Trilogy is a set of three works of art that are connected and that can be seen as a single work of art or as three individual pieces. I pulled this definition from WIKIPEDIA. I wouldn’t quite go as far to say this series was ‘work of art,’ the only thing I did find comparable with the meaning was this could be read as a series or they can stand alone separately. Anyway, you can read Volume 1 here and Volume 2 here to complete the trilogy of mortgage terminology.

Consumer Proposal vs Bankruptcy

A consumer proposal is a formal, legally binding process that is administered by a bankruptcy trustee. The trustee will work to develop a plan or an offer to pay creditors a percentage of what is owed, or extend time you have to pay off the debt…or both. The concept of personal bankruptcy in Canada is to assign or surrender everything you own to a Trustee in exchange for the elimination of your debts. This is governed by federal law, the law is designed to permit an honest but unfortunate debtor to obtain relief from his or her debts while treating creditors equally and fairly with a fresh start. Debt must be insolvent; a minimum of $1,000 owing and able to meet ones debts as they are due to be paid. You may be entitled to an automatic discharge from personal bankruptcy in 9 months, the minimum time set by the Court to be bankrupt, provided you have never been bankrupt before and you complete various duties and responsibilities.

Monoline Lenders vs Chartered Banks

A monoline lender is a mortgagee that only processes mortgage applications; mono is the numerical prefix representing anything single, meaning one. Monoline lenders do not have other products that they cross sell and try to bundle with their mortgage product, they only provide financing solutions. Most monolines back-end insure or securitize their mortgages instead of keeping them on their balance sheet. This allows them to sell the asset to an investor. Monoline lenders are quite restrictive because they are back-end insured by CMHC, Canada Guaranty or Genworth therefore, their tolerance for exceptions on the debt service ratios is extremely limited.

Chartered banks are quite the opposite. They are a full-service financial portal offering everything from savings/chequing accounts, to investment opportunities to personal loans and of course mortgage financing. Their mortgage lending services are always cross-sold with other in-house banking products. Another major difference to mention is how each entity calculates the Interest Rate Differential (IRD) penalty.

Monoline lenders utilize the PUBLISHED RATE METHOD and banks use the POSTED RATE METHOD. Be sure to have the mortgage provider explain the IRD penalty calculation in detail. The different calculations can amount to a difference of thousands of dollars. Monoline lenders typically offer more competitive rates from the start, as their overhead and operating costs are substantially lower than Banks. These lower operating costs are passed onto the consumer as an interest savings. Banks will usually match the rate if challenged, but it’s not profitable.

Conventional vs High Ratio Mortgage

These are two terms that Mortgage Brokers and bankers use to categorize two types of mortgages, ones that require mortgage insurance and ones that do not. For a mortgage file to be deemed conventional, the borrower must demonstrate that they can put a minimum of 20% of the purchase price or 20% of the market value down. Mortgages that fall into the high ratio category are utilizing 19.99% down payment or less to a minimum of 5%. These mortgage applications require a third party to insurance to protect against future potential default. The most recognizable mortgage insurer is CMHC but there are 2 other privately operated organizations called Canada Guaranty and Genworth.

HELOC (Home Equity Line of Credit) vs LOC (Line of Credit)

Similar but different, both being securitized by the subject property. The HELOC is described as a multi-segmented mortgage product utilizing various types of mortgages; variable, fixed and line of credit product all registered against title as one charge. For example if one had a $300,000 HELOC product they could slice it up into three different segments, each totaling $100,000. A LOC is a single segment standing on its own as a charge against the title. Both allow for easy access to funds at any given time. A LOC is a great mortgage vehicle for someone in the growth stage of the financial cycle, which can be defined as young families with kids in school buying their first home that may require some renovations. As the mortgage consumer progresses into stage two and three of their financial life cycle, one may want to convert the LOC into a standard mortgage with structured payment amortized over a period of time.

Home Inspection vs Home Appraisal

I often come across clients that use these terms incorrectly, referring to the appraisal as the inspection and vice versa. An inspection is the careful examination or scrutiny of the subject property with the main purpose to uncover defects. An appraisal is used to determine the market value of real estate to lend against. This process involves comparing historical sales of the same product to the subject property.

