To buy, or to lease, that is the question… this decision can effect your Mortgage

General Mark Goode 29 Oct

The question of whether it’s better to lease or buy a vehicle is a common dilemma. And do you buy or lease a new or used vehicle? The answer depends on the specifics of your situation.

It’s important to realize that many consumers overburden themselves with car leases or loans they simply can’t afford. While most of us require a vehicle to get to and from many destinations throughout the course of any given week, we don’t need a high-end vehicle to serve this purpose.

The key to remember when you’re looking to purchase a home and obtain a mortgage or refinance an existing mortgage is that, if you overspend on a vehicle, it affects your debt ratios and may restrict or negate your mortgage financing ability.

Leases and purchase loans are simply two different methods of automobile financing. One finances the use of a vehicle while the other finances the purchase of a vehicle. Each has its own benefits and drawbacks

When making a lease-or-buy decision, you must, therefore, look at your financial abilities in terms of your debt ratios. And if you’re unsure about how leasing or purchasing a vehicle will affect your ratios, it’s best to speak to someone. You can speak with Mark or Brad prior to making your decision, so you fully understand the impact of your leasing or buying decision on your credit.

When you buy, you pay for the entire cost of a vehicle, regardless of how many kilometres you drive. You typically make a down payment, pay sales taxes in cash or roll them into your loan, and pay an interest rate determined by your loan company based on your credit history. Later, you may decide to sell or trade the vehicle for its depreciated resale value.

When you lease, you pay for only a portion of a vehicle’s cost, which is the part that you “use up” during the time you’re driving it. You have the option of not making a down payment, you pay sales tax only on your monthly payments, and you pay a financial rate, called a money factor, which is similar to the interest on a loan. You may also be required to pay fees and a security deposit. At lease-end, you may either return the vehicle or purchase it for its depreciated resale value.

As an example, if you lease a $20,000 car that will have, say, an estimated resale value of $13,000 after 24  months, you pay for the $7,000 difference (this is called depreciation), plus finance charges and possible fees.

When you buy, you pay the entire $20,000, plus finance charges and possible fees. This is fundamentally why leasing offers significantly lower monthly payments than buying.

Lease payments are made up of two parts – a depreciation charge and a finance charge. The depreciation part of each monthly payment compensates the leasing company for the portion of the vehicle’s value that is lost during your lease. The finance part is interest on the money the lease company has tied up in the car while you’re driving it.

Loan payments also have two parts – a principal charge and a finance charge. The principal pays off the full vehicle purchase price, while the finance charge is loan interest. Since all vehicles depreciate in value by the same amount regardless of whether they’re leased or purchased, however, part of the principal charge of each loan payment can be considered as a depreciation charge. Just like with leasing, it’s money you never get back, even if you sell the vehicle in the future.

The remainder of each loan principal payment goes toward equity – or resale value – which is what remains of your car’s original value at the end of the loan after depreciation has taken its toll. The longer you own and drive a vehicle, the less equity you have.

With leasing, you may have the option of putting your monthly payment savings into more productive investments, such as your mortgage, an investment property or a vacation home, which will increase in value. In fact, many experts encourage this practice as one of the benefits of leasing.

We are always available to speak to you. and at Mortgage Man – Dominion Lending Centres it does not cost anything for advice. Book your appointment today with Mark or Brad.

 

Mortgage Man – Dominion Lending Centres | Ph: 705-326-8523 | Fx: 705-326-8645 |  www.markgoode.ca | FSCO# 12254 | 180 Memorial Avenue | Orillia, ON L3V 5X6 |
    
 All credits and copyrights to their respective owners. 
Reposted Articles may have been altered or edited from Original post
Corin Payie MMDLC

 

Scotchmints.com

 

