26 Nov

First Time Home Buyer Tips!

General

Posted by: Stephanie Blake

TIPS ON GETTING READY TO BE A FIRST TIME HOME BUYER

Tips On Getting Ready To Be a First Time Home BuyerVery often, the first question is “what can I afford”. To answer this for a person getting ready to buy, we need to know about what is happening now, income, bills, savings, credit score etc. There are many positive things that you can do in the year or two prior to buying.

It is always best to consult with a Mortgage Broker well in advance to get started on the right path to becoming a home owner. If you already have some savings set aside, then you already have a great head start!

Here are some simple notes and tips to get you well on your way.

Special Income Note:

If using commission, lenders want to see a 2 year average income for commission/bonus income to use it at all. So file your Taxes each year and keep your NOA, Notice of Assessment that is mailed to you.

Down Payment:

You need to have a minimum 5% of the purchase price Down Payment and 1.5% of purchase price in your own funds. This CAN be gifted from an immediate family member.

Ex.

$300,000 home = $15,000 minimum Down Payment, plus $4,500 for Closing costs

$200,000 home = $10,000 minimum Down Payment, plus $3,000 for Closing Costs

Co-signer or Co Borrower:

IF you can have a parent with good income and credit go on as a guarantor for your mortgage, then we can add their income to the file to strengthen your position.

IF you have a partner/co borrower, then their income, credit score etc. can be added to the mortgage as well to strengthen the file.

Budgeting – Try Mint.com – Free:
www.mint.com

Start tracking your expenses, start with what you think you spend and see/track the reality (1-2months!) Set up bill date reminders and get notifications on your cell phone when you go over budget!

Find and stop the bleeding; unnecessary spending that can add to your savings.

NOTE: 3% of all unsecured debt has to be used as payment – even though reality payment is lower. $10K on a credit card = $300.00 payment and nearly $75,000 less mortgage buying power!!!

Crazy…..pay them down as much as possible!

Saving in RRSPs :

Save on Income Tax for filing next spring, lock it away!

Able to use up to $25,000 each TAX FREE as a First Time Home Buyer on a qualifying home value. Once you know what you can save per month, we can make it automatic (like a bill payment) OR you can save organically and then deposit every month or two into your RRSP account.

CALL ME – I have access to full line of Bank Products; RRSPs, TFSAs, Lines of Credit, Visa etc.

Check your Credit Score:

Equifax Customer Inquiries 1-800-465-7166

Pull your own credit bureau. Identify any errors or issues and fix now. You can call me when you get it, we can review and I can provide some tips on how to improve if need be!

Pay all bills on time, more than minimum payments!

Use NO MORE than 50% of available limit on cards – Going over 65% of limit reduces your score – EVEN if you are NOT over limit! Easy TIP: Pay on time and pay down debt a bit over next few months….then call to increase your limits! This will lower your % of credit utilization immediately for free and be a plus to your credit score.

Become a Rock Star that any lender will want to work with!

I really hope that this helps you in starting forward progress – starting is the hardest, but then it quickly becomes normal. Remember – we here at Dominion Lending Centres are here to help!

 
19 Nov

How To Avoid the 7 Biggest Mistakes Refinance Shoppers Make

General

Posted by: Stephanie Blake

Whenever interest rates drop or housing values jump, a refinancing frenzy follows. Whether you are looking to trim your mortgage payments, eliminate credit card debt or renovate, experts say you should fully understand all the options available to you before deciding to refinance. Here are some common pitfalls that consumers can avoid when refinancing:

1. Check interest rates to see if your new rate will pay off the penalty for leaving your present mortgage. It is best to decrease your interest rate by at least .75% to 1%. This would save you $100.00 a month on a $150,000 mortgage.

2. Know what your costs are – Check with your bank to find out what the penalty would be for an early payout.. It may be 3 month’s interest or more.. Don’t tell them you are moving your mortgage or they will pass you on to a high pressure salesperson who will try to talk you into coming into the branch to discuss the issue. It’s easier to say you are thinking about paying out your mortgage early.

3. Be sure to compare apples to apples- Make certain the rate you were quoted over the telephone was for a similar product. Comparing 3 year rates at one lender to 5 year rates at another is like comparing apples to oranges.

4. Overvaluing your Home – pride of ownership sometimes overshadows our common sense. You may expect the value of renovations to be equal to the cost of labour and materials. While return on investment for new carpeting or new paint jobs is close to 100%, it can be as low as 15% for a granite entranceway. Some people use their tax evaluations which may be too high or too low. Consider checking with your realtor or someone who recently sold their home on your street.

5. Not considering future plans – getting locked into a 10 year fixed rate when your kids will be leaving for college in 3-5 years may not be a smart move. If you are planning on buying a vacation home or an investment property why not plan for it now? You might be able to get it sooner than you expect.

6 Don’t let low interest rates or catchy slogans stop you from shopping around. Often the lower rates come with unattractive conditions: they may not be portable to a new home, the interest rate may only be available in one province, or you may be tied to the mortgage unless you have a bonafide sale of the home.

7 Finally don’t go to your present bank first. If you don’t know the rates you won’t get the best rate. The major reason people go to their present lender is convenience. There is comfort in “being known” and a belief that they should receive special treatment. The reality is that all lenders are under pressure trying to process the unprecedented volume of refinances. They have to set priorities. And you would be a low one as they already have your loan. They may lower your present rate from 3.99% to 3.79% to pacify you but if you shopped around you might find that other lenders are offering 3.19% at this time.

In conclusion, be a good consumer. Consult with your Dominion Lending Centres mortgage professional who can review the best options with you. We can help you make an informed decision on your finances.