Reverse Mortgage vs Standard Mortgage

A Reverse Mortgage is a mortgage product that allows any home owner 55 years or older to borrow money against the value of their property. It can be deemed a financial planning tool to assist with retirement or assisting loved ones with their own personal finances. The mortgage payments are 100% deferred until they die, sell or move. Simply put, a standard mortgage is the opposite of the a reverse mortgage. Standard mortgage products require a principle and interest payment on a regular frequency; monthly, weekly, bi-weekly or semi-monthly. Over time the equity or ownership stake will shift from the lender to the deed holder.

As always, if you are looking for help with your mortgage, we here at Dominion Lending Centres would love to chat with you!

Courtesy of Michael Hallett, AMP – DLC Producers West Financial 

We have finally seen a bump up in interest rates. The 5 year government bond rate hit a low of about .60 in mid-September and is now pushing towards 1%. The lenders have reacted to this and we have seen the low rates of 2.59% on the 5 year fixed rate disappear. Some banks have raised their 5 year fixed rate to 2.99%, while there are a few lenders still offering 2.64% on high ratio mortgages. The banks have also been reducing their discount rate on their variable mortgages. Where there were some rates as low as prime -.80 they are now floating between -.30 to -.50. Since the Bank of Canada and the prime rate have not changed, why is the discount being reduced? Could it be that the lenders are concerned that the Bank of Canada could drop rates again in the near future?

With all the recent changes, what does the future hold? The European Central Bank (EBC) just cut its key interest rate to -0.3% and now we have the Bank of Canada talking about the possibility of the Bank rate dropping to 0% and the willingness to go negative to help spur on the Canadian economy. Negative interest rates are another whole topic.

So where are interest rates going? Reading the economic data is like looking down the road. The further down the road you look the less clear it becomes. Therefore, we must keep an eye on the road so to speak, to know what is best for our personal mortgage situation and if we should be making any changes to our current situation. This is one of many good reasons to have a mortgage adviser, as it is to have a financial adviser.

The current economic data tells us interest rates will remain low for some time to come. The 5-yr Canada Bond Rate has fluctuated in a range between 0.60% and 1.0% for the last year and currently is sitting at about 0.86%. I suspect we will be in this range for some time to come. Looking at the price of oil and commodities in general and the huge impact they have on the Canadian GDP does not bode well for the Canadian economy. That being the case, what is the best mortgage for you? Consult your Dominion Lending Centres mortgage professional on the options that best fit your situation.

If you come across clients that are looking for mortgage advice, I am happy to review anyone’s situation, even if they are just looking for information. I offer free mortgage reviews as many mortgage holders can better their situation by renewing early or positioning themselves to secure the best mortgage well before their mortgage comes due. I follow the economy and bond rates on a daily basis; therefore, have been able to proactively secure low rates in advance for clients who have done mortgage reviews with me well before their mortgage was due.

If there is ever anything I can do to help put you in a better financial situation please contact me at Dominion Lending Centres.

Courtesy of Kevin Bay, AMP – DLC Producers West Financial 

On Friday, Finance Minister Bill Morneau announced changes to down payment requirements. Effective February 15, 2016, the minimum down payment for new insured mortgages will increase from five per cent to 10 per cent for the portion of the house price above $500,000. The five per cent minimum down payment for properties up to $500,000 remains unchanged.

Homes priced at more than $1 million by law require a minimum down payment of 20 per cent. This announcement therefore focuses on homes priced between $500,000 and $1 million.

In the Mortgage Professionals Canada (MPC) Fall Report, Chief Economist, Will Dunning discusses why raising the down payment could cause problems for the housing market, including this cautionary observation: “Rising prices have made it increasingly difficult for first-time home buyers to accumulate down payments. Increasing down payment requirements would, most likely, severely dampen housing demands from people who are financially well-qualified to make their monthly mortgage payments.”

MPC notes that the 10% requirement does represent a graduated approach while the Ministry of Finance commented that they believe this will only impact 1% of home purchasers.

Also, buyers will require greater savings in order to qualify for a mortgage. 

Courtesy of Mark Alltree, AMP – DLC Innovation Group 

Many Canadians think of retirement as a time filled with vacations, getaways to the cottage and spending more time on hobbies and interests. However, there are many other factors to consider when thinking about retirement savings. More and more Canadians are forgetting about some key obstacles that may change their perspective on what they actually need to save in order to retire comfortably.

Life Expectancy

Canadians are underestimating their life expectancy. Along with many societal advancements, health care technology has been one of the most improved areas in recent years. As a result, people are more aware of their health conditions, taking better care of themselves and thus, seniors are living longer.

