Reverse Mortgages the PROS & CONS

General Tracy Ferguson 5 Sep

ORIGINALLY PUBLISHED by DLC Marketing Team Aug. 24, 2021

PROS & CONS of a reverse mortgage

After all of that, you may still be wondering whether or not a reverse mortgage is the best idea. Like anything else in life, it comes with its own set of pros and cons involved. This makes it worth considering and looking further into.

Let’s start with the good news first.

THE PROS

This type of mortgage can be a very powerful source of income for older individuals. It can be for those who need to increase their retirement income or take on a big household project. Since the largest asset that most retirees have is their home – and it is likely paid off – this allows for an increase in income without increasing monthly payments. It is a great way for retirees to stay in their homes.

Not only that, but it can be highly beneficial because it requires no payment. That is until ownership of the home changes hand, the home is vacated or condemned, or the borrower passes away. It is the quickest and easiest path to substantially more income for a retired person who may not otherwise have that kind of access to additional funds.

THE CONS

Generally speaking, the interest rates tend to be much higher than most other types of mortgages out there. It is also worth considering that the equity in your home could go down. Combined with interest on your loan adding up, it could create quite the gap.

While you won’t need to repay the loan until you pass or sell the home, paying the loan and interest in full will fall on the shoulders of your estate. Not only that, but it must be repaid within a specific period of time.

The general costs associated with this type of mortgage also tend to be much higher. While there is certainly greater flexibility in how you get and spend your money, it comes at a cost, literally.

THE VERDICT

Ultimately, it is up to you to determine if the benefits offset the higher cost and burden of repayment that falls on your estate. Getting the money from your loan, as well as what you can spend it on, is perhaps one of the most flexible mortgage options out there. This is especially true for seniors.

It also provides much-needed income for those retirees who may not have adequate funds for retirement. This shortfall can happen for a lot of reasons, and it is common for retirees to exceed their expected retirement life.

Weighing the pros and cons is essential regardless of the loan type. A reverse mortgage has all the potential to be beneficial to seniors in need of funds and provides greater flexibility for acquiring and spending that money.

5 Approval Roadblocks

General Tracy Ferguson 31 Aug

5 Approval Roadblocks.

When in the process of buying a home, there is nothing worse than having your mortgage broker or lawyer call and say “there is a problem”.

If you have found your dream home and negotiated a fair price, which was accepted, and you have supplied all the documentation to your broker, you probably assume everything is fine. The reality is that your financing approval is based on the information the lender was provided at the time of the application. If there have been any changes to your financial situation, the lender is within their rights to cancel your mortgage approval.

To ensure that you don’t encounter any last-minute issues on your home buying journey, there are five major approval roadblocks to be aware of and avoid for a smooth transaction:

EMPLOYMENT

When submitting a request for financing, whether a mortgage or car loan or to handle personal debt, one of the most important aspects the lender looks at is employment. If you were working at Company X for five years at $50,000 a year and – just before your deal is finalized – you change jobs, the lender will now require proof from the new job. This can include proof that probation for this new job is waived, or new job letters and pay stubs at the very least. If you change industries, they will want to see more proof that you are capable of keeping this job. For any employment involving overtime or bonuses, the lender often requests a two-year average, which you would not be able to provide at a new position. Another employment change that could hurt your financing approval would be if you decide to change from an employee to a self-employed contractor.

When it comes to financing, it is best to wait to make any major employment or life changes until after the deal has gone through.

DOWN PAYMENT SOURCE

As mortgage financing is based on the initial information provided, you will most likely need to do a final verification of the down payment source. If it is different than what the lender has approved, it could spell trouble for your financing approval. Even if you said that your down payment was coming from savings and, at the last minute, mom and dad offer  you the funds as a gift, it could affect your approval. This is an acceptable source of down payment, but only if the lender knows about it in advance and has included this in their risk assessment, but it can end a deal.

DEBT

A week or two before your possession date, the lender will obtain a copy of your credit report and look for any changes to your debt load. Since mortgage approval is based on how much you owed on that particular date, it is important not to increase your debt before the deal is finalized. Buying a new car or items for the new home must be postponed until after possession; even if they are “do not pay for 12 months” campaigns because you will need to fulfil those payments, regardless of when they start.

BAD CREDIT

One of the biggest roadblocks to mortgage approvals is credit card payments. When you enter the financing process, it is important that your credit score remains positive. If your credit score falls due to late payments, this can cause major issues with your financing. Even if you have a high-ratio mortgage in place which requires CMHC insurance, a lower credit score could mean a withdrawal of the insurance and removal of any financing approval.

MISSING IDENTITY DOCUMENTS

Before a deal is finalized, the lawyer must verify your identity documents and see that they match the mortgage documents. You may not think it needs to be said, but it is important to use your legal name when you apply for a mortgage. Even if you go by your middle name or a nickname, all legal documents should match.

Keep in touch with your Dominion Lending Centres mortgage professional right up to possession day. Make this a happy experience rather than a heartbreaking one.

