Inflation and interest rates

There is lots of talk about an impending increase to the bank of Canada prime lending rate. This is because inflation has been on the rise recently. Also rising inflation is usually a sign that the economy is doing well. While I do not profess to be an economist and can’t really give you any hard facts on GDP, I do see the costs of almost everything going up. The cost of gas has almost doubled since last year, most car lots are empty as they can’t get enough vehicles and year over year the cost of new homes in Halifax has increased by 21.2%

Now does that all point to a booming economy as the real reason for the prices of almost everything increasing. I think it’s more complex than that. Nationally we are still adding jobs, 31K in October alone. Yet at the same time minimum wage positions are being left unfilled as more and more people can’t make ends meets at our current minimum wage of 12.95/hour. There are no vehicles on lots mostly due to the shortage of computer chips to build them, thus creating a high artificial demand for new and used cars. Lastly our real estate market, normally Halifax has around 2,100 listings at any given time. Currently we are around 335, which is not enough to meet the demand thus further adding increase of home prices due to rampant bidding wars.

So if and when the Bank of Canada decides to intervene and increase the rates, I don’t think it will change anything. This is because the interest rate adjustment will not actually address the root cause of the increase of so many of the items that are effecting our lives at this vary moment. Having no chip shortage will allow auto makers to ramp up supply again, thus brining down demand and prices. Also when more building permits equal more home starts and more listings then that will release some of the pressure of our housing market. So while increasing rates in the past may have seemed like the right thing to do to keep a cap in raising inflation, currently I don’t think that is the logically solution.

“Inflation is when you pay fifteen dollars for the ten dollar haircut you used to get for five dollars when you had hair.” Sam Ewing

I look forward to your thoughts on this as well.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Don’t pull my credit

Sometimes clients who apply for a pre approval or a mortgage ask me not to pull their credit. They are concerned that my pulling their credit will negatively effect their credit score. When you apply for a mortgage through a broker or a financial institution, as part of the application process you give permission for them to pull a full and current credit bureau. This is required so we can get you approved for the loan.

There are two type of credit inquires. A soft pull when when you don’t have to give your permission and the institution only receives a condensed version of your credit report. This is typically done when you receive a pre qualified credit card offer in the mail or when you go to get a new cell phone. However when you are looking to borrow money for a car loan or a mortgage, we do a hard pull where we receive a comprehensive version of your credit report.

Typically people are worried that if too many people pull their credit report in a short period of time that this will negatively effect their credit score. So whether you are shopping around for a mortgage or a new car, the enquiries made within the last 30 days will not effect your credit score. Since creditors report to the credit agencies every 30 days, it’s the enquiries and credit over 30 days that really matter. Also when you give me authorization to pull your credit, I pull it once then use that same report with all my lenders that I have available.

If you are concerned that your credit is just at the cusp of qualifying for the loan and that if it gets pulled you then may not qualify. If this is the case then I highly suggest that you get a free copy of your comprehensive credit report from Equifax directly. As if this is the case you may need to work on it to improve your score. Here are some tips to help you do that.

Today I am thankful for sacrifices of our veterans and the freedom that we now have today, the slower pace of a weekday off and the cool crispness of a November morning.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Purchase Plus Improvements

In this age of highly competitive real estate market, sometimes you just have to jump and offer on the next available decent house in your price range. However since the homes are going for well over asking price and sometimes with interiors that have not been touched since Justin Trudeau’s father was Prime Minster, a purchase plus improvement mortgage may be something that you want to consider.

With this mortgage program it allows you to purchase an as is home ( not one that is not livable) and make some improvement to make it your own. The improvements are limited to structural and permanent fixtures ( paint, flooring, cupboards, roofing or furnace / AC etc) rather than appliances.

Depending on the lender programs can be the purchase price of your home + up to 10% or 40K whichever is less or some lenders are now doing the purchase price + 20% of the purchase price as improvements.

Here is an example, you were the successful bider on a home that you are buying for 500K. You still have room in your debt service ratios and want to improve the house to make it your own. So depending on the lender in some cases you can add 40K in improvements and others you can go up to 100K.

Don’t forget that if your purchase required high ratio mortgage insurance (CMHC,Sagen or Canada Guaranty) your down payment will now change. You will need to put down 5% for for 1st 500K and 10% of the improved value. So that would be 25K on 500K and 4K for 40K or 10K more if you were getting 100K worth of work done.