According to Statistics Canada, Canadian males have an average life expectancy of 79 and females an average of 83. In 2000, the average life expectancy for males was 77 and females 82. On average, there is an increase of about 2-3 years on the average life expectancy of Canadian male and female every decade.

Knowing this, seniors now have to save more for their retirement than their predecessors. 4 in 10 Canadians age 55+ say there is a serious risk that they will outlive their retirement savings. While an additional 40% will still be in debt after the age of 65, according to The Vanier Institute for the Family.

The Rise of Long Term Care Cost

According to benefitscanada.com, Baby Boomers currently account for 33% of the population and 14% of Canadians are over the age of 65. Based on today’s demographics and trends, by the year 2036, 25% of the population will be over the age of 65. And according to Statistics Canada, in 2036, one in ten Canadians will require long-term care by the age of 55, three in ten Canadians by the age of 65 and five in ten by the age of 75.

Seniors requiring long-term care will incline in the next couple decades, and with that, the cost of long-term care will also be on a steady climb. Based on inflation for health care services reported by Statistics Canada, the inflation rate of long-term care costs per year since 2010 is an average of 3% per annum.

Young Adults living in the Parental Home

Is your 20-29 year old still living at home? According to the 2011 Census Report, 42.3% of over 4 million young adults between the ages of 20-29 either never left the parental home or they returned home after living elsewhere. More and more young adults are still living with their parents as a source of emotional or financial support. Some of the reasons include cultural preferences, cost of housing, aspirations for higher education or the struggles of unemployment.

These and many other factors can help you determine how much you need to save in order to live a comfortable retirement life. It is also important to understand your options when it comes to financial security. Seniors who are at least 55 years of age, and who own a home, are eligible for a reverse mortgage.

With a reverse mortgage, you can access up to 55% of the value of your home, while maintaining the ownership, never having to move or sell. There are no payments required and you can receive your tax-free cash in monthly installments, in a lump sum or a combination of both. The best part is, the loan from the reverse mortgage does not have to be repaid until the borrower passes away or moves/sells their home. You can now live comfortably knowing that this is an option for you.

Contact Dominion Lending Centres to find out what you can access from your most secure investment, your home!

Courtesy of Yvonne Ziomecki, Senior Vice-President – Marketing and Sales – HomEquity Bank 

Growing in popularity over the past few years, the vendor take-back mortgage can help buyers to purchase and sellers to find qualified buyers – especially in a tough market.

What is a vendor take-back mortgage – or VTB?

When a seller offers to lend the buyer a portion of money towards the down payment – this is a vendor take-back mortgage. Essentially it is a second mortgage offered at lower than current market interest rates to the buyer from the seller to facilitate the sale. It is a legally binding secondary charge on title to the property. The seller then will collect payments from the buyer on that second mortgage and the mortgage is fully repaid by the buyer upon refinance of the property or sale of the property at a future date.

What are the benefits of a VTB?

To the seller, the VTB allows them to access buyers who don’t have sufficient down payment or, in some cases, a buyer who may have credit issues which impact their ability to get a mortgage through a traditional lender, such as a bank. This can also be a great marketing tool for sellers when property sales are slow, to help move the house more quickly. For sellers of investment properties, they may be able to defer capital gains on the sale if a portion of the proceeds are provided back to the buyer as a second mortgage. It is important to talk with your accountant before buying or selling an investment property to be clear on tax laws, etc.

For those buyers who may be struggling to buy, a VTB allows them to access more money for a down payment.

What do you need to qualify for a mortgage with a VTB?

If the buyer is able to qualify based on income and credit, the lenders (regardless if it is a bank, mortgage company or alternative “B” lender) will require a minimum of 10% down payment from the buyer in addition to the VTB funds. There are some private lenders, rent-to-own and others who will provide a VTB and first mortgage financing – but at higher interest rates. So do your homework and talk with your mortgage professional at Dominion Lending Centres, realtor and lawyer, to ensure you are clear on all your options before proceeding with this kind of purchase financing strategy.

Courtesy of Pauline Tonkin, AMP – DLC Innovative Mortgage Solutions 

With mortgage interest rates at historical lows, it is a wonderful time for first time home buyers to take the leap into the market. But there are some considerations and preparations to be made before starting the process.

A higher level of bank scrutiny has come into play now that the governance of CMHC has been shifted to the Office of the Superintendent of Financial Institutions (OSFI). The banks have been jumping through hoops to meet stricter lending policies and so must potential mortgage borrowers.

