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Blog #15 – Types of Mortgages

 

In today’s economy it pays to research different types of mortgages when you are looking at buying or selling a home.  While a mortgage is essentially a loan that is secured against your home, there are many variations to the type of mortgage that can be used for various needs.  Based on what you want and the level of risk that you handle there may be a number of different mortgage products that will meet your needs.  Below are brief descriptions of many different types of mortgages that may work for you.  Ultimately you will need to meet with a mortgage specialist to crunch the number and see what fits best for your personal situation.

Pre-Approved Mortgage

Ø  This lets you know what you can afford before you go start looking at homes.  This would normally be your first step when you start your home search.  By getting a pre-approval you will know what price range of homes you can afford and when it comes time to put in an offer you will know that financing will not be an issue.

Conventional Mortgage

Ø  A conventional mortgage is a loan that does not exceed 75% of the purchase price or appraised value of the home, whichever is less. This type of mortgage does not have to be insured against default. 

High-Ratio Mortgage - CMHC / GE Capital Insured

Ø  This works the same way as a conventional mortgage; except, since you are no longer putting at least 20% down you will have to get the mortgage insured.  These mortgages must me insured against loss by either Canada Mortgage and Housing Corporation (CMHC), a Federal Government Corporation, or GE Capital, a private insurer.

Open Mortgages

Ø  An open mortgage allows you the flexibility to repay the mortgage at any time without penalty. Open mortgages are available in shorter terms, 6 months or 1 year only, and the interest rate is higher than closed mortgages as much as 1%, or more. They are normally chosen if you are thinking of selling your home, or if you are expecting to pay off the whole mortgage from the sale of another property.

Closed Mortgages

Ø  A closed mortgage offers the security of fixed payments for terms from 6 months to 10 years. The interest rates are considerably lower than open, and if you are not planning on any one of the above reasons, then choose a closed mortgage. Nowadays, they offer as much as 20% prepayment of the original principal, and that is more than most of us can hope to prepay on a yearly basis. If one wanted to pay off the full mortgage prior to the maturity, a penalty would be charged to break that mortgage.

Fixed-Term Mortgages

Ø  With a fixed-rate mortgage, the interest rate is set for the term of the mortgage so that the monthly payment of principal and interest remains the same throughout the term. Regardless of whether rates move up or down, you know exactly how much your payments will be and this simplifies your personal budgeting. In a low rate climate, it is a good idea to take a longer term, fixed-rate mortgage for protection from upward fluctuations in interest rates.

The Adjustable Rate (A.R.M.) Mortgage

Ø  The Adjustable Rate Mortgage (A.R.M.) provides a lot of flexibility, especially when interest rates are on their way down. The rate is based on prime minus 0.375% and can be adjusted monthly to reflect current rates, and for the first 3 months of the mortgage, a large discount on the rate is given as a welcoming offer. Typically, the mortgage payments remain constant, but the ratio between principal and interest fluctuates. When interest rates are falling, you pay less interest and more principal. If rates are rising, you pay more interest and less principal, and if they rise substantially, the original payment may not cover both the interest and principal. Any portion not paid is still owed, or you may be asked to increase your monthly payment. This mortgage is fully convertible at any time without any cost to you, if you choose a 3 year term or greater, and offers a 20% prepayment privilege at any times throughout the year. While traditionally, banks offer variable mortgages up to 75% of the purchase price or the value of the home, we can go up to 90% with this product.

Secured Lines of Credit

Ø  Use the equity in your home that you have built up to purchase investments (where interest costs would be deductible against the earned income), finance home renovations, buy a car, or any other reasonable needs, with rates as low as prime. They can be arranged up to 75% of the purchase price or value of the home, and should you need more, we can arrange another secured line of credit as a Second mortgage up to 90%. Accessing the available credit is as simple as writing a cheque, or using the issued credit and/or debit card. You do not have to draw the money until you need it, and once you make a withdrawal, you can pay of your balance at any time or make monthly payments as low as interest only. As you pay down the balance, you have that much more available credit (revolving credit).

