Banks and other lending institutions want to know the “current” market value of your home before they consider loaning money on the property. An appraiser checks the general condition of your home and compares your home to other similar homes which have recently sold in order to define a comparable market value for your home.
Here are 7½ tips that can help you get top current market value.
Short version – Prepare your home as if it was going to be sold!!
Long version… If a picture is worth a thousand words, think what kind of story the pictures from your home are telling?
In the world of mortgages, lenders seldom set foot on the property before making a loan decision.
Instead, they rely on their trusted list of approved appraisers. All a lender usually gets is the appraiser’s pictures of your property and their comments about how your home was appraised.
Tip #1 – Clean up. The appraiser is basing the value of your property on how good it looks. Before the appraisal, prepare your home as if you’re selling it. Clean and declutter every room, vacuum, and scrub. Do whatever you can to make your home as presentable as possible.
Tip #2 – Pay attention to curb appeal. An appraisal is all about first impressions. And the very first one the appraiser gets is when they walk up to your property. Spend an hour or two making sure the outside of your house, townhouse or condo is warm and welcoming.
Tip #3 – The appraiser must be able to see every room of the home, no exceptions. Refusal to allow an appraiser to see any room will be noted in the appraisal can be a game stopper. There are times when it is not appropriate for the appraiser to take pictures of certain things and appraisers and lenders understand this, but refusal to grant access could kill your deal.
Tip #4 – Make a list of upgrades and features. It’s important that the appraiser is made aware of any updates you’ve made, especially those which are hidden, like new plumbing and electrical. If possible, give the appraiser this list. That way they have a reference as to what has been updated and how recent or professional that work was done.
Tip #5 – If you need to spend to update, be prudent. Many people think “bathrooms and kitchens” are the answer for getting high prices on home value. They aren’t. First, consider that kitchen and bathroom remodels can be some of the priciest reno costs. For that reason, it may be more prudent to spend a bit of money, for just a bit of updating. Paint, new flooring, new light or plumbing fixtures don’t break the bank, but can provide a dramatic impact and improve your home’s value.
Tip #6 – You know your neighbourhood better than your appraiser does. Find out what similar homes in your neighbourhood have sold for. Your property might look like one down the street, but if you believe the value of your property is worth more, let them know why.
Tip #7 – Lock up your pets. I’m sure most appraisers like pets, but some may be put off by your cat rubbing against their leg or the dog barking or following them around.
Tip #7½ – One last tip – don’t annoy the appraiser with questions and comments and follow them around. Instead, simply be prepared to answer any of their questions and, if you do have concerns or queries, wait until they’ve completed their viewing of the property, then ask.
Mortgages are complicated, but they don’t have to be… Blog post written by my colleague Kelly Hudson
You may have noticed that there are many different terms for those of us who work in the mortgage industry besides “broker”.
Mortgage: specialist, expert, advisor, associate, officer, etc. I just want to clear up some potential confusion with all these monikers.
There are 2 main categories that these fall in to. Those that work for a bank to sell mortgage products available from that bank.
The other is for those like myself that work within a mortgage brokerage that has no direct affiliation with any one bank.
Each mortgage brokerage has agreements in place with multiple banks and mortgage lenders to be able to submit mortgage applications for consideration.
There are of course obvious differences between these but some may not be quite so apparent.
All those working in the mortgage brokerage industry must be licensed by a provincial government agency, in Saskatchewan it’s called the Financial & Consumer Affairs Authority (FCAA).
While every province has their own set of guidelines, there are 3 different types of licenses offered by FCAA: mortgage associate, mortgage broker & principal broker.
The mortgage associate and broker are very similar as both advertise themselves to obtain clientele, work directly with the clients, mortgage lenders, mortgage insurers, realtors and lawyers in the service of their clients. The key difference is that an associate must work under a supervising mortgage broker to ensure they remain in compliance with FCAA regulations.
Each mortgage brokerage will have a principal broker (aka: broker of record) that oversees the operations of the brokerage as well as all the associates and brokers within the brokerage.
Most all those working in the mortgage broker industry are commission based. Our income is derived from the mortgage lenders that we submit mortgage applications to.
In order to apply for a license as a mortgage associate, applicants must complete an approved mortgage associate education course and provide a current criminal record check along with the required application documents.
Application for a license as a mortgage broker are the same as for an associate with the addition of a previous experience requirement.
The applicant must have been licensed as a mortgage associate for at least 24 of the previous 36 months.
In addition to annual applications for renewal, licensees must also:
Bank Branch Mortgage
Those that work in mortgage lending for a bank are normally paid by the hour or are salaried and may have a performance bonus structure.
Entry level positions do not require any education beyond high school. Training is provided on the job by the employer with supervision by the branch manager and more experienced staff.
