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Reasons to Avoid FSBO (For Sale by Owner) – Consult with a Vancouver Mortgage Broker

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Reasons to Avoid FSBO (For Sale by Owner)

For Sale by Owner or FSBO might sound like a good idea on paper but it could it end up costing you big time.

One of the major appeals of FSBO is that people believe it will make them more money because you don’t have to pay a commission to a realtor. Sounds like a great idea, because how hard can it be?

You probably think all you have to do it advertise the home on some website, put a “For Sale” sign on the yard, or an ad in the local paper. Prospects drop by and someone falls in love with your house and you sell it. It sound simple but here a few hard facts you should consider before you attempt to do so.

You Will Not Get a Good Real Estate Listing

Realtors have one significant advantage over you and that’s because only a licensed real estate broker can access the Multiple Listing Service which is also known as the MLS for short.

You can’t! And, that is a big disadvantage because this is actually what most serious homebuyers use when they are looking to buy a home. Also, if you think you’re going to be avoiding out of pocket expenses then think again. Listing you home on any other website or in the papers is going to cost you money.

FSBO’s Aren’t Very Reputable

Credibility is a very big concern when you are investing $500,000 in buying a new home. The Vancouver real estate market is hot which means home prices are high. Buying a home is the biggest single investment that most people make in their lifetime.

Let’s face it – is a new buyer really going to believe you when it comes to making a full disclosure about any issues they should know about when they are buying a house from a complete stranger? Although I have no doubt that most people are relatively honest, it’s just bad business if you don’t disclose everything that’s negative about your home.

You could end with more costly litigation issues because you could end up being sued, and it might not even have been your fault. The issue or problem might only have appeared after you sold the house and you had no legitimate knowledge about it. You might escape having to pay a judgement, but there’s still no avoiding the costly legal fees involved.

 Do You Have the Time It Takes to Sell a Home?

Real estate agents work wacky hours. They work when their clients need them and not the other way around. From evenings and weekends, when a client wants to see a house, it’s their job to do their best to accommodate that client.

And, if you and your partner are working, will you be able to take the time from work to show someone your home? Are you prepared to give up your evenings and weekends to accommodate a prospective buyer?

Are you really going to be getting quality viewers or just a bunch of time-wasting curious tire kickers who have nothing else to do? A real estate agent gets a feel about their clients and in most instances their clients are serious about buying, looking at and possibly putting in a bid on your home.

Another question you might want to ask yourself is whether you really know what it takes to prep a home for sale? If you don’t know what you’re doing and what it takes to sell a home, then you could end up wasting a lot of your valuable time and getting nowhere in the end.

Real estate agents are trained at their job and know what they’re doing so save yourself a bunch of headaches and hire a professional to the job for you.

101 Series – How to Buy a Vancouver Home with a Poor Credit Score – Bruce Coleman Vancouver Mortgage Broker

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How to Buy a Vancouver Home with a Poor Credit Score

Spending beyond your means is common today. Sometimes you get financially jammed up and get behind on those blasted credit cards and other bills.

This scenario can negatively affect your mortgage application. If you’re still struggling to make ends meet then buying a home should maybe be put on hold.

But, if you’re back on track and caught up on your debts then maybe you might be ready to tackle a new home. Your credit score is a reflection of how well you can manage the responsibility of taking on a mortgage.

There are two strategies that you can adopt to improve your chance of getting approved by lenders as the new B20 regulations (Underwriting Guidelines for Residential Mortgages) introduced by the Feds have made getting approved even more of a challenge.

Worst Case Scenario – Recent Bankruptcy

If you’ve recently declared bankruptcy or have made a credit proposal, then your best strategy to use in not only getting approved but qualifying for a decent rate is to hold off and wait it out for awhile.

Your only option at best in these circumstances when it comes to applying for Vancouver home mortgages is to hope that you get approved for a subprime rate. These were somewhat easier to get before the new regulations.

Right now however, it’s a tough sell as many lenders have tightened their belts and are performing a more rigorous due diligence when it comes to applications.

The majority of conventional lenders won’t even give you the time of day until you’ve managed to get 2 years beyond your bankruptcy discharge or credit proposal. You will also need to have qualified for at least 2 sources of credit that have at least a $1000 or $2000 limit with a 2 year track history of paying your debt on time.

If this fits your situation then you might be concerned how you are even going to get approved for any credit card. Well, you can as there are credit cards which you can apply for and these are called “secured credit cards.”

These “secured” credit cards require a security deposit before you are approved but they can help reinstate your credit rating and get you back in financial shape again. You also want to make certain that you choose a lender which will guarantee they will refund your security deposit after a certain period of time.

To rebuild the confidence in lenders you need to make sure that all your bills are paid on time including your household bills so you can rebuild your credit score again. You have to make a plan and stick to that plan and above all else you must be patient.

The More Expensive Approach

Even though you have declared bankruptcy or going through the process of a credit proposal it could be that your financial situation has improved so dramatically you believe you can swing a mortgage. You want a home now, but is it possible even with your circumstances?

