How Canadians Budgeting For Higher Mortgages? Don’t Know or Care?

I haven’t been blogging much, nearly everything I do is on Twitter now. It’s pretty amazing how writing in 140 character intervals forces you to the core of your argument. Nevertheless I occasionally want to have a long rant so here we are.

How are Canadians budgeting these days? Like many countries there is a huge culture of home ownership in Canada. It makes for a great new facebook pic that unofficially says you’ve ‘made-it’.

There are two issues that are very concerning for home buyers. First off, you have what I’m very confident is a real estate bubble in Canada. This has been discussed on this site since it was started and more recently in the media. That being said, the media focuses mainly on the condo bubble. Indeed I agree that condos are the most overvalued but much like the real estate bubble in the US which started with ‘just sub-prime borrowers’ a large correction in real estate prices will effect the entire sector.

We’ve all heard this argument a million times and I’m not going to bring it any further today. Its my opinion, I’ve presented my facts and if you disagree with my conclusion that’s cool.

But back to the story, maybe you don’t care about what your house is worth in 2, 10 or 20 years, you are just buying it for pride of ownership. Again, that’s cool, not my cup of tea when it comes to your biggest investment, but my question is; how are people budgeting this?

There is a huge difference between the US and Canada in terms of mortgages. In the US, the standard government backed mortgage is a 30 year fixed. You can perfectly budget your mortgage expense over 3 decades. I won’t even mention other benefits such as writing off part of the payments. In Canada, our government backed mortgage is traditionally a 25 year mortgage, fixed for 5 years.

So Canadians really have no clue what their mortgage payment will be in 5 years. With record low interest rates, it’s not hard to imagine them reverting to a more normalized level. What happens if your mortgage payment doubles? (or worse), let alone if we have a recession and a big jump in unemployment. This is the problem with the ‘no bubble crowd’ which cite the current relatively low debt service ratios as evidence of appropriate real estate prices. Yes, service ratios are good now, with today’s economy and low interest rates. The problem is a mortgage lasts for 25 years and credit conditions shouldn’t be judged on today’s economic variables remaining constant for decades to come.

So How Are Canadians Budgeting For Higher Mortgage Costs? Well I did some boots on the ground research. I’m 28 and more and more of my friends are making the big switch from renting to buying. I’ve asked them about this and I get very similar responses on Canadian real estate.
Real estate will always go up (recency bias).

Renting is wasting your money (they need to factor in potential capital losses and hidden costs of home ownership).

The bank approved me for this mortgage, therefore I can afford it (don’t let the bank’s poor decision making determine your own).

And in terms of what happens when they have to renew their mortgage in 5 years? Well I usually get a blank look and then something like “I never really thought about that”.

So there is your answer, Canadians don’t know and and don’t really care about future mortgage payments and housing prices. They are budgeting based on today’s current rates and happy to have their own place.  They are busy with work and the every day problems that come with life. They are not economists and don’t spend their day thinking about income ratios and where interest rates will be in 5 years. I understand this way of thinking, but given the magnitude of the financial commitment, I’m nervous for them.

End of story, Canadians are extremely exposed to higher interest rates and its low on their list of worries.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

24 Sussex Drive Worth $7.2 Million, U.S. Real Estate Firm Says

OTTAWA - Call it fake estate.

An American real estate company has done a fictional listing for 24 Sussex Dr.

California-based national brokerage Movoto says the home of Canada’s prime minister is worth $7.2 million.

Movoto does legitimate work for publications such as Forbes, but its fake listings are gaining in popularity. Previous faux listings have included Wayne Manor in Gotham City, Superman’s fortress, Sesame Street and The White House.

The firm is clearly familiar with Canadian stereotypes. The 24 Sussex “listing agent” is identified as “The Mountie” with an accompanying photo. It also includes a testimonial quote from Stephen Harper.

"The Mountie was always there when I needed him, hot poutine at the ready!"

Funny, eh?

Local elite real estate agent Marilyn Wilson of Dream Properties claims 24 Sussex is worth far more — as long as the home is torn down first.

Looking over the municipal property assessment, Wilson figures the property itself — minus the buildings — would go for $12 million even though it’s assessed for $7.9 million.

"It would be worth more as vacant land," she said. "A buyer would want their own style. It’s not formidable, it’s lacking great bones. It wasn’t built to be a prime minister’s residence."

