Financial difficulty can happen. Marital breakdown, economic downturn / job loss, health issues are all realty.

If I can give one piece of advice it’s this – in the face of financial difficulty the worst thing that a person can do is to go dark on their creditors.

In my experience, being 100% upfront and honest with creditors is by far the best 1st step in face of a cash crunch. CALL YOUR CREDITORS. EXPLAIN YOUR SITUATION. ASK FOR A TEMPORARY REPRIEVE. BE PROACTIVE WITH LOOKING AT A SOLUTION EARLY.

Trust me – most creditors DO NOT want to foreclose on homes, send you to collections or push you over the brink of financial ruin. Many will actually work to help you get back on your feet if you let them know early on that you are in a crunch. I have seen some of our lenders make amazing concessions for customers who hit a stumbling block financially when they have gotten in touch BEFORE they fall behind.

It’s when a person stops making minimum payments, avoids calls from creditors and just gives up on their situation / assumes they are up the creek or are too embarrassed to admit that they may not be able to meet obligations.

This looks to creditors that the person has abandoned the debt and is now looking to stick it to them.

Unfortunately, many times people call us at Dominion Lending Centres when they are already months behind and been served with collections / seizure notices and credit is ruined. At that time, they are too far gone and lenders/creditors are normally not able to help.

Any time a person calls to advise that they are looking for a solution to help with a cash crunch, the first question I ask is “Have you spoken to your creditors?”

Don’t be embarrassed, be proactive!! Save your credit standing, your assets and your future. Short term pain is much better than long term ruin any day.

We have seen it all at DLC and are here to help.

Courtesy of Shaun Serafini, AMP – DLC Canadian Mortgage Excellence

The fast pace of buying and selling real estate is daunting. Throw in trying to manage closing dates, possession dates and access to the proceeds for the purchase and you have a recipe for disaster.

I recently received an email from a potential client asking these very questions:

“I was wondering how the process usually goes, for looking at a new place. We had planned to use our equity in this home as the down payment for a new place. But if we can’t unlock that equity until the closing date, what usually happens in the interim?  Do we have to find a place to rent?…a month or longer? When we bought this place, it was our first home purchase, so moving to a new one is new to us. I don’t understand how we are supposed to start looking for a place after subject removal (which is 30 days after tomorrow), when we can’t access the equity to make a down payment.”

This scenario happens much more often than one thinks. In order for sellers to access their equity to become buyers they are required to utilize a bridge loan to transition into their “next” home. The bridge loan allows you to purchase a new property before the sale completes on the existing or current residence.

Most lenders have a 45 – 60-day window to exercise this option, with a range of daily rates and admin fees. The four vital components to a mortgage application are income, credit worthiness, the subject property and down payment.

The first three have been approved; now how does one unlock the down payment? Easy. The borrower is required to supply the fully executed purchase and sale contract, subject removal addendum and the current mortgage statement for the existing property. This provides confirmation that you have sold the property on X date as well it confirming the sale price less the possible real estate commission fees and closing costs. Once the current mortgage amount is subtracted the net proceeds are yielded, leaving you your down payment amount.

As mentioned above, there are fees to access bridge financing, as well as a daily interest rate. If the purchase of the next property completes the same day as the sale, then it is handled at the lawyer’s office internally and the funds are transferred accordingly.

The equity is yours to access right now. The lenders verify your equity with the conditions provided.

Here is an example of the timeline and fees of how the bridge loan scenario can be utilized:

Existing home sold, completing December 14, 2016 $600,000

Current outstanding balance $400,000

Equity remaining $200,000

New home purchase, completing November 30, 2016

The lender has approved the down-payment amount. Because the proceeds are still secured against the existing home we had to provide confirmation that the funds were available. We determined there was $200,000 by way of sales contract, subject removal addendum and the current mortgage statement.

The second layer to the bridge loan is the cost of borrowing the $200,000. Bear in mind the funds are still tied up in the existing property. The cost to borrow the $200,000 temporarily is Prime + 2% (daily rate) plus an administration fee of $250.

$200,000 x 4.70% / 365 (days) = $25.76 per day to borrow $200,000

There is a 14-day completion difference. The total cost to utilize a bridge loan is $360.64 (in interest) + $250 (admin fee) = $610.64.

