Maximizing good neighbour behaviour!

Essentially, being a good neighbour means being considerate of how your behaviou affects your fellow residents. Here are some tips to keep in mind!

Keep up with garden chores

If you have a yard, keep your lawn mowed, your trees and bushes trimmed and your weeds under control. (I wish that some of my neighbours would read this!!) A well kept yard is welcoming to neighbours, and could encourage pride in their homes and neighbourhood!

Be conscientious about noise

Mowing your lawn in the early morning or during dinner can be intrusive, especillay in warmer weather when neighbours are enjoying dining outdoors. The same consideration should be taken with snow blowers and other loud equipment.
This rule applies to parties too. Give neighbours advance notice of the day you plan to have a party, the start time and when you expect it to end. Let them know that if the nouse gets too loud, they are welcome to call you.

Keep your dog under control

Always keep your dog on a leash during walks and never let it run free in the neighbourhood. Anyone with a fewar of dogs could be afraid to exit their own home. Keep barking to a minimum. For someone relaxing in their backyard, it can become an annoyance quickly. And, of course, always clean up after your dog.

Welcome new neighbours

A friendly welcome to new neighbours can immediately provide them with a sense of belonging. Let them know garbage and recycling days, where to find the local grocery store and post office, and offer to be their go-to person for questions about the community.

Consumer debt is the problem.

I came across an article today that I've been try to stress for a couple of years now. (more so when the federal government starting changing mortgage rules)

The debt problem brewing in Canada is NOT due to mortgages. The problem is due to all the un-secured debt; line of credits, visas etc. which the banks almost force on people to take.

The article is here and I truly beleive that something has to be done.

The end all is that we must be responsible for our own actions and not take on the unecessary debt. However, if a family situation takes place, sometimes you need to fall back on the equity in your home. With all the rules that have pretty much killed the refinance business and with more and more banks registering mortgages as collateral mortgages not allowing you to take out a second, I guarantee you that we will start to see more foreclosures, consumer proposals and bankruptcy's.

Time will tell...

I can't beleive this can happen.

Yesterday a fellow co-worker went through an exact situation that I've been through twice in the past and I feel very compelled to write about it today.

A client of hers needed to redeem his GIC from a major banking institution and went into the branch yesterday to do so. He needed these extra funds for his down payment and he knew that pulling the money out early meant he didn't receive any interest that he would have earned on this money.

However, when this fellow went into the branch to redeem his money the bank told him that there was no way he could UNLESS they did the mortgage. WHAT?????? This is complete black mail and is brutally unfair.

"Don't worry," they told him, "we'll give you free banking as well". What a joke as the rate he is getting was slightly higher than the one she was obtaining and they knew that. So the $5/m he saves in "free banking" will actually end up costing him more in the end as he's in with a slightly higher rate and doesn't have the expertise of an experienced mortgage broker monitoring his mortgage through it's life.

He felt very stuck and like he had no other option. Which I don't blame him for.

I'm not too sure if there's a moral to this story or not, however, it makes me very frustrated and upset that we continue to be taken by the big banks and others. This type of business is WRONG.

Why is Christmas soley about spending money?

Why do so many people beleive that Christmas is solely about the money we spend?

I've been saying this for years as do many people in the comments of this article. http://bit.ly/sFVEIX

Why isn't it about being close to family and friends and enjoying each others company? It's virtually the only time of year that we really stop what we're doing and make this happen as we're always "too busy".

Don't get me wrong it's nice to open up a gift or two and more importantly watching the children's eyes light up when they open their gifts! However, I would really like to see it go back to even when I was a kid. I did look forward to the presents, more importantly I looked forward to the big party in the evenings where we all got together and played as kids!

I guess I can keep dreaming and do my best to make sure my two little girls understand the true meaning :)


On a side note:

I particularly enjoy reading when big banks talk about this sort of thing. And quite honestly, I feel bad for the not so smart people who beleive what the banks say and beleive they have more money and spend more...all on the banks credit etc. More interest money for them!

How much more can we take?

Today I'm writing as I'm getting to that boiling point where many of you are as well.

There's one thing in life that I really can't stand and that's being taken advantage of. And especially being taken advantage of from our government and big corporations. Good on the people on Wall Street for taking a stand.

