Don't Be Affraid To Buy A Home. Use This Information To Help

Article Source: http://bestmortgagebrokers.net/

Buying a home or other piece of real estate will be one of the most significant decisions of your life, so it's vital that you go into this process with a solid understanding of what is involved. This article will lay out the basics and give you good advice on how to proceed.

Make sure that the offer you make on your desired real estate is attractive to the seller. Confer with your realtor and lawyer so you have a realistic approach in the offer you make. If your offer is targeted to the sellers wishes, they will not hesitate to move forward with your deal.

When considering a piece of real estate you feel you may want to buy, talk to the owners of neighboring properties if you can. Realtors, mortgage providers, and sellers have their own interests and biases when they tell you about the neighborhood. The people who live and work right next to your potential property have first-hand experience with the area. Pick their brains if you can.

Oftentimes, homes that need major improvements are offered at lower prices. This lets you pocket some extra cash up front, and then you can make the repairs on your schedule. You will have the ability to renovate the house to your exact tastes while you accumulate equity along the way. Do not focus on what is wrong with the house; instead, focus on what is good. Behind the outdated kitchen and the peeling paint could be the home of your dreams.

You don't have to let the idea of becoming a property owner intimidate you. While the process may seem opaque and confusing at first, some basic education can clear up much of your confusion. By applying the ideas you've learned in this article, buying real estate can be a painless and rewarding process.

Why the Bank of Canada has an inflation and interest rate dilemma

Article Source: http://bestmortgagebrokers.net/

Have you checked out the price of steak lately? I did last week in preparation for the first family  barbecue of the season. What a shock! I hope everyone liked the chicken I bought instead.

  There’s no getting around it — prices are heading up. Inflation, which has been a non-issue since    the crash of 2008, has suddenly reared its head again. Last month Statistics Canada reported that  the Consumer Price Index rose 2 per cent in April on an annualized basis. That was the biggest      jump in two years.

  Gas prices, which everyone has complained about, were up by 6.6 per cent year-over-year. But the biggest increase, which may have gone unnoticed because many families are on monthly equal billing plans, was in the cost of the natural gas that heats many of our homes. It was up a whopping 26 per cent over last year.

As for those steaks, they’re 4.5 per cent more expensive than they were a year ago. And they weren’t cheap then.

The Bank of Canada didn’t expect our inflation rate to hit its two per cent target until early 2015 so we’re a year ahead of schedule. Higher energy prices and a lower loonie, which raises the cost of imports, are the main culprits. We’re not likely to see any relief soon. If anything, the loonie is likely to drift lower which will make everything we import even more expensive.

Related: Why we’re stuck in a low interest rate trap

The rapid return of inflation has left the new Bank of Canada Governor Stephen Poloz caught between a rock and a hard place. Although he won’t say so publicly — no central banker would — he’d like to see our dollar fall even lower. That would give a boost to exporters by making our goods cheaper in international markets. Right now our manufacturers need all the help they can get; exports fell 1.8 per cent in April leaving Canada with an unexpected trade deficit of $638 million.

But if core inflation moves past the official two per cent target, Mr. Poloz and his colleagues might have to raise interest rates or risk losing credibility. That would have the effect of pushing up the value of the loonie, which is the last thing the Bank, or the federal government, wants right now.

For now, the Bank is dancing, trying to convey the impression that the inflationary spike is transitory, citing “the temporary effects of higher energy prices and exchange rate pass-through.” Although most economists are skeptical, Mr. Poloz continues to maintain there is a risk that we could sink back into the disinflation scenario that dominated the years immediately following the crash.

To give credence to this, we’re getting some trash talk about the state of the economy (“weaker than anticipated” said the statement released last week). And we’re told “the downside risks to the inflation outlook (are) as important as before.”