Eenie meenie …My new home

General Mark Goode 29 Oct

Deciding which type of home to purchase

There is an endless supply of different types of homes available for purchase – from condos to townhouses to fully-detached homes. The key is to decide what you can afford and which amenities you prefer before heading out shopping for a new home. Your best first step is to seek the advice of a Dominion Lending Centres Mortgage Professional and get pre-approved on a mortgage. That way, you already know what your price range is – and, therefore, which type of home you’re in the market for – before you begin shopping. Budgeting is also an important part of preparing yourself for the purchase of a home. If you save for a down payment and up-front costs, such as closing costs and emergency reserves, much sooner, you’ll be sure to save enough to cover the many expenses facing a new homeowner, including moving, utility hook-ups, tools, maintenance supplies, window coverings, etcetera. Once you have the money available to make your home purchase a reality, you should weigh the following options to help decide what type of home is right for you: Condo A condo makes a great first home because it typically costs less than a townhouse or a detached home, which translates into a smaller down payment. But there are, however, monthly maintenance fees you must take into consideration when budgeting for a condo. Condos are also ideal for those who do not want to maintain a lawn or worry about clearing snow away from walkways and driveways. Townhouse If the condo life is not your forte and you’re not looking for a big yard to maintain, a townhouse may be your best home purchase option. A townhouse costs less than a fully-detached home and results in cheaper property taxes as well. Many townhouses also come with monthly maintenance fees unless they are freehold townhouses. In situations where you pay a monthly fee, however, you won’t have to worry about outdoor maintenance or snow removal. Detached Home If it’s privacy you’re seeking as well as a larger yard, a detached home is your ideal choice. Still, prices can vary drastically based on such variables as whether you’re seeking a spot in the city, a place in the suburbs or a more rural location. Other Considerations The size of the home and property (if you decide not to opt for a condo) are also important things to consider before you head out shopping. While everyone has their dream home in mind, this is not always a practical purchase choice, especially if this is your first home purchase. When it comes to location, think about in which area or neighbourhood you’d like to make your purchase, and which home features are absolutely essential – including what you can live without and what aspects are entirely out of the question. Take a look at real estate ads for the area(s) you’re interested in to see what’s on the market and the price ranges. Also drive around a few neighbourhoods and see what’s for sale or visit Open Houses. This can help crystallize what you want or don’t want in a home. By making your first purchase a modest and affordable ‘starter’ home, you will be putting money towards a mortgage that will build equity in that home. And once you’ve paid down a significant portion of that first home’s mortgage, you will then have more money to put towards an upgrade into your dream home.

Looking for answers on how you can get into your dream home faster?

Call now 705-326-8523
Or email mark@markgoode.ca

 

Mortgage Man – Dominion Lending Centres | Ph: 705-326-8523 | Fx: 705-326-8645 |  www.markgoode.ca | FSCO# 12254 | 180 Memorial Avenue | Orillia, ON L3V 5X6 |
    
 All credits and copyrights to their respective owners. 
Reposted Articles may have been altered or edited from Original post
Corin Payie MMDLC

Scotchmints.com

Deciding which type of home to purchase

General Mark Goode 29 Oct

There is an endless supply of different types of homes available for purchase – from condos to townhouses to fully-detached homes. The key is to decide what you can afford and which amenities you prefer before heading out shopping for a new home. Your best first step is to seek the advice of a Dominion Lending Centres Mortgage Professional and get pre-approved on a mortgage. That way, you already know what your price range is – and, therefore, which type of home you’re in the market for – before you begin shopping. Budgeting is also an important part of preparing yourself for the purchase of a home. If you save for a down payment and up-front costs, such as closing costs and emergency reserves, much sooner, you’ll be sure to save enough to cover the many expenses facing a new homeowner, including moving, utility hook-ups, tools, maintenance supplies, window coverings, etcetera. Once you have the money available to make your home purchase a reality, you should weigh the following options to help decide what type of home is right for you: Condo A condo makes a great first home because it typically costs less than a townhouse or a detached home, which translates into a smaller down payment. But there are, however, monthly maintenance fees you must take into consideration when budgeting for a condo. Condos are also ideal for those who do not want to maintain a lawn or worry about clearing snow away from walkways and driveways. Townhouse If the condo life is not your forte and you’re not looking for a big yard to maintain, a townhouse may be your best home purchase option. A townhouse costs less than a fully-detached home and results in cheaper property taxes as well. Many townhouses also come with monthly maintenance fees unless they are freehold townhouses. In situations where you pay a monthly fee, however, you won’t have to worry about outdoor maintenance or snow removal. Detached Home If it’s privacy you’re seeking as well as a larger yard, a detached home is your ideal choice. Still, prices can vary drastically based on such variables as whether you’re seeking a spot in the city, a place in the suburbs or a more rural location. Other Considerations The size of the home and property (if you decide not to opt for a condo) are also important things to consider before you head out shopping. While everyone has their dream home in mind, this is not always a practical purchase choice, especially if this is your first home purchase. When it comes to location, think about in which area or neighbourhood you’d like to make your purchase, and which home features are absolutely essential – including what you can live without and what aspects are entirely out of the question. Take a look at real estate ads for the area(s) you’re interested in to see what’s on the market and the price ranges. Also drive around a few neighbourhoods and see what’s for sale or visit Open Houses. This can help crystallize what you want or don’t want in a home. By making your first purchase a modest and affordable ‘starter’ home, you will be putting money towards a mortgage that will build equity in that home. And once you’ve paid down a significant portion of that first home’s mortgage, you will then have more money to put towards an upgrade into your dream home.