Mortgage rule changes that came into effect in July 2012 shortened the maximum allowable amortization on mortgages from 30-years down to 25-years. This has made it more difficult for buyers to meet debt-servicing requirements of lenders due to the higher monthly payments of the shorter repayment structure.

These two components of the lending landscape have put First Time Buyers in the hot seat. Most young people are newer to both the employment game and the credit world and have had limited time to build up their own savings for the down payment.

Canadian mortgage insurers (CMHC and Genworth) have minimum credit requirements of two years’ history on at least two credit accounts with a good repayment record. While potential borrowers may think it responsible not to overextend themselves with credit, they can be negatively affected by “under extending”. Paying on time on at least two accounts, such as a credit card or loan, demonstrates credit responsibility because these types of accounts report to the credit bureaus, a third party, and demonstrate a borrower’s credit responsibility.

Avoiding credit means there is no third party record of how credit is handled, leaving financial institutions lacking the tools to assess how a potential borrower will handle repayment of such a large loan. While it’s not advisable for young people to apply for credit everywhere, it is a good idea to establish two different credit accounts as soon as possible to create a strong credit history.

Because many first time home buyers are young people with limited employment history, there is a very good chance they have not saved up the minimum 5% down payment yet. Direct relatives, such as parents, can “gift” the down payment to their adult child to help them buy the home. There must be no requirement for re-payment and they should have no vested interest in the property being bought.

Keep in mind though that if the first time home buyer has limited credit and their down payment is being gifted, they are really not bringing much to the equation as far as their own personal risk, so many lenders are requiring co-applicants to bring some strength to the deal. If there is the potential for a purchase in the near future, it may be a good idea for the parents to put the gifted funds into their child’s personal bank account. As long as the money is in their name for at least 90-days, those funds are now considered their own and no longer gifted.

We here at Dominion Lending Centres are always available to help you – contact us today!

Courtesy of Kristin Woolard, AMP – DLC National 

Lower oil prices, alongside a continued slump in mining and metals, has weighted on growth. Oil-dependent provinces such as Alberta, Saskatchewan and Newfoundland and Labrador have seen their economies hardest hit. That includes a drop in housing activity. Meantime, the more diversified economies of Ontario and B.C. are picking up, and housing sales and prices continue to climb rapidly in Toronto and Vancouver. Will this mixed economic and housing picture continue in the months ahead? Dr. Sherry Cooper, Chief Economist with Dominion Lending Centres, offers her outlook on what Canadians can expect in 2016:

How would you characterize Canada’s economy in 2015?

It has been a very tough year, particularly given the huge decline in commodity prices. Alberta’s economy slipped into a recession, which has had a big impact on Canada’s over-all economy, especially given the province had the country’s strongest economy for many years. Overall in Canada, we saw a contraction of economic growth in the first half of 2015. Since then, we’ve seen a modest rebound. I fore-cast growth to be about 1.2 per cent in 2015.

What is your forecast for Canada’s economy in 2016?

We are seeing a continued pickup in some provinces. The growth will likely be strongest in B.C., followed by Ontario. I think overall growth for Canada in 2016 will be around 2.2 per cent. That’s not what one would call a rapid expansion. I don’t believe the full effect of lower oil prices has come through in our economy. Some of the economic growth will be driven by increases in government spend-ing, assuming the new Liberal government keeps its promise to add stimulus, and lower taxes for the middle class. The one thing that concerns me is the government’s proposed tax increase for high-income earners, which I believe will be counterproductive.

Many Canadians have been watching the Canadian dollar lose strength this year. Where do you see it headed in 2016?

It’s not a great story for the Canadian currency. I think we’ll see more downward pressure on the Canadian dollar next year, as a result of a rising American dollar as its economy gains steam and the Federal Reserve hikes interest rates.

What’s your position on Canada’s housing market now and into 2016?

The Bank of Canada cut interest rates twice in 2015, which drove down borrowing costs and in turn helped to boost housing activity in many markets. Housing has been stron-gest in Vancouver and Toronto, but certainly not in the rest of the country. We’ve seen a significant slowdown in Alberta, Saskatche-wan and the Atlantic provinces as a result of the steep drop in oil prices since mid-2014. I expect housing activity will slow a bit in Vancouver and Toronto in 2016. It will still be strong, but just not as strong as it was in 2015 in B.C. and Ontario.

Where do you see mortgage prices heading?