Equity Mortgages

Ø  These are mortgages that are assessed on the equity of the home (market value minus the mortgage amount). They can be as high as 80% of the purchase price or value of the property and if more is required, we can look at a small Second mortgage. These are generally offered to applicants that do not meet the normal income and/or credit qualifying guidelines. You may have little or no income verification, self-employed, and/or your credit may be less-than-perfect.

Multiple Term Mortgages

Ø  If you wanted the lower rates of a short term mortgage but wanted the security of a long term, why not choose both. Yes, "build your own mortgage" product. You can split your mortgage in to as many as 5 parts, all having different terms, rates, and amortizations, but one total monthly payment. This way, you are spreading the risk. But, be prepared to be "hands-on" and watch the market very carefully here. This is not for everyone, as the time and stress levels are quite high.

The 6 Month Convertible Mortgage

Ø  When rates are on their way down, or you may feel that they will in the near future, a 6 month convertible mortgage offers you the short term commitment at fixed payments, with an added advantage that while within the term, the mortgage is fully convertible to a longer term from 1 year to 10 years. At the end of the 6 month period, the mortgage becomes fully open, where one can renew with the existing lender or transfer to another lender. Even though it is offered at many financial institutions, there are differences from one to the next.

All-Inclusive-Mortgage (A.I.M.)

Ø  The AIM mortgage takes care of everything automatically. For Purchases, it includes: Solicitor's legal fees and standard disbursements to close the purchase and mortgage; Title transfer; Title Insurance from LandCanada for the clients; CMHC application fee or Appraisal fee; 1% Cash-Back to cover Land Transfer Tax; Registration of Deed and Mortgage. For Refinances, it includes: Legal fees and standard disbursements to prepare and close the mortgage; Title Insurance from LandCanada; CMHC application fee or appraisal fee; 1% Cash-Back; Registration of new first mortgage; Registration of discharge of existing first and second mortgage. The minimum term available is a 5 year term.

Bridge Financing

Ø  Bridge financing refers to a special, short-term loan needed to cover the time gap when two properties, both firm sales, are involved and the closing dates don't match. The property being purchased closes before the one that was sold. There is a small set-up fee charged by the lender to have the bridge loan arranged, plus the cost of the interest as now you are carrying both properties for a short time. The rate charged on the bridge loan is about 2-3% above the bank's prime.

Althought there are many other combinations that you may come across, these are the more common terms that you will hear when dealing with mortgages.

 

Have an awesome day,

Dave Watt

 

Blog #14 – Mold Prevention Tips

When buying or selling a home you never want to come across the word MOLD!  It can kill any home purchasing deal in an instance.   Mold can trigger allergies and asthma attacks, irritate, the eyes, the skin, the throat, nose and lungs of a human being living in contaminated house. It can also damage and stain walls and appliances.  For the personal safety of yourself and others so here are some ways to prevent it before it becomes a problem.

Keep Humidity Low - The less humidity in the air, the less moisture, the less mold.  Relative humidity can be measured with a moisture or humidity meter, a small, inexpensive ($10-$50) instrument available at many hardware stores.

Keep your roof up-to-date – A leaky roof is a recipe for mold in the attic.  So, make it a habit to check out the roof and attic for any leaks or moisture.  Also, remember to keep the gutters clear as well. 

Showers – The purpose of a bathroom fan isn’t just to vent unpleasant odours.  Its primary purpose is to reduce condensation which, if left unchecked, can lead to mold, failing grout, wall rot and other problems.  Experts suggest you keep the bathroom fan running for at least 30 min after a shower.

Increase ventilation – Open windows when possible.  Make sure to give you windows regular cleaning as well.

Cold pipes – Pipes that are close to the exterior wall should be covered with insulation.  This will also decrease the risk of your pipes freezing and breaking in the winter time. 

Increasing air temperature – Experts say to increase temperature.  Now, we all know most of us are trying to keep the temperature down to save on heating costs.  So, maybe increasing your insulation in your home may be a better overall alternative.