Mortgage Man – Dominion Lending Centres | Ph: 705-326-8523 | Fx: 705-326-8645 |  www.markgoode.ca | FSCO# 12254 | 180 Memorial Avenue | Orillia, ON L3V 5X6 |
    
 All credits and copyrights to their respective owners. 
Reposted Articles may have been altered or edited from Original post
Corin Payie MMDLC

Scotchmints.com

I wanna Hit Reset… a To Do List for the newly single

General Mark Goode 26 Oct

Your financial well being, a to do list for the newly single

Here are some tips that will help you get back on your feet after a divorce, separation or death.


One of the most difficult of life’s passages to navigate is that of moving from being one in a couple to being alone. Whether through widowhood or divorce, thousands of Canadians find themselves taking over the reigns of their lives each year, directing their own futures as the suddenly single.

One moment things are as they should be. The next, everything has been thrown into chaos. And just at a time when we are least able to think straight, we’re forced to make dozens of decisions, consider hundreds of possibilities, and uncover important facts, many of which are not at all intuitive.

Facing the reality of less money? Look hard for ways to cut expenses. If you think you may be faced with shortages in your cash flow, consider applying for overdraft protection as a short-term way of avoiding non-sufficient funds (NSF) cheques. The last thing you need is to ruin your credit history. But don’t turn that overdraft into part of your cash flow planning or you’ll never get out of the hole.

Inherited assets through a will or as part of a separation agreement? Time to figure out how to get that money invested in the right way for you. Take your time. Don’t let anyone talk you into doing anything too quickly. And if you don’t understand what you’re being offered, the answer is always, “No thank you.” You should be able to explain whatever you’re buying to a twelve-year-old. If you can’t, you don’t understand it well enough to be buying it.

If your partner had RRSPs or RRIFs, the assets can be transferred to you without tax consequence through your partner’s beneficiary designation, will or through a divorce settlement. You won’t have to pay any tax on the money, provided you roll the funds directly to your own registered plan. You may also be entitled to a lump sum from your buddy’s corporate pension plan, which can be transferred tax-free to your RRSP.

Book an appointment with your lawyer. It’s time to change your will, powers of attorney and any other documents in which your spouse was named. Remember to change the beneficiary designations on your own insurance, RRSPs, RRIFs, or anything else on which your partner was your beneficiary. And if you have young children and haven’t yet named a guardian for them, the appointment of one is now a must.

Tackling the details can be difficult when all you really want to do is hide from your sorrow. Let your friends and family help. And don’t be too hard on yourself during this emotionally ripe time. Trust the people you know and accept all the help you’re offered. Get a notebook and take copious notes. And go slow. There’s no rush to get to where you need to be next. Time heals. It also helps you make better decisions.

By Gail Vaz-Oxlade

Mortgage Man – Dominion Lending Centres | Ph: 705-326-8523 | Fx: 705-326-8645 |  www.markgoode.ca | FSCO# 12254 | 180 Memorial Avenue | Orillia, ON L3V 5X6 |
    
 All credits and copyrights to their respective owners. 
Reposted Articles may have been altered or edited from Original post
Corin Payie MMDLC

Scotchmints.com

HOW TO, Get the most out of your home equity…

General Mark Goode 26 Oct

Refinancing – What are your Options?

There are times when we need quick access to cash to fund our projects, support our family or get us through tough situations.  What are the most sensible ways to find money?  Many people don’t think twice before borrowing on their credit cards and soon find themselves buried in debts with a poor credit rating.

There are many options besides credit cards that can help you find money when you need it most.  Fortunately there are excellent mortgage brokers, like the team at One Stop Mortgage Corp, who can provide timely advice and assist you in finding the money you need.

Using your Home to finance your short term and long term goals

New projects, and financial needs come up all the time.  You may want to consider refinancing to:

Pay down your debts with high interest rates
Consolidate your debts
Finish home renovation projects
Invest in your business
Pay a child’s tuition
Take advantage of low interest rates
Take a much needed vacation
Buy a new car
 

Using your home equity can be an easy way to lower your borrowing costs without taking out a traditional loan.

