3 Apr

TECHNOLOGY IN MORTGAGES AND REAL ESTATE

General

Posted by: Derek Vandall

Technology is already playing a huge role in the mortgage industry. In the past, mortgage applications had to be physically taken by hand and faxed in (what’s fax anyways?!)… It may soon be possible, with technology’s help, for borrowers to be able to fill out their own application and send it, along with all supporting documentation, straight to lenders without a mortgage professional’s help – kind of scary.

On the Realtor side, there is DocuSign, Realtor.ca, Zillow, and a host of other technology-driven solutions that help Realtors be more efficient in their business. However, just like in mortgages, it’s coming to a point where buyers and sellers may see value in going to discount brokerages such as Redfin.

Let’s first look at the mortgage side.

Quicken Loans’ Rocket Mortgage in the States started out as an online-only mortgage application tool. The promise is faster service, with a little headache, and everything is done “from the comfort of your own home.”

In Canada, Scotiabank just rolled out their eHOME Mortgage application. RBC has had a Pre-Qualification Application for a year and TD rolled out their Digital Mortgage Application in early 2019.

Our own parent mortgage company, Dominion Lending Centres, brought out their “My Mortgage Toolbox” application for Mortgage Brokers to use, and other Broker houses are fast on the trail. All lenders are trying to capitalize on a Millennial’s and Generation Z’s comfort level with providing their personal information to a computer system.

The promise with all of these digital tools is to make a borrower’s mortgage journey easier, and with how technology is progressing, this digital experience is going to keep getting better and better.

Unfortunately, as with any process change, problems arise…

The first and most glaring issue with the digital mortgage experience is that because mortgages are complex, with timelines to follow and anxiety to manage, borrowers are continually requesting human interaction to answer their questions. Rocket Mortgage’s own website now advertises being able to chat online with a specialist right up front.

Secondly, although digital applications promise speed and ease of use, all mortgage files still have to have “eyes” on an application. We’re not there yet (nor will we be for the foreseeable future) where humans do not have to touch mortgage applications for final approval. This human requirement means that a mortgage file must wait in a queue to be approved.

Lastly, if any file has the slightest hiccough and doesn’t conform to exactly what the computer systems need to see, an expert will have to be called in during the process to troubleshoot. As an aside, the “experts” who look at these files are salaried individuals; more on that later.

All-in-all, technology alone is not changing the mortgage market.

On the Realtor side, the biggest issue with using Redfin, or relying too much on technology-driven companies, is that the Realtors who work there are most likely going to be sub-par… Yeah, I said it… Just like 1% and 2% Realty, if someone is working for half the commission, they are, by nature, not going to be as good or competent as someone who prides themselves on working for their due.

Additionally, I firmly believe that in life, we get what we pay for. The best advisers and salespeople will gravitate to where they are better compensated. Salaried individuals and discount mortgage and real estate professionals will invariably move to become independent if they are any good. If they are just so-so, bad at their jobs, or are just happy to provide the bare minimum in service, they stay and let someone else hunt for business – see the “more sinister” reason for technology and apps below.

Technology as a Benefit:
There are ways that technology is being used for the benefit of borrowers.

The first is that in our hyper-connected world, a borrower’s credit, income, and down payment can all be verified at the touch of a button. Mortgage Brokers can already pull someone’s credit bureau in seconds, and there are also services to allow us to get 3-months of bank statements for down payment verification with a client’s permission. The last step is to have our systems validate income by way of a national employer registry or by other means. In the States, this is done through their IRS and the credit bureau companies and it will come to Canada in the future. All of this means that a borrower can get firm approvals more efficiently (not having to download bank statements, get employment letters, etc.) and it will allow the professionals more time to provide advice and cater to the client’s needs.

The second benefit to borrowers is that the new applications are now able to receive documentation, communicate on the application status in real time, and much more, all in one easy-to-use platform. It’s incumbent on the professional to make sure that their technologies and systems are properly integrated to provide a seamless, but better, mortgage experience for their clients.