All-in-all this is a very inexpensive and easy way to access the equity you have built up in your current home. Remember, lenders are in business of making money…this is simply a cost of doing business.

Be sure to surround yourself with industry professionals (like the mortgage brokers at Dominion Lending Centres) to make sure nothing is overlooked or miscalculated.

Courtesy of Michael Hallett, AMP – DLC Producers West Financial

Now a days with the amount of information that is shared on the Internet and social media, identity theft and Ponzi schemes are happening regularly. Homeowners are taking the necessary steps to protect one of their largest investments which is their home. However, the last thing you want to worry about is yet another way to lose your hard-earned money.

But as a homeowner, you need to be aware of crimes on the rise known as mortgage fraud and real estate title fraud.

Mortgage fraud

Some borrowers may think that providing false documents and making false statements is not a big deal. However, the Criminal Code clearly states that obtaining funds, including mortgages by providing false information is a crime.

The most common type of mortgage fraud involves a criminal obtaining a property, then increasing its value through a series of sales and resales involving the fraudster and someone working in cooperation with them. A mortgage is then secured for the property based on the inflated price.

Following are some red flags for mortgage fraud:

• Someone offers you money to use your name and credit information to obtain a mortgage.
• You are encouraged to include false information on a mortgage application.
• You are asked to leave signature lines or other important areas of your mortgage application blank.
• The seller or investment advisor discourages you from seeing or inspecting the property you will be purchasing.
• The seller or developer rebates you money on closing, and you don’t disclose this to your lending institution.

Title fraud

When you purchase a home, you purchase the title to the property. Your solicitor registers you as the owner of the property in the provincial land title office.

Title fraud normally starts with identity theft. This occurs when your personal information is collected and used by someone identifying themselves as you. There are several ways criminals can steal your identity without your knowledge which includes:

• Dumpster diving
• Mail box theft
• Phishing
• Computer hacking

Sadly, the only red flag for title fraud occurs when your mortgage mysteriously goes into default and the lender begins foreclosure proceedings. Even worse, as the homeowner, you are the one hurt by title fraud, rather than the lender, as is often the case with mortgage fraud.

Unlike with mortgage fraud, during title fraud, you haven’t been approached or offered anything – this is a form of identity theft.

Here’s what happens with title fraud: A criminal – using false identification to pose as you – registers forged documents transferring your property to his/her name, then registers a forced discharge of your existing mortgage and gets a new mortgage against your property. Then the fraudster makes off with the new home loan money without making mortgage payments. The bank thinks you are the one defaulting – and your economic downfall begins.

The following are ways you can protect yourself from title fraud:

• Ensure you keep personal information confidential when on the internet or phone until you know who are dealing with, how it will be used and if it will be shared with anyone.
• Only carry minimal information and identification in your wallet, don’t have your social insurance card with you.
• Check your credit report regularly. You can get them free when you request them from the Equifax and Transunion when they mail them to your home. If you notice anything suspicious, contact the credit bureau right away.
• Check your financial, bank and credit card statements regularly for any inconsistencies and unknown charges.
• Consider obtaining a title insurance policy, as title insurance protects against many title risks associated with real estate transactions.
• Check your mailbox for mail on regularly, if not every day.
• Shred and destroy any financial and personal identification documents, as well as any unsolicited credit card applications rather than just simply throwing them away.
• If you don’t receive your bills or other mail, follow up with your creditors.
• If you receive credit cards that you didn’t apply for or if you did apply for them and didn’t receive them.
• Contact your mortgage lender first if you are having difficulty making your mortgage payments.