That kind of bank-speak is designed to give the impression that the next move on interest rates could just as easily be down as up (the current target rate is one per cent). That uncertainty helps maintain downward pressure on the loonie, which is what the Bank privately wants, even if it can’t come out and say so. Our dollar fell by about a quarter of a cent after the Wednesday morning announcement, so the strategy seems to be working for now.

But if inflation continues to move higher at the rate we saw last month, it could be crunch time for the Bank before the snow flies again.

Internal report says Parks Canada buildings in worse shape than claimed

OTTAWA — Parks Canada’s crumbling forts, historical houses and other heritage structures are in much poorer shape than the agency estimates.

That’s the finding of an independent consultant asked to review a comprehensive inventory created by Parks Canada to determine how much repair work is needed for its varied infrastructure across the country.

The agency’s 2012 inventory found that 47 per cent of all its assets — from dams, bridges and roads, to old stone forts — are in poor or very poor condition.

But Opus International Consultants Ltd. said its own sampling of hundreds of assets pushed that overall level to 53 per cent.

And so-called cultural assets — the historical houses, fortifications, locks and other heritage gems from Canada’s past — are in even worse shape.

Opus estimates 61 per cent of these 2,000 structures are in poor or very poor shape, compared with Parks Canada’s more rosy assessment of just 33 per cent.

“Results indicate that at the portfolio level the value of (Parks Canada) assets in poor condition has increased from condition reported in the 2012 National Asset Review,” says the Opus report, which cost taxpayers $316,000.

A copy of the Dec. 16, 2013, document was obtained by The Canadian Press under the Access to Information Act.

Parks Canada has come under fire in recent years for weak management of its real-estate portfolio, which includes historic canals and archeological sites, in addition to campgrounds, access roads and visitor centres.

An internal evaluation in 2009 slammed officials for failing to maintain a reliable inventory of hundreds of buildings and other structures, estimated to be worth some $15 billion today.

In response, Parks Canada undertook a thorough review of all its assets in 2012 to set a baseline, estimating there was $2.9 billion worth of deferred repairs.

More than half the deferred work was earmarked for waterways, highways and bridges — so-called high-risk assets — but Opus found these structures were in better condition than Parks Canada estimated.

Instead, irreplaceable cultural assets were found to be the most neglected, with almost two-thirds requiring about $230 million worth of repairs and maintenance work.

A spokeswoman for Parks Canada said the agency is still reviewing the Opus report, which she said largely backs the inventory estimates about the cost of repair work.

“Parks Canada has invested an average of $119 million annually over the last 10 years on the recapitalization of its infrastructure,” Genevieve Patenaude said in an email.

“Investments include incremental capital resources announced by the government, the most recent of which was $19 million announced in Budget 2013 to address critical improvements to national park highways and bridges.”

Parks Canada, which operates more than 200 national parks, historic sites and marine conservation areas, has been hit hard since 2012 with budget cuts. The agency lost some 587 staff in 2012-2013, for example, or about 13 per cent of its workforce.

At the same time, 20.6 million people visited its sites in 2012-2013, a three per cent increase and the first rise in visitor numbers in four years.

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

Hundreds of Canadian Credit Cards Hacked By Infected Terminals, Firm Warns

A new strain of computer malware infecting payment card terminals in restaurant and gas station has compromised nearly 700 credit cards in Canada, a computer security firm says.

The viral code, JackPOS, infects point-of-sales terminals, a security breach similar to other highly publicized recent cases that struck victims such as the Target retailing chain or the White Lodging hotel management firm.

According to a map released Monday by the California security firm IntelCrawler LLC, JackPOS stole data from 400 cards in Vancouver and from 280 other cards at a location in Longueuil, Que., south of Montreal.

IntelCrawler said the infection appeared about three weeks ago.

In an e-mail to The Globe and Mail, IntelCrawler CEO Andrew Komarov said the point-of-sales terminals were breached through remote access, by hackers who created a large list of possible passwords (such as POS1, Administrator or 123456789) and then “brute-forced” themselves into the systems.