There are several ways to use your home equity to find the money you need to get back your life.  However, in order to access these, you will need to qualify, as well as ensure that you are able to pay back the loans to ensure your home is secure.
 

Refinancing

There are many lenders who offer refinancing options, and it is important to discuss these with your mortgage broker in order to get the best advice.  With refinancing, you can have the opportunity to access the equity in your home that you have built up over time of ownership through mortgage payments and market value.

If you refinance, it may involve changing the terms of your original mortgage agreement, with the refinanced portion taking advantage of different interest rates than the original mortgage.  There may be fees involved in refinancing.

Depending on your credit rating and the value of your house, you can usually borrow up to 80% of the appraised value of your home, minus the amount left to pay on your mortgage.  Be aware that borrowing over 80% of the value of your home will require you to pay mortgage default insurance fees, and that the rules about the value of your home that is insured have changed.  Want to know if this is an option for you? Call Mark & Brad 705-326-8523. or email us mark@markgoode.ca

Example:

George is planning to invest money in his business so that the company is in a better financial position to pass on to his children when he retires.  He wants to refinance his home to gain access to the equity he has built up over the years.

When he contacted his mortgage broker, an appraisal of the home was ordered and he discovered it was currently worth $540,000 according to the real estate market.  His mortgage broker calculated his credit limit for refinancing.  This made things much clearer for George so he could decide how much credit he wanted to take out to invest in his business.

Appraised value of George’s home:                                     $540,000
Maximum loan amount:                                                         x80%
Loan amount possible, based on current value of home:                        $432,000
Less current amount of mortgage:                                        $233,000
Refinancing credit limit:                                                         $199,000

If George was approved to take out the total loan amount,
he would owe:       $432,000

 

Home Equity Lines of Credit

A Home Equity Line of Credit is similar to a regular line of credit, except that it is based on the equity in your home, and generally has a lower interest rate than an unsecured line of credit.  You receive a credit limit, and are able to borrow money whenever you need to up to that limit, pay it back and borrow it again.  Once you apply and qualify for a home equity line of credit, you can take advantage of this flexible option.  You can take out a home equity line of credit for up to 65% of the value of your home, or you can combine it with refinancing up to a limit of 80%.

Many people who are self-employed use this option, since it allows them to borrow money when they are between contracts and pay it back quickly when they are working.   If your cash flow is not constant, this is also a great option.  Many people who want to do a home renovation, or take a vacation also use this opportunity to take money out of their home.  Besides taking advantage of lower interest rates, a Home Equity Line of Credit also has the option of being increased as you pay down your mortgage.

Want to know if this is an option for you?

Call us at 705-326-8523 or email us mark@markgoode.ca

Second Mortgages

A second mortgage is a secondary loan you take out of your home, based on your home equity, from a different mortgage lender.  This mortgage is in addition to your first mortgage.  This option enables you to make payments on both the original and second mortgage.  If you are unable to pay your mortgage and you default on the loan, the first mortgage holder has access to the funds based on the sale of your home first.  Since a second mortgage has more risk for the lender, interest rates are usually higher than the first.  Usually, you can borrow up to 90% of the appraised value of your home, minus the amount owed on your first mortgage.  If you borrow this much, you will have to pay mortgage default insurance premiums.

Want to know what options are available to you? Call Mark & Brad 705-326-8523. or email us mark@markgoode.ca

Mortgage Man – Dominion Lending Centres | Ph: 705-326-8523 | Fx: 705-326-8645 |  www.markgoode.ca | FSCO# 12254 | 180 Memorial Avenue | Orillia, ON L3V 5X6 |
    
 All credits and copyrights to their respective owners on reposted articles. 
Article may have been altered or edited from Original post
Corin Payie MMDLC

Scotchmints.com

Want to pay more for your Mortgage?

General Mark Goode 26 Oct

mortgage-shoppingBig banks love mortgage consumers who don’t carefully comparison shop… and capitalizing on their “home bank” advantage with existing customers.

The article that follows examines recently-released research on these topics. It’s a revealing look at how big lenders benefit significantly from things like mortgage “search costs” and customer “switching costs.”

“Search costs” refer to the time, skill, money and effort required to find a better mortgage deal. “Switching costs” represent the expense of moving to a new lender.