“When you are good at something, you will tell everyone. When you are great at something, they will tell you.” Walter Payton

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Year end closings

If you are currently house hunting or planning to refinance and would like to close on before the end of the year, then please choose your dates wisely. This is because we have 3 statutory holiday’s within the last week of the year. Christmas & Boxing day fall on Saturday & Sunday this year and that means that Monday and Tuesday will also be holiday’s for the banks and law offices. December 24th is normally a half day anyway and with the week after Christmas being a total write off anyway, if you are looking at dates to close pick no later than December 15th.

People take vacations in the week leading up to and after Christmas. Also not all closings happen on the day that they are supposed to and are sometimes carried forward a few days to get everything in order. So to prevent your closing being delayed please get all your ducks in a row and don’t put any date later than December 15th on your purchase or refinance. Otherwise you could see it possibly being delayed until Jan 12th next year.

Today I am thankful for seeing all the deer in our neighbourhood during our walks, clients planning ahead and closing mid December and friends that call out of the blue just to chat.

” Every new beginning comes from some other beginnings’s end” Seneca the Younger ( not semi sonic lol)

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Teamwork

Your mortgage like most things in life takes a team to make happen. It is more than just you and me. Here are some of the players on our team.

Myself your broker- I help you complete the application and assist you in getting your documents together. Review all the supporting documents ( credit, income, down payment, purchase & sale and employment confirmation) to make sure that we have everything that is required. Present client mortgage & lender options. Submit to the lender for approval. Communicate with the lender & fulfilment specialist at the bank to make sure all the documents are signed off on for the loan request. Order your appraisal if necessary. Get your approval package prepared and signed by you the client. Make sure your file meets compliance standards. Touch base with your solicitor or notary to make sure they have received the closing documents.

Underwriter- reviews (& hopefully approves) your loan request to make sure it meets the lender’s guidelines for credit, income & location. All of which I would confirm in advance as well.

Fulfilment specialist- they review and sign off on all the supporting documents for the loan. This includes income, down payment, commitment and purchase & sale agreements. Conduct verbal employment confirmation with employers.

Reator- In this market they are superstars. Once you are official pre approved they then proceed to show you every available listing in your price range and then run you all over town & province if necessary to show you the properties. Present offers ( in this market clients have been know to have placed upwards of 15-20 offers before getting one to stick). The forward me the offer, listing cut, amendments and taxes once they have an accepted offer so I can get it approved. Assist coordinating the property inspection if necessary ( some are waiving this to secure the offer but I don’t think that is wise). Final walk through inspection with client prior to close.

Solicitor- Receive mortgage documents from the lender. Review with clients at signing appointment. Collect down payment, deed transfer and property taxes. Register the new mortgage.

I am sure I am leaving people and roles out of this process but I just wanted you to know the teamwork that is required to get your file across the finish line and into your dream or forever home.

Today I am thankful for all the great team players that I work with on a daily basis, the Realtors in this competitive market are really superstars for their work and patience and for the clients for persisting till they finely find a home. Thank You.

“None of us, including me, ever do great things. But we can all do small things, with great love, and together we can do something wonderful.” – Mother Teresa

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Be Caring

In a very competitive fields like mortgage brokering, car sales, financial planning or real estate sales, where most of the established agents have a similar level of knowledge. Clients are attracted and retained not by how much you know as the playing field is pretty level after you have been doing it for a while but by how much you care.

I tell prospective clients upfront that I want them to be comfortable dealing with me. There are many choices in this marketplace and we all have access to similar rates and lenders but what truly separates us is how we care for our clients. This is why I treat my clients how I want to be treated, and have been very fortunate to work with those I have worked with and am thankful for all their 5 star google reviews.

Today I am thankful for all the kids and their costumes who came to visit us last night, my clients and all their great reviews and the bowl full of left over halloween candy.

“Nobody cares how much you know until they know how much you care.” Theodore Roosevelt

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

All said and done

When all is said and done then you can put your guard down and celebrate. However beware of premature elation. You financing is not complete when the vendor accepts your offer. It’s not complete when your mortgage request has been approved. It’s not complete when all financing conditions have been approved.

