaxed business?
• Send them an e-mail with any questions! Do they have the appropriate knowledge?

Feeling better about buying that first Home? That’s exactly what we like to hear.

Courtesy of Chris Cabel – AMP – DLC HomeHow Mortgage based in Calgary, AB.

THE TALE OF THE FORGOTTEN MONEY

General Darick Battaglia 22 Jan

Ever wonder what happens to bank accounts that are inactive, forgotten about and left unclaimed? The answer to that question is that you probably haven’t. I know the thought of it never really crossed my mind and I bet that would be the case for most Canadians.

My initial thought was “Seriously? Who forgets they have money or investments sitting at a bank?” However, the numbers actually speak for themselves and I bet you will be a bit blown away.

At any given time, the Bank of Canada holds approximately $740 million of unclaimed money. You read that right….

$740 MILLION!!

This is money that at one time was held in a Canadian Financial Institution and went unclaimed. Those funds are eventually transferred to the Bank of Canada for safe keeping. The number caught my attention, so I did some digging.

It is not uncommon for funds to go unclaimed and when you think about it, it makes sense. Maybe there was a death and family members did not have a full picture of their loved one’s financial holdings or maybe there was no family to step in. Maybe there was a volunteer group, organization or business that had funds sitting somewhere, but they ceased operations and these accounts were lost or forgotten about.

Here are the highlights on what happens to the money.

When an account or investment remains inactive for a period of 10 years and reasonable efforts have been made to contact the rightful owner, those funds are then transferred to the Bank of Canada at the end of the year.
The Bank of Canada then takes control over those funds. Interest is earned and paid on the funds held over the next 10 years or until the funds are claimed by the rightful owner or beneficiary.
The Bank of Canada retains those funds for 30 years if the balance is less than $1,000.
If the balance is greater than $1,000 then the Bank of Canada retains those funds for 100 years!
If the funds are not collected by the rightful owner (that includes estates or beneficiaries) within those designated time frames listed above, then funds become the property of the Receiver General of Canada.
Here is the good news! The Bank of Canada has an online database that you can search and its quite simple to use. The data base retains any funds that have yet to be collected and remain in their possession. Once a claim has been made, approved and a payout processed, that information is removed from the data base. Therefore, when you search the database anything that shows up is still in the possession of the Bank of Canada. The Data base shows the account owners name, the institution the funds came from along with branch address (if available), and the amount being held by the Bank of Canada. A simple search I conducted showed balances as low as $2.00 up to $10,000-plus.

If you have some time, CLICK HERE and take a few minutes to search the names of your loved ones that have previously passed away, see what comes up. If you run a business or community organization, search those as well. Just remember that the funds will not show up in this database until the original account has been inactive for less than 10 years.

Courtesy of NATHAN LAWRENCE – AMP – DLC Lakehead Financial based in Thunder Bay, ON

7 THINGS EVERY SELF-EMPLOYED INDIVIDUAL SHOULD KNOW — BEFORE YOU APPLY FOR A MORTGAGE

Mortgage Tips Darick Battaglia 21 Jan

Self-employed individuals are quickly becoming one of the most common clients that we handle. Daily we have successful business owners come into our offices who enjoy the perks of being an entrepreneur. One of these includes fantastic write-offs that allow them to bring their income down to a low tax bracket.

However, this benefit can also mean that the same business owner may have a hard time qualifying for a mortgage all because their income is significantly reduced on paper… how frustrating ‘eh? But these savvy business owners know that there is advanced planning that is involved in being able to qualify for conventional financing. Back in 2015, Statistics Canada reported that there were about 2.7 million people self-employed in Canada… which is an astounding 14% of the total population of Canada! What does that stat mean? Two things:

1. That being self-employed is a more than viable way of earning income in today’s world.
2. That 14% may not fit into the conventional lending “box”

The Conventional Lending Box
To fit into this box, self-employed individuals must meet certain qualifications. For example, they must be able to provide:
>Two most recent years of personal tax returns
>Two most current years Notice of Assessments
>Two most current years financial statements
>Statement of Bank Account Activity
>Investment Income Statement
>Photo ID

Now, the one area that raises a red flag in the above is the tax returns. As we previously mentioned, their income claimed on the return itself might be significantly different than their actual income. Tax deductions related to business often reflect meals, rental spaces, credit card interest etc. The result is that the income the self-employed business owner shows on their tax return is a significantly lower figure than what their actual take home pay is. However, the conventional lending box requires income to justify the mortgage. So how do we pull this off?