 

Content Published by DLC Marketing Team June 8, 2021

7 Steps to Selling Your Home and Getting Top Dollar!

General Tracy Ferguson 20 Aug

What’s the number one thing buying and selling a house has in common? Getting the best price possible. Buying a home is one of the most significant financial investments you’ll make, so there’s no surprise why so much time is spent tracking mortgage rates, researching how much house you can afford, the best location, and even the types of homes that can make good investments. But, when it’s time to sell your home, too often, sellers list their home on the market and hope for the best offer.

Before you sell your home, it’s essential to set the right strategy to stay ahead of the competition, especially in today’s housing market. And putting in the work beforehand can make all the difference in setting you ahead of the selling curve and make your listing more desirable. Here are some tips to help you sell your home for more money and get the best possible offer.

1. Make sure you can afford to sell
It only makes sense to sell your house if you’re going to make money, so it’s important to figure out the cost of selling a house in your area before putting your home on the market. However, figuring out how much you’ll make from selling your home isn’t as easy as subtracting your outstanding mortgage from the price you hope to get. Keep in mind that you’ll have to pay several fees when selling your home, including agent commissions, excise tax, title insurance, and other closing costs, which vary by region. Using an online sale calculator that estimates these variables is a good place to start. However, working with an agent will give you a better understanding of how much you can hope to get in proceeds since they’ll know the current market conditions and the amount your home can sell for.

2. Work with a local real estate agent
The housing market can be difficult to predict, and unless you’re an investor or real estate expert, you’ll benefit from having professional help and guidance from a real estate agent. A local real estate agent has the know-how to help you get the most money out of your home sale and can be an asset when navigating the ins and outs of the selling process. Your real estate agent can also be an asset when it comes to staging, marketing, negotiating, and staying on top of the local market conditions and laws.

3. Set a competitive asking price
Nothing deters homebuyers more than an overpriced listing. A good place to start is finding out what your home is worth and researching real estate comps in your area to figure out how to price your home for the market. That way, you’ll have a general idea of what homes are selling for in your area. Once you’ve done your research, this is where having a real estate agent on your team can help sell your home for more money. Ask your real estate agent for a comparative market analysis (CMA), which will help you determine a reasonable price based on sales of similar homes in your area. Your agent can also work with you to determine the best price to motivate buyers to schedule a tour to view your listing and generate the necessary exposure for your listing.

Also, be sure not to overprice your home. Homes get 64% more views the day they first hit the market compared to the day after a price reduction. The goal is to set a good price the first time, so you don’t have to drop the price later. Your home may not get the same attention the longer it sits on the market and can even cause some buyers to be skeptical of the discounted price. Plus, if you play your cards right and price it competitively from the get-go, you may even incite a bidding war to encourage buyers to bid higher.
Homes get 64% more views the day they first hit the market

4. Time it right
Listing your home for sale at the right time can help maximize the sale price, so it’s important to consider which month may be the best time to list your home. Spring is widely considered to be the best time to sell a house, and for a good reason. According to Redfin data, homes listed in March and April not only sell the fastest, but they also sell for the most money. The average home listed in April will sell 14 days faster and for $2,750 more than if the same home were listed in November. However, if your timing is flexible, March and May are excellent options to help you sell your home for more money.

You’ll also want to consider which day of the week you list your home as well. The best day to list your home is on a Tuesday, Wednesday, or Thursday since homes listed for sale midweek sell for an average of $1,700 more than homes listed on the weekend.

5. Spruce up your home to help you sell for more
It’s no surprise that kitchens and bathrooms are the main hotspots buyers look at when touring a listing. So, if you’re considering which repairs to make before selling, a kitchen or bathroom remodel is some of the smartest investments you can make to increase the value of your home. However, there are many other budget-friendly projects you can do to make a great first impression, including replacing your front door, installing dual-pane windows, adding a fresh coat of paint to the exterior, and maintaining the yard.

Don’t forget that a deep clean inside and outside your home can go a long way in refreshing its appearance. Washing the windows, steam cleaning the carpets, pressure washing the deck, and scrubbing down your appliances will help your home look well-maintained to eagle-eyed buyers. A clean and orderly house has a higher perceived value than one that needs attention and can help your home sell for more money.

6. Use professional listing photos to sell your home for more money
Enhance your listing with staging and professional photography
Staging is commonly used when selling a home and should be a key component of your strategy, especially if you want to sell your house for the most money. A professional stager can help neutralize the space to help buyers visualize themselves in a move-in-ready home. Plus, stagers have the knowledge needed to highlight your home’s best features and make it feel warm and welcoming.

Once your home is looking its best, hire a professional photographer to take the listing photos as homes with professional photos are known to sell faster and for more money. Most people start their home search online, so photos are crucial to getting their attention. Eye-catching listing photos are integral in showing off your home’s features and can include some home trends buyers are looking for, making all the difference in swaying buyers into viewing your listing or passing on it completely.