She says the cost to renovate would be prohibitive.

"It would be cheaper to demolish it and perhaps reuse the stone," she said. "Do it over in a new style, to 2014 standards."

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Canadian Real Estate Market Is Not In A Bubble, Poloz Says

OTTAWA - Canada’s housing market is not in a bubble and not likely to suffer a sudden and sharp correction in prices unless there is another major global shock to the economy, Bank of Canada governor Stephen Poloz said Wednesday.

The central banker, testifying before the Senate banking committee on his latest economic outlook, said he believes the most likely scenario is a soft landing where home prices stabilize, although he acknowledged that an imbalance in the market and high household debt remain key risks.

Poloz used the testimony to pointedly disagree with a couple of forecasting organizations that weighed in this week on the Canadian situation — the Fitch Rating service that judged Canada’s housing market as 21 per cent overpriced, and an OECD recommendation that he start raising interest rates in a year’s time.

"Our judgment is (the housing market) is a situation that is improving, this is not a bubble that exists here that would have to be corrected," he said. "If there is a disturbance from outside our country that’s another analysis."

Poloz said most of the fundamentals surrounding the housing market appear headed in the right direction. The prospects for the economy is improving, he noted, which should create more jobs.

As well, he said banks are now demanding higher credit scores from new borrowers and added that he does not believe there has been serious overbuilding in the housing market.

"It looks expensive," he said of home prices. "But which markets are expensive? Well those markets have been expensive my whole life,"he said, noting that Toronto and Vancouver both absorb high rates of immigration.

Asked to put odds on his soft landing scenario, Poloz said he would place it in the 60-to-80 per cent probability range.

Poloz was asked about the Organization for Economic Co-operation and Development’s advice this week that the Bank of Canada start moving off its one per cent policy rate by the end of 2014 and keep hiking until it reaches 2.25 per cent by the end of 2015.

In unusual clarity for a central banker, Poloz said he respectfully disagreed. In his analysis, he said, there remains plenty of slack in the Canadian economy and inflation, at 1.1 per cent, is well south of the central bank’s two per cent target.

"Those things together give us the judgments we reach and obviously they differ in a material way from what the OECD is saying … and it’s our job to reach that final conclusion," he told the senators.

Last month, Poloz surprised markets by dropping the central bank’s official tightening bias and moved to a more neutral stance, which signals that the bank is as likely to cut as to raise interest rates in the future.

Analysts interpreted the move as the bank telling markets it won’t likely start raising borrowing costs until the first or second quarter of 2015. Markets reacted to that assessment by selling off the loonie.

On the overall economic outlook, Poloz said he believes the global economy is “healing” and that Canadian growth will start picking up next year as the U.S. recovery intensifies.

The bank’s official forecast is for 2.3 per cent growth in 2014, following a lacklustre 1.6 pace this year, and for 2015 to see the economy speed up to 2.6 per cent.

The testimony before the banking committee was the first for Poloz, who took charge of the central bank in June, and senators took the opportunity to question him on a wide range of topics, including the dearth of women on the new currency.

Poloz repeated previous remarks that he was “wide open” to the idea of finding images that include more women in the next roll-out of bank notes, but cautioned that won’t happen overnight — the current new bills took eight years to develop.

On the issue of Dutch disease — the theory that a commodity bubble such as oil exports pushes up the value of a nation’s currency and undermines manufacturing — Poloz said that while generally a “myth,” there was a certain element of truth to the theory.

He said oil exports helped maintain the Canadian economy during the recession and did contribute to the loonie’s appreciation, increasing competitive pressures on the manufacturing sector.

But he said the collapse in global demand also was a major factor and overall, revenues from the oil exports were a net benefit to Canada

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

How Do Real Estate Agents Determine Your Home's Value

Thinking about selling your home? Understanding what your home is worth can help you decide how much to price your home and how much it is truly worth. Get real insights from experienced Seattle, WA real estate agents. 

Local Community
Efficient emergency services and thriving local businesses ordinarily translate into healthy property and home values.

Your Neighborhood

Take a look around your neighborhood. Is it safe? Is it visually appealing? Or does your neighborhood have a high crime and poverty rate? Real estate agents, as well as potential buyers, look into these qualitative and quantifiable properties while assessing your home's resale value.

