5 Things NOT to do before closing on your new home

1. Change your job.  You were qualified for your mortgage financing based on your income, years at the job and the understanding that you were there for a while. Changing jobs should be put off until after possession day.
2 – Changing your name. Make sure that your identification and your name match. Do not change from John Smith to J. Michael Smith during this critical time.
3- Make any large purchases. Put off buying new furniture for your future home or a new car. The debt ratios were calculated based on your present debt obligations. It can also be bad to pay off any existing accounts. Some lenders want you to have some cash in the bank for a rainy day. They may have given you an approval with this in mind.

4- Switch banks or move money to a different institution. This may not sound like much but a paper trail to show your down payment source and the automatic withdrawal forms for your mortgage payments are all set up. You can change them after the house sale closes.
5 – Don’t miss any payments on credit cards or loans you already have. Lenders often pull another credit report a few days before closing. If you’ve missed a payment on your Visa card, it could mess up your home purchase big time.
Finally, check with your Dominion Lending Centres mortgage professional if you are unclear about anything between the time when you receive your approval and possession day.

David Cooke

Dominion Lending Centres – Accredited Mortgage Professional
David is part of DLC Jencor Mortgages in Calgary, AB.

Get to know Title Insurance

Are you officially Mortgage Free? CONGRATULATIONS! That is a monumental milestone to achieve!

With that significant accomplishment, you should look at obtaining a Title Insurance Policy. What most people don’t realize is that when you had a mortgage, the lender will likely have had this in place for you. Once your mortgage is paid out in full the insurance is no longer in place. It is crucial that once your final payment is made that you, as a home owner, now get a policy.

What is Title Insurance? Good question!

Title Insurance protects you, the homeowner. It’s not like traditional insurance in that it does not ONLY cover things that might happen, but it also covers things such as property defects that have already occurred in the past.

A title insurance homeowner policy will cover:

• Forgery – If someone forges your signature on a registered document that entitles them to sell or mortgage your home.
• Duty To Defend – If you experience title risk, the policy will cover the legal fees and costs associated with restoring and protecting your title.
• Lack of Building Permits – Prior to purchasing the home, if there were renovations performed without the proper building permits you may be required to remove or fix the structure.
• Fraud – If someone fraudulently transfers your property without your consent.
• Encroachments – If a structure built by a previous owner is outside the property boundaries, or if a neighbour builds a structure that is on your property.

Title Insurance offers you peace of mind if anything should happen to your property once you are the owner. It is relatively low cost, on average coming in at $200-$400. It is a one-time purchase and does not need to be purchased each year. More than reasonable right?

If you are still on the fence about obtaining title insurance, we’ve recently had a client who experienced title fraud:

A woman went to her bank to make a payment on a line of credit that was secured by a mortgage on her property. When she arrived, she was told that her $30,000 line of credit had been paid in full and that according to the lawyer who sent the funds, her house had been sold.

This left her quite perplexed, so she followed up with the land registry office. They confirmed the sale of the property for $350,000 and that a new mortgage was registered on the property for $325,000. The woman was stunned to find out that she had been the victim of a title fraud scheme—and that the fraudsters had collected $350,000 on the deal.

Thankfully, in the above case the woman was covered by a Title Insurance Policy which fully covered all her legal fees to remove the mortgage from title and rightfully transfer it back to her. Having the coverage saved her approximately $12,000 in legal fees, time, and stress.

Your home is a sizable investment and one you worked hard to purchase! Title Insurance can protect you and your property should there be anything that comes up. For the $200-$400 it costs, we feel that’s a low-price tag for peace of mind. Ready to get a quote? Let us help you by contacting Dominion Lending Centres mortgage professional to set up your Title Insurance Policy!

Geoff Lee

Dominion Lending Centres – Accredited Mortgage Professional
Geoff is part of DLC GLM Mortgage Group based in Vancouver, BC.

5 Reasons why Realtors want you to have a Pre-approval

You’ve decided that you want to buy a home and you call up a realtor to show you a listing and the first question they ask is “ How much are you pre-approved for?” Many realtors will refuse to book home viewings until they can confirm that you are pre-approved. Why?

1- It shows that you are seriously committed to a home purchase. I have been told stories by realtors of people booking a series of homes to see and then being dropped off at McDonald’s to be picked up by another realtor to see some more homes.