I wont get into the whole oil and gas spiel as I know I share the same views as almost everyone who depends on their car.

As well I wont get into the proposed 2c a litre gas tax being voted on today and the increase in property taxes to pay for a transit system that will NEVER work. Especially for us in the burbs.


My main focus is on banks and lending insitutions. In the last week we're seeing lenders dramatically reduce the discounts off of prime. They say due to liquidity issues. This is utterly wrong. In my opinion and I've been told by lenders themselve, the reason why the don't like variables is they don't make as much money off of them. So their reducing the discounts to bring them closer in line to the fixed rates so people lock in instead of float.

Oh and by the way, one lender just emailed me right now saying the discounts are pretty much gone as of Monday afternoon and will most likely be surpluses. Thanks for the heads up going into a long weekend!

Just today RBC announced rate cuts on their fixed rates. Conveniently only on the shorter 2 and 3 year terms. You may say this is good. No it's not! Why? Becuase anyone that bought into a fixed rate a few years ago are sitting in the high 4 to mid 5% range. If you wanted to take advantage of reducing your rate to lower your payments and pay less interest costs, you would have to pay an IRD (interest rate differential) on your current rate and the current 2 or 3 year fixed term. See where I'm going with this? I heard of one persons IRD go UP $4,000 in a matter of two days because of this. Absolutely NOT FAIR.

These big corporations are doing nothin more than taking advantage of us consumers by taking every last dime out of our pockets to put into theirs. Having a CEO making less than $10 million a year is just unheard of.

Anyways, theres my rant for the day and beleive me, I could go on for much longer!

Have a great long weekend.

Inflation Hedge Strategy

After watching this video make sure to advance to "IHS at work" example!

Inflation Hedge Strategy at Work

Here's the Inflation Hedge Strategy at work and how an un-managed mortgage compares to a managed mortgage from myself.

This strategy will save you thousands of dollars and shave years off your mortgage.

Most importantly, this strategy, avoids a potentially large payment shock at the end of your term.

The key to this, is to have someone manage your mortgage for you. Typically your bank will not provide this extra service and you'll only hear from them at the end of the term to renew. With me, at no cost, I will monitor your mortgage and implement this simple strategy to save you money.

Call or email me today if you need further explanation or would like to implement this to your mortgage! 604-786-9099 christos@gitersos.com

Here's the first video I created on this excellent strategy http://gitersos.blogspot.com/2011/09/inflation-hedge-strategy.html

Influence and Association

Here I'm quoting one of America's top business philosphers Jim Rohn.

I truly beleive in a lot of what he says and this is no different. Brings true meaning to, you are who your friends are.

Purchase plus improvements

-This program is with all 3 insurers. The amount allowed for improvements is typically 10% -20% of the purchase price, or up to $40,000 maximum. The money is to be used for “improvements” or “upgrades”, not necessary repairs like leaks or structure issues. Also must be for something that adds value to the home, not a chattel like appliances.

-You need to get quotes for the cost of the improvements that the client wishes to complete. Add the amount of the quote/s to the purchase price, and this becomes the new purchase price. The down payment is now based on this new higher purchase price as well.

-The mortgage is funded in order to purchase the home, but the money to be used for improvements is held at the solicitor’s office until the work is complete.

-The work can be done by the client or a company/contractor, but client labor is not something that can be reimbursed for. If a client does the work him or herself, only the cost of the materials is released. If a contractor or company does the work, send us the invoice and we can pay them directly for the full amount at the end.

-An inspection report from an appraiser is required when all is done so we can confirm that the said work was completed.

-If the final cost ended up being less than expected, the left over money is applied back against the mortgage.

What style of variable should I take? Open, closed, or LOC

Open? Closed? Line of Credit?

I get asked often whether or not I should go with an open variable, closed variable or if I should get a line of credit.

This is what I say.

The only time you would want to consider taking an open variable mortgage, meaning you have the ability to pay the mortgage out at anytime without penalty, is when you know for sure that you WILL be paying off your mortgage within the first 10 or so months.

In order to have the abililty to pay out your mortgage without penalty the lender or bank will charge you an increased amount over prime as opposed to a discount off of prime. This could be a large spread of over 1%.