Keep Water away from the Foundation - Make sure the ground slopes downward away from your home. Water pooling around the foundation of your house is a sure recipe for mold.

As long as you stay on top of cleaning your home and making sure there is proper air circulation you should be able to avoid this issue entirely.  When selling a home you want to make a great first impression, but most important you want to be living in a healthy environment.

 

Have an awesome day,

Dave Watt

Blog #13 – Tips on selling your home in the winter

Many people believe it’s harder to sell in the in winter than summer, but there are a number of real advantages to selling during the cooler months.

For one thing, sellers can take a little more time to consider offers, and with fewer homes on the market, there’s less competition.  Remember, the things that lead people to make new home purchases -- a new job, a growing family, up- or downsizing -- happen all year round, and there are still plenty of buyers out there.  Winter can be a great time of the year for playing up the cozy factor when showing off your home.

Start with the exterior
As with any time of year, make sure that the house looks well maintained and cared for, with eaves troughs clean and minor repairs taken care of. While you can’t paint in winter, washing paintwork and siding with warm soapy water on a mild day can make a big difference. Make sure the windows are freshly washed as well; winter light has a way of highlighting grime.

Tend to shrubbery
Make sure that shrubs and tree-branches don’t obstruct walkways or entrances; brush the snow off or prune if necessary.  Ensure that the walkway is shovelled and ice-free before every showing; not only is this a courtesy and crucial to making the home look well maintained, but if a visitor slips and is hurt, you could be liable for damages.  You want to make the walk from their vehicle to the home as welcoming and as safe as possible.

Front door greeting
A wreath on the front door, Christmas lights and a garland hung on the doorframe or front porch presents a welcoming entry.  Even some decorative plant urns with festive greenery arrangements will add to the welcoming factor.

Make a good first impression
Once a prospective buyer comes inside, remember that you may have only minutes to make a lasting impression. (A small but crucial point for unoccupied homes: make sure the heat is turned on several hours before the showing. All the window-dressing and staging in the world won’t entice buyers to linger inside a home that’s freezing.)

Light candles
Entice the prospective buyer’s sense of smell by lighting fragrant candles or placing bowls of potpourri in main rooms.   Another trick is to have a pot of cider simmering on the stove, or cookies or fresh bread baking.

After the holidays, seasonal decorations can be taken down, but some arrangements and even the front door wreath can stay up for the rest of the winter, if it isn’t too Christmasy in design. Make sure you continue to maintain walkways clear of ice and snow, and think warm thoughts!

Have an awesome day,

Dave Watt

Blog #12 – Why Your Home Should Be Off the Market Over the Holidays

With the holidays fast approaching the shift from buying and selling a home seems to shift to family, friends, and the hustle and bustle of Christmas.  This is not to say that people do not buy and sell during this time of the year, but if you are in a situation where you can wait then why not sit back, relax and enjoy some time with your family.  Here are some reasons why I think it is ok to take your home off the market and give it a rest for a week or two.

• Buyers may think you are desperate.
• It's inconvenient to always be ready to show at a moment's notice.
• The offers you receive will likely be for less than list price.
• You're appealing to a much smaller inventory of buyers who have very specific needs that your home might not match.
• It's almost impossible to close a transaction in December if the offer is received mid-month. Buyers who want to close in January make offers in January.
• If you remove your home from the market, it can go back as a new listing in January, thereby drawing more traffic because it's fresh.
• Many of the professions that deal with the transaction for the sale of a home may be unavailable for parts of December and this may cause frustration for timelines in a deal.

Some sellers insist on leaving their homes on the market, regardless. The deciding factors depend on local custom, on what neighbours are doing and how real estate activity is viewed by others during the holiday season in your area.  Every town is different. There are neighbourhoods in California where, if you didn't see plastic Santa Clauses tied to palm trees, you might never know it was Christmas.