Quality of the School District
High quality schools raise your home's value. Poor school districts and low graduation rates have the potential to negatively impact your home's value.

Community Amenities
Local amenities such as parks and libraries have the potential to enhance local property values. If community amenities are un-kept, dirty and dangerous, this can negatively impact your home's value.

Urban Planning & Property Zoning
Property values can be influenced both positively and negatively by zoning decisions and community development plans. How readily available are local shopping, entertainment and eateries? Is there public transportation available or easy access to a freeway? What is nearby the home for sale? These important issues are things real estate agents need to consider before pricing a home.

State of the Economy
Home sales and the state of the economy go hand in hand. When the economy is flourishing, asking prices for home sales go up. When the economy is depressed, it will be more difficult to sell your home, therefore influencing to a lower asking price.

Perception of Your Neighborhood
Whether your neighborhood's perceptions are negative or positive, realistic or unrealistic, they do influence property values. These perceptions have the potential to drive your home price into the ground or up into the stratosphere.

Natural Disasters
Natural disasters such as hurricanes, wildfires and earth quakes have the potential to lower property values temporarily after such an event. If natural disasters are a reoccurring problem, it can depress your home value permanently.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Canadians Deeper In Debt Than Ever: Average Non-Mortgage Debt Hits $27,355

TORONTO – A new study shows that non-mortgage debt is continuing to rise in Canada, but at a relatively modest pace, and that low delinquency rates indicate Canadians have so far been able to handle the increase.

The study by credit reporting agency TransUnion says that the average consumer debt load, excluding mortgages, increased $225 to $27,355 in the third quarter.

It says the quarterly increase of 0.83 per cent was in line with the rise observed in second quarter, after a significant decline of two per cent in the first. On a year-over-year basis, total debt increased 2.19 per cent from $26,770 at the end of the third quarter in 2012.

Despite the increase, two of the country’s largest cities —Toronto and Vancouver — both experienced quarterly and yearly declines in average consumer total debt.

Montreal, the country’s second-largest city by population, saw minimal rises on both a quarterly and yearly basis, while the only major city to experience a rise in debt greater than the national average was Edmonton, with total debt rising 4.6 per over the past year.

Meanwhile, TransUnion says delinquency rates, or failure to make good on debt repayment, remains low across all credit products, from credit cards to auto loans.

“The relatively low delinquency levels observed in the third quarter are a positive sign that Canadian consumers are managing their greater debt loads,” said Thomas Higgins, TransUnion’s vice-president of analytics and decision services.

“Credit card delinquencies saw the biggest decline on a percentage basis in the last year, which is a positive as we embark on the final three months of the year when credit card usage tends to pick up.”

Meanwhile, the study showed that the increase in average debt varied throughout Canada, with provinces experiencing year-over-year changes from a low of minus 0.4 per cent in British Columbia to a high of 15.49 per cent in Saskatchewan.

Elsewhere, consumer debt levels fell 0.03 per cent in Ontario, while rising 2.72 per cent in Quebec and 7.46 per cent in Alberta. The report did not give figures for other provinces.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Consolidating Debts Can Be Effortless With One Of These Tips

Consolidating debts applications can be a wonderful alternative in case you are in fiscal stress, however they are not the same. In order to choose the best one, you want a standard comprehension of precisely what the applications can offer, what to take into consideration and what phrases are in your very best monetary attention. This article offers you most of that information and facts. Read more to find out more.

Do your homework in your possible debt consolidation loans firms.

Not each one of these businesses is right for your situation. Some usually are not even trustworthy—there are tons of “take flight by night time” operations in this particular marketplace. Don’t get caught in the trap. Check out the firms completely before making any judgements.

Find a debt consolidation agency that hires competent staff members.

Advisors needs to have a qualification from a professional business. Will be the firm genuine with the support of well-known and very trustworthy institutions? This can help you kind the great organizations in the bad.

Find out whether a debt consolidation loans organization will take your specific condition into mind.

A one size fits all technique generally is not going to operate when it comes to these sorts of financial matters. You need to deal with someone that will take the time to determine what is going on along and work out how best to street address the specific situation.

You can pay off your debt by borrowing dollars underneath the correct terms.

Talk to financial loan providers to find out the costs that you simply be entitled to. You may have to set up security, such as a car, to find the dollars you need. You should make sure your loan is paid back promptly.

Recognize why you are in this article to begin with.