To recap, technology will be playing a larger and larger role in how mortgages are obtained in the years to come, and in order to thrive in the 2020s, Mortgage Brokers and Realtors are going to have to use technology to the best of their abilities. The marriage between human interaction (building rapport) and providing a seamless experience through leveraging technology should dominate our thinking!

EITAN PINSKY

Dominion Lending Centres – Accredited Mortgage Professional

27 Mar

WE CAN FIX YOUR CREDIT PROBLEMS

General

Posted by: Derek Vandall

Many people do not realize that Dominion Lending Centres mortgage professionals can help you with your credit and get you to a point where you will qualify for a mortgage. We have been doing this for years.

New to Canada or Just Graduated – both of these groups of people have the same problem. They have little or no established credit so lenders are hesitant to lend them hundreds of thousands of dollars to buy a home without a track record. Your DLC mortgage professional can get you a Dominion credit card. You should get a $1,500 limit as that’s the magic number with lenders. A car loan or a personal loan would be a good idea as well. Why? Lenders want to see that you can pay off a debt such as a loan and that you can budget for a revolving line of credit such as a credit card where the balance goes up and down monthly.

Previously Bankrupt or in Consumer Proposal – you had credit and something went wrong. Now you need to re-establish credit. We can help you obtain a secured credit card or help you with suggestions on how to rebuild your credit. This can’t be done overnight, but if you are patient and work with us, the end result will be improved credit. Did you know that we have lenders who will pay out your consumer proposal as part of a mortgage refinance? It’s not well advertised but we can do it.

Bruised Credit – these are people who have had credit and then something goes wrong, but we can help. Usually, it’s a result of a divorce, a long illness or a job loss. You can go see a credit counsellor for help in improving your credit which will cost you about $6-800 for a year of help, or come see us. We have a program set up by one of the credit reporting agencies that will tell you exactly what to pay off first and how much to pay to get the maximum improvement in your credit score. This program costs $17 a month. Your Dominion Lending Centres mortgage professional can get you set up with this.
Instead of being denied a mortgage and told to come back when your credit is better, go directly to your DLC mortgage professional and get help. We’re in the business of helping people.

DAVID COOKE

Dominion Lending Centres – Accredited Mortgage Professional

20 Mar

INCOME QUALIFIED

General

Posted by: Derek Vandall

There are many different ways a borrower can qualify for a mortgage when it comes to their income. One of the most common ways is known as income qualified. All of the following methods of employment income are under the income qualified umbrella:

  1. Annual salary income employees
  2. Full-time employees working guaranteed weekly hours
  3. Part-time employees working guaranteed weekly hours
  4. Auxiliary/On-call employees with 2-yr history at the same employer
  5. Commission Sales who have a 2-yr history in same job/industry
  6. Employees earning gratuities who have claimed over 2-yr history
  7. Contract employees with 2-yr history at job/industry

There are a couple more types of employment that may fall into this category, but for the most part, these are the types of borrowers whose mortgage application is going to be done using income qualifying.

When it comes to the first 3, a borrower’s income is paid by a business in which they generally do not have any interest/ownership in. This means an human resources representative or a supervisor can write a letter of employment stating the weekly guaranteed hours, the guaranteed hourly pay rate, the start date, and the employee’s position. The lender will then use this letter, a most recent pay stub, as well as verbally confirm the letter with the employer to verify a borrower’s income. This is how a borrower who works guaranteed hours or salary has their income verified and qualified on a mortgage application.

For numbers 4 to 7, lenders and mortgage brokers will verify and qualify a borrowers income a little differently. Because an employer does not guarantee hours or income, we need to see that there has been at least a 2-year history making the same amount. This 2-year history will usually need to be with the same employer and will need to be documented on your personal income tax returns to the Canadian Revenue Agency. The income amount on your line 150 of your T1 General Tax Returns for the past 2 years are added together and then divided by 2. The amount you get is the income you are allowed to use on your mortgage application and this is then verified by a letter of employment stating you have in fact been an employee there for more than 2 years, you are currently working there, your position, as well as a pay stub showing year-to-date income that is comparable to your 2-year average given the month you are in.