Still, fewer inventories over the holidays mean less competition. However, when the pool of buyers drops, the remaining balance of inventory might not make much difference. In parts of the country where it snows, buyers think twice about bundling up in heavy coats, boots and gloves to trudge through snow banks and look at property when they'd rather be out shopping or staying at home in front of the fireplace.

Have an awesome day,

Dave Watt

 

Blog #11 – Five Great Things about Homeownership

If you've been on the fence about homeownership, now is the time to take a leap! Don't let the negative press deter you from one of life's greatest joys.

Take a look at five short and sweet reasons that homeownership is great!

1. Equity. When you pay rent, you never see that money again. It is lining the landlord's pocket. Yes, buying a home may come with some hefty initial costs (down payment, closing costs, inspections), but you will make that money back over time in equity built in the home. Historically, homes appreciate by about 4 to 6 percent a year. Some areas are still experiencing normal appreciation rates. For the areas that have seen harder times since the recession, experts feel that the housing market will recover. Homeownership is about building long-term wealth. A home bought for $10,000 in 1960 is most likely worth 10 times that in today's market.

2. Relationships: Renters tend to see their neighbours come and go quickly. Some people sign year leases while others are in the community for much shorter terms. Apartment complexes also tend to have less common shared space for people to meet, greet, and socialize. Homeowners, however, have yards, walking trails, or community pools and clubhouses where they can get to know each other. Neighbours stay put much longer (at least three to five years if they hope to recoup their closing costs). This means more time to develop relationships. Research has shown that people with healthy relationships have more happiness and less stress.

3. Predictability: Well, as long as you have a fixed-rate term on your mortgage it's predictable. Most people buying homes today know that a fixed-rate is the way to go. This means your payment amount is fixed for the life of the term. If your mortgage payment is $500 today, then it will still be $500 a month in 10 years. This allows for people to budget and make solid financial plans. The sub-prime crisis meant many homeowners with adjustable rate mortgages saw their monthly payments rise and then rise some more. Homeownership, though, generally comes with a predictable table of expenditures. Even the big purchases are predictable. You know most roofs last just 15 years (or so). You know that each year you'll need to pay for the gutters to be cleaned, and so on.

4. Ownership: Okay, this is a given. Homeownership means you "own" your home. That comes with some incredible perks, though! You can renovate, update, paint, and decorate to your heart's desire. You can plant trees, install a pool, expand the patio, or do holiday decorating that would rival the Cranks (if the HOA allows!). The bottom line is this is your home and you can personalize it to your taste. Most renters are stuck with the same beige walls and beige carpet that has been standard apartment decor for 20 years. Now is your chance to let your home speak!

5. Great Deals: It's a great time to buy. Interest rates are at historic lows. We're talking 4.0 percent instead of 6.0 or higher. This means big savings for today's buyers. Home prices have also taken a dip since the recession, which means homes are more affordable than ever. If you have steady income and cash for a down payment, then be sure to talk to your local real estate agent about what homes in your area could be a fit for you.

Homeownership can be a real joy. It's time to get off the fence and into a home that is right for you!

 

Have an awesome day,

Dave Watt

 

Blog #10 – 3^rd Quarter MLS Trends

The Canada Mortgage and Housing Corporation (CHMC) released their 3^rd quarter MLS trends today and I thought it would be a great topic to go over and highlight some of the numbers.  CMHC releases these stats quarterly for all parts of Canada.  Since real estate is different from province to province, and even city to city, it’s great that they break it down for you to focus in on your territory. 

Since I am from Fredericton, NB I will be highlighting numbers from my region.  Please visit this link to find out the numbers in your area. http://cmhc.ca/en/search/search_001.cfm. 

In the greater Fredericton area MLS sales were up 5.6% to 568 units, compared to 538 units that were sold during the same period last year.  This year-to-date, MLS sales in the greater Fredericton area to the end of September also saw an increase of 2.8% to 1,782 compared to last year.  Even the average MLS sale price rose in the 3^rd quarter 1.8% to $165,271 in the greater Fredericton Area.  Fredericton continues to offer optimistic numbers in the real estate industry.  Please visit http://www.cmhc-schl.gc.ca/odpub/esub/64203/64203_2011_Q03.pdf?lang=en for the full report on the 3^rd quarter trends.