Mortgage rates in Canada are at generational lows. I believe they have now bottomed. The days of falling mortgage rates are over. In-stead, I think we’ll see a gradual increase in rates, which will lead to a gradual slowdown in housing activity in the coming months, as affordability decreases. Mortgage rates could rise by about a half a percentage point over the next year, to about 3.25 per cent for the average five-year fixed rate term. It’s not a huge increase, but given how low rates are, it’s a meaningful percentage gain.

Courtesy of Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres 

Financing on home purchases can become more complicated when it comes to things like 60 amp electrical service, and aluminum wiring just to name a few! Another bad boy may be the vermiculite issue where vermiculite was used in the attics as insulation.

Vermiculite is a silver-gold to gray-brown mineral that is flat and shiny in its natural state. When heated to around 1,000 degrees C, it pops (or puffs up), which creates pockets of air. This expanded form, and the fact that vermiculite does not burn, made the material suitable for use as insulation.

Is all vermiculite a health concern?

Vermiculite itself has not been shown to be a health problem. However, some vermiculite insulation contained asbestos fibres, which can cause problems if inhaled. As long as this kind of vermiculite-based insulation remains undisturbed behind intact walls or in attic spaces and does not become airborne, it should not be a concern.

Of concern is Zonolite© Attic Insulation; this insulation was sold in Canada under the name of Zonolite© and was extracted from the Libby Mine in Montana, USA. This mine had a natural deposit of asbestos which resulted in the vermiculite being contaminated with asbestos.

Vermiculite produced by the Libby Mine has not been on the market in Canada for more than 10 years. Not all vermiculite sold in Canada before 1990 contains asbestos fibres. However, if you believe that your home may contain vermiculite insulation, it is reasonable to assume that it may be contaminated with asbestos.

What are the health risks of vermiculite containing asbestos?

Asbestos can cause health problems when inhaled into the lungs. Breathing in very small, airborne asbestos fibres has been associated with diseases such as asbestosis, mesothelioma and lung cancer. (See OSH Answers web page How Do Particulates Enter the Respiratory System? for information about how small particles have to be to get into the lungs.)

• Asbestosis – Asbestosis is a lung disease that occurs when asbestos fibres are inhaled. It is a chronic disease with slow onset that usually requires several years of exposure. The development and progression of asbestosis varies from individual to individual. It is often slow with little changes over five, ten or more years. Many cases do not advance after diagnosis. It may, however, be quicker in some individuals than in others due to different conditions of past dust exposure. Asbestosis is characterized by pulmonary fibrosis (the formation of scar-like tissue). Shortness of breath is the most common symptom. In most cases, the first and often the only physical sign is “crackles” – sounds that can be heard through a stethoscope. Also known as “rales”, they are usually detected near the end of a full inspiration. Chest x-rays will show small, irregular opacities (spots in x-ray film that are opaque or where x-rays could not “see” through the tissue). These are commonly found in the middle and lower lungs. Lung function tests can help to determine how serious the condition is.
• Mesothelioma – Mesothelioma is a cancer of the pleural and peritoneal cells (lining of the lung and abdominal cavity). The site of this tumor might be the lung (pleural) or the abdomen (peritoneal). Patients with pleural mesothelioma experience chest and shoulder pain and dry cough is frequent. As the cancer progresses and the tumor grows bigger, weight loss, weakness, and fever may also occur. The time between the initial exposure to asbestos and clinical signs of the disease (latency) is difficult to define because, for mesothelioma, the range is quite wide and the disease is rarely seen less than 10 years from the time of the first exposure and it may occur even after 40 years.
• Lung Cancer – Asbestos can cause lung cancer. Lung cancer takes many years to develop, but changes in the lung can begin almost as soon as a person is exposed to asbestos. Lung cancer usually does not cause symptoms in the early stages. When symptoms occur, the cancer is often advanced. Symptoms of lung cancer include chronic cough, weight loss, shortness of breath, fever, and chest pain. These symptoms are also common with other lung disorders, therefore, to confirm the diagnosis it is necessary to carry out laboratory tests including chest x-ray.

How can we minimize the risk?

The best way to minimize asbestos exposure from vermiculite is to NOT remove or disturb the insulation. Moving the vermiculite will cause fibres to become airborne. The following precautions will prevent releasing asbestos fibres into the air:

• Do not use the attic for storage.
• Nobody should go into the attic.
• If you plan to renovate, hire a professional who is trained and certified to handle asbestos.
• Never remove the insulation yourself.
• Seal all cracks and holes in the ceilings to prevent insulation from sifting through

Should you find vermiculite in your home, treat it as if it is asbestos and follow all the guidelines for the safe handling and disposal of asbestos, or better yet, get the professionals in to gather a sample for testing.