The findings below come from a brilliant Bank of Canada research paper by Jason Allen, Robert Clark and Jean-François Houde. It’s chock full of insights into why mortgage consumers pay higher rates than they have to, and why being loyal to a lender can cost you.

The key findings of this research are summarized below. If you don’t have time to read them all, focus on the highlighted parts. CMT comments appear in italicized text and after the “Observations” labels. All quotes are taken directly from the study.

Consumers aren’t created equal:

  • Research shows that there are major differences in people’s:
    • “Degree of loyalty to their main financial institution.”
    • Ability to “understand the subtleties of financial contracts”
    • Ability and willingness to “negotiate and search for multiple quotes”
  • Canadians generally don’t consider all available mortgage alternatives.

Hunting for a better mortgage:

  • Many borrowers simply do not work as hard to “search” for a better mortgage. That’s largely because of the effort they “must put forth when gathering multiple quotes.”Picking-a-mortgage-Blind
  • Inadequate mortgage research induces “profits for lenders” and “permit(s) them to price discriminate between consumers.” (It also raises your chances of getting stuck with bad mortgage terms.)
  • The average markup is estimated to be 4.1% for non-searchers and 1.9% for searchers, but the distribution is much more skewed for searchers with close to 25% of [comparison shoppers] facing zero markup (above the marginal cost).”
  • In the past, “approximately 25% of borrowers [paid] the posted rate.” (This was based on data from more than a decade ago. The numbers are not as high now, especially for well-qualified borrowers. That said, there is no data to confirm how many people actually pay the posted rate today.)
  • “…Consumers dealing with [large] institutions pay more on average for their mortgage.”
  • Not surprisingly, the decision to switch lenders is “correlated with” the borrower’s willingness and ability to search for a better deal.
  • “The fraction of ‘switchers’ is significantly larger” for:
    • New homebuyers (i.e., former renters or [those] living with their parents), and for
    • Broker customers (Lenders love to get their hands on first-time buyers, and it’s a big reason many are happy to pay brokers to deliver those customers.)
  • “Consumers financing larger loans…are more likely to search (and pay lower rates).” In turn, they have a higher “switching probability.”
  • “Richer households have a higher value of time, and therefore higher search costs on average.” (…and many of them needlessly overpay.) In short, they have less tendency to switch lenders.
  • “…About 30% of consumers only consider dominant lenders.” (Usually a big mistake.) “For these consumers, the average number of lenders drops to three, which can significantly increase the profit margin of banks.”

“Home Bank” advantage:

  • Everything else equal, a customer’s home bank usually gets their mortgage business. This is akin to a home field advantage in sports. ()bank-tactics“Home bank” can also refer to a client’s “home lender.”
  • Even when all is not equal, the home bank often wins. That’s partly because consumers are “motivated by more than just price.”
  • The study’s authors estimate that consumers are willing to pay “between $759 and $1,617 upfront ($13.80-$29.40 per month) to avoid having to switch banks.” (Many will pay more because they can’t quantify the value of lender differences. Case in point are mortgage penalties, which most people can’t measure until it’s too late—when they have no choice but to break their mortgage and pay whatever they’re quoted.)
  • Put another way, “lenders directly competing with [a client’s] home-bank will on average have to discount the [mortgage] by a margin equal to the switching cost in order to attract” a new customer.
  • The study finds that “loyal consumers pay on average nearly 9 basis points above the rate paid by switchers.” (It’s no coincidence that many borrowers choose to stay with their existing lender when a competitor’s rate is better by less than 10 basis points.)
  • Not surprisingly, “the market for ‘non-loyal’ consumers is very competitive”
  • Factors that support customer loyalty to their home bank include:
    • Proximity to a local branch
    • Better access to lending terms
    • Association with a strong recognizable brand
    • Consolidation of accounts (for convenience)
    • Lower chequing account fees, higher savings rates and other perks (Bank and credit union reps commonly use these perks to counter customer objections to higher mortgage rates. To some extent, free banking, banking comparison sites and modern-day electronic funds transfers are reducing the allure of these home lender “freebies.”)
    • The cost and effort of switching bank accounts to a new lender (It isn’t necessary to have your mortgage and bank accounts at the same lender, but some people believe it’s important.)
  • Cut-Mortgage-RatesObservation:The data used in this study is 11-13 years old. There is no way to know how much the home lender advantage has changed in that time. Various factors have altered this advantage over the last decade, including:
    • Rate comparison sites — which make it easier to know when your lender isn’t being competitive
    • More broker competition — Brokers reduce consumers’ search costs by assisting them with comparison shopping and offering comprehensive advice not biased to one lender. (Although, it should be noted that in most cases 90% of a broker’s volume is routed to three lenders, so there can be bias there as well.) “Unlike in the United States, brokers in Canada have fiduciary duties…The average discount that a mortgage broker can obtain for a borrower is about 20 basis points, or approximately $16 per month on a $140,000 loan.” (It’s likely lower now as this data is old.)
    • Electronic banking — Many consumers want a mortgage that’s integrated with their banking. That plays right into the hands of deposit-taking lenders. Today, however, one can link different institutions’ mortgage accounts and bank accounts and electronically move funds between them with ease.
  • “In 2004, 80% of new borrowers…contacted their main financial institution when shopping for their mortgage.”
  • The research shows that, depending on the year, “nearly 60% of new home-buyers remained loyal to their main institution.” (CMHC’s Mortgage Consumer Survey finds that 88% of renewers remain loyal to their existing lender.)
  • “…Only 35% of consumers dealing with brokers remain loyal to their home institution
  • 73% of households choose a lender with which they already have a prior financial relationship. The study authors estimate that “72% of consumers have a positive home (bank) bias.”
  • “67% of Canadian households have their mortgage at the same financial institution as their main checking account.” (Having your bank account gives a bank an enormous advantage. Some have even been known to scan customer chequing accounts to see if they’re making a mortgage payment to another lender. The bank then contacts them ”out of the blue” to solicit their mortgage business.)
  • Banks are more likely to transact with customers who are not motivated to search as hard. (These customers are low-hanging fruit for the banks.)

