24 Sep

Mortgage brokers can help you get financing for every stage of your life

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Posted by: Alisa Aragon

Buying a home can feel like a journey. Whether it’s your first place or 10th, there are so many steps to go through and things you need to know. While you could try to secure financing on your own, at some point you’re going to need the help of a professional. And that’s where a Dominion Lending Centres mortgage broker can help. They are your tightest companion on the road to home ownership.

The trend towards using mortgage brokers/agents to arrange mortgage financing is continually increasing. Why has this shift occurred? Well, very simply put, TOP-NOTCH SERVICE and UNBIASED ADVICE!

The banks are cutting back on staff and are centralizing operations to save money. This doesn’t bode well for the consumer. Unlike individual banking representatives, who often move from one branch to another hoping to advance in the corporations, your mortgage advisers work to form lifelong relationships with their clients.

Today, many banks are buying out smaller trust companies to expand their portfolios. Most major banks lend out money through these trust arms at reduced rates. If you just stick with your bank, you lose access to hundreds of other financing arms – including offerings from multiple banks, credit unions and trust companies that may have better rates, products and terms to offer you.

Mortgage brokers get paid by the lenders so their service is offered to you without charge. What else can you ask for? Better rates, personalized service, flexibility and products at no cost to you. Some will say that the fee is built into the payment, but this is not so.

It costs the banks approximately 40 per cent less to generate a mortgage through a broker than a branch, as there is no overhead to pay if the bank doesn’t get a client’s business. Instead, the mortgage broker bears the entire cost of day-to-day business activity.

18 Sep

Should we stay or should we go

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Posted by: Alisa Aragon

 

If you’re founding your family has grown out of your current home or your house could use a makeover to better fit your changing needs, renovating is a great option to examine. Instead of putting your home on the selling block and heading out shopping for a new home right away, it may be worth considering using some of your home equity to renovate so you can remain at your current address.

The first consideration is whether your home can be adjusted to meet your needs. Is your lot big enough for an addition? Will your foundation handle the weight of an extra floor? Does the tired look of your home require a major over houl? Will the renovations add value to the home?

Plan out the changes you would like to make and speak to professional renovators to seek several quotes before making your decision.

Next, depending on the complexity of the project, you have to decide if it’s worthwhile for you in your family to live in a construction zone for several weeks or even months while improvements are being made to your home.

Finally, unless you have a lot of money saved up, you have to weigh your finances to determine what makes the most financial sense to you and your family in the long run.

WING ON YOUR FINANCES

Now is a great time to think about making renovations to your existing home to create your dream home. With mortgage rates still sitting at historic lows, it makes sense to use some of your home equity to put to words renovations that could help you remain in the house you love, in the neighborhood you desire that’s close to work, school and amenities to which you’ve grown accustomed.

Other possibilities include a home equity line of credit (HELOC) – where you can access money as required for each stage of your renovation – or it may be a construction mortgage may be your best bet. The key is to talk to an independent Mortgage Expert who has access to multiple financial institutions and products to ensure you get the most bang for your Buck.

It’s important to weigh the renovation costs with the potential for your home to increase in value as well.

Moving can also be quite expensive. Possible costs to consider when moving include:

  • real estate fees (upon selling your existing home)
  • legal fees
  • property transfer tax
  • moving expenses
  • decorating the new home
  • mortgage penalty

OTHER CONSIDERATIONS

The decision between renovating and updating to a new house is not solely financial. You should also consider your time, energy and peace of mind.

Each choice has advantages and disadvantages. When determining the best option for you and your family, consider the pros and cons of both renovating your existing home and moving to a new home.

By taking into account what do you want to do, why you want to do it, the cost of the renovations and upgrades, and the value of your renovated home in relation to other homes in your neighborhood versus the costs of buying a new home, you can determine which option is best for you.

Written by:

Alisa Aragon, Mortgage Expert

Published: 22 HOME DÉCOR AND RENOVATIONS JUL – AUG 2014

16 Sep

6 Things all Co-signors should consider

General

Posted by: Alisa Aragon

Co-signing on a loan may seem like an easy way to help a loved one (child, family member, friend, etc.) live out their dream of owning a home. In today’s market conditions, a co-signor can offer a solution to overcome the high market prices and stress testing measure. For example, if you have a damaged credit score, not enough income, or another reason that a lender will not approve the mortgage loan, a co-signor addition on the loan can satisfy the lenders needs and lessen the risk associated with the loan. However, as a co-signor there are considerations.