“It provides them good results, as the security in this sector is surprisingly really very poor,” M. Komarov wrote.

Other countries affected by JackPOS include Brazil, where data for 3,000 cards in Sao Paulo were stolen; India, where 420 cards were compromised in Bangalore; and Spain, where 230 cards were pirated in Madrid.

The two outbreaks in Canada likely happened at a gas station, said Richard Henderson, a Vancouver-based security strategist for Fortinet's Threat Research Labs.

“In Canada we’re lucky that the vast majority of our transactions done day-to-day are with chip-and-PIN, which are much more secure,” he said, adding however that some gas stations’ pumps are still relying on the old magnetic-swipe method that is more vulnerable to hacking.

JackPOS appears to be a variation of a previous malware, Alina. Both are known as RAM scrapers, which capture card data when it is transmitted from the sales terminal to a payment-processing centre.

Mr. Henderson said JackPOS’s key feature is its ability to hide on a machine by pretending to be a version of Java, a programming platform used by some computer applications.

“That’s a really neat obfuscation technique by the malware to make it look like it’s a legitimate piece of software.”

According to a global security report by the anti-cybercrime firm Trustwave, victims of point-of-sale hacking tend to be merchants or franchises who have to outsource their IT work and rely on contractors who access their systems remotely. Weak passwords and remote access make it easier for hackers to breach POS systems.

Most of the breaches can be attributed to three criminal groups, with the data being dumped in Russia, Ukraine or Romania, the Trustwave report said.

The rollout of chip-and-PIN cards in Canada and Europe have made fraud harder. However, the report said cyber-thieves still go after POS targets in hotels and premium retailers, because those businesses attract an international clientele that does not have chip-and-PIN cards.

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

How Higher Rates Might Affect Your Mortgage

Interest rates have been so low for so long that we barely raise an eyebrow about the warnings of higher rates ahead. But long-term interest rates might tick upward this year as the U.S. Federal Reserve cuts back on its economic stimulus which has kept rates low.

For the past five years, the Fed has been buying U.S. Treasury bonds every month by creating the money. It writes a cheque to buy the bonds which has expanded consumer credit, making it cheaper to borrow money.

The impact of the Fed’s action on Canadian homeowners is a gradual increase in long-term mortgage rates. This includes the five-year fixed rate mortgage, now among the most popular. In 2013, 82 per cent of new mortgages were fixed rate terms, according to the Canadian Association of Accredited Mortgage Professionals.

“We expect long-term rates to rise later this year, which will impact five- and10-year mortgage rates in Canada,” said Benjamin Tal, deputy chief economist at CIBC.

A homeowner who chose a five-year mortgage in 2012 would have paid 2.99 per cent. In 2013, the average was 3.29 per cent. That’s why it’s a good idea to take a look at how you might be affected by higher rates, especially if your mortgage will soon come up for renewal.

The idea is to prepare for the worst, says Robert McLister, editor of Canadian Mortgage Trends.

“At the very least, folks should run a couple of rate hike scenarios through a stress test calculator,” McLister said.

The goal is to ensure you can afford payments at that higher rate come maturity time.

“If the results look ominous given your budget, the time to strategize is now, well before maturity,” he said.

Here are some examples:

If you have a $300,000 mortgage at 3.49 per cent and rates rise by two points at renewal time it will cost you $274 more a month. At $400,000 it’s $365 more per month.

Here are some options if your payments are too high for you to carry at renewal:

Refinance: If you have to, extend the amortization. If you’ve worked it down to 20 years, say, increase it. This option generally requires at least 20 per cent equity in the home and it means you’ll be increasing your interest bill over the life of the mortgage. It’s a last-ditch thing to do, McLister says, but “it’s better than defaulting on your mortgage.”

Take a payment vacation: Some mortgages have a skip-a-payment feature. This is an alternative to extending your amortization.