The same process would be used for those who earn overtime or bonuses, claim tips, or work part-time with two jobs. If you have any questions, contact a Dominion Lending Centres mortgage professional near you.

RYAN OAKE

Dominion Lending Centres – Accredited Mortgage Professional

13 Mar

A BANK THAT MAY NOT BE FAMILIAR TO YOU

General

Posted by: Derek Vandall

Quiz time! Who is the largest non-bank mortgage originator in Canada with over $100 billion dollars in mortgages under administration? Answer – First National Financial Corporation. If you’ve never heard of them before, don’t feel bad. The only way to get a First National mortgage is through the broker channel. They do not have any branches anywhere in Canada. How did First National become #1?
Service – First National is fast. They will accept your application, underwrite it and if approved you will get a response within 4 hours. The industry average is 24 hours. Mortgage brokers use First National for clients who have very good credit, salaried income and need approval or pre-approval quickly.

Another nice feature of First National is that they will provide pre-approvals. Many lenders do not want to spend the time and money to provide these but First Nat has always provided pre-approvals that are underwritten. What this means is that an underwriter has reviewed your application and if everything in it is straight forward they foresee no problems with an approval for the specified amount of money.

Additionally, if the home you are purchasing is 5 years old or older, a First National mortgage may be for you. They offer Echelon Home System Warranty Program. This is a warranty on your electrical, heating and cooling systems as well as your plumbing. Most hot water tanks have a 6-year warranty. After that, it can cost you $20 a month for a warranty program with your utility company. Echelon is free for the first 12 months and then it costs you only $17 a month. Any calls you make for repair work have a $50 call fee but everything else is covered by the warranty. Imagine your hot water tank breaking down on Sunday afternoon. In addition to paying a service call fee of probably $100, you would be paying time and a half for weekends. The tank alone could be $800+. It’s worth it.

Finally, First National introduced something new in fall 2018, a second mortgage. If you have a need for funds for renovations or something else substantial and you are part way through your First National mortgage term you can now obtain a second mortgage. No need to break your mortgage and incur penalties. When your first mortgage term ends, the second mortgage is rolled over into your first mortgage so you don’t have two different expiration dates for your mortgage. This is unheard of for a non-bank to do.
Remember, you can only get First National through the broker channel. Be sure to ask your Dominion Lending Centres mortgage professional if this would be a good mortgage for you.

DAVID COOKE

Dominion Lending Centres – Accredited Mortgage Professional

6 Mar

4 HOME IMPROVEMENTS THAT WILL PAY YOU BACK

General

Posted by: Derek Vandall

Some home improvements provide more of a payback when you sell the house down the road.

Here’s a list of the four home improvements which will provide the biggest payback when you sell.

  1.  Adding square footage – while this can be a very expensive project, adding to the size of a house can re-coup between 50-83% of your initial investment. Putting a bonus room on top of your front-facing garage increases the square footage without having to enlarge the foundation.
  2. A deck addition – adding a deck makes a house feel larger and allows you to enjoy your backyard during the warmer months. Typically you can get between 65-90% of your investment back.
  3. Remodelling the kitchen – one of the most important rooms in the house is the kitchen. A well-done project will get you between 50-120% back when you sell the house but remember not to over-do the project. A million dollar kitchen in a $500,000 home won’t be fully appreciated by future buyers.
  4. A bathroom addition – the second room buyers check out is the bathroom. While remodelling a bathroom will recoup a lot of the renovation costs adding a second bathroom to a one bathroom home is huge. Many homeowners find that they get between 80-130% of the cost of the project.