Consolidating debts is only 50 % the combat. You must make changes in lifestyle for so that it is a highly effective means to boosting your monetary well-being. It means going for a tough look at your credit history and bank accounts. Determine what resulted in this circumstance.

With regards to handling debt consolidation loans, make sure that you chill out.

This practice is quite typical and can help improve your financial situation when all is claimed and carried out. You have the opportunity to lower fees each month, reduce great curiosity, get rid of late costs, placed a stop to people harassing phone calls, and ultimately come to be debt cost-free. You can bounce back with this, nevertheless, you should always keep relax and take note of your payment plan.

Lots of debt consolidation loans specialists offer home equity loans but do not present these items as a result.

If you work with your own home as being a security for a mortgage loan, you will be trying to get a residence value bank loan. This may not be a great choice unless you are self-confident about spending this loan again promptly.

For those who have a number of bank cards, consider merging your entire accounts into one.

You can save a great deal on your passions and charges if one makes one particular big transaction once a month rather than giving dollars to several credit card banks. Handling the debt is going to be much simpler in the event you blend your accounts.

Have a loan to support consolidate the debt.

Though, this is dangerous for that relationship should you never pay for the money-back. This might be your only opportunity to get a keep in your condition, but handling the debt with debt consolidation will only function if you’re capable of handling the relation to new debt consolidation financial loan.

It is usually much better to try to restoration your debts with out delivering on extra debts, say for example a debt consolidation personal loan. When you can discover ways to pay off whatever you are obligated to pay, even should it be with the help of a credit history consultant, get it done! You will save time and expense.

While engaging in a consolidating debts means a smaller bill for the short term, do not forget that furthermore, it means your instalments will pull on for considerably longer. Is it possible to pay for that in case one thing were to take place later on? Some individuals discover that repaying one of their smaller outstanding debts performs greater for these people. Think about your choices.

As has become stated, not all debt consolidation loans applications are appropriate for everybody. To discover the a single which fits your life-style, assess the advice in the following paragraphs once again. Think about it cautiously when analyzing your options, and ensure to continue having a advanced level of caution. In this way, you can expect to come up with a great fiscal decision which will help to help you get out of debt.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

U.S. Government Shutdown Driving Canadian Mortgage Rates Lower, For Now

The U.S. government shutdown has had an interesting side effect for Canada: It has held out the promise of lower mortgage rates, and therefore a stronger housing market.

Not that the housing market needs much help these days. Housing starts jumped 5.3 per cent in September, according to data released Tuesday by Canada Mortgage and Housing Corp., beating analysts’ estimates. All parts of the country saw rising starts except Ontario, where they fell 15.6 per cent.

September house sales in the two most closely-watched markets, Toronto and Vancouver, are up 30 per cent and 63.8 per cent respectively, according to those cities’ real estate boards (though there is reason to doubt those numbers).

But the housing market could see even more heating, thanks to the U.S. shutdown. That’s because, with the economic uncertainty, investors are flocking to bonds, driving down bond yields. Fixed-rate mortgage rates are tied to bond yields, somortgage rates are going to come down as a result, according to RateSupermarket’s mortgage outlook panel.

Of course the flipside of lower mortgage rates is higher house prices, and Canadian municipal leaders are getting worried about the erosion of affordability, the National Post reports.

In a letter to Prime Minister Stephen Harper, Claude Dauphn, president of the Federation of Canadian Municipalities, urged the federal government to help address the shrinking supply of affordable housing.

“Housing costs and, as the Bank of Canada notes, household debt, are undermining Canadians personal financial security, while putting our national economy at risk,” Dauphin wrote.

But all bets are off if the gridlock in the U.S. Congress extends past the debt ceiling deadline on Oct. 17.

If the U.S. were to suddenly default on its debt, it would “devastate stock markets from Brazil to Zurich, halt a $5 trillion lending mechanism for investors who rely on Treasuries, blow up borrowing costs for billions of people and companies, ravage the dollar and throw the U.S. and world economies into a recession that probably would become a depression,” Bloomberg reports, citing dozens of experts.

So the good news for mortgages could be short-lived indeed.

TROUBLE IN TORONTO CONDOS?
The Toronto Star reports that some buyers of pre-construction condos are struggling to get financing to close their deals.