The Unconventional Lending Box
Now please keep in mind that “unconventional” in this box just means that as a self-employed individua,l you are going to work with a Mortgage Broker to find an alternative to allow you to show that you can justify the mortgage. There are several well-known and consistently used pieces of advice that we would like to pass along to you:

1. If you are organized and planning (think 2 years out) you can plan to write off fewer expenses in the two years leading up to the property purchase. Yes, you will pay more personal taxes. However, your income will be higher, and it will be easier to qualify you for the mortgage amount you are seeking.
2. Set up your finances through a certified accountant. Many lenders want to see self-employed income submitted through a professional rather than doing it yourself. The truth is that the time you spend doing your own taxes will not be nearly as efficient both financially and time-wise as a professional. Make sure that you discuss with them what your goals are so that they can set up your taxes properly for you!
3. Choose your timing carefully. If you are leaving for an extended holiday within the two years before purchasing, your two-year average income may fluctuate. Plan your vacations and extended trips away with income in mind.
4. Consider using Stated Income. You have the option to state your income. This is based on you being in the same profession for 2+ years before being self-employed. The lender looks at the industry and researches the mean income of someone in that profession and with your experience. You will be required to provide additional documents such as bank statements, showing consistent deposits and other documentation may be asked of you to show your income.
5. Avoid Bankruptcy at all cost…. or if you do declare bankruptcy have all your discharge papers on hand to present to the lender and ensure you have two years of re-established your credit.
6. Mortgage Brokers can state income with lenders at the best discounted rates. But if you do not qualify with A lenders using stated income, then a broker will work with you to utilize a B Lender who are more lenient but may come with higher interest rates and applicable lending and broker fees.
7. Last but not least, if A or B lenders don’t fit, private financing can be looked at as an alternative option in order to get you into the market and offer a short-term solution to improve credit or top up your reporting income. Then you and your broker can refinance into an A or B lender at that time. Just keep in mind that private lending will have a higher rate associated with it , with lender and broker fees added on as well, if you choose to go with this option.

So, to all of our self-employed, hard-working, determined individuals, take heart! You can qualify for the mortgage you want, it just takes a little more planning to get everything in order. Keep in mind to that every lender has different guidelines as to how they view self-employment.

Courtesy of Geoff Lee – AMP – DLC GLM Mortgage Group based in Vancouver, BC

5 REASONS WHY REALTORS WANT YOU TO HAVE A PRE-APPROVAL

Mortgage Tips Darick Battaglia 18 Jan

You’ve decided that you want to buy a home and you call up a realtor to show you a listing and the first question they ask is “ How much are you pre-approved for?” Many realtors will refuse to book home viewings until they can confirm that you are pre-approved. Why?

1- It shows that you are seriously committed to a home purchase. I have been told stories by realtors of people booking a series of homes to see and then being dropped off at McDonald’s to be picked up by another realtor to see some more homes.

2.- People have an idea of how much home they can afford. Sometimes this amount is way off. Lines of credit, installment plans, alimony or child support payments or high condo fees can make the amount of house you can afford a lot less than you would expect.

3- Surprises on your credit report. Many times home buyers haven’t checked their credit report before house hunting. An unpaid bill or a dispute with a contractor may result in a lien or collection showing on your credit. There may even be something from a person with a similar name. It’s important to make sure your credit is clean and that it is yours and not someone else’s.

4 –Income issues. A lot of people run out to get a new home when they receive a promotion at work. If the promotion includes a pay hike, is it salary or are they relying on overtime? Mortgage rules demand a two-year history for communion, overtime or self-employed income. This also can curtail how much you qualify for.

5A – Credibility of the realtor. When a realtor makes an offer on a home for you, they are not only investing their time and the listing agent’s time but their reputation. Making offers that will not result in a firm sale hurts their reputation in the industry. Trustworthiness and reputation are very important to realtors as they are guiding you in the largest purchase you make in your lifetime.

5B- Negotiating Strength. In a situation where there are competing offers on a property, the sellers agent will encourage the sells to take the offer that is backed by a pre-approval over another offer that does not have a pre-approval to support it. Your chances of getting your dream home are greatly increased with it.

My one recommendation is that you take the time to contact your favourite Dominion Lending Centres mortgage broker and get pre-approved. It will save everyone time and help avoid disappointment for everyone.

Courtesy of David Cooke – AMP – DLC Jencor Mortgages in Calgary, AB

NEW YEAR, NEW WAYS TO MANAGE THAT HOLIDAY DEBT!