Go shorter: Choose a shorter term with a lower interest rate and payment. That assumes you can handle the risk of rising rates when it comes time to renew again, but if you’re having cash flow problems, there’s a good chance you can’t.

Downsize: A last resort, maybe. But consider selling or renting out a portion of your home.

McLister says that if you find yourself in this position then maybe it’s time to sell and avoid the stress.

“If your budget is stretched, something will happen to stretch it further. It’s Murphy’s Law of borrowing,” he said.

While long-term interest rates may finally head up this year, the Bank of Canada remains committed to keeping short-term rates low. As the spread between long- and short-term interest rates widens, variable rate mortgages become more attractive.

“When long-term rates rise, more and more people look at variable rate mortgages,” said Tal.

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

To Rent Or To Buy? 8 Questions Canadians Should Ask Before Taking The Plunge

TORONTO – Should you rent or buy?

Conventional wisdom suggests it’s a no-brainer – buying real estate is a worthwhile investment with a high return.

Despite record low interest rates, the sky high prices and carrying costs are causing many to rethink the allure of home ownership.

When you factor in the costs of repair, maintenance and other expenses associated with owning a home, Toronto-based financial planner Shannon Simmons argues that renting and putting saved money into another investment – such as a stock portfolio – could earn more in the long run.

Simmons gives new clients a questionnaire asking where they see themselves in 10 years. Many answer “buying a house.”

“Then we meet in person, and they say, ‘Oh I don’t really care if I buy a house, but shouldn’t I want to?’”

Based on advice from financial planners—both independent and those employed by banks—Global News has compiled a list of questions (and some context) to help you decide whether buying or renting is the right move for you.

1) Do you have 10-20 per cent of the home’s purchase price saved for the down payment?

While it’s possible to purchase a home with as little as five per cent down in Canada, big banks prefer first-time home buyers to have an average of 10 per cent.

“If this is the property of your dreams and it’s a really good buy, and you don’t have the full 20 per cent down,” says Royal Bank of Canada’s Rachel Wihby, it may make sense to pay the mortgage loan insurance charged to anyone who doesn’t put 20 per cent or more down on the home.

But “the less you put down, the higher the amount that you’re actually being charged,” Simmons said. That could mean you end up paying an additional $10,000 or more.

2) Do you have another 1.5-5 per cent saved for closing costs?

First-time home buyers don’t have to pay realtor fees, but there’s a number of other closing costs that need to be taken into account.

Depending where you live, land transfer taxes can carry a “significant” price tag, said Farhaneh Haque, director of mortgage advice for TD Canada Trust.

“Lawyer fees, seller/buyer property tax adjustment, appraisal fees, home inspection fees, even just your moving costs,” Haque said.

David Stafford, Scotiabank’s managing director of real estate secured lending, added fire and loss insurance to the list, suggesting $50-$100 per month as a ballpark figure.

Stafford also stressed the value of a building inspection, particularly for first-time home buyers, who may be easily impressed by granite countertops and hardwood floors but miss such other details as an old furnace, a leaky roof, or electrical wiring that’s in need of repair.

“Given you’re contemplating a multi-hundred thousand dollar purchase, a building inspection for a couple hundred dollars isn’t a bad idea.”

3) Can you keep debt servicing below 40 per cent of your income?

Your total debt service ratio measures the percentage of your gross annual income needed to cover housing payments (principal, interest, property taxes and heat, known as “PITH”) plus registered debts like car loans, personal loans and credit cards if applicable. Simmons says this 40 per cent rule is “specifically to please the bank” and is the general eligibility criteria when applying for your mortgage at most financial institutions.

So if you add it all up, housing payments and other debts should be between 35 and 40 per cent of your gross annual income.

4) Are your monthly fixed costs at 50-60 per cent of your after-tax income?

These “fixed costs” include housing and transportation, groceries, toiletries, and “everything you have to pay every month whether you like it or not,” Simmons said.