There are no licensing requirements by any provincial or federal governing body and errors and omissions insurance is not required.
Many banks have mobile mortgage staff that may or may not conduct business within the branch and are often paid on a commission basis rather than hourly or salary.
If you have any questions, contact your Dominion Lending Centres Mortgage Broker near you.
Written by Kevin Carlson, Accredited Mortgage Professional
A number of times I have had people who wonder why they need to provide so much documentation when it comes to arranging a mortgage. Besides an employment letter, you are usually asked to provide a pay stub and your most recent Notice of Assessment (NOA) to prove income. “Why do they need all 3, doesn’t the employment letter satisfy this condition?” I am often asked. No, is the short answer.
A pay stub shows your current income and shows how much you have made year to date. This will also show overtime or any special allowances you receive such as a northern living allowance. This confirms or sometimes does not agree with your employment letter. The employment letter shows what you are going to make this year and your NOA shows what you made in the past. It also shows that you do not owe taxes to the government. This is important to lenders because they don’t want the government to put a lien on your property ahead of their mortgage claim on title.
Your realtor will provide an offer to purchase and sale agreement, so why do they ask for a MLS listing sheet? While the purchase agreement shows the financial agreement and what is included with the house, the MLS describes the size of the house and lot as well as the amount paid for municipal taxes and the size of each room. This allows the lender to establish whether you have a fair market price for your new home.
Finally, a lender will ask for a 90-day bank statement to show your down payment money. The reason they ask for this is due to Canadian money laundering laws which need to show the source for all funds and that you have been saving the funds over the past 3 months. If you get an inheritance, you will need to show documentation that this is the source of your sudden wealth.
Be sure to contact your local Dominion Lending Centres mortgage professional before making an offer on a home. He/She can tell you exactly what documents you will need in advance and make the home buying process go much easier.
Written by my colleague David Cooke, DLC Accredited Mortgage Professional
It’s common for a first-time homebuyer to be overwhelmed when it comes to real estate industry jargon, so this BLOG is to help make some of the jargon understandable.
To help you understand the process and have confidence in your choices, check out the following common terms you will encounter during the homebuying process.
In order to get a mortgage, you are going to need credit…
When you get a mortgage, banks lend you “their” money and secure the loan against the property you are buying. Therefore they want to know how you’ve handled credit in the past.
If you have bad credit, you need to improve your credit to get a mortgage/better interest rates.
When you have had credit challenges – you are going to be limited with the number of credit card companies willing to offer you credit.
In order to buy something on credit, most lenders follow the Rule of 2:
One of the quickest ways to rebuild your credit is to get 2 credit cards.
Since you’ve had credit blemishes in the past, many credit card companies aren’t interested in giving you more credit.
One way to get a credit card for the credit challenged, is to get a secured credit card.
DEFINITION of Secured Credit Card
Five Tips for Wisely Using a Secured Credit Card
The point of using a secured credit card is to show your ability to responsibly charge and then pay off your balance. To do this, make a few purchases each month and pay your bill in full. By NOT carrying a balance you avoid paying interest & build your credit.
To get a healthy credit score – it is essential that you pay on time. Ideally you want to pay off your balance in full. If you can’t pay the full amount, pay down as much as you can, so you are reducing your credit utilization (the amount you owe compared to your credit limit).
Making more than one monthly payment can help keep your balance low. A large balance reduces your overall credit which can negatively affect your credit score. If you make a large purchase, pay it off quickly to keep your credit utilization low.
Even the most organized person misses a payment now and then… That’s OK for people with good credit… if you have credit blemishes you’ve lost your “get out of jail free” privilege. One missed payment is one time too many! Set up payment reminders 1 week before your payment is due.
If you are concerned about making your payments on time? The easiest plan is to enroll in autopay, which allows your credit issuer to automatically deduct the monthly balance form your bank account, so you don’t have to keep track of bills. This assumes you have the money in the account to pay off the credit card.
Please note: Prepaid Credit Cards do NOT help you build credit. You’ve prepaid the amount on the card, so no one is actually offering you any credit.
If you have any questions, contact a Dominion Lending Centres mortgage professional near you.
If you are a Canadian living in debt, you are not alone. According to Statistics Canada, household debt grew faster than income last year, with Canadians owing $1.79 for every dollar of household disposable income to debt(1).
• Canadian households use almost 15% of income for debt re-payment(1).
• 7.3% of this re-payment goes towards interest charges (1)
• Interest charges are at their highest level in 9 years(1).
• The cost of living is projected to increase in 2020 (2)
So how can one ever get out of debt? Debt consolidation.
What is debt consolidation?