It’s by no means impossible but you better be prepared to pay the price. Your best bet will be with a subprime mortgage and that’s going to mean higher interest rates. You will also have to be prepared to put down a fairly substantial down payment of at least 25% if not even more before a lender will give your application any credence.

You may also have fork out between 1 – 2%, and maybe even more for a broker or lender’s fee.

It’s a lot tougher to find subprime mortgages but they are out there.

If you got the cash for a down payment and are still determined to buy a home then you most definitely want to use an experience mortgage broker like me to evaluate and assist with your particular circumstances.

Bruce Coleman, Vancouver Mortgage Broker

TD Joins RBC in Raising Fixed Rates – Consult with a Vancouver Mortgage Broker

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TD Joins RBC in Raising Fixed Rates

 By Rob McLister, Editor, CanadianMortgageTrends.com”

Taxpayer-free housing finance change coming to Canada – Bruce Coleman – Vancouver Mortgage Broker

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Finn Poschmann, Special to Financial Post 

Vancouver Mortgage Broker

The Bank of Nova Scotia, a few days ago, received permission from the Securities and Exchange Commission to market to U.S. retail investors what are known as covered bonds. In pursuing SEC approval for market access, Scotia was following a trail blazed by the Royal Bank of Canada; market rumour has it that the Bank of Montreal is on the same path.

There is no madness to the approach; there is method. Change is underway in Canada’s housing finance system. More of it will be done without the taxpayer backing, or insurance, that common financing channels currently enjoy, by way of the Canada Mortgage and Housing Corporation. RBC’s covered bonds are backed by uninsured residential mortgages – so too will be Scotia’s, in future, and so will others. Lenders, mostly banks, who have not already developed the financial instruments and skills to diversify their funding sources will do so, because they must. This is all to the good.

Background. CMHC, a Second World War era Crown agency intended to help returning vets find homes to live in, until recently grew in leaps and bounds.

CMHC became a source of systemic risk because its mortgage insurance products, which insulate lenders from loss when the loans they make go bad, for years backstopped easy loans, mortgages with long amortizations, and cheap home equity lines of credit that Canadian consumers took up in droves.

Scotiabank, RBC to lead the way with covered bond issues

As consumer debt rose, and housing investment bubbled, so did Canadian house prices, over the past decade, well outstripping income growth. Low interest rates helped, but so too did easy credit terms – with few incentives, owing to CMHC insurance, for lenders to hold back on extending them.

Shrinking CMHCs oversized role in the mortgage market, and taxpayer exposure, became overdue, and Ottawa has gently reined in CMHC and ease of access to its insurance products. Consumer debt growth has slowed, and housing markets have tapered – to this point, gently so.

Alongside, the covered bond market has become important to housing finance. Covered bonds are prized by some investors, because normally they are backed by highly rated assets – like good quality residential mortgages – as well as the security of the fully bank-backed, bankruptcy-remote special investment vehicle that sponsors create to fund them. Their dual cover enables the bonds to attract high ratings and go to market at low spreads, sometimes as low as 10 to 20 basis points over similar term government bonds, perhaps 50 basis points in the U.S. market today – and that means cheap financing all round.

However, Canadian banks’ bonds have long have been shut out of some markets. Many European institutional investors, for instance, are forbidden from buying covered bonds sponsored by issuers who do not operate within a legislated covered bond framework that specifies creditor priority in the event of a bankruptcy.

Changing the Canadian legislation to accommodate market needs was a minor matter, and the government did so in Finance Minister Jim Flaherty’s 2012 budget. Also helpful was establishing CMHC as a bond registrar.

The changes, however, came with a quid pro quo attached. Canadian covered bond issuers would get the legislative framework they coveted, but under conditions: no insured mortgages, whether insured by CMHC or others, would be allowed into the pool of assets backing the bonds, and no writing of contractual covered bonds outside of the legislated framework.

RBC was primed to take advantage of the new rules – their covered bond pools, unlike those of all other issuers, already contained no insured mortgages. And, owing to the 2012 legislative changes, that allowed them to be quick out of the gate in acquiring SEC registration and, with it, access to U.S. buyers who seek index-eligible bonds, better price transparency and higher disclosure standards. For other issuers, the route has been and will be longer and more complex.

And there will be bumps. Covered bonds are not for all issuers; the regulatory and legal hurdles are big, and profitability in the market depends on scale. Smaller market issuers of commercial paper backed by insured mortgage assets will likewise be pinched by the prohibition on taxpayer-backed mortgages in their securities. That means less access to funding and bigger spreads for them.

And Canadian banks eventually will bump into the regulatory policy cap on covered bonds: they may not exceed 4% of bank assets, and the mortgage market is many times bigger than that. A move to expand the cap will encounter headwinds from the Superintendent of Financial Institutions. And from deposit insurers, who will worry that the bigger the share of assets that are bankruptcy remote – and therefore remote from depositors’ claims on them in a bankruptcy – the more costly will be deposit insurance for everyone else.

There is a broader challenge, too, surrounding another alternative, developing a residential mortgage-backed securities (RMBS) market that operates without CMHC guarantees – there isn’t one in Canada, and it will take time to develop both the product and investors’ comfort with it.