If you kept your mortgage for more than the 10 months, it would be cheaper, interest wise, to pay the penalty on the mortgage, which is a 3 month interest penalty. This is cheaper than paying the premium on Prime on an open for the 10 months.

Every case is of course different and this is why we talk about planning and strategy from the get go.



Now when people talk about a line of credit there's one one important thing that needs to be said first. You can only obtain a line of creit with 20% or more equity in your home. If you have less than 20% equity, you can NOT obtain a LOC.

I also say to people, why would you want a secured line of credit at say Prime +.50 or higher, when you can have the same amount of money at prime -.50 or deeper today? You'd be paying 1% more for the priviledge of that LOC.

Well, I guess the interest only payments may be enticing, however, in my opinon, and I beleive debt is not good and should be cleared, paying that little bit extra and paying towards principal at a much lower rate is more realistic and a huge cost savings!


Of course though, everyone's situation is different and there may be a reason why you need a LOC attached to your mortgage. One being, you know a large sum of money is coming in. why pay a penalty on that portion of the mortgage your paying out.

Everyone needs to find a plan and strategy to make your mortgage work for you and not for the lender. This is what we'll do together!!

More tightening of mortgage rules? Why?

Here's an article I read this morning in the Financial Post talking about tightening up mortgage rules, again. When are these people going to understand that it's not the mortgages that are causing the debt issue, it's the unsecure debt loads that Canadians have. I see it everyday in this field pulling credit bureaus.

Leave the housing market alone. Without a strong housing market the economy could fall apart. There are so many people that are involved with one transaction. And I'm sure, especially in BC, they would hate to stop losing revenue on the way overtaxed Property Transfer Tax.


David Pett Sep 8, 2011 – 11:22 AM ET | Last Updated: Sep 8, 2011 5:47 PM ET

With Canadian interest rates now on hold for some time to come, the government may move to tighten mortgage rules again to keep the already hot housing market from bubbling over, says the chief economist of Canada’s biggest bank.

“As we go forward in an environment of lower rates for longer now, we may see another round of mortgage rule tightening,” said Craig Wright, chief economist at RBC Financial Group during a panel discussion on Canada’s economy at the Economic Club of Canada.

Following Wednesday’s decision by the Bank of Canada to keep its key lending rate unchanged at 1%, it is now widely expected that interest rates will stay at uncommonly low levels well into 2012 or longer if the global economy continues to deteriorate.

Mr. Wright believes that Canada’s fast-growing housing market, which resulted in an impressive 6% increase in building permits last month, will start to slow in the months ahead.

Several factors boosting mortgage activity in the first half of the year, including the HST in Ontario and B.C., are becoming less important catalysts, he said, while consumer confidence about the economy and overall affordability are growing headwinds.

In a cooling scenario, he said it is unlikely that more stringent mortgage rules will be forthcoming. However, if a moderate slowdown doesn’t take place as expected, it becomes increasingly possible that regulatory changes, including shorter amortization periods and an increase in the amount of mortgage insurance required will be needed in the future in order to curb a growing appetite for credit.

“Lower rates make debt more attractive but that is countered by the confidence shock that we are all feeling towards the economy,” he said. “So the jury is still out but [Ottawa] may end up feeling the need to tighten a little bit further.”

Part of the run-up that Canada has seen in personal debt levels over the past decade has largely been driven by mortgage growth that has coincided with easier access to credit.

In more recent years, concerns about the rising levels of household credit has prompted Ottawa to tighten its mortgage rules and this past January Finance Minister Jim Flaherty announced three new changes:

The first reduced the maximum amortization period to 30 years from 35 years for government-backed insured mortgages with loan-to-value ratios of more than 80%; the second lowered the maximum amount Canadians can borrow in refinancing their mortgages to 85% from 90% of the value of their homes; and the last adjustment withdrew government insurance backing on lines of credit secured by homes.

Mr. Wright points out that even with these tighter measures, mortgage rules are still much looser than they were ten years ago.

He noted that the required downpayment used to be 10%, compared to 5% now, while amortization was previously a maximum of 25 years. Furthermore, the qualification for mortgage insurance had been 25% and is 20% today.