The following are ways to protect yourself from title fraud when purchasing or refinancing a home:

• Make sure you work with a licensed real estate agent and is familiar with the area you are interested in buying. Select to work with someone that can provide trusted referrals and check on them.
• Check listings in the community where the property is located – compare features, size and location to establish if the asking price seems reasonable.
• Always view the property you are purchasing in person, don’t buy without seeing it first.
• Beware of a real estate agent or mortgage broker who has a financial interest in the transaction.
• Ask for a copy of the land title or go to a registry office and request a historical title search.
• In the offer to purchase, include the option to have the property inspected and appraised.
• When giving a deposit when purchasing a property ensure the funds will be held “in trust” with a solicitor or a real estate agency and not directly with the seller.
• Insist on a home inspection to guard against buying a home that has been cosmetically renovated or formerly used as a grow house or meth lab.
• Ask to see receipts and permits for recent renovations.
• Consider the purchase of title insurance.
• Review and make sure you are comfortable with the terms and conditions with the mortgage commitment letter or approval.
• Review the “cost of borrowing disclosure statement” and be aware of any additional fees or charges. Ask questions if you are not sure.
• Know and understand what you are signing. If you have questions, ask. If you are not comfortable or something is not right, do not sign the documents.
• You might want to consider using your own solicitor for legal advice if you are asked to use the same lawyer as the seller.

“Straw buyer” scheme

Another term for mortgage fraud is the “straw” or “dummy” homebuyer scheme. For instance, a renter does not have a good credit rating or is self-employed and cannot get a mortgage, or doesn’t have a sufficient down payment, so he or she cannot purchase a home. He/she or an associate approaches someone else with solid credit. This person is offered a sum of money (can be as much as $10,000) to go through the motions of buying a property on the other person’s behalf – acting as a straw buyer. The person with good credit lends their name and credit rating to the person who cannot be approved for a mortgage for his or her purchase of a home.

Other types of criminal activity often dovetail with mortgage fraud or title fraud. For example, people who run “grow ops” or meth labs may use these forms of fraud to “purchase” their properties.

It’s important to remember that if something doesn’t seem right, it usually isn’t – always follow your instincts when it comes to red flags during the home buying and mortgage processes. Get in touch with your local Dominion Lending Centres mortgage professional to learn more.

Courtesy of Alisa Aragon, AMP, – DLC Canadian Mountain View 

When bad things happen to good people sometimes the reality is they just can’t keep up with their mortgage payments. While Canadian mortgage defaults are amongst the lowest in the world at just 0.31%, foreclosure still happens.

In BC, if a lender forecloses on a homeowner they are required to give the borrower a 6-month Redemption Period – time granted to bring their mortgage up to date or find another lender. If at the end of this period the borrower is unsuccessful the foreclosing lender can ask for a Court-Ordered Sale. Once granted the property will be appraised and then listed by a realtor for sale at a price that will get the bank their money back in a reasonable amount of time. This usually translates into a lower asking price than if the seller that could hold out for the best the market has to offer.

If you have found a property in foreclosure listed at a great price there are a few things to consider before submitting an offer.

First, as soon as an offer is made and accepted a court date is set for about two weeks after. At court other parties can attend and make their offers and it can turn into a bidding war with the Court approving what they feel is the best offer.

Another point to consider is that you have to come to court with basically a condition-free offer. This means if you need financing to buy it you can only have one condition left on the mortgage approval – the Court accepting the offer. If you have less than 20% down and need mortgage insurance (CMHC) some lenders won’t take it to the insurer before your offer is accepted so your options may be limited somewhat. You have a much stronger bid if you have more than 20% to put down.

The rest of the financing conditions are pretty much exactly what to expect but again, all conditions need to be satisfied before presenting an offer. This means the cost of an appraisal and house inspection are upfront costs that may be a waste of money if you don’t get the property in the end.

Once the Court approves your offer the completion date is set usually for two weeks after that so you had also better be prepared for a hasty move if that proves necessary.

The last thing to note is that once the sale completes at lower than true market value you have now effectively established a new value for your place. Over the next 6-months or more likely a year an appraisal on this property will have its own sale price factored into its appraised value so if flipping is your game you could have a longer than normal investment period before seeing it’s true market value reflected.

Buying a foreclosure is a step up in the complexity of buying real estate so always seek the professional advice of a Dominion Lending Centres agent before jumping in.

Courtesy of Kristin Woolard, AMP – DLC National 

If you have have overextended yourself with credit card debt, or have consolidated all of your consumer debt into your mortgage, or are at the point where you just want to cancel your credit cards, we have the 3 steps for you to follow to get your credit back in check.