I have copied most of this information and pasted into this blog for your convenience from http://www.ccohs.ca/oshanswers/diseases/vermiculite.html

It is also recommended that you read the disclaimer on the web site.

As always, I encourage you to visit this site and follow the links provided should you have any further questions contact the proper departments for the right answers.

Courtesy of Gerry Puhan, AMP – DLC Mountain View 

Money does not make us happy—but constant worry about lack of financial security can make us miserable.

Women often enter their 40’s (and beyond) with a murky financial picture. We have put a great deal of our energy, earning time, and cold cash into being there for our children, our spouses, our family, and even our friends but along the way we forget to be there for ourselves. We are typically uncomfortable with asking for help, even after consistently giving to the people in our lives.

Good news! It is never too late to create the resources that will allow us enjoy our days without worrying about whether we can afford life’s necessities and pleasures. However we often have to make choices and changes to reach this point. We may have to wean ourselves from spending habits that ultimately bring more stress than pleasure. We may need to decide to continue at our work for an extra year or two or, if we are already retired, take a part-time job.

A few sticking points for women and money:

Spending

We shy away from big money purchases with worries of “what if” but can nickel and dime ourselves to financial death on seemingly inconsequential purchases that add up to long-term financial instability. Or we reserve the right to spend big bucks on family and friends—never comfortable investing in our own dreams.

Building Equity

As a mortgage specialist with Dominion Lending Centres, I’m probably biased, but I think one of the easiest ways for us to build up cash for retirement is through home ownership and the right mortgage. It’s just as easy to pay a sensible mortgage as it is to pay rent. And each dollar that goes down on the principal, along with the rise of your home’s value, becomes money in a future bank.

You can almost always sock even more away by using a mortgage professional who has access to dozens of lenders, rather than just a single borrowing source (as is the case for banks and credit unions). This holds true whether applying for a first mortgage or replacing an existing one. Especially right now while interest rates are fairly low. Just one percentage point of difference on a typical Ottawa mortgage is worth almost $10,000 in savings on a three year mortgage!

As equity builds, it can be transformed into cash and the proceeds invested in dividend-paying stocks, income properties, education, and such.

The Kids

We love our kids and we want to give them everything their heart’s desire. But sometimes this urge gets in the way of allowing our children the opportunity to grow up—to discover for themselves the joys of self-reliance. Helping them is fine, but what kind of lessons do we teach if we put our own futures at risk?

Education is becoming increasingly expensive. Make it clear to your teenagers that they will be expected to contribute and that tuition fees, living expenses, and travel costs will all be factors in deciding what secondary institution they will be able to attend. In most parts of the country, a car is not a need; it is simply an expensive convenience. Activity fees and equipment can be expensive. Ask your teenagers to prioritize, rather than join everything that strikes their fancy.

The big white wedding has become even bigger in recent years. If you are planning on contributing to your adult children’s wedding, know what you can afford well in advance. Make a point of telling your children what you will be able to contribute and that there is no room for “creep” or extra money from the Bank of Mom.

The “boomerang” phenomenon of an adult child returning to the family home is becoming increasingly common. You need to be clear that your child is expected to make financial contributions and carry his or her own share of chores. They are not returning to the cocoon of childhood. They are returning as an adult and a loving parent understands that it is in the child’s best interests if grown-up responsibilities are expected.

Get Comfortable with a Little Risk

Women are conservative investors. We have almost no comfort zone with risk.

The “free” financial advisors offered by banks may well be experts, but their job is to look after the bank’s profits first and then yours. Do a little research and find an independent financial investor who comes with solid recommendations. The investment of a consultation fee with an independent expert is worth it—you can evaluate your current financial picture, and then ask for advice on putting a small portion towards higher risk investments that can pay bigger dividends.

You Deserve It—Restore the Balance

You have the right to financial comfort and stability. If you don’t feel like you are in a safe place with money, then it is time to pull back some of the energy you put into others and restore the balance by putting it into your own issues. This is easy advice to give, but can be tough to put into action after a lifetime of putting yourself second. Let’s face it, saying “No” to people we care about is hard. But remember the flight safety demonstration—if the oxygen masks drop down, we need to put our own masks on before we can help our seatmates.