“There is still, if need be, some room to move back to where we were,” he said. “We may not need to go back there, but there is an option if we don’t see any moderation in debt going forward.”

While Canada’s mortgage rules may be looser than was previously the case, they have remained much more stringent than U.S. regulations governing home loans, said Sherry Cooper, chief economist at BMO Capital Markets. Because of that, she considers Canada’s housing market to be in much better shape than it would be otherwise.

“Not only did Canada dodge the sub-prime problem, but when you look at the aggregate of equity in homes among Canadian households it is much higher than in the United States,” she said during the panel discussion.

She is also encouraged by the fact that Canada’s home-ownership ratio is much higher than it is south of the border and statistics that show Canadians typically pay off their mortgages prior to retirement.

While there has been an inordinate rise in house prices in some regions of the country, notably in Vancouver and to a much smaller degree Toronto and Calgary, which already seen a correction, she doesn’t believe a massive housing bubble is going to burst, largely because much of the demand for Canadian homes is coming from foreign investors who aren’t reliant on mortgages to make their purchases.

“As anyone who has been involved in the housing market, there seems to be tremendous interest in our markets by foreigners who want to diversify their investment and see Canadian real estate as a positive and affordable — believe or not — opportunity,” she said.

BC Retains AAA Credit Rating

British Columbia will retain its AAA rating despite the defeat of the harmonized sales tax, says credit rating agency Standard & Poor's.

An AAA rating reflects "extremely strong capacity to meet financial commitments," according to S&P's website.

Regarding its decision to continue the top-level rating for B.C., the agency said the province has the solid revenue and expenditure flexibility necessary to meet its deficit targets and a moderate tax-supported debt burden.

But it said B.C. faces new challenges - the loss in revenue; the initial administrative costs of transitioning back to a PST-plus-GST tax system; plus the likelihood of having to repay $1.6 billion in HST transitional funding from the federal government.

B.C. Finance Minister Kevin Falcon welcomed S&P's statement. "I believe this is a reflection of the fiscally conservative approach we have taken over the past decade," he said in a press release. "During this time of global economic uncertainty, our credit rating is more important than ever and we will continue to manage taxpayer dollars responsibly while we focus on strengthening our economy and creating jobs."

medha@vancouversun.com

The more you make the more you pay???

I just read this and had to share it:

"In the Bank of Canada study I referenced earlier they cite: “The results indicate that high-income borrowers pay more for their mortgages, as do loyal consumers, consumers who search less, and those that value large branch networks”."

We have to be reminded that without mortgage brokers, and the competition we bring to the big banks, we all as mortgage consumers would be paying far higher interest rates.

The banks are in business to make money and that's the bottom line. In the end more times than not they will try to fill their pocket books with your money. Where as me, the Mortgage Broker, who works for you, will do the opposite and try to keep your pocket filled with your own money.

Day in and day out I hear stories from people who are at their branch and they feel the branch is not doing a good enough job, especially when it comes to rate. They talk to me, find out that I can usually do a better job not only on rate but on overall product, then they go back to the bank and the bank matches them and they call me back and say 'thanks for your help, the bank matched you and I'm staying with them.' WHAT ARE YOU THINKING!?!?

Why would you go back to them when they've clearly tried to charge you more and have clearly shown that you are just another potential sucker? And most importantly, what product did they suck you in to? Read my other posts on my blog about products and why the best rate is not always the cheapest for you.

Anyways, I could go on and on about this, however, I wont bore you!

"Beware of collateral-charge mortgages"

I've talked about collateral mortgages a few times in the past.

Today I opened up the latest edition of the CMP (Canadian Mortgage Professional) Magazine and came across an article that I had to share.

"Beware of collateral-charge mortgages"
While private lenders are increasingly looking for 'opportunity financing' that expands their portfolio beyond refinancing and debt consolidation, that core business remains an industry pillar. The growing use of collateral-charge mortgages by the big banks, however, is threatening to erode that support, said David O'Gorman, broker/owner of MortgageLand Inc., an independent firm brokering private lending deals.