“Some have had to walk away from deposits worth tens of thousands of dollars. Others have been forced to borrow from family — or against their principal residence — to come up with final payments on condos that lenders are no longer keen to finance,” the newspaper reports.

It’s not just a question of lenders being more cautious in today’s housing market; tighter mortgage rules brought in by the federal government last year mean many who bought condos two or three years ago now have to make larger down payments than they bargained for, the Star reports.

“This is the hardest environment I’ve seen for borrowing money in the last 10 years,” Toronto condo developer Brad Lamb told the newspaper.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Simple Ways To Raise Your Credit Score

If you’re like most people, the recession took a toll on your finances and probably your credit score. So how do you get it back to where it needs to be? While it usually takes seven years for any negatives marks to be removed from your credit report, there are a couple quick and simple ways to you can raise your credit score now. Here are a couple to keep in mind.

1. Keep paying things on time:
The most important thing to remember is to keep your credit report clean from here on out. Pay your bills on time. Make sure you aren’t over your limit on any of your credit cards. Keep the balances on your credit cards low. Keeping your finances clean is the best way to raise your score.

2. Don’t cancel any of your credit cards:
This may seem counterintuitive, but canceling credit cards actually lowers your credit score. Part of your credit score is based on how much credit you utilize (your credit utilization score), so the more credit you have available, the higher your credit score. If you cancel a credit card, you no longer have that credit available, which lowers your credit utilization score, which in turn lowers your credit score. Even if you’ve paid off a credit card, keep it open and gather up the extra points you get from having that extra line of credit. If you qualify, you can also apply for a new credit card to raise your credit utilization ratio, although don’t apply for more than one. Applying for too much credit at once can lower your score. Here is a good list of the best rewards credit cards that can help you save money and raise your credit score.

3. Open the lines of communication with your credit card lenders:
If a bunch of credit card debt is keeping your credit score down, talk with your credit card lenders to see if you can strike a deal to pay off that debt. Many lenders are open to making deals with you, since all they are really after is the money you owe. Just remember, if you do make a deal with a lender, ask them how they will be reporting it to the credit bureaus. They have two options: “Paying as agreed,” which won’t hurt your credit score, or “Not paying as agreed,” which could bring your credit score down. Make sure they are reporting it as “paying as agreed” before you agree to any deal.

4. Sign up for a secured credit card:
If your credit is so bad that you keep getting denied for a credit card or loan, try signing up for a secured credit card. Traditionally, you put down a “deposit” for a secured credit card that ends up being your credit limit, so it doesn’t matter how bad your credit is, secured credit cards are available for everyone. Just make sure to apply for a card that reports to all three credit bureaus, otherwise having the extra line of credit won’t affect your credit score.

5. Make sure there are no mistakes on your credit report:
Over 42 million people in this country have errors on their credit report, and 10 million of those have errors that affect their credit score. Make sure you are regularly checking your credit report to make sure there are no mistakes and that you haven’t been a victim of identity theft. Fixing simple mistakes on your credit report can be a quick way to boost your score. Each of the different credit bureau has instructions on their web sites on how to fix an error, or you can hire a credit repair service to do the work for you (as well as try other methods to raise your credit score.)

Keep in mind, the only guaranteed way to raise your credit score is to keep your report as clean as possible and wait until negative information expires from your credit report, which takes seven years (some bankruptcies take 10 years.) As new positive information appears and old negative information disappears, you’ll see your score start to rise.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

10 Tips About Mortgages And Refinancing In 2013

If you’ve been sitting on the sidelines, waiting for the best time to refinance or get a mortgage to buy a home, think of 2013 as your last chance to act.

With good credit, persistence and some shopping skills, you can still snag phenomenal deals this year — even if you are underwater on your loan.

Here are 10 mortgage tips to help you with your mortgage decisions in 2013.

Tip 1: Stop procrastinating and refinance

If you haven’t refinanced recently, you’re probably paying a higher interest rate on your mortgage than you should. Take advantage of today’s record-low mortgage rates while they last. Rates are expected to remain low during the first few months of the year, but they should gradually increase. When they do, many borrowers will regret having missed the opportunity to grab the lowest mortgage rate in history.

Tip 2: Buyers, get moving

With rates near the bottom and home prices on the rise, it’s still a perfect time to buy a house. If you can afford a home and qualify for a mortgage, this may be your last chance to take advantage of the market and own a home for less. To speed up the homebuying process, get a mortgage preapproval before you start shopping.