  1. If you act as a co-signor or guarantor, you are entrusting your entire credit history to the borrowers. What this mean is that late payments on the loan will not only hurt them, but it will also impact you.
  2. Understand your current situations—taxes, legal, and estate. Co-signing is a large obligation that could harm you financially if the primary borrowers cannot pay.
  3. Try to understand, upfront, how many years the co-borrower agreement will be in place and know if you can make changes to things mid-term if the borrower becomes able to assume the original mortgage on their own.
  4. Consider the implications this will have regarding your personal income taxes. You may have an obligation to pay capital gains taxes and we would highly recommend talking to an accountant prior to signing off.
  5. Co-signors should seek independent legal advice to ensure they fully understand their rights, obligations and the implications. A lawyer can lay it out clearly for you as well as help to point out any things you should take note of.
  6. Carefully think about the character and stability of the people that you are being asked to co-sign for. Do you trust them? Are you aware of their financial situation to some degree? Are you willing to put yourself at risk potentially to take on this responsibility? Another consideration is to think about your finances down the road and determine how much flexibility will be needed for yourself and your family too! If you have plans of your own that will require a loan, refinancing your home, etc. being a co-signor can have an impact.

Co-signing for a loan is a large responsibility but when it is set-up correctly and all options are considered, it can be an excellent way to help a family member, child, or friend reach their dream of homeownership. If you are considering being a co-signor or wondering if you will require a co-signor on your mortgage, reach out to a mortgage professional. They are always happy to answer any questions and guide you through processes like this.

Dominion Lending Centres

9 Sep

Bank of Canada Holds Overnight Rate Steady Amid Uncertainty

General

Posted by: Alisa Aragon

Image result for bank of canada

This article addresses the overnight rate steady Amid uncertainty. The Bank of Canada held the target overnight rate at steady at 1.75% for the seventh consecutive decision date but will monitor closely the impact of the US-China trade war on economic activity around the world and in Canada. The second-quarter growth–posted at 3.7%–exceeded the Bank’s forecast in the July Monetary Policy Report (MPR), but the Bank expects the economy to slow from that pace in the second half of the year.

Q2 Was boosted by stronger energy production and robust export growth, both recovering from a weak Q1 performance. But evidence suggests that export growth slowed in July and could weaken further as the global economy slows. Canada bears the brunt of Chinese trade restrictions on Canadian agricultural imports. Housing activity also boosted the expansion in the second quarter as resales and housing starts picked up. Falling longer-term interest rates have driven down mortgage rates. The Bank asserted that “this could add to already-high household debt levels, although mortgage underwriting rules should help to contain the buildup of vulnerabilities.”

Wages picked up further last quarter, boosting labour income, yet consumption spending was unexpectedly soft. Canadian consumer confidence recorded its most significant monthly drop this year in August amid growing concerns about the global economic outlook. The setback reflects waning optimism about Canada’s economy and effectively reverses the pick-up in sentiment earlier this summer.

The deterioration in confidence coincides with the escalation of the U.S.-China trade war. Many Canadians increasingly worried they’ll soon feel a bigger impact. Consumers aren’t the only ones feeling the uncertainty as business investment weakened sharply in the second quarter. Trade tensions have hit farmers and manufacturers hardest. The U.S. implemented additional tariffs on China September 1 and have slated more on December 15. These include duties on clothing and electronics, will pinch US consumers where it hurts, in the pocketbooks. These moves will sideswipe Canada.

Despite all of this gloom, the central bank held off from signalling explicitly any immediate need to cut interest rates. While growth has been stronger than expected, inflation has remained on target.

“In sum, Canada’s economy is operating close to potential and inflation is on target. However, escalating trade conflicts and related uncertainty are taking a toll on the global and Canadian economies,” the central bank said in its statement. “In this context, the current degree of monetary policy stimulus remains appropriate.”

Market Interest Rates Are Tumbling

The Bank prefers to wait for more concrete evidence that the economy is in need of additional stimulus. Despite this, market interest rates have fallen to record lows in Canada and elsewhere and the yield curve is inverted. Government of Canada 5-year yields have slid from 1.85% to 1.15% this year, an incredible 38% decline. Ten-year returns are down from 1.92% to 1.13% (lower than the 5-year yield), and the 30-year bond yield has plunged from 2.13% to 1.40%.

Short-term interest rates are higher than longer-term yields. The overnight rate, controlled by the Bank of Canada, is 1.75%–well above all of these long-term yields. The 3-month bill rate is at 1.62%, almost 50 basis points higher than the 5-year yield.

The posted mortgage rate is the qualifying rate for mortgage borrowers. It has barely moved this year, down only 15 basis points to 5.19%. Its stickiness at elevated levels has prevented many borrowers from taking advantage of today’s low contract mortgage rates.

Mortgage Rates Have Fallen Even More Than Bond Yields

According to Rate Spy, the best high-ratio 5-year fixed mortgage rate is at 2.25%, down 94 basis points from the 3.24% rate posted at the beginning of the year. Conventional high-ratio 5-year fixed mortgage rates are down 95 bps and refinance 5-year fixed rates have fallen 118 bps. Much of this phenomenon might be lenders playing catch-up as they were slow to cut fixed rates when interest rates began to fall at the end of last year.