Home bank tactics:

  • “Lenders…are open to haggling with consumers based on their outside options.” ()Bank_StatusWe all know that, right?
  • “This practice allows the home bank to price discriminate by offering up to two quotes to the same consumer: (i) an initial quote, and (ii) a competitive quote if the first one is rejected.” (Savvy well-qualified consumers routinely reject their lender’s first quote.)
  • Lenders know that “low risk and wealthy consumers represent lower lending costs.” For that reason, lenders offer “lower rates on average” to these borrowers.
  • “The loan sizes and credit scores of consumers are particularly strong predictors” of the rates they pay.
  • Lenders know financially constrained consumers have fewer options. These people “pay on average a premium equal to 14 basis points.”

Stats of note:

  • At the time of this study, the “Big 8” (Bank of Montreal, Bank of Nova Scotia, National Bank, Canadian Imperial Bank of Commerce, Royal Bank, TD Canada Trust, Desjardins and ATB Financial collectively “controlled 90% of assets in the banking industry.”
  • “Interest and fees generated from mortgages represent approximately 21% of total revenue for the largest banks.”
  • “80% of new homebuyers require mortgage insurance.”
  • This is the distribution of mortgages between a client’s main and secondary financial institutions:

Account

Main FI

2nd FI

All other FIs

Mortgage (all)

67.4%

10.9%

21.7%

Mortgage (no broker)

70.3%

10.8%

18.9%

Mortgage (broker)

37.3%

30.6%

32.1%

Source: Canadian Finance Monitor survey conducted by Ipsos-Reid, between 1999 and 2007.

  • “On average, borrowers pre-pay an additional 1% of their mortgage every year.”
  • “Richer households are more likely to pre-pay their mortgage, which reduces the expected revenue for lenders.”
  • “The (mortgage) transaction rate is on average 1.2 percentage points above the 5-year bond rate” but varies widely.”
  • “The standard-deviation of retail (mortgage) margins is equal to 66 basis points.”
  • At the time of the study, “80% of consumers transacted with a bank that has a branch within 2 kilometres of their new house” (In the electronic banking age, lender location has taken on less importance. Tens of thousands of customers now choose lenders located nowhere near their home—often in a totally different province.)
  • Here’s an interesting finding from the U.S.: “Hall and Woodward (2010) calculate that a U.S. homebuyer could save an average of $900 on origination fees by requesting quotes from two brokers rather than one.”