1. DO NOT CANCEL ALL YOUR CARDS

It may seem tempting, but money lenders want to see that you can handle your credit responsibly. Instead keep your 2 oldest credit cards (trade lines). The longer you have had your trade line, the better it is for your credit.

2. FOLLOW THE 2/2/2 RULE

The 2/2/2 rule means that money lenders what to see 2 trade lines, for 2 years with a minimum of a $2,000 limit. These cards need to be paid on time each month, and they also need to stay within that $2,000 limit!

3. USE WITH CARE-REGULARLY

The 2 trade lines you keep need to be actively in use. If you are concerned about consumer debt, then have a monthly bill such as your cell phone, cable, or even Netflix charge billed to your credit card. Then have that credit card paid automatically each month from your bank account.

Follow these steps to keep your credit in check and growing.  When it is time to renew or revamp your mortgage, or purchase a new home, your credit won’t hold you back—And you can bet Dominion Lending Centres is here to help you get the sharpest rate and the best product.

Courtesy of Geoff Lee, AMP GLM Mortgage Group 

There seems to be some confusion about what it actually means to co-sign on a mortgage and you know that where there is confusion, your trusted mortgage professional seeks to offer clarity. Let’s take a quick look at why you may be asked to co-sign and what you need to know before, during, and after the co-signing process.

So why are you being asked? Last year there were two sets of changes made to the mortgage world which can likely explain why you are receiving this request in the first place.

The first occurred early in 2016 whereby the overall lending standards were increased in regards to an individual’s management of their credit and the resulting responsibility of Canada’s financial institutions to ensure they are lending prudently. We have seen an increase in requests for co-borrowers to help strengthen applications when credit or job stability is an issue.

The second happened just in October. A new ‘stress test’ rate applies which has especially impacted borrowers with less than 20% down. They must qualify at a rate of 4.64% though their actual interest rate is much lower. This has decreased affordability for many which means they could be looking for a co-borrower to increase how much home they can qualify for.

If it was me, I would ask questions as to exactly why the applicant needs a co-borrower. If it is a credit issue then you need to assess if that an acceptable risk. If it is a matter of not enough income, you need to assess that instead. What is the exit strategy for you all from this joint mortgage?

What can you expect? You will be required to complete an application and have your credit pulled. As you are now a borrower the banks will ask you for all the documentation that the main applicant has already provided. This can include but will not be limited to:

• Letter of employment
• Paystubs
• 2 years Notice of Assessments, Financial Statements and complete T1 Generals
• Mortgage statements on all properties you own
• Bank statements if helping with the down payment
• Property tax bills
• Lease agreements
• Divorce/separation agreement

So you get the idea. You are now a full applicant and will be asked for a whole bunch of paperwork. It is not just a matter of saying yes. Once the application is complete and all conditions have been met with the mortgage, you will have to meet with the lawyer as well.

What do you need to be aware of?

1. This is now a monthly liability according to the world. You will have to disclose this debt on all your own applications going forward. It can affect your ability to borrow in the future
2. Each lender is different in their policy as to how soon you can come off the mortgage. Familiarize yourself with this. Are you committing to this indefinitely or only for a couple of years?
3. Mortgages report on the credit bureaus so you could be adversely affected if there are late payments
4. If the main applicant cannot make the payment for whatever reason, you are saying that you will. Make sure your budget can handle that for a few months.

A few things you may want to consider if you do agree to co-sign:

• Ask for an annual statement to be sent to you as well on both the mortgage and the property taxes.
• Consider a joint account for mortgage payments so that you can check in every so often to ensure all payments are being made on time
• Talk about life insurance! If the worst occurs, then at least have enough of a policy in effect, with yourself as the beneficiary, to cover a year of mortgage, taxes and bills so that you are not hit with an unexpected series of expenses until the property sells.

So though you just want to help your loved one into their dream home, you are all better served if you know exactly what you are getting into and are prepared for the contingencies. We here at Dominion Lending Centres are ready to help!

Courtesy of Pam Pikkert, AMP – DLC Regional Mortgage Group 

If you’re on the hunt for your first home and want to have a smooth and successful home purchasing experience avoid these common first-time homebuying mistakes.