7. Carefully consider offers, and be prepared to negotiate
An experienced listing agent will know a good offer when they see it. They’ll also guide you through the offer process and advise you on when to negotiate prices and terms. While the highest bid will grab your attention, especially if it’s close to or above your asking price, it doesn’t mean that it’s the best offer. Your agent will know what’s “normal” when it comes to offers and know when someone is trying to get a bargain. You should consider all the terms of the offer, not just the price, to make sure you get the best deal. If a buyer has included contingencies, you’ll want to be sure to review those carefully as they’re the deciding factor in when you get paid. With the right planning and real estate agent on your side, you can begin your home selling journey with the confidence you’ll get the best offer.

Source:

Hannah Tan, Redfin

How to Make the Most Money When Selling Your Home

5 Things to Know Before Buying a Rural Property

General Tracy Ferguson 2 Aug

5 Things to Know Before Buying a Rural Property.

As cities continuing to grow bigger and busier, a rural home beyond those limits can seem like a dream come true! However, before you dive into country living, there are a few things you should know! Especially, how different it can be to qualify for a mortgage.

1. CHECK THE ZONING

When it comes to buying rural property, it is important to check how the property is zoned. This is vital! Zoning will determine how you are able to use the land, as well as the types of buildings that are allowed and where they can be located. Is the property zoned as “residential,” “agricultural” or perhaps “country residential”?

Zoning could affect the lenders available to you and what you qualify for, as well as what you can do with that property. Differences in lending and foreclosure processes, has caused some lenders to be hesitant with financing mortgages in agricultural/country residential zones.

2. PROPERTY BOUNDARIES

Once you have determined how a property is zoned, it is important to look at the land. Requisitioning a survey early in the process will help mark the exact boundaries of your property to avoid future disputes. This is also a good time to get an appraisal done on the land and its value.

3. CONSIDERING THE LAND AND YOUR MORTGAGE

What many borrowers don’t realize is that land has a drastic effect on mortgage qualification and what you can borrow. In fact, most lenders will mortgage: (1) house, (1) outbuilding and up to (10) acres of land. If you have a second building or extra land that is being purchased, you will need to consider additional funding on top of your typical 5% down payment.

4. WATER AND SEWAGE

When it comes to rural living, many people draw water from private wells and utilize septic tanks for sewage. To ensure everything is safe and in working order, it is a good idea to have an inspection done on the septic tank and water quality as a condition on the purchase offer. Due to the nature of these properties, be advised that inspections may cost more than it would in the city. However, it is important as lenders may request potability and flow tests!

5. COVERAGE MATTERS!

Coverage matters, especially when you are living away from the city. When it comes to rural properties, there are two types of insurance that you should consider:

  1. Home Insurance: When it comes to rural living, this can be more expensive than city homes due to the size and location of the land and distance from fire stations and hydrants. 
  2. Title Insurance: This is vital for rural purchases and will protect you from unforeseen incidents with the deed or transfer. It will also alert you to any improper previous use of the property (such as dumping for waste). 

If you are thinking about purchasing a home/cottage in a rural area; Please contact me today before you do anything.  I can explain the differences that come with rural purchases in both the mortgage process and when qualifying.

https://dominionlending.ca/mortgage-tips/5-things-to-know-before-buying-a-rural-property

National home sales fall 8.4% from May to June 2021

General Tracy Ferguson 15 Jul

July 15, 2021

Today the Canadian Real Estate Association (CREA) released statistics showing national existing home sales fell 8.4% nationally from May to June 2021, marking the third consecutive monthly decline. Over the same period, the number of newly listed properties fell 0.7%, and the MLS Home Price Index rose 0.9%, a marked deceleration from previous months.

Activity nonetheless remains historically high, but in contrast to March’s all-time record, it is now running closer to levels seen in the first half of 2020. While sales are now down a cumulative 25% from their peak, and below every other month in the last year, June transactions still managed to set a record for that month (see chart below).

For the second month in a row, sales were lower in every province. The steepest drops were in B.C. (-14.6% m/m) and the Atlantic provinces (down a combined 9.8% m/m). In Ontario, sales fell 9.0% m/m. They posted a much smaller 1.9% m/m drop in Quebec.

June’s decline was helped along by stricter stress test rules implemented at the beginning of the month. We expect these rules to continue to weigh on demand in the near term, although the amount of tightening this time around (+46 bps) pales in comparison to early 2018 (+220 bps), the last time the rules were changed.

The actual (not seasonally adjusted) number of transactions in June 2021 was up 13.6% on a year-over-year basis.

“While there is still a lot of activity in many housing markets across Canada, things have noticeably calmed down in the last few months,” said Cliff Stevenson, Chair of CREA. “There remains a shortage of supply in many parts of the country, but at least there isn’t the same level of competition among buyers we were seeing a few months ago.”

Source:

Dr. Sherry Cooper

Chief Economist, Dominion Lending Centres