Debt consolidation means paying off smaller loans with a larger loan at a lower interest rate. For example, a credit card bill debt with interest of 19.99% can be paid off by a 5-year Reverse Mortgage with an interest rate of 5.74%* from HomeEquity Bank. (*rate as of May 2, 2019. For current rates, please contact your DLC Mortgage Broker).
A lot of confusion surrounds debt consolidation; many of us just don’t know enough about it. Consider the two sides:
• The lower the interest rate, the sooner you get out of debt. A lower monthly interest allows you to pay more towards your actual loan, getting you debt-free faster.
• You only have to make one monthly debt payment. This is more manageable than keeping track of multiple debt payments with different interest rates.
• Your credit score remains untarnished because your higher interest loans, such as a credit card, are paid off.
• Consolidating your debt doesn’t give you the green light to continue spending.
Consolidating helps you get out of debt; continuing to spend as you did before puts you even further into debt.
• A larger loan with a financial institution will require prompt payments. If you were struggling to pay your debts before, you may be still be challenged with payments. A CHIP Reverse Mortgage may be a better option; it doesn’t require any payments until you decide to move or sell your home.
• You may require a co-signer who will have to pay the loan, if you’re unable. Note that a Reverse Mortgage does not require a co-signer, as long as you qualify for it and are on the property title.
So how do you know if debt consolidation is the option for you? Start by contacting your mortgage broker and asking if the CHIP Reverse Mortgage could be the right solution for you.
Since we know that lenders can back-end insure our mortgages (please read our Mortgage Insurance Market and Wholesale Lenders article first), and that this specifically makes these mortgage investments more attractive to investors, what does it mean for borrowers (every day people like you and me)?
To recap, any mortgage that is inexpensive for a wholesale lender to get financing for allows the lender to pass on savings to their clients, meaning mortgages that are insured get the best rates! An insured mortgage is where a borrower pays the mortgage default insurance because they have less than 20% down payment and is required on all mortgages where the down payment is less than 20%.
But, lenders can also pay for insurance for their client! An “insurable” mortgage is one where the clients puts 20% down (or more), and their mortgage is approved as though a client is paying for insurance, but the actual insurance is paid for by the lender.
Rates for insurable mortgages are generally very similar to insured mortgages. An “uninsurable” mortgage is one where mortgage insurance is not available.
The graph below outlines what type of mortgages are insured, insurable or uninsurable.
So what does this all mean for you, the borrower?
If your mortgage is insurable, you may be able to get the best rates. What is interesting to note is that if you have a mortgage that was previously uninsured, your current lender cannot insure your mortgage but your mortgage may be insurable if you transfer to a new lender – this is where our opportunity lies!
As an aside, if your mortgage was previously “insured,” and you paid for mortgage insurance, you will also be offered the best rates upon transfer or renewal.
Please call your local Dominion Lending Centres mortgage professional if you have any questions.
You may be seeing and hearing a lot more regarding the Reverse Mortgage in today’s marketplace. I have taken the time to get familiar with the program here in Canada and have been quite surprised by how it’s changed and how different it is to its counterpart in the US and how relevant it has become given our aging population in Canada.
Who are they best suited for? People age 55+ that own a house, townhouse, or condo and want to either increase their cash flow, or access equity without making a monthly payment. The older the client, the higher the approved limit.
Here is a list of PROS and CONS of the Reverse Mortgage.
If you, a family member, or a contact of yours could benefit from a reverse mortgage or want to learn more please let me know. I work directly with the lender to get you all the information you need to make the right decision. If you decide to proceed, I will walk you through the entire process.
Eliminate mortgage payment – Retired, or wanting to retire, but still have a mortgage and mortgage payment to make? Use a reverse mortgage to pay off the traditional mortgage, getting rid of that monthly payment.
Unexpected expenses – Home repairs, helping children, vehicle repairs, health care/home care, etc. A reverse mortgage gives you access to your tax-free equity whenever you need it. The equity can be used to pay for those expenses without the burden of adding a new monthly payment into your life.
Helping family – Home values have risen, and often the plan is to leave the house to children or grandchildren as an inheritance. A reverse mortgage is a way to access some of that inheritance money today, gift the money now and enjoy it with them as the family benefit much earlier in life.
Purchasing a new home – Some clients are moving to that just right, final home, but finding they cost more than anticipated. A reverse mortgage can be used to buy a new home, allowing clients to afford a much higher priced home, or keep more cash on hand.
Aging parents needing home care – As we age, sometimes a little additional help is needed to stay in the home. Instead of selling and moving to a care home or assisted living, some clients prefer to stay in the house and have in home care. A reverse mortgage is a terrific way to access the equity in the home, month by month, to pay for those care costs.
Tax free retirement funding – By using the home as part of the financial plan, clients can preserve investments, pay less tax, and often have a greater net worth in the end.
If you or a family member would like to learn more about reverse mortgages, contact me today at email@example.com