“When the money hits your bank account, if more than 60 per cent is tied up in things that you can’t get out of every single month, then you have no room after that for spending money which is not a fixed cost – things like going out for dinner, going out with friends, weddings, anything else that’s not just a bill.”

Keeping this ratio under control ensures you have enough money left over to keep saving, and avoid becoming “house poor.”

“Once you buy a house, it’s not like retirement’s done; you still have to save for other things,” Simmons added. “You also want to make sure that you have enough cash flow every single month that you don’t have to go into credit card debt – and that’s what I see: house broke, all the time.”

5) Can you save 1-2 per cent of your income in a “housing maintenance fee” each year?

The top mistake Canadian homebuyers make? Underestimating “significant renovations needed to the property,” according to a recent RBC poll.

Stafford suggests asking your realtor, and getting a home inspection.

“Even if it’s in pretty good shape, most homes of any age, there’s something you’ve got to do every year…and you need to factor that into your cash flows,” he said.

Simmons advises setting aside 1-2 per cent of your after-tax income each year to what she calls a “house maintenance fund” to avoid going into debt.

“When there’s not that extra cash sitting in an emergency fund, if there’s a $10,000 renovation or if you get cockroaches … It has to go on debt, because you’re not going to live in a place with cockroaches,” she said. “That can take a long time to pay off if you don’t have flexibility with your cash flow.”

6) Do you plan to stay in your home for at least three years?

Haque said TD advises clients to think about their life in three- to five-year chunks when considering purchasing a home.

A young couple buying a condo, for example, should consider how soon they’ll need a bigger space if they want children in the near future.

Wihby suggests regarding a home as a long-term investment – it might not be worth it if you buy a home and sell it a year later.

7) Is your job stable?

Are you planning to stay in your field? What would happen if your income decreased?

These are some of the questions RBC planners ask clients to determine how monthly payments and lifestyle would change as a result of job fluctuations.

“So you need to think of things like, will you be on a single income household instead of two?” Wihby said. “Maybe that means you won’t be taking those trips you thought you’d be taking or maybe you won’t be going to the gym as often.”

8) Are you emotionally ready to own a home?

It may sound hokey. But this is a big lifestyle leap to take.

“A lot of people heard that it was almost a no-brainer to go into property, especially when we saw property prices rising like we did in the past,” Wihby said. “But I think a lot of people got into purchasing a home before they were ready emotionally.”

The impact of what Stafford calls the “single biggest financial commitment for most people” includes the mental shock of going from a tenant to a homeowner.

“When you’re a tenant, the month that cheque goes out, it clears your account, and then you don’t think about it for the next 30 days,” Haque explained. “But when you’re a homeowner, you have those multiple payments like home insurance, maintenance fee, utilities, property taxes, that you have to account for on an ongoing basis. And sometimes it’s very much a shock to your system.”

Simmons emphasizes that homeownership is a personal choice, and isn’t the imperative it was 30 or 40 years ago.

“I know a lot of professionals who just don’t want to be bothered cutting the grass on Saturday, and doing the gardening. … They would much prefer to rent and save a bunch of money, so they can travel every weekend,” she said. “If you’re not actually going to enjoy the house, what’s the point in buying it?”

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

Ten Top Tips For Getting An Overseas Mortgage

Geoffrey Simmonds of Connect Overseas provides some essential advice for anyone looking to get a mortgage abroad.

1. Get finance pre-approved. If you intend to borrow money to help you buy a property make sure you get the finance pre-approved before you commit to the purchase. If you pay a holding deposit to a property agent it is very unlikely you will get this money back if you are unable to raise the finance, so it is important you understand how much you can borrow and on what terms as early as possible. Knowing how much you can borrow before looking at properties will also help you understand exactly what you can afford and you can tailor your property search accordingly, saving you both time and effort.