Which means there is work to do, and policy and legislative change to come in due course. But a path to a housing finance market that is less dependent on government backing is surely the right one, and taxpayers should rest easier when we are safely on it.

Finn Poschmann is vice-president, research, at the C.D. Howe Institute.

Spring puts bounce back in Canadian home prices – Bruce Coleman – Vancouver Mortgage Broker

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TORONTO — Canadian home prices jumped in May from April as a spring rebound in real estate continued in most cities, offsetting a couple of weak markets, the Teranet-National Bank Composite House Price Index showed on Wednesday.

The index, which measures price changes for repeat sales of single-family homes, showed overall prices rose 1.1% in May, the ninth time in 15 years that May prices were up 1.0% or more from April.

The index was up 2.0% from a year earlier, which matched the April rate and marked the smallest 12-month gain since November 2009.

The report suggested Canada’s housing market regained strength in the spring after a long slow winter of decline following the government’s move to tighten mortgage lending rules in July 2012.

Residential real estate activity typically picks up in the spring, and economists have been waiting to see if demand will return after a dramatic slowdown since the middle of 2012.

The report echoed one released on Monday by the Canada Mortgage and Housing Corp that showed housing starts jumped much more than expected in May from April, suggesting residential construction may contribute to Canadian economic growth in the second quarter.

The Teranet data showed prices rose in May from April in nine of the 11 metropolitan markets surveyed, led by a 2.3% gain in Calgary and a 1.9% rise in Edmonton. Prices were up 1.4% in Hamilton, 1.2% in Montreal and Winnipeg, 1.1% in Ottawa, 1.0% in Toronto, 0.8% in Quebec City and 0.7% in Vancouver.

They were flat in Halifax and down 0.8% in Victoria.

Year-on-year prices dropped in two cities — Victoria, where they were down 4.1% from May 2012, and Vancouver, where prices fell 3.2%. British Columbia had the hottest housing market going into the downturn.

Compared with May 2012, prices were 6.5% higher in Quebec City, 5.8% higher in Calgary and Hamilton, 4.6% higher in Winnipeg, 4.0% higher in Edmonton, 3.9% higher in Toronto, 2.3% higher in Halifax, 2.0% higher in Ottawa and 1.9% higher in Montreal.

© Thomson Reuters 2013

101 Series: Tips for the First Time Home Buyer – Ask Bruce Coleman – Vancouver Mortgage Broker

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Buying a home for the very first time can be both very daunting and stressful. The investment and expense can be significant and for many people it is the biggest financial single investment most of you will make in your lifetime.

Careful financial planning and preparation is the best way to make the process a lot more painless and ensure your success in securing a Vancouver home mortgage.

Advantages of Home Ownership

The first advantage of owning a home is that you won’t be flushing all that rent money away. Although housing prices do fluctuate they do not do so anywhere near as drastically as the whacky world of the stock market.

With stock market investments, you can expect the Feds to grab up to half the money you make. With a home purchase however, as you make money through a combination of appreciating house prices and by building equity, the profit you make is all yours to keep.

You can also increase the potential profit on your home by completing some quality home renovations. Some renovations such as updating your kitchen and modernizing your bathrooms actually give you a very decent ROI (Return on your Investment).

Another advantage is that is you can also borrow against the equity that you have built in your home such as through a second mortgage or through a reverse mortgage such as CHIP (Canada Home Income Plan).

The money you borrow can be used in a variety of ways such as paying for your kids’ college tuition or taking that dream trip you always wanted.

The bottom line is that investing in a home is a good investment as it provides you with a number of advantages that wouldn’t be available to your otherwise.

Preparation Tips for a First Time Home Buyer

The most pressing consideration about buying a new home is how comfortable you are in taking on the financial responsibility. You want to feel comfortable having long term employment prospects and whether you would be able to cope if you or your partner lost your job.

You can use a mortgage calculator to help you look at a variety of scenarios. A calculator will give you an idea of the how long a term or amortization you will need as it compares to your down payment. It will also help you with budgeting.

Most creditors look at what is known as your “debts service ratio” which is how much of your income would be used to towards all your household debts such as a mortgage payment, property taxes, utilities and other personal debts. The maximum amount accepted by most lenders comes in around 32%.

Your next big consideration is the amount of your down payment. If you have less than 20% of your available savings to use for a down payment then you will also have to obtain mortgage insurance such as through CMHC (Canada Housing and Mortgage Corporation). This is an additional cost on top of you mortgage payment.

You also have to keep in mind the amount of closing costs involved in going through the mortgage process. Closing costs entail legal fees, appraisals, a home inspector and other costs which can work out to about 1% to as high as 2 1/2 & of the purchase price on your new home.

Ready for Your First Home?

Although you might be tempted to simply go through your bank, this can may not as advantageous as you think. You may not be approved or you may not be getting the best rates. A mortgage broker such as myself has access to dozens of lenders and we can walk you through the process and make it a lot less stressful. We may even find you better mortgage rates which can save you a ton of money over the life of your mortgage.