Miscellaneous Findings:

  • It is “unlikely that the posted rate is used to attract new customers,” say the authors.rates-mortgages
  • But why are posted rates still in existence? Well, the report states: “Banks have an incentive to post an artificially high interest rate that is not binding. Indeed, the pre-payment penalty is…evaluated at the posted rate valid at the signature date, rather than the (actual) transaction interest rate. Banks therefore have an incentive to raise the posted rate, in order to reduce their pre-payment risk.” (Many discount lenders—particularly broker-only lenders—don’t play these penalty games. They base your penalty on the actual rate you pay, which is much more fair than the big banks’ method of using posted rates.)
  • “…Lenders can incur transaction costs in the event of default, therefore lowering the expected revenue from risky borrowers.” When a borrower defaults, lenders also face “lost revenue from complimentary products like other loans and saving accounts.” Hence, contrary to charges by many housing critics, mortgage insurance does not eliminate a lender’s risk. (For more on this see: Skin in the Game)

Implications of this data

cost-comparisonThose of us who see borrowers overpaying on a regular basis know how important it is to compare mortgage options. But it’s interesting to hear the repercussions of not doing so, as articulated by a reputable academic source.

These findings should stick in regulators’ minds, especially as they contemplate policies that:

  • discourage price discrimination
  • support greater access to funding (via securitization) to promote lender competition.

Allen, Clark and Houde note that “policies designed to increase information about the market, (mortgage) contracts, or the availability of different lenders would be beneficial to consumers.” A good example of this is the Department of Finance’s penalty disclosure initiative—for which it deserves big applause.

Similarly, the authors conclude: “policies that encourage consumers to consider lenders other than their main financial institutions would reduce overall market power.”


About the Data: It’s important to note that this study’s data was comprised only of high-ratio insured mortgages arranged in branches between 1999 and 2001; It did not include brokered mortgages, very big or very small mortgages, applicants with extremely high or extremely low incomes, or conventional (uninsured) mortgages.

 

Mortgage Man – Dominion Lending Centres | Ph: 705-326-8523 | Fx: 705-326-8645 |  www.markgoode.ca | FSCO# 12254 | 180 Memorial Avenue | Orillia, ON L3V 5X6 |
    
This article may have been reposted. All credits and copyrights to their respective owners. ~ Article may have been altered or edited from original. Corin Payie MMDLC Scotchmints.com

Spooked by the thought of home ownership?

General Mark Goode 24 Oct


Even with so many choices, and so many decisions over the life of your mortgage working with an Accredited Mortgage Professional on a well designed mortgage plan is your blueprint to getting the terms you need, at discounted rates you can afford, and becoming mortgage free faster. Mortgage Man – Dominion Lending Centres, can help you overcome the looming challenges, to realize your dreams of home ownership.


Mortgage Man – Dominion Lending Centres | Ph: 705-326-8523 | Fx: 705-326-8645 |  www.markgoode.ca | FSCO# 12254 | 180 Memorial Avenue | Orillia, ON L3V 5X6 |
    
 All credits and copyrights to their respective owners on reposted articles. 
Article may have been altered or edited from Original Post LinkedIn.
Corin Payie MMDLC

 

Scotchmints.com

 

Credit Challenges?

General Mark Goode 22 Oct

In today’s economic climate of tighter credit requirements and increased unemployment rates taking their toll on some Canadians, there’s no doubt that many people may not fit into the traditional banks’ financing boxes as easily as they may have just a year ago. Your best solution is to consult your Accredited Mortgage Professional to determine whether your situation can be quickly repaired or if you face a longer road to credit recovery. Either way, there are solutions to every problem. Accredited Mortgage Professionals who are experts in the credit repair niche can help credit challenged clients improve their situations a number of ways.

 If you have some equity built up in your home and still have a manageable credit score, for instance, you can often refinance your mortgage and use that money to pay off high-interest credit card debt. By clearing up this debt, you are freeing up more cash flow each month. In the current lending environment, with interest rates at an all-time low, now is an ideal time for you to refinance your mortgage and possibly save thousands of dollars per year, enabling you to pay more money per month towards the principal on your mortgage as opposed to the interest – which, in turn, can help build equity quicker.

Following are five steps you can use to help attain a speedy credit score boost:

1) Pay down credit cards. The number one way to increase your credit score is to pay down your credit cards so you’re only using 30% of your limits. Revolving credit like credit cards seems to have a more significant impact on credit scores than car loans, lines of credit, and so on.

2) Limit the use of credit cards. Racking up a large amount and then paying it off in monthly instalments can hurt your credit score. If there is a balance at the end of the month, this affects your score – credit formulas don’t take into account the fact that you may have paid the balance off the next month.