'We're saying 'no' more often now than we did in the past, and i can think of no less than six people since last year that we've simply had to turn away because there was nothing we could do for them,' he told CMP. 'It's because they've signed up for a collateral mortgage with the banks, and have pledged all their equity to that bank. It makes it all but impossible for a second lender to come behind and provide a second mortgage or refinancing or even for a homeowner to switch lenders at renewal.'

Last fall, O'Gorman and other brokers working with private lenders raised the specter of a loss of business stemming from collateral mortgages at the big banks. They are securing mortgages with a promissory notes backed by collateral charges. That translates into a first or second lien on the property for as much as 125% of its value. That doesn't, in fact, mean the borrower is guaranteed access to all those funds.

The private lenders that O'Gorman deals with - along with most banks and monolines - refuse to accept the transfer of collateral mortgages, forcing homeowners to pay additional fees to register a new mortgage in order to move the loan from the original lender for a much-needed second mortgage or refinance.

O'Gorman wrote to people, with 'different to the norm' conditions and increasing the borrower's exposure to significant loss, all the while flogging a cheap closing service, enticing the borrower to go without the opportunity of having an independent legal opinion of the documents they are signing, just plain stinks' he wrote in the two-page letter.

A policy adviser for Flaherty did contact O'Gorman for a brief discussion, although the broker doubts the matter will move beyond that.


Be leary of collateral mortgages. Ask a professional to explain them to you and why they may not be the best option for you.

Mortgage Apprenticeship

The write up well below belongs to http://www.canadianmortgagetrends.com However I thought it so important I wanted to put my words into it and pass it along. For comments and other greatly written articles in our business, I encourage you to go to their website.


Here's my take:

I've been in the Mortgage business approaching 7 years. My first couple of years were very difficult. Fortunately I was able to be mentored by one of the best brokers I know today.

In my first year of the business I did place a few mortgages, with the help of my mentor. My MAIN focus though was learning products and learning them well. I used to go for coffee on a daily basis with lender reps so I can gain knowledge. I still do this. I thought that this was mandatory as, why would I want to put someone in such a big investment and not know what I was doing???

So often I see "Mortgage Professionals" come right out of school and try to jump in and sell mortgages to people without knowing if that's the best product for someone. All they worry about is having the best rate. As you've read in my previous posts, IT'S NOT ABOUT RATE. It's about knowing your products and finding the right match for that person(s) need, for the short term AND the long term.

As a true mortgage professional, I am still consistently going out with my lender reps to gain product knowledge and being an AMP, (Accredited Mortgage Professional) I am required to do a minimum 12 hours of education, which I consistently do more than every year. Not to be a bad mouth, however, bank reps do NOT have to go to school to get licensed. They also do not have to do training hours yet I do know some that do.

I truly believe to keep our industry as professional as possible, we must be adhered to proper training in the beginning 2 years and mandatory education for EVERYONE no matter if you have the AMP designation or not. We have to stay on top of our products and make sure we always do the right thing for the client.



Article from http://www.canadianmortgagetrends.com

Mortgage Apprenticeship

Plumbers can't get a license without an apprenticeship.

Makes sense. You wouldn’t want a botched pipe job putting your house under water and costing you thousands.

The advice of a mortgage banker or broker could cost you just as much—if it’s bad.

That might make you wonder: Why is there virtually no legislation to ensure that bank reps and brokers have the practical knowledge to advise you properly?

We as brokers do have to write a licensing exam (depending on province). That, however, doesn’t prepare us to skillfully counsel you about:

term selection and suitability
mortgage restrictions
refinance analysis
mortgage portability rules
prequalifying with atypical income or credit
credit rebuilding
financing condition removal
porting default insurance
…and dozens of other mortgage topics where advice could cost (or save) you thousands.

Few things would boost our industry’s creditability more than practical training requirements. A 12- to 24-month apprenticeship under an experienced sponsoring broker would ensure new brokers have a minimum degree of competence when advising consumers.

At the moment, our industry relies on a system whereby someone who passes a background check, completes a licensing course, and joins a brokerage firm, can counsel you on a transaction worth hundreds of thousands of dollars. Poor guidance generally goes unnoticed because, most of the time, customers don’t even know they’ve received bad advice.

Fortunately, the majority of practicing mortgage professionals are experienced and highly capable. But it takes time and a lot of mistakes (often at customers’ expense) before most new brokers have the skillset needed to be proficient.