Most women find that it takes a blend of practical actions, new boundaries with family and friends, the willingness to accept progress rather than perfection, and even therapy to get comfortable with building financial balance. It works best when it is part of a holistic process that encompasses all aspects of life, building the true wealth of secure happiness.

Courtesy of Jacqueline Richards, AMP – DLC The Mortgage Source

The primary purpose for producing this piece was to try and demystify the job of a Mortgage Broker. By now everybody that has a mortgage has heard about Mortgage Brokers. Whether they have decided to use the services of one is a completely different topic altogether. Having said that, the market share of borrowers ‘using their banks’ still swings in their favour at a staggering 70%. I’m excited to be part of the push for equal or greater market share…but let’s get back to the topic at hand.

This idea came to me while I was speaking to a colleague of mine about a recent file she was working on. It was a difficult one with multiple layers and barriers to mitigate before a lender would accept it. In the end, she got the ‘file complete’ status that we as Brokers all seek. At the end of the process the client was very grateful, but admittedly said that he was really unsure what she as a Mortgage Broker really does. This is where the idea was born.

What Do You Think I Do?

Here’s what a quick Facebook poll unveiled after posing this question: In my quest to write fun and sometimes ‘different’ mortgage content for my blog, I want to ask my NON-mortgage broker friends on Facebook a simple question. What do you think I do? Everybody has a different opinion of what Brokers really do. I knew there would be some fun jabs, but here is what was sourced.

• You lay with your feet up on the couch watching sports all day…answering the phone when it rings.
• You sit around, drink coffee, wait for the files to roll in then hit the pub for afternoon drinks…
• Laundry, cleaning, cooking, napping
• Match potential homebuyers with the mortgage product that best fits their needs. And you do this by knowing what your customer’s wants/needs are and being aware of what programs are available and which company offers them.
• A fellow broker replied with an image, which I felt was very appropriate. It was the Dos Equis XXX actor with a caption that read “I don’t always make it rain, but when I do, it’s usually rolls of quarters.” Some friends think I sell cash.
• Broker on Wall Street juggling multiple phones on-the-go!

Further to the crowd-based outsourcing, I also found another image online that made me chuckle and thought it was appropriate for this piece as well. I summarized the image into 4 points below. As individuals, we all have our own sphere, people that we look up to and depend on, whether it’s for advice or friendship. All of those individuals have opinions. And the more I thought about the graphic I found, the more it made sense as I’ve had these very conversations with these people in my life as to what I do.

• My friends think all I do is go from one party to the next, trying to drum up business.
• My mom still thinks I work on cases (no, I’m not a lawyer), sitting in a boardroom having cerebral conversations with other high level executives.
• The general public thinks I am a slippery car salesman, wearing 70s clothes and a pinky ring while dangling a cigar from my month.
• My clients (might) think that all I do each day is sit back and calculate my future commission cheques.

What I Really Do!

Mortgage Brokering is the career path I chose six years ago. At the time I made the decision to pursue Brokering I thought it was a job. I know now that is an incorrect statement, it’s a lifestyle that I live. It’s not a regular 9AM-5PM-Monday-to-Friday-with-5-weeks-of-vacation-and-employer-double-up-RRSP-contributions-a-year-job. It’s much more complex than that. For starters, I have to be ‘on’ and engaging all the time. I don’t power down because the moment I do I could miss an opportunity and opportunities don’t always come around in the same shape. I have a duty to my next client to be:

• up-to-date on all the current real estate market data,
• changing lender interest rates (and why),
• economic influencers that trigger the market,
• constantly changing lender guidelines,
• know how to structure a file when it lands on my desk, quickly and efficiently.

Right now I’m fairly certain that all my Broker friends are nodding their heads agreeing with me.

Creating an exceptional experience for that one client could mean one or more referrals from that very client in the future. A referral is the ultimate testimonial. Each client is treated like they are the only one I am working with at that present time.