General Darick Battaglia 16 Jan

We hope your holidays were spent warm, safe and in the company of family and loved ones. We also hope that you’re not drowning from all the holiday purchases such as the dinners, the appetizers, the gifts, the gift cards, the drinks, the party favours – shall I continue?
It is expected that most people will spend over their budget during the holiday season. In fact, Canadian consumers spent 3.7% higher than they did last year. According to PwC, Canadians spent, on average, $1,563 each on consumer products this holiday season.
Are you among that group who spent 3.7% higher than last year? Not too worry, we get your generosity and as always, we are here to help you during this NORMAL time period of financial anxiety and discomfort.
Once again, we’re all in this together. You are not alone in your debt situation no matter how high or how low.
Our first suggestion is to put those credit cards on ice and leave them for awhile. Cut out the temptations completely and focus only on the necessary transactions including home utilities, car insurance, mortgage, etc.
This extra money can be put aside and stored in your savings for multiple reasons. It is important that you DO NOT SPEND this lump sum of cash on clothes, electronics, or big ticket items. Just because this money is readily available to you – doesn’t mean it should be spent on materialistic items.
Don’t know what to do with that extra cash and want to make good use of it? Direct this money towards credit card debt (this one is important!!) or perhaps a “nest egg” before a move across the country, retirement, whatever suits you best.
We highly suggest not letting that holiday debt get the best of you by addressing it first and foremost. Do not let this debt slide under the radar and come back mid-year with more debt racked on top of it. Trust us! Addressing your Christmas dues now will make the rest of your financial year reasonably better without having those regrettable thoughts about giving your gifts to your families.
Since it is the beginning of January and new year resolutions are [hopefully] still fresh in peoples minds, make it your 2019 goal to create a monthly spending plan. Setting up a budget will put an end to bad spending habits and increased debt if you take your budget seriously as well as make realistic changes that are suitable to your current lifestyle.
Having a financial plan will force you to look at the numbers and assess your spending. You may be very surprised by the amount of money you are currently using towards just a simple cup of coffee on the way to work.
If you have questions as to how to get started, here is a link to the 10 Basic Steps provided by Smart About Money that takes you through your motivations about your money, how you would like to utilize your money and how to put your budget into action.
Lastly, and this tip is easy, if you already have one or two credit cards that are racking up debt – do NOT apply for a new credit card. We assure you handling one monster at a time is better than taking on multiple beasts.

Courtesy of Chris Cabel – AMP – DLC HomeHow Mortgage based in Calgary, AB

2018 IS IN THE BOOKS, HERE ARE THE Q4 NUMBERS!

Mortgage Tips Darick Battaglia 15 Jan

2018 was a challenging year for the housing and mortgage market—new regulations, rate increases and more made it one of the toughest years for homeowners to qualify. Despite all this, there was still $45.3 billion in collective profits made by the Big Six Banks (Bank of Montreal, CIBC, National Bank of Canada, Royal Bank of Canada, Scotiabank and TD Bank).

Profits for the big banks were up an average of 13% over last year, however their stock prices were down across the board. Here’s the key points from each of the 6 major banks.

What can we expect in 2019? In general, the banks are forecasting increased mortgage growth, but there are also lowered expectations of Bank of Canada rate hikes this year which could impact net interest margins negatively.

From the Big Bank reports there were areas that stood out:

1. BMO: predictions of increasing 1-2 bps per quarter, dependent on certain moves and choices required to do so. Source: BMO conference call
2. CIBC: RESL growth has slowed, but they are predicting an increase in their mortgage portfolio in line with where we see the overall market growth trending. Source: CIBC Conference Call
3. National Bank of Canada: 2018 completed their repositioning of their distribution model translating to higher levels of mortgage originations and renewals. They saw a year over year increase in amortizing HELOCS due to consumers choosing to lock in their rates. Source: NBC Conference Call
4. RBC: Increase in mortgage portfolio of 5% year over year, with a growth in the range of 3-5% for 2019. They feel they have a strong renewal rate in comparison to other banks. HELOC products have shrunk for RBC as clients at renewal looking to lock in our residential mortgage. Source: RBC Conference Call
5. Scotiabank: expecting increased margins supported by higher interest rates. Residential mortgages are also expected to grow at mid-single digits in 2019. Source: Scotiabank Conference Call
6. TD Bank: mid-single digit growth for their proprietary total real estate secured lending portfolio in 2019. They are expecting a rate of growth a little bit lower in the first half, but mid-single digits for the full year. Source: TD Conference Call.

Do you still have questions regarding the 2019 Mortgage Market or the Q4 wrap-up? Dominion Lending Centres mortgage professionals are well versed in the in’s and out’s of the mortgage market and would be happy to walk you through the full details.

Stat Sources: https://www.canadianmortgagetrends.com/2019/01/q4-2018-bank-earnings-mortgage-morsels/

Courtesy of Geoff Lee – AMP – DLC GLM Mortgage Group based in Vancouver, BC

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