 

Have an awesome day,

Dave Watt

 

Blog #9 – Mortgage rates

Maybe it's because we're always looking for the catch, always being a bit skeptical. Maybe by nature, we as Canadians really are a pessimistic bunch. The most pessimistic among us will tell you, that it's because we're realists. Whatever the reason, recently the Bank of Canada has announced that they would keep interest rates low, right where they are now as a matter of fact, and instead of rejoicing, what are we doing? Worrying about what that will do to our economy. How much will we borrow? Are we going to send ourselves right back into a recession?

It's a reasonable question, even for the few optimists that are out there. The rate goes down, and people run out getting second mortgages, home equity line of credit, and home equity loans. Many of these people can't afford it, but the rate is so low and the deal on the mortgage or the loan so good, that they simply can't resist. This is how we got ourselves into a little bit of trouble a few years ago; and how the States got themselves into a bunch of trouble that they're still trying to get out of. But, we needn't worry. Just look back to the beginning of the year, when tighter mortgage rules were imposed to stop that from happening.

It was in January when Jim Flaherty announced that mortgage insurance would no longer be provided for home equity line of credit.   People were in a frenzy, thinking that it would make borrowing out of reach for many Canadians. And in fact, it sort of did. The rate of borrowing went way down and interestingly, our economy went up and up and up. Housing prices didn't drop; in fact, they went up. And housing markets didn't cool; for the most part, they got hotter.

The lesson to be learned is that we should relax, and enjoy the low interest rate that we currently have. The Bank of Canada has announced that it's not going anywhere for some time; and it's not the first time the announcement has been made. In the past, the Canadian economy did not crumble, borrowers did not flood the banks, and the housing market was not thrown into turbulence. The steady, low interest rate has does nothing but help us in recent history. And there's no reason to think that it won't do so in the near future as well.

 

Have an awesome day,

Dave Watt

 

Blog #8 – Rental Incomes

You hear people all the time saying why pay rent when you can pay yourself and build equity by purchasing a home.  This is true, but you will still have to pay your mortgage for the time being.  But what if there was a way to get someone else pay for your mortgage?  Why not consider a rental income when you are searching for your new home.  When you consider the financial advantages, it's no wonder that so many homeowners take this route.

Let’s say, for example, that you have $100,000 outstanding at 6% interest, and are paying it off at $1000 per month. At this rate, it will take you 11 years and 7 months to pay off the mortgage, and in the process, you will pay $38,983 in interest.

Now, suppose you have the same mortgage, but rent out a basement suite to a university student. Let's assume that you charge enough rent so that after expenses, you can put an extra $500 of that towards your mortgage. The result is that you will pay off your mortgage in just under 8 years - nearly 4 years sooner, and in the process, save $17,123 in interest.

In addition to the benefit above, homes that produce rental income are very attractive on the market because they allow the buyer to take on a larger mortgage. Mortgage companies recognize this as well, and will often reduce the amount of the required down payment on the mortgage as well.

There's also good news from the tax perspective.If you renovate to create rental income, you can deduct the expense from your taxes, and the interest on any financing that you do. This is one of the few ways in Canada that you can get a tax-free loan. However, you should always consult an accountant or tax advisor whenever your financial plans may have tax implications.

This is a great way to start climbing the property ladder and get you one step closer towards your dream home.  So, why not put your home to work for you and build equity at the same time.

 

Have an awesome day,

Dave Watt

 

Blog #7 – Energy Efficiency

With the colder winter weather fast approaching this is a great time to go through your home and give it the attention that it needs to make it more energy efficient.  There are many little tasks that you can do at a relatively low cost that will help you save money on those higher winter bills.  Below are just a few areas that you can update/improve to help with your homes energy efficiency.  Make sure to contact your local home improvement store as everyone’s situation may be a little different.