It is only complete when your solicitor/lawyer/notary has received the funds from the lender and dispersed them and you have received the keys. Only then can you finely celebrate and then look at getting the new car that you have been putting off or the appliances that you needed. Not before.

This is because there have been so many horror stories about clients going and financing a new car after they have gone firm on their home purchase thinking all was said and done. Only to find out the the lender does a second credit check just prior to closing and now their debt service was out of whack. Don’t let this happen to you.

Today I am thankful for seeing deer for the 2nd morning in a row on our morning walks, calls from friends overseas just as my day was starting and their’s was finishing and what was perceived as a mountain of a problem turned into a molehill.

“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” ~ John Quincy Adams

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Mortgage Math Revised

A few years ago I wrote a post about how you can calculate out your own debt service and figure out on your own how much house you can afford. A lot has changed since I published that in 2015, so today I wanted to update a few key components to that prior post.

Insurer’s ( CMHC, Sagen & Canada Guranty) have revised the debt service requirements ( GDS/TDS). See the prior post for the definitions. What was once the limit at 32/40 has now changed to 35/42 and up as high as 39/44. Note that these new limits are based on your credit score. If your beacon score is between 650-680 you can now qualify for 45/42 and those over 680 beacon scores can now qualify for 39/44.

Also one must not forget the fantastic qualifying rate of 5.25% that all mortgages must qualify for even though the current rates are much much less.

So here is a quick example. Say that your engineering job pays you 70K per year and you have 750 beacon score. Let’s assume for now that there are no other outside debt to make the example easy. 70,000/12=5,833.33 X .39 = 2,275. This is now your maximum mortgage payment for GDS before household expenses.

Now for TDS the process is the same but with a different ratio. 70,000/12 = 5,833.33 X.44 = 2,566.66. This is now your maximum payment for TDS before household expenses and debt payments.

To figure out what your maximum mortgage you can afford, you take the lesser of the two ratio’s which in this case is 2,275 and divide that by the the qualifying rate of 5.25 and multiple that by 1000. So 2,275/5.25 = 433.33 X 1000 = 433,333.33. This is your maximum mortgage amount.

“Pure mathematics is, in its way, the poetry of logical ideas.” Albert Einstein

Today I am thankful for the beautiful fall colours, the crispiness in the air and the feeling of euphoria after a great run.

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Get it in writing

Important events in your life should always be received in writing. A handshake is good for a greeting not for a formal agreement. I had a prospective client call me yesterday and tell me that the previous broker they worked with got them pre approved but that they had never received it in writing.

Job offer’s for any reputable company are always received in writing. Part of the marriage ceremony is to sign your marriage certificate. If you go into business with someone you enter into a partnership agreement. When I take on commercial clients I have them sign a mandate agreement. Most importantly when you buy real estate you need to get it in writing.

Also to illustrate this is that your pre qualification is only a rough calculation of what you can afford based on what the clients disclose. A pre approval is NOT a pre approval unless it is received in writing. In writing it will have the rate that is being offered, for how long it is held for and the amount of the pre approval.

Today I am thankful for crisp cool nights and still some warmth in the afternoons, getting to practice my french during my daily calls and the new licensing process is almost complete.

“Do one thing every day that scares you.” Eleanor Roosevelt (she was awesome)

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Sales process

One of my colleagues recently told me an interesting stat. He said that 74% of people find their realtor because they called them back after they made several calls to agents to enquire about their services. I find that surprising for a service that is 100% commission. I know we are in a very busy real estate market but wouldn’t you want to call everyone back?

If one were to simplify the sales process, it would be down to prospecting, following up and following through to close. It has historically always been harder to find the prospect then to make the sale so why are so many people not returning phone calls or email enquiries? My wife and I went though this a few years ago when we were shopping for a new car, we must of visited 8-9 car lots and test drove a few different models. However we went with the person who followed up with us and seemed to want our business.

Whether you are looking for a realtor, mortgage broker, financial advisor, insurance agent or heck even a new car. In every major centre you have your pick of where to go so make sure that the person that you are dealing with truly wants to help you and has your best interest in mind.

Today I am thankful for the people who have called me back after I have called enquiring about their services, the clients who take the initiative to make the first call and the time and energy that is saved by having people reach out to you.

“Diligent follow up and follow through will set you apart from the crowd and communicate excellence.” John C Maxwell

I look forward to hearing from you in regard to your mortgage needs.

Patrick

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here