3) Check credit limits. If your lender is slower at reporting monthly transactions, this can have a significant impact on how other lenders may view your file. Ensure everything’s up to date as old bills that have been paid can come back to haunt you. Some financial institutions don’t even report your maximum limits. As such, the credit bureau is left to only use the balance that’s on hand. The problem is, if you consistently charge the same amount each month – say $1,000 to $1,500 – it may appear to the credit-scoring agencies that you’re regularly maxing out your cards. The best bet is to pay your balances down or off before your statement periods close.

4) Keep old cards. Older credit is better credit. If you stop using older credit cards, the issuers may stop updating your accounts. As such, the cards can lose their weight in the credit formula and, therefore, may not be as valuable – even though you have had the cards for a long time. You should use these cards periodically and then pay them off.

5) Don’t let mistakes build up. You should always dispute any mistakes or situations that may harm your score. If, for instance, a cell phone bill is incorrect and the company will not amend it, you can dispute this by making the credit bureau aware of the situation. If, however, you have repeatedly missed payments on your credit cards, you may not be in a situation where refinancing or quickly boosting your credit score will be possible.

Depending on the severity of your situation – and the reasons behind the delinquencies, including job loss, divorce, illness, and so on – your Dominion Lending Centres mortgage professional can help you address the concerns through a variety of means and even refer you to other professionals to help get your credit situation in check.

To speak to Mark Goode AMP or Brad Day about your current credit situation and see how we can help.Call now 705 326 8523 | 1866 326 8523 | mark@markgoode.ca | click here to request contact at a later date.

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Mortgage Man – Dominion Lending Centres | Ph: 705-326-8523 | Fx: 705-326-8645 |  www.markgoode.ca | FSCO# 12254 | 180 Memorial Avenue | Orillia, ON L3V 5X6 |
    
 All credits and copyrights to their respective owners on reposted articles. 
Article may have been altered or edited from Original Post LinkedIn.
Corin Payie MMDLC

Scotchmints.com

 

All you single ladies… put your hands up if you have considered home buying solo

General Mark Goode 19 Oct

Single Ladies Buying Homes

It’s becoming increasingly apparent that a greater number of women are now taking the reigns when it comes to home purchases. There’s a growing trend among single women – and, more precisely, professional single women – who are becoming independent homeowners. While many of them may be putting off marriage, they’re not waiting around for Mr Right before taking the plunge into homeownership.

It’s believed that around 20% of homebuyers in North America are single women based on a 2011 report released by the US National Association of Realtors. Harvard University’s Joint Center for Housing Studies also released a report that said single women are buying in record numbers.

There’s no equivalent data for Canada, but an abundance of anecdotal information has led to the creation of shows like HGTV’s Buy Herself, which follows single women making their first real estate purchases.

Women are looking for ways to become financially independent, and investing in real estate and building equity for themselves are ways to invest in their future – building financial security.

Women are taking advantage of historically low interest rates and recognizing homeownership is often more affordable than renting.

Seeking expert advice

One of the amazing things about women looking to invest in real estate is that they’re getting more advice before they make the decision to enter the market. They’re seeking out mortgage experts and real estate agents, and building a plan for the perfect entry into the market. They’re making lists of areas in which they’re interested in purchasing, itemizing amenities they would need in their ideal neighbourhoods, ensuring they have all the facts around closing costs and fees associated with making the purchase, and securing a mortgage.

Buying a home is likely one of the largest purchases you’ll ever make in your lifetime, and can feel overwhelming. That’s why working with a professional mortgage agent, real estate agent, home inspector and so on is essential. You’ll be working with these professionals closely – possibly for months – so interactions should feel comfortable, and they should be knowledgeable and responsive even to the smallest question.

The more prepared you are, the smoother the experience will be so do a little research on your own over the Internet to get a good idea of what types of properties and areas are of interest to you. Make a list of questions to ask your mortgage agent or realtor – and keep it on hand so you can add to it as more questions arise.

Interest rates are the lowest they’ve been in history and they have nowhere to go but up. Industry professionals believe that as rates begin to rise, they’ll continue to rise for some time. There has never been a better time for women to make the decision to get into the real estate market to find the perfect place to call home.

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Mortgage Man – Dominion Lending Centres | Ph: 705-326-8523 | Fx: 705-326-8645 |  www.markgoode.ca | FSCO# 12254 | 180 Memorial Avenue | Orillia, ON L3V 5X6 |
    
 All credits and copyrights to their respective owners on reposted articles. 
Article may have been altered or edited from Original Post LinkedIn.
Corin Payie MMDLC

 

Scotchmints.com