As Mortgage Brokers, we all operate our businesses differently. I have chosen a business model where most of my business flows from professional referral sources; accountants, financial planners, lawyers, realtors, bank representatives, property managers, stock brokers, developers, professional recruiters, home insurance providers, commercial brokers and so on. These professionals are key to my success as I have positioned myself as a resource. One that can assist with every aspect of a mortgage transaction and beyond. I am able to connect people.  They are all people I share a common thread with – we KNOW, LIKE and TRUST one another. This is the basis for a natural flow of referrals. You’re likely asking yourself, “why am I bringing this up”? The answer is because this is what ‘I DO.’ I get to know the people I work with on a personal level to form a friendship. If there is no friendship, just personal monetary gain, then there will not be a long lasting business relationship. I have seen a couple of referral sources come and go over the years, where personal gain was the only thing top of mind for the other party. Needless to say, we are not working together anymore. The act of getting to know someone is quite simple, just ask questions then sit back and listen. Take that information and store it – I guarantee you it will become very handy in the future.

An exceptional Mortgage Broker is also an exceptional story teller. All my clients have their own unique individual story and it’s up to me to tell that story to the audience – the potential lender we are pursuing. The ultimate goal throughout the application process is simple, minimize the stress level of the borrower and complete the task quickly with comprehensive updates along the way. This is done by structuring the file accordingly, providing detail. I must admit I’ve got the process dialed. It’s so good that I have quite honestly surprised myself a few times on a few difficult files. I put a lot of pressure on myself to tell a seamless story.

Providing an abundance of detail helps to break down the barriers of entry, this being access to the lenders financing. My goal at the start of the application process is to receive an approval without receiving a call or an email from the lender’s underwriter. When I accomplish that, then I have done my job successfully. It’s quite simply the easiest part of the process. All I have to do is answer questions about the property, income source, down payment source and credit history – just 4 things!

All lenders have a different appetite for risk – knowing how to mitigate and answer those risk questions is all part of managing this business. Once this is all tabulated then the financing is guaranteed, right? One would assume (never assume…you know the saying) that ‘a mortgage is a mortgage,’ WRONG! Every mortgage file is different. In my short 6 year tenure, I’ve never seen one file that is exactly the same as a previous one. There are definitely elements of one that might be similar, but this business does not have a template. The round hole, square peg scenario happens a lot in this business. It’s up to me to shave down the edges of the square peg to squeeze it into the round hole. There are definitely ones that come together easier than others, but there are also files that consume my day, even multiple days. Again, I can sense my Broker friends nodding their heads.

The most important role ‘I do’ through the application process is to assume the position of an Educator. I entered this business knowing that I wanted to learn from my mistakes in the past. As a first time mortgage consumer, I had relied on my bank to advise me accordingly, to educate me and to help me make the right decision. Instead, I got what would work best for the bank’s shareholders. Knowing what I know now, I don’t think they did their job. I should have done my own research and asked the right questions. I learned the hard way. From day 1 (August 30, 2009), I vowed to provide as much information to my clients as needed to help them make an informed and educated decision. One that would benefit them and their family, not the lender. Knowing that my clients are advised correctly provides me the confidence in knowing they will instruct me on the path they would like to follow.

Processing mortgage files is just a half of what I do. Of course the other side is marketing. How does the saying go? – ‘you gotta spend money to make money.’ To generate business or potential clients, I have to get out and meet with as many people as possible and let them know what I do. I try to attend as many networking events as I possibly can. Heck, I even attend industry functions and conferences, as you never know when a Broker-to-Broker conversation will lead to placing the ‘next’ file or an unforeseen opportunity. The glamorous life of a broker also involves endless coffee meetings and luncheons, along with relentless periods of time spent on the phone with clients and lenders. I am constantly building the fortress around me. I have made a conscious effort to always utilize the same suppliers; lender(s), lawyer, appraiser. By maintaining focus on a select few it can sometimes pay in spades. At times this business presents strict or short timelines where having a solid relationship is key. If I need to place a rush on a file or ask for an exception or need some legal advice I know I have someone that I can rely on. If not, these calls usually end with ‘sorry I’m too busy..’ or ‘who is this..’ or a flat out ‘no.’ It’s not what you know, but who you know in this small world of Brokering. Building solid, reliable relationships is vital for survival in this business.

So, what do I do as a Mortgage Broker?

I strive to build long lasting relationships with my referral partners, clients and providers. I structure intricate applications by telling detailed stories about one’s past, present and future. I am dedicated to providing the best options to fit one’s current lifestyle and future long term goals through education. I share ideas and experiences about my mortgage practice, what has worked and what has not. I am continuously planting seeds like a farmer, never knowing when I will be called on. I work for the client, not the lender. What do I really do?

I am a connector! I connect my clients with the correct financing as well as connecting them with other real estate related professionals…and I’m looking forward to working with you!

Courtesy of Michael Hallett, AMP – DLC Producers West Financial