2. Use a specialist independent mortgage broker. There are various ways you may be able to raise the finance you need in order buy a property. Using a independent mortgage service which specialises in both foreign and domestic property finance, may give you a wider spectrum of options that will enable you to keep the costs of finance down. Raising equity from your UK home or securing finance from a bank in the same country as the property are all options which should be considered. An independent mortgage specialist can help you understand all these options and help you to make an informed decision on which option is right for you.

3. Choose a mortgage that matches your requirements. Although it makes sense to use a mortgage provider that offers the cheapest product in terms of interest rate and mortgage fees, you should also consider other benefits that may be important to you. Variable rate mortgages are usually cheaper than those offered on a fixed rate, however fixed rate deals do give you the added comfort of knowing exactly what your mortgage payments will be every month, which is particularly useful if you are working within a budget.

If you are looking to buy a property as investment or intending to sell it within a few years you should also understand if any early repayment charges apply as these can be as much as 6% of the loan amount. Having a mortgage on a interest only basis instead of repayment may also help reduce your monthly costs, but this option should only be considered if you know exactly how you intend to repay the mortgage, as you will not be repaying any of your outstanding loan balance through your monthly mortgage payments. Another thing to consider is the standard of service offered by the mortgage provider, which is particularly important if you have a time commitment when buying a property. Using a mortgage provider with a good track record can mean you get a mortgage offer within weeks not months.

4. Be prepared to visit the bank. Some mortgage providers will insist that you visit them in person in order to sign the mortgage offer. This is of particular importance if you are buying a property located a great distance from where you live. Sometimes mortgage providers do have branches based within the UK meaning this process can be carried out closer to home.

5. Remember mortgage repayments are not always in pounds.Sometimes a range of currency choices are made available by international mortgage lenders when it comes to repaying a mortgage. Typically however property finance is expected to be repaid in the currency typically associated with that country, so for example in France the mortgage provider would expect your monthly repayments to be made in Euros. A currency specialist service may prove cheaper than your high street bank and therefore should be considered to avoid paying unnecessary fees.

6. Seek independent legal advice. An independent lawyer or solicitor means that they represent you and only you and have no interest in helping the agent sell their property. Impartial advice is important to ensure there is no conflict in interest ,which can occur if the legal representation acts for both the seller and the buyer.

Issues such as nearby upcoming developments or properties built illegally on land registered as agricultural (Spain is a good example of this) should be picked up by the lawyer early on to help prevent you from buying a “problem property”. Although a mortgage provider will carry out a basic property valuation as part of their process this is for their purposes and not yours, it is therefore important you do your own research.

7. Translate everything to English. Buying a property abroad can be a big financial commitment, it is therefore of up most importance that you understand every document and contract before signing them. Most mortgage providers will draw up a mortgage offer in the language associated to where you are buying and you should therefore get it professionally translated in to clear and simple terms that you understand.

8. Be mindful of currency fluctuations. Exchange rates can drastically effect the value of your property and should be considered not only when you look to buy a property but also when you look to sell it. A 5 to 10 percent drop in value of sterling against the currency where the property is located may push the property out of your price range or cause you to rethink the timing of when you choose to buy or sell. Currency rates are constantly changing and the advice from a specialist can help you understand what way the market is expected to move and secure a good exchange rate.

9. Buy to let finance is assessed differently. If you are looking to buy an overseas property as an investment with the intention of letting it out. An international mortgage provider will lend to you based on your disposal income and will not account for any monies you may earn by letting out the property, which is different to how mortgage providers assess applicants in the UK. Typically mortgage lenders abroad will expect you to have at least 35 - 45 percent disposable income left after your current credit commitments and new mortgage for your overseas property have been taken into account.

10. Be prepared not to refinance. Although many international lenders are happy to fund property purchases to foreigners a number of them do not offer remortgage or equity release options. It is therefore important that you are comfortable with any property finance terms you secure at the outset and that you do not stretch yourself financially. A common mistake made by investors is to buy a property outright using their own money with the intention of taking out mortgage finance at a later date, only to find that such an option is not available at that time.

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