2.- People have an idea of how much home they can afford. Sometimes this amount is way off. Lines of credit, installment plans, alimony or child support payments or high condo fees can make the amount of house you can afford a lot less than you would expect.

3- Surprises on your credit report. Many times home buyers haven’t checked their credit report before house hunting. An unpaid bill or a dispute with a contractor may result in a lien or collection showing on your credit. There may even be something from a person with a similar name. It’s important to make sure your credit is clean and that it is yours and not someone else’s.

4 –Income issues. A lot of people run out to get a new home when they receive a promotion at work. If the promotion includes a pay hike, is it salary or are they relying on overtime? Mortgage rules demand a two-year history for commission income, overtime or self-employed income. This also can curtail how much you qualify for.

5A – Credibility of the realtor.  When a realtor makes an offer on a home for you, they are not only investing their time and the listing agent’s time but their reputation. Making offers that will not result in a firm sale hurts their reputation in the industry. Trustworthiness and reputation are very important to realtors as they are guiding you in the largest purchase you make in your lifetime.

5B- Negotiating Strength.  In a situation where there are competing offers on a property, the sellers agent will encourage the sells to take the offer that is backed by a pre-approval over another offer that does not have a pre-approval to support it. Your chances of getting your dream home are greatly increased with it.

My one recommendation is that you take the time to contact your favourite Dominion Lending Centres mortgage broker and get pre-approved. It will save everyone time and help avoid disappointment for everyone.

David Cooke

Dominion Lending Centres – Accredited Mortgage Professional

Source of Funds

Over the past several years, investigators have been working on an ongoing investigation relating to criminal money laundering in Canada. Looking at B.C. alone, billions of dollars have been laundered through B.C. casinos by criminal organizations and parked in high end B.C. real estate over the past decade or more.

With government citing limited resources and a lack of funds available to conduct a proper investigation, criminals have been able to manipulate and take advantage of the Canadian and B.C. legal system for years and it is now finally coming to light the impact it has had on our economy, most notably our real estate market.

One of the measures the government implemented several years ago to help crack down on this was sourcing the funds people were using for the down payment on their home purchases. Lenders are required by the federal and provincial government to collect a minimum of 30 days of transaction history for every bank account where money comes from to help complete a purchase on real estate. Most lenders are still requiring 90 days and they are also required, by the government, to source any large deposits above $1,000 that are unrelated to employment income.

If you have e-transfers and transfers between your own accounts within the 90 day period, the lender will require a 90 day history of the account in which funds were deposited from. That means, if you have a savings account reserved just for a down payment, but you put $1,000 a month in there from your chequing account, brought in $5,000 from a TFSA, and put in $3,000 in cash all before you wrote an offer on a home, a lender is going to want to see 90 day history of your savings, your chequing, and your TFSA account as well as an explanation on where the $3,000 cash came from.

Most people find this frustrating and rightfully so, you are handing over personal information over a long period of time. However, due to the extreme affect money laundering has had on our economy, these rules are likely not going anywhere. When preparing your down payment, be prepared that the lender will be required to collect a 90 day history of every account you have where money is coming from to help cover your down payment. This is not because the lender feels like it, this is because the government regulators who review the loans the banks give out need to see that the lender verified the money was legitimate.

Also, with your T4’s and Notice of Assessments usually going into lenders, if you are just starting a new job and were making $20,000 a year while in school and now have $150,000 in savings for your down payment a year out of school, the lender is allowed to ask for a full year history because your income does not justify the savings you have.

Be prepared! Lenders are required to source down payment funds and with more and more news coming out every month on money laundering, the rules may only get more rigid. If you have any questions, contact a Dominion Lending Centres mortgage professional near you.

Ryan Oake

Dominion Lending Centres – Accredited Mortgage Professional

Source of Funds

Over the past several years, investigators have been working on an ongoing investigation relating to criminal money laundering in Canada. Looking at B.C. alone, billions of dollars have been laundered through B.C. casinos by criminal organizations and parked in high end B.C. real estate over the past decade or more.

With government citing limited resources and a lack of funds available to conduct a proper investigation, criminals have been able to manipulate and take advantage of the Canadian and B.C. legal system for years and it is now finally coming to light the impact it has had on our economy, most notably our real estate market.

One of the measures the government implemented several years ago to help crack down on this was sourcing the funds people were using for the down payment on their home purchases. Lenders are required by the federal and provincial government to collect a minimum of 30 days of transaction history for every bank account where money comes from to help complete a purchase on real estate. Most lenders are still requiring 90 days and they are also required, by the government, to source any large deposits above $1,000 that are unrelated to employment income.