If you are thinking about buying a home or renovating your present home, speak to your Dominion Lending Centres mortgage professional about how they can help you to finance any of these projects in your mortgage and pay lower interest rates.

DAVID COOKE

Dominion Lending Centres – Accredited Mortgage Professional

28 Feb

5 REASONS TO CONSIDER BUYING A CONDOMINIUM APARTMENT OR TOWN HOME

General

Posted by: Derek Vandall

If you are thinking about purchasing a home in the near future, here are some reasons you may consider buying a condo apartment or townhome. You should also be aware there are some cons as well.

Pros

  1. They are relatively inexpensive. As your footprint is small and you share exterior walls with others, the cost for a condo is often far lower than owning a single-family dwelling.
  2. No shovelling or painting. Most maintenance costs are covered in your monthly condo fees as are large repairs such as roofing and hallway carpeting.
  3. Amenities. Often condos have a pool or gym which is included in your condo fees.
  4. Security. for seniors and single women this is a big concern. Living in a building which a locked front door in addition to your own unit door is a big plus.
  5.  A sense of community. Often condo boards have an annual picnic or event where you can meet your neighbours. This helps to develop a sense of community.

Cons

  1. Restrictions on pets. How you can paint your front door or what you can do to your balcony can see like restrictions on your lifestyle. Be aware of these restrictions by reading the condo documents in advance.
  2. Maintenance may not be done when you would like for it to be done. Major projects may be delayed if the condo board has not allowed for large expenses and this may result in a large special assessment payment. Be sure to read over the section of your documents that covers the reserve fund.
  3.  Condo fees may go up higher than you can afford over the years. This is a particular concern to owners on fixed incomes.

Be sure to speak to your favourite Dominion Lending Centres mortgage professional before you go house hunting to get expert advice on how to proceed.

DAVID COOKE

Dominion Lending Centres – Accredited Mortgage Professional

21 Feb

WHO REALLY SETS INTEREST RATES?

General

Posted by: Derek Vandall

A recent article in the Huffington Post addressed the pricing strategy for the Big Six Banks, BMO, CIBC, National Bank, RBC, Scotia and TD and who really sets interest rates.  RBC announcing a rate drop in January and the other banks soon followed.  For consumers, the banks are seen as leaders of the pack and everyone waits to see what else they will do.  The reality is the bank rates were higher than the market for some time.

The Huffington article states “Canadians pay attention to the big guys, however, because they’re either too comfortable to make a change or simply not aware they’re being taken for a ride. The banks have a 90-per-cent stranglehold on the Canadian mortgage market and we’ve been slow to start paying attention to the alternative — often cheaper — options out there.”

The drop in rates was a measure to bring bank rates in line with the non-bank lenders who have already been offering lower pricing. The only difference is the banks have a high market share of the business and more profit each year so they can afford to spend money on media and other forms of advertising. The media attention helps them to capture more business with a rate drop after a lag time of passing on higher rates to consumers. The informed consumer working with an independent mortgage broker will already know the market and what mortgage product is best for their needs.

However, interest rates are not the only consideration when choosing a mortgage. Each time you make a purchase, renew your mortgage or take equity out, it is always best to consult with your mortgage broker for a review.

One of the big factors is the cost to exit that mortgage before maturity. Life happens. There are costs to breaking the contract early in the event of a sale, marital break-up, death or need to consolidate other debts. Bank penalties for an early payout are higher than non-bank penalties by a factor of 4 times. By reviewing your needs with your Dominion Lending Centres mortgage broker, we can discuss all of the options available from lenders including bank and non-bank, to ensure you are making an informed decision.

PAULINE TONKIN

Dominion Lending Centres – Accredited Mortgage Professional

14 Feb

3 STEPS TO TAKE YOU FROM PRE-APPROVAL TO GETTING THE KEYS

General

Posted by: Derek Vandall

Picture this: You’ve finally been able to put away enough for a down-payment on your dream home. It’s taken you years of diligent saving, but you did it! You have also been tirelessly working on finding financial stability by improving your credit score and paying off debts. So, first of all, KUDOS TO YOU! Now what do you do? Here are the three steps that will take you from browsing new homes to getting the keys to your new place.