Make sure all your caulking is good.Take a look at all your windows, your dryer vent, and any other vents or exhaust ports you may have along your house. Make sure that the caulking along these are still good, and doesn't need to be replaced. In the event that they do, make sure that you fill any cracks that there may be, or simply replace the caulking to prevent any drafts.

Use interior plastic sheeting.During the colder months, apply some plastic sheeting to the interior of your windows to offer a little bit better protection against the cold. Often all you need to do is tape this plastic to the window frame and then warm it with a hair dryer. This will remove the wrinkles, and allow you to see through with little or no problem.

Check all exterior spigots. Take a look at the water spigots that you may have outside. Often these little places are overlooked when insulating your home. Simply take some expandable insulating foam and spray it where the walls and the spigot meet to help ensure that there is a tight seal.

Install window well covers.By simply installing a few window well covers around any basement windows, you can dramatically cut off the loss of heat, and reduce the amount of heat you use. When you install these, make sure that you caulk around the edges to help ensure that there is a tight seal.

Seal your air conditioners. When you don't need your air conditioner, make sure that it is covered and sealed properly. Regardless of when you use your air conditioner, make sure that wherever it is attached to the house to ensure that there are no leaks.

Install gaskets around electrical fixtures.Surprisingly, one of the most common locations for a leak is around electrical fixtures. These are often simply left open, with no protective coverings other than the hard plastic faces. Install some soft rubber gaskets over the fixtures to provide some tougher insulation.

Seal along baseboards.Remove the base moulding along the bottom of the walls, and check to see if there is any cracks where the floor and the walls meet. If there is, then apply some expandable insulation foam to prevent any drafts.

In today’s economy every little cent helps and by attending to all these areas you will give yourself satisfaction by knowing that you are taking all the appropriate steps to maintaining your home and putting a little extra change in your pocket.

 

Have an awesome day,

Dave Watt

 

Blog #6 – Living in a condominium

The easiest way to understand the idea of condominium ownership is to see it as an apartment you own (in fact, many condominiums are apartments that have been converted over the years). Your ownership extends inward from your interior walls, floors and ceilings. In addition, you are a partner, with all the other owners in the complex, of the exterior structure (the foundation, exterior walls and roof) as well as any common areas and amenities (such as swimming pools, clubhouses, tennis courts, play areas, etc.)

One of the requirements of condominium ownership is the payment of a monthly condo fee, which covers general repairs and maintenance to the common areas of the complex as well as building a cash reserve for future needs. In general, all exterior maintenance and repairs are the responsibility of the condominium association, although you will be charged for them, either through your association dues or a special assessment (a one-time charge assessed to all owners for, as an example, a new roof). The normal day-to-day maintenance of the grounds (some examples are cutting the grass, shovelling snow and maintaining the pool) are also the responsibility of the association. Interior maintenance and repairs (for example, replacing a dishwasher) are the responsibility of the individual owner.

At the end of the day, a condominium is a different kind of lifestyle and has many different factors when you are comparing them to a single family home.  Although it is ideal for some, make sure you look into every aspect so you know what you are getting yourself into.

 

Have an awesome day,

Dave Watt

 

Blog #5 – Housing Market

Growing concerns over the global economic outlook and unsettled financial markets have contributed to a notable deterioration in consumer sentiment in recent months, and have moderated domestic retail sales activity. So far, however, this does not appear to have dented Canadians’ enthusiasm for real estate.  Seasonally-adjusted MLS home sales held steady in August, and are currently tracking in line with the average of the past decade.

Historically low interest rates remain a powerful draw in the interest-sensitive housing sector, and should maintain a healthy level of sales in the months ahead. Yet, heightened economic uncertainty combined with recent signs of a loss of momentum in Canada’s jobs market could keep some potential first-time and move-up buyers on the sidelines for the time being.