If you have e-transfers and transfers between your own accounts within the 90 day period, the lender will require a 90 day history of the account in which funds were deposited from. That means, if you have a savings account reserved just for a down payment, but you put $1,000 a month in there from your chequing account, brought in $5,000 from a TFSA, and put in $3,000 in cash all before you wrote an offer on a home, a lender is going to want to see 90 day history of your savings, your chequing, and your TFSA account as well as an explanation on where the $3,000 cash came from.

Most people find this frustrating and rightfully so, you are handing over personal information over a long period of time. However, due to the extreme affect money laundering has had on our economy, these rules are likely not going anywhere. When preparing your down payment, be prepared that the lender will be required to collect a 90 day history of every account you have where money is coming from to help cover your down payment. This is not because the lender feels like it, this is because the government regulators who review the loans the banks give out need to see that the lender verified the money was legitimate.

Also, with your T4’s and Notice of Assessments usually going into lenders, if you are just starting a new job and were making $20,000 a year while in school and now have $150,000 in savings for your down payment a year out of school, the lender is allowed to ask for a full year history because your income does not justify the savings you have.

Be prepared! Lenders are required to source down payment funds and with more and more news coming out every month on money laundering, the rules may only get more rigid. If you have any questions, contact a Dominion Lending Centres mortgage professional near you.

Ryan Oake

Dominion Lending Centres – Accredited Mortgage Professional
Ryan is part of DLC Producers West Financial based in Langley, BC.

A bank that may not be familiar to you

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 are 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 an 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 have always provided pre-approval 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
David is part of DLC Jencor Mortgages in Calgary, AB.

A bank that may not be familiar to you

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 are 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 an 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 have always provided pre-approval 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
David is part of DLC Jencor Mortgages in Calgary, AB.

Nuts & Bolts of the Federal 2019 Budget | What you REALLY need to know!

On March 19, the Federal Government announced the official 2019 budget. One major topic on the discussion table (and one we were all holding our breath for) was the discussion of affordable housing in Canada. So just what happened on “Budget Day?” Here are the highlights of the 2019 Federal Budget:

MORTGAGE INDUSTRY RELATED:

CMHC First Time Home Buyers Incentive Plan

-This would give first time home buyers the ability to share the cost of buying a home with CMHC
-For existing homes – the incentive would provide up to 5% (funding/equity sharing) of the PURCHASE PRICE
-For newly constructed homes the incentive would provide up to 10% (funding/equity sharing) of the PURCHASE PRICE
-Funding/Equity sharing means that CMHC would cover a percentage of the purchase price

Example:

• 400K purchase price, 5% down payment (20K), AND 5% CHMC shared equity mortgage (20K), the size of the insured mortgage would be reduced from 380K down to 360K, which would lower the monthly payment amount for the first time home buyer

To qualify for the program:

• 120K max household income
• Cannot borrow more than 4x their annual household income – making max purchase price approx. 505K
• 100k household income would mean max 400K mortgage in order to use this program.

HOME BUYERS PLAN RRSP INCREASE

An increase of the previous $25,000 for RRSP withdrawal amount through the Home Buyers Plan to $35,000
These were the only two key changes that came out of the Federal Budget (so far). It provides minimal assistance for First Time Home Buyers, especially in a market like Vancouver and the Fraser Valley, who have home prices well above the 505k purchase price limit. However, it could provide assistance to those looking to purchase condos or townhomes ore in more rural areas. One area that will remain the same for the mortgage industry is the continued B-20 stress testing measures (which have recently come under fire)

The predicted start time is Fall 2019 for these guidelines. We will keep you updated on any new additions or changes as the information becomes available. If you have any mortgage related questions, contact a Dominion Lending Centres mortgage professional near you.

Geoff Lee

Dominion Lending Centres – Accredited Mortgage Professional
Geoff is part of DLC GLM Mortgage Group based in Vancouver, BC.

3 “Rules of Lending” – What Banks look at when you apply for a Mortgage

Buying a home is usually the biggest purchase most people make and there are a lot of factors to consider. Our job is to provide you with a much information (as you can handle!!) so you make the best decision based your particular situation.

The 3 “rules of lending” focus on determining the maximum size of mortgage that can be supported by your provable (what you paid taxes on) income.