1. Thinking you don’t need a real estate agent

You might be able to find a house on your own but there are still many aspects of buying real estate that can confuse a first-time buyer. Rely on your agent to negotiate offers, inspections, financing and other details. The money you save on commission can be quickly gobbled up by a botched offer or overlooked repairs

2. Getting your heart set on a home before you do your homework

The house that’s love at first sight may not always be what it seems, so keep an open mind. Plus, you may be too quick to go over budget or may overlook a potential pitfall if you jump in too fast.

3. Picking a fixer-upper because the listing price is cheaper

That old classic may have loads of potential, but be extra diligent in the inspection period. What will it really cost to get your home where it needs to be? Negotiating a long due-diligence period will give you time to get estimates from contractors in case you need to back out.

4. Committing to more than you can afford

Don’t sacrifice retirement savings or an emergency fund for mortgage payments. You need to stay nimble to life’s changes, and overextending yourself could put your investments – including your house – on the line.

5. Going with the first agent who finds you

Don’t get halfway into house hunting before you realize your agent isn’t right for you. The best source: a referral from friends. Ask around and take the time to speak with your potential choices before you commit.

6. Diving into renovations as soon as you buy

Yes, renos may increase the value of your home, but don’t rush. Overextending your credit to get it all done fast doesn’t always pay off. Take time to make a solid plan and the best financial decisions. Living in your home for a while will also help you plan the best functional changes to the layout.

7. Choosing a house without researching the neighbourhood

It may be the house of your dreams, but annoying neighbours or a nearby industrial zone can be a rude awakening. Spend time in the area before you make an offer – talk to local business owners and residents to determine the pros and cons of living there.

8. Researching your broker and agent, but not your lawyer

New buyers often put all their energy into learning about mortgage rates and offers, but don’t forget that the final word in any deal comes from your lawyer. As with finding agents, your best source for referrals will be friends and business associates.

9. Fixating on the lowest interest rate

Yes, a reasonable rate is important, but not at the expense of heavy restrictions and penalties. Make a solid long-term plan to pay off your mortgage and then find one that’s flexible enough to accommodate life changes, both planned and unexpected. Be sure to talk your your Dominion Lending Centres mortgage professional to learn more.

10. Opting out of mortgage insurance

Your home is your largest investment so be sure to protect it. Mortgage insurance not only buys you peace of mind, it also allows for more flexible financing options. Plus, it allows you to take advantage of available equity to pay down debts or make financial investments.

 Courtesy of Marc Shendale, Genworth Canada- Vice President Business Development

Are you a first time home buyer and looking to use your RRSP’s as a down payment? Here’s a few things you need to know:

1. To use this program you must have not owned a home in the last 4 years but did you know that if your spouse owned a home previously and you didn’t live in the house then you may still qualify.

2. RRSP contributions need to be in the RRSP account for at least 90 days before they can be used. If you are a monthly contributor to the account then only the amounts there for more than 90 days can be used for down payment.

3. You can borrow money to put into an RRSP and have it be there 90 days to use for down payment. Using this method of acquiring the RRSP means that you must be sure of two things, one being that the lender is ok with you taking it out in 90 days. Secondly that it isn’t put into an account that will not have fees to take the money out, money market funds or simple 90 day term certificates shouldn’t cost you any penalty.

4. You can withdraw up to 25000 dollars from your RRSP to put down on a home. Locked in LIRA’s are not eligible for this program so make sure before you start down this path that you know what type of account you have your money located in at the bank.

5. You have to pay the amount you borrowed back to the RRSP account over the next 15 years. If you took 15000 dollars out you would need to repay $1,000 a year to the account. Failing to pay this money back may result in CRA taxing it as income.

6. You can contribute to your 2016 RRSP up until March 1st and receive a tax deduction for the contribution, this also applies if you borrowed the money to contribute. Theoretically you can also take the tax refund and apply it back to the loan or use it for your new home.

Contact your local Dominion Lending Centres mortgage professional so we help you take advantage of this opportunity to enter the home owners market…We’ve got a mortgage for that!

Courtesy of Len Lane, AMP DLC Brokers for Life