Sales in the existing home market did not keep pace with new listings in the second quarter of 2011.  This caused markets to move back to balanced market conditions.  Market conditions for most of 2011 and 2012 are expected to be in balanced market territory.  In comparison to sellers’ market conditions, balanced market conditions typically lead to more moderate housing starts activity.  On balance, we anticipate a modest slowdown in the volume of sales transactions heading into year end. With balanced market conditions in most parts of the country, look for fairly stable prices.

 

Have an awesome day,

Dave Watt

 

Blog #4

There are so many important decisions that must be made when you are choosing a home to buy.  Where to live?  How much space do you need?  What type of home?  The list goes on. There is also another important decision that you will have to make when choosing a mortgage that is right for you.  Will you choose a fixed or variable rate?  First, let’s define what the difference is between the two:

Fixed rate mortgage- A fixed rate mortgage is a mortgage where the rate of interest is fixed for a specific period of time, generally known as the term of the loan.  As time goes on, more of the mortgage payment goes towards the principal and less of the payment goes to the interest. 

Variable rate mortgage- A variable rate mortgage is a mortgage that has fixed payments, but the interest rate fluctuates with any changes in interest rates. If interest rates go down, more of the payment goes to principal and if interest rates go up, more of the payment goes towards the interest. 

So, which one is better?  You will want to do as much research as you can to find out about fixed rate vs. variable rate mortgages and which one is right for you. The more you know the easier you will be able to decide which one you want to go for.  A good way to determinewhich one is better for you is as simple as looking at your ability to handle risk.  If you loose sleep worrying about the possibility of a .25% increase in the interest rate or get stressed thinking about the impact on your monthly budget if your monthly mortgage payment changes, then a fixed rate mortgage is for you.  There is no right or wrong decision here, it is a matter of making an educated decision.  Make sure to consult your local mortgage broker and be very clear about the decision you are going to make.

Have an awesome day,

Dave Watt

 

Blog #3

How Much do You Need for a Down Payment?

There are many different options available for everyone’s personal financial situation.  Many times you hear of people saying that they can’t afford to buy a home as they do not have enough for a down payment, even though they have not spoke with a mortgage specialist.  The first step in purchasing a home is discussing your personal finances.  Do yourself a favour and have a mortgage specialist go over all of your options so that you can make the best educated decision for one of the most important purchases in your live.

Typically you will need to pay 5% of the purchase price of a home.  By going to a mortgage specialist you will know what price range of homes you will be able to afford and therefore will be prepared to put in an offer when the right home comes your way.  Remember, different mortgage companies offer different promotions and some have been able to offer as little as 1% down payment.  Shop around to make sure you are getting the best deal possible.

You will need a 20% down payment if you want a conventional mortgage. A conventional mortgage is one that's set up between you and a lender, with no outside interference from a third party. However, if you don't have the 20% down payment, you'll need to apply for a high-ratio mortgage. These mortgages are similar to conventional mortgages, except that you'll need to pay more for additional mortgage default insurance. This is where the third party comes in, and that's the Canada Mortgage and Housing Corporation (CMHC.)

The CMHC is the organization that insures high-risk mortgages (less than 20% down payment). This insurance protects the lender in case you default on your mortgage, something that's unfortunately viewed as "more likely to happen" because of the small down payment amount. The CMHC does require a couple of things before they approve the default insurance. The first is that the applicant (you) have a beacon score of 620 or higher. The second is that you still must be able to pay at least 5% of the down payment.

So, before you cut yourself short, have a mortgage specialist go over all your options and point you in the right direction.

 

Have an awesome day,

Dave Watt

Blog #2

With Summer nearing an end and with the Fall season fast approaching many people are putting one last final push on selling before the Winter season hits.  Here are a few helpful tips on putting you ahead of the competition and getting your house sold.

Ø  Curb appeal.  Fall can make or break you when it comes to curb appeal and the all-important "first impression." As the leaves begin to turn different colors and shades this can add an extra level of curb appeal but, on the other hand, an un-kempt lawn can leave a bad first impression as they come to your home.  Make sure that your landscaping is neat and tidy as possible so the potential buyer does not start out with a bad taste in their mouth.