You need to consider two affordability ratios:

Rule #1 – GROSS DEBT SERVICE (GDS) Your monthly housing costs are generally not supposed to exceed 36-39% of your gross monthly income. Housing costs include – your monthly mortgage payment, property taxes and heating. If you are buying a condo/townhouse, the GDS will also include ½ of your strata fees. The total of these monthly payments divided by your “provable” gross monthly income will give you your Gross Debt Service.
Mortgage payments + Property taxes + Heating Costs + 50% of condo fees / Annual Income

Rule #2 – TOTAL DEBT SERVICE (TDS) Your entire monthly debt payments should not exceed 42-44% of your gross monthly income This includes your housing costs (GDS above) PLUS all other monthly payments (car payments, credit cards, Line of Credit, additional financing, etc.). The total of all your monthly debts divided by your “provable” gross monthly income will give you your Total Debt Service.
Housing expenses (see GDS) + Credit card interest + Car payments + Loan expenses / Annual Income

What about the other 56% of your income?? This is considered to be used up by ‘normal’ monthly expenses including: taxes, food, medical, transportation, entertainment etc.)

Rule #3 – CREDIT RATING Everyone who will be on title to the property will need to have their credit run. Your credit bureau is important because it shows the lenders how well (or not) you have handled credit in the past. This gives them an indication of how you will handle credit in the future, and will you be a good risk and make your mortgage payments as promised. If you handle credit well, you will have a high Credit Score and get the best interest rates from the banks/lenders. If you have not handled credit well, and have a poor credit score, you will either be charged a higher interest rate or your application will be declined.

If you have any questions, contact a Dominion Lending Centres mortgage professional near you.

 

Kelly Hudson

Dominion Lending Centres – Accredited Mortgage Professional
Kelly is part of DLC Canadian Mortgage Experts based in Richmond, BC.

How do you know when you’re ready to buy house?

Here are 7 signs that you’re ready to buy your first home…

1. You have saved enough for the down payment
Most people think the biggest hurdle to overcome when buying a house is saving up a down payment. You normally need to save at least 5% of the purchase price as a down payment. This down payment shows that you have some of your own money invested in the house which gives the lender some comfort that you will protect your investment. Having the ability to save money is a great first sign you might be a future homeowner.
2. You have good credit
Having perfect credit isn’t a requirement to get approved for a mortgage in Canada. However, if your credit score is at least 650, your odds of getting approved are much higher. If your score is at least 620, you may qualify for a mortgage with as low as a 5% down payment. Lenders look at more than just your credit score. If you have not missed a single missed payment in the past 12 months this is a great sign that you’re more likely to qualify.
3. You can afford the mortgage payment
The amount of home you qualify for is tied to your debt to income ratio. It’s typically recommended to keep you spend no higher than 35% of your monthly income on housing related expense (Mortage, property tax and heating). If you’re renting a home, chances are that your mortgage payment will be close to what you’re paying in rent. Use our calculator to find out what your mortgage payment will be and how much you can afford. How much house can you afford calculator
4. You have steady employment
If you have been in the same job with the same employer for at least 1 year, you’re financially stable enough to have a mortgage. Having steady employment history is a good indicator that you’re ready to buy a house.
5. You don’t plan on moving to a new city anytime soon
We all dream of living somewhere different. Buying a house is better financially than renting, but only if you plan on staying put for 3 years. If you don’t have any immediate plans on changing cities, then buying is a great option for you. There’s a chance that home you buy today will increase in value in a few years. Buying a home is a great investment.
6. You have kids, or kids on the way
If you already have children, you most likely want to settle down into a nice neighborhood. Kids don’t like moving away from their school and friends, so buying a home makes the most logical sense. If you don’t have kids this doesn’t mean you’re not ready to buy a home, not at all.
7. You’re tired of renting
Renting is financially exhausting. You are basically paying someone else mortgage payment. You’re hurting your bank account and helping theirs. You might want to spruce your place up but as a renter, what’s the point. If you feel the need/want to upgrade your home, now is the time to buy. You will feel proud and a sense of accomplishment taking care of and improving your home. So, get your DIY skills ready.

If you think a few of these describe where you are at in life, contact a Dominion Lending Centres mortgage broker who can put you on a path to home ownership.

Chris Cabel

Dominion Lending Centres – Accredited Mortgage Professional