Tip 3: Compare FHA vs. conventional loans

Many homebuyers opt for a Federal Housing Administration mortgage because it allows them to buy a home with as little as 3.5 percent down. But the already costly FHA fees that are added to your loan will increase again in 2013. As the costs of FHA mortgages rise, some buyers may consider saving a little extra for a conventional loan. Buyers need at least 5 percent down to get a conventional mortgage, depending on their credit. If you can afford the slightly higher down payment, get quotes for FHA and conventional loans, and compare the costs.

Tip 4: Ensure that your credit is golden

Credit standards remain tight. As new mortgage rules are unveiled in 2013, the standards are not expected to loosen. If you plan to get a mortgage anytime soon, you must treat your credit as one of your most valuable assets. Most lenders want to see a spotless credit history of at least a year on your credit report. You’ll need a credit score of at least 720 to get the best rate. Borrowers with a credit score of 680 or more can still get a good deal, but the lower your score, the harder it will be to get approved.

Review your credit report before you apply for a mortgage. Sometimes, paying part of your credit card balances can boost your credit score quickly. Generally, if you are using more than 30 percent of the available credit on your cards, you may be hurting your score. Also, check for credit errors and have them corrected before you apply for a loan.

Tip 5: Want to pay off your mortgage earlier?

If you are one of those homeowners who dream about being mortgage-free, the low-rate environment may be a good opportunity to refinance your 30-year mortgage into a 15- or 20-year loan. But make sure you can really afford the slightly higher payments on the shorter loan and that you have some money saved for emergencies.

Tip 6: Underwater refinancers: Don’t take ‘no’ for an answer

If you owe more than your home is worth and have tried and failed to refinance, why not give it another shot in 2013? The Home Affordable Refinance Program, or HARP 2.0, was revamped to allow homeowners to refinance regardless of how deeply underwater they are.

Even after revisions to the program, many borrowers still found obstacles when refinancing. But the situation is improving. Lenders are much more open to HARP 2.0 refinances these days than they were a few months ago. If one lender says you don’t qualify for a HARP refi, don’t take “no” for an answer, and try to find a lender willing to do it.

Tip 7: Give your lender a chance

If you have trouble paying your mortgage, don’t ignore your mortgage servicer. There are new programs available for borrowers who struggle to keep up with their mortgage payments, including forbearance for those with FHA mortgages. Lenders have been more willing to work out delinquent loans through loan modifications and even short sales for homeowners who can’t afford to stay in their homes. It can be a frustrating process to deal with your lender, but communication is still your best tool.

Tip 8: Shop for a low rate and good service

Even with rates hovering near record lows, you should still shop for the best mortgage deal. Get quotes from at least three lenders and compare not just the interest rate but closing costs and the quality of their service. Favor lenders that have a reputation of closing on time. Start with referrals from friends and relatives when shopping for a lender and read online reviews from other borrowers about the particular lender or mortgage broker you are considering.

Tip 9: Approved for a mortgage? Leave your credit alone

Most lenders order a second credit report for the borrower a few days before closing. Don’t open new accounts or charge up your credit cards at the furniture store while you wait for closing day. New credit lines and maxed-out cards may hurt your score. If you were on the edge when you qualified, your mortgage loan could be rejected at the last minute.

Tip 10: It’s not over until the loan closes

You’ve submitted your mortgage application and locked a rate. The race has just begun. Submit any documents requested by your loan officer or mortgage broker within 24 hours, if possible. Any delays in responding to the lender or in letting the appraiser into your house are wastes of valuable time. Lenders will remain overwhelmed with the large volume of refinance applications at least through the first few months of 2013. It doesn’t take much more than lost paperwork or last-minute requests from your lender to delay your closing. If that happens, you risk losing the locked rate. Follow up with your lender or mortgage broker at least once a week to ensure the process goes smoothly.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

20 Questions To Ask Before You Pick a Home Loan

Home loans can be complicated. But choosing one that meets your needs can be much easier if you gather enough information before you make a decision. Here are 20 questions that might apply to your situation.

Rate, term and payment

The most fundamental questions about any loan concern how long you’ll have to repay the amount you borrowed, how much interest you’ll be charged and whether the interest rate and payments are fixed for the entire term or subject to periodic adjustments as market interest rates fluctuate.