STEP 1: PRE-APPROVAL
This should actually be the step BEFORE house hunting. Visiting your mortgage broker to get pre-approved is the first step anyone looking to buy a home should do. When you meet with your broker for the first time they will:
• Have you fill out an application (or you might be able to fill out one online)
• Pull your credit
• Determine what your maximum purchase price will be.

Be aware that you will also be asked for additional information when you visit your broker to apply, including a letter of employment/pay stub, down payment verification, two years notice of assessment and/or T4’s, a void cheque, and a number of other potential documents.
Once you are pre-approved it’s house hunting time for you! The benefit of having this done BEFORE you start looking is that you can work with your realtor to find properties within that price range.
When you do find just the right home for you, it’s on to step two.

STEP 2: APPROVAL
If you were able to provide the bulk of the paperwork for your pre-approval, then it will be smooth sailing from here. You may have to supply a few pieces of updated information but otherwise, it’s up to the lender to do the hard work at this point.
Your application will be re-assessed, and the lender will take a look at the property you are purchasing. Once they confirm that it aligns with the guidelines they have laid out for your loan, then it is sent off to the mortgage default insurer for approval. At this point, make sure that you do not remove the financing condition until all the lender conditions are met.
Now that you have final sign-off and are waiting for the final conditions to be met, it’s on to step three.

STEP 3: FINAL STEPS
Your broker will notify you once the conditions have all been met, and the lender will send the paperwork over to the Lawyer’s office. The lawyer will take a few days to go through the mortgage and prepare it for your final sign off. When you go, you will be asked to present:
• Void Cheque
• Two forms of identification
• Balance of the down payment in the form of a bank draft

On the day of funding, the lender will send the funds to the lawyer who sends them to the seller’s lawyer who upon receiving the funds will give you the all clear.
All that’s left is to hand you the keys to your new home!
As one final step, keep asking questions at each stage of the mortgage process. You should check in with your Dominion Lending Centres mortgage broker if you have any questions along the way. They are happy to guide you through the process of not only getting a mortgage but also having a mortgage too!

GEOFF LEE

Dominion Lending Centres – Accredited Mortgage Professional

7 Feb

WHICH MORTGAGE LENDER IS BEST FOR YOU?

General

Posted by: Derek Vandall

The following is a summary of the choices available for clients when looking at the four different types of lending groups.

So what exactly is a lender? By simple definition, a mortgage lender provides financing for a real estate purchase hence the word lend.

The lender that is best for you will all depend on who you are as a borrower, what your current situation is and what your situation will look like in the future.

Big Banks

Currently, mortgage brokers have access to TD Canada Trust and Scotiabank. Big banks are especially appealing to first-time home buyers as it offers a sense of comfort knowing your mortgage is being dealt with a nationally recognized financial institution.

TD offers a very fast review of documents with the ability for collateral charges, multiple branch locations and competitive privileges such as pre-payment abilities.

Scotiabank is also an advantageous option for homeowners as they have one of the most comprehensive and easy-to-use home equity lines of credit, referred to as their Scotia-Step.

Being able to access a Home Equity Line Of Credit (HELOC) and roll it into your mortgage offers simplicity and efficient methods of borrowing for homeowners. The drawback with both banks is that they are chartered banks. When a client decides to use them for fixed-rate mortgages, specifically the 5-year terms, they can potentially be on the hook for penalties north of $10,000 due to breaking their mortgage early. Career changes, moving from different neighbourhoods or cities, upgrading or downgrading home sizes, marital issues – these are all reasons why someone may need to break their mortgage early. Being in a long term fixed rate mortgage with a chartered bank can be unpleasant.