Ø  Celebrating the season. Adding the appropriate décor to your home can give off a cozy feeling and will make the buyer feel right at home.  Try adding a wreath to the front door or even a few pumpkins and fall display on your front step.

Ø  Scents of the season. If you're a smoker or have pets, make sure the nose doesn't know. Also, try to take everyone into consideration by getting natural scents and nothing to strong.  Nothing beats a freshly baked pie or cookies.

Ø  Nice and Bright.  Remember to let as much natural light into your home as possible.  Turn on all your lamps and lights so everyone will be able to see what it is that you are selling.  It is also a good idea to open some windows and let in some cool fresh air.

Ø  Pre-Inspection. Once a buyer makes an offer, they will most likely hire someone to conduct an in-depth inspection of the house. Some sellers like to do this at their own cost before they put their house on the market so there are no surprises down the road. This is one extra feature that you will be able to highlight while selling as you can promote your home with confidence that it is up to par.

Ø  Tidying up. Put away all those knickknacks and paper piles.  Try and de-personalize your home as much as possible.  Remember, what is nice to you may not be nice to someone else.

Ø  Asking price. Make sure that your home is appropriately priced so that it will be taken seriously and does not go stale on the market.  A properly priced home should sell within the first 6 weeks of listing, after that you should re-evaluate the situation.

Ø  Real Estate Agent.  Make sure that you interview some agents and just don’t pick the first one.  Select someone who has market knowledge, confidence, experience, and is someone who fits your personality.  Once you have someone picked out you can begin the process of getting your home listed and SOLD!

 

Have an awesome day,

Dave Watt

 

Blog #1

Different kinds of markets

Hello, my name is Dave Watt and I work out of the Fredericton NB with Exit Realty Advantage.  I lead a team of two other professionals under the name of The Right Choice Realty.  I have been in the real estate industry for the past four years and have met many goals and targets along the way.  I have been coached by some of the best and still continue to be coached on a weekly basis as it has proven to keep my mind on track and help me keep focused. 

On a weekly basis I will be discussing current trends in the Canadian market, relevant real estate news and information, mortgage and financial updates, and general home selling tips.  I hope that you are able to find value in my topics and I am open to anyone contacting me for advice, questions, or just a casual conversation.  Please feel free to visit my website to learn a little bit more about the business I run. www.davewatt.ca

To start off our weekly blog we thought it would be a great starting point to understand the different types of market conditions that you can be involved in.  First, there is a basic understanding how supply and demand works. In a nutshell, when there are more homes for sale than there are potential buyers, house prices drop. When there are fewer houses on the market than there are buyers, house prices will climb. When the number of homes on the market is roughly equal to the number of buyers, it’s called a balanced market.

Here is a breakdown of these types of market conditions...

Buyer’s market

A buyer’s market provides the ideal situation for the house hunter. Home sellers have more competition, and homes often stay on the market longer. This gives you, the buyer, more leverage. Expect to pay a little less than normal, expect to have more time to make a decision, and expect conditional offers to be accepted far more readily than in a seller’s housing market.

Seller’s market

Your position as a buyer becomes a little trickier in a seller’s market. With fewer homes to choose from, competition between buyers becomes a factor. This can spawn bidding wars that drive prices up.

You’ll want to be ready to act fast in a seller’s market. With buyers outnumbering sellers, you will soon learn to snatch up a good deal when you see one.  To achieve this you should have all your financials in order and be mentally prepared to make a clean offer when the right home comes along.

Balanced market

Buying in a balanced market is a much more predictable endeavour. With sellers and buyers in balance, housing prices stabilize and the atmosphere on both sides of the transaction becomes relaxed.

Market conditions can vary widely across the nation, across provinces and even across neighbourhoods. The demand for housing in a given locale may be influenced by any number of factors. Swings in the economy (both national and local), the availability of property (supply), and the unpredictable nature of consumer trends can determine if a given neighbourhood is hot or not.

 

Have an awesome day,

Dave Watt