Here are four questions to ask:

1. What is the term of this loan?
2. What is the initial interest rate?
3. Is that rate fixed or adjustable?
4. How much would my initial monthly payments be?

Adjustment periods, caps and negative amortization

If the interest rate on the loan is adjustable, your monthly payment likely will change in the future and could be much higher than your initial payment.

Here are some questions to ask on this topic:

5. When can the interest rate be adjusted?
6. How will the interest rate be calculated?
7. What is the maximum interest rate increase for each adjustment period?
8. What is the maximum interest rate increase over the lifetime of the loan?
9. How much would my payment be today if the interest rate were calculated as it will be at the first adjustment period?
10. How much would my payment be at the maximum interest rate?
11. Could the amount I owe increase over time?

Costs and fees

Along with the interest rate and payment, you’ll want to consider the upfront and ongoing fees and costs you’ll be charged in connection with the loan.

Here are some questions to ask regarding costs and fees:

12. Can I see a Good Faith Estimate (GFE) for this loan?
13. Which of the costs on the GFE might change and by how much?
14. Are there any other costs that aren’t on the GFE?
15. Does this loan have a prepayment penalty?
16. Would this loan require an escrow account for homeowner’s insurance and property taxes?
17. Would I need to pay for mortgage insurance on this loan?

Needs and qualifications

Not all loan products are available to all borrowers, so you’ll want to explore your options before you decide which loan would be right for you.

Here are three questions that may help:

18. What are the qualifications for this loan?
19. Why would you recommend this loan for my needs?
20. Which other loans might also meet my needs?

These 20 questions can help determine if a loan is right for you. Don’t be afraid to ask your lender these and any other questions you may have. The more you know, the better equipped you’ll be to choose your loan.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Settling Unsecured Debts

If you are experiencing money problems, trouble paying your debts or your financial situation is deteriorating you need debt relief. Ideally, you can either avoid paying some of your unsecured debts or you can pay off some of your debts for less than 100 cents on the dollar. Depending upon the situation you might be able to settle one or more of your unsecured consumer debts for anywhere between 5% and 85% of the balance owing.

Type of debts where generous settlements may be available

If you owe money to the government the government will usually take the position that it wants you to repay the entire debt. It is also difficult to settle debts with certain types of consumer creditors such as a landlord or a utility; water, hydro, cable or internet service provider. If you do not pay your rent your landlord is going to evict you. If you do not pay your cable bill your cable service will be disconnected. However, there are plenty of opportunities to settle debts at major discounts with certain types of unsecured debts including credit cards, personal loans, lines of credit and cellular phone charges.

Settlements involving purchased debt

In Canada today about 90 per cent of the debts collection agencies attempt to collect are debts owned by the original creditor. However, in some cases a creditor will sell a large group of debts to a company called a debt buyer, a company that specializes in buying debts. Typically debt buyers purchase debts that are more than 3 years old for pennies on the dollar. If a collection agency is attempting to collect an older debt from you that is owned by a debt buyer the collection agency may be willing to settle this debt for as little for 5 cents or 10 cents on the dollar.

Settlements involving debts owned by the original creditor

Typically major credit grantors in Canada attempt to collect a debt on their own for 3 to 6 months before placing the accounts for collection on a commission basis with a collection agency. When an account is initially placed with a collection agency it is referred to as a first assign. Some creditors may not permit settlements on first assigns. Other creditors may permit settlements for approximately 85% of the balance owing. After a year a delinquent account may be recalled and placed with a new agency as a second assign and the creditor’s blanket settlement instructions may then be reduced to somewhere around 65% of the balance owing. Upon the expiry of another year the debt will likely become a third assign and the settlement guidelines may be reduced to approximately 50% of the balance owing.

In some cases it may be possible for a collection agency to obtain permission from its creditor-client to settle a debt for an amount even more generous than that permitted under the client’s blanket settlement instructions. A creditor may consider settling a debt for a lump sum payment less than its blanket settlement guidelines where the creditor is satisfied the consumer will never be in a position to repay the debt or the creditor is on the verge of insolvency.

Importance of obtaining a written settlement offer before making a payment
In the event you negotiate a settlement with a collection agency it is important that you obtain a satisfactory written settlement offer from the collection agency before making your payment to the collection agency. Failure to do so may result in the creditor or another collection agency attempting to collect the balance from you.

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