Credit Unions

One of the biggest benefits of credit unions such as Westminster Savings or Coast Capital is that they are not federally regulated, they are provincially regulated. They are not required to adopt federal mortgage rule changes unless they want to. This can be an extreme benefit to those considering rental properties, those with unique income/employment situations or complex transactions that chartered banks do not or cannot work with.

Some of the negative attributes are, however, a reputation for slow review times of documents and mortgage applications, as well as portability. If you work for a company or in an industry that is known for relocation and re-assignment across provinces, you will pay a penalty to a credit union every time. This is something that is likely not to happen when working with charted banks or monoline lenders as they will have more flexibility in allowing you to port your mortgage to a new property in other provinces.

Monoline Lenders

Monoline Lenders are supported by mortgage brokers, and in turn, mortgage brokers are supported by monoline lenders. You cannot access mortgage products that a monoline lender offers without using a broker as they typically do not have physical branches or locations. They are funded by private investors dealing only in mortgage transactions, allowing their products to be more customized based on the investors’ risk tolerance. The benefits? – Extremely low-interest rates, very competitive privileges with pre-payment and portability, fast turnaround times, and the best part, significantly lower penalties for breaking a mortgage.

With a big bank, a $10,000 penalty for breaking the mortgage early may only cost you $3,000 with a monoline lender. This is highly advantageous to someone who wants the security of a long term fixed rate but isn’t 100% certain they will be carrying out their mortgage at that property for the full five years. The disadvantage is the almost blind trust a client must have. These monoline lenders do not have much brand recognition with the public, limited direct access with clients and usually do not have any physical locations to visit. This makes it hard for some people to feel comfortable using them as their mortgage provider.

Private Lenders

The benefit of a private lender is that anyone who has inconsistent income, unique properties, poor credit history or any type of severe risk in their application can get an approval. When a chartered bank says no, a credit union says no and a monoline lender says no, a private lender can say yes. The disadvantage? – your interest rate is going to be significantly higher and the privileges such as prepayment and portability are going to be significantly less. As well, with most lenders, they will pay the mortgage brokers commission themselves. In this case, the borrower will be paying a fee to the broker.

This information is extremely powerful to you as a homebuyer and even as a current homeowner. As always, please contact a Dominion Lending Centres Mortgage Professional if you wish to discuss any of these options further!

CHRIS CABEL

Dominion Lending Centres – Accredited Mortgage Professional

31 Jan

HOME BUYERS’ PLAN

General

Posted by: Derek Vandall

The Home Buyers’ Plan is a Canada wide program that allows individuals to withdraw a certain amount from their Registered Retirement Savings Plans (RRSPs) for the purposes of qualifying for a home or if you are planning to help a related person who may have a disability.

Currently, the maximum amount an individual can withdraw from their RRSPs under the Home Buyers’ Plan is $35,000. It just means the most you can withdraw tax-free is $35,000 for the purchase or construction of a home.

There are 2 main conditions you will need to meet if you plan on using the Home Buyers Plan for the purchase of your own home:

1.) First-Time Home Buyer

You are considered a first-time home buyer if, in the four-year period, you did not occupy a home that you or your current spouse or common-law partner owned.

The four-year period begins on January 1st of the fourth year before the year you withdraw funds.

Example- if you withdraw funds March 19, 2019, the four-year period begins on January 1, 2015, and ends on February 28, 2019.

2.) Are You Buying or Building a Qualifying Home

You are if you buy or build it, or are considered as buying or building it, before October 1st of the year after the year of the withdraw. Also, that you buy or build it, alone or with one or more individuals.

The RRSPs you withdraw will also need to be repaid. Repayment starts the second year after the year you withdrew funds for the Home Buyers Plan. You will have 15 years to completely repay the entire amount you withdrew and the amount is calculated by the Canadian Revenue Agency and posted to your CRA Account.

To find out more information on how to withdraw funds as well as determine whether or not you qualify, you can visit their site here.

RYAN OAKE

Dominion Lending Centres – Accredited Mortgage Professional