Having a senior broker review and sign off on a new recruit’s applications for 12-24 months would be one way to help clients avoid paying for inexperience.

Rule of Thumb: Never be afraid to ask your bank rep or broker:

How long he/she has been a full-time mortgage professional
How much volume he/she has closed in the last 12 months.

If the individual has been full-time less than a year or has closed less than $5 million of mortgages in the last 12 months, take extra care when evaluating their expertise.

CMHC info breakfast notes

This morning I spent some time not only having a good breakfast, learning a few interesting points from CMHC and their research. More geared towards the Fraser Valley.

Here's some interesting points that I was able to quickly write down. They are in point form and some may just seem random. I tried to write down what I beleived were the most important!



-Fraser Valley market is in a balanced market, while Chilliwack is in a buyers market

-Vancouver average house price is $1.182m while the Fraser Valley is at $623k.

-With the twinning of the Port Mann more people are to settle in the Fraser Valley. Easier access to Vancouver and surrounding areas which will keep the Fraser Valley, more so Surrey and Langley as a hot spot

-House prices are predicted to go up 5% in 2011 and 3% in 2012 in the Fraser Valley

-Rates are to remain favourable

-CMHC predicts the variable to have a very modest increase of maybe up to .50% in 2011 and 2012

-$123B in housing starts are registered

-Inter provincial population growth is expected to be about 8-9000 people. Which international is expected to be around 50-55,000 for 2011-2012. In the Fraser Valley approximately 11,000 of those will come while the others spread around the GVRD. Surrey is still expecting about 1,000 people a month, as it is right now, to come.

-Business bankruptcies do not have huge numbers like they did in the 90's which is a great sign

-The population age between 65-74 years old is growing fast and more demand for smaller homes will be needed

-Full time employment is down. Abbotsford's unemployment was one of the highest recently at just over 10%, while in the last month it has come down


And here's something that I really didn't know about in regards to your CMHC insured mortgage if you are making lump sum payments. You can actually ask for that money back from the lender in one lump sum or over a period of time. The returned amount has to be the lesser of the original amount or 90% of the homes value.

Why the banks are ran solely as a business

People say to me a lot 'oh I'm ok, I don't need your services, I've been dealing with my bank for 30+ years. They'll do what I need'

I hear this often and I have one good story that hits a little too close to me and some past clients.

I know of an older dear couple that the wife had just passed away and the husband needed to get out a $30k unsecured line of credit. Not that he needed the money. It was that all his investments were tied into GIC's (which is not good)

His bank, with which he's had a relationship for 30+ years, turned to him and said "sorry the max we can do without securing against your home is $20k" This wasn't enough for him. A funeral now a days is pretty darn expensive.

So he complained a little, told them he had more than enough in his GIC's to cover it etc.

They let him leave saying we'll look into doing something and will call you back in a couple days.

Finally they did and this is what they did for him. 2 line of credits of $15k each. One at Prime +.50% and one at Prime +3.5%. Secured against his GIC's.

They would NOT give him a full $30k, with a good rate, unsecured. I think this is wrong as he's been such a huge supporter of this bank for so many years.

The moral of this story is, no matter how long you've been with your financial institution, it does not necessarily matter. Not to say this is the case all the time, I just hear about it a lot. Using an independent whomever mortgage, insurance, investment, adviser is always the way to go as we are unbiased and do not use just one lenders products.

Remember the banks are in it to make a profit. This is their sole drive.

Great quote - Follow up to, 'not about lowest rate'

I was sent this quote today and it ties in so perfectly to previous posts about how it's not about the lowest rate out there, it's about the best product that suites your needs and not the lenders needs.

Here's the most recent post http://gitersos.blogspot.com/2011/05/its-not-always-about-lowest-rate-follow.html


"It is unwise to pay too much, but it is worse to pay too little.
When you pay too much, you lose a little money...that is all.
When you pay too little you sometimes lose everything, because the thing you bought was incapable of doing the things it was bought to do.

The common law of business balance prohibits paying a little and getting a lot...it cannot be done.
If you deal with the lowest bidder it is well to add something for the risk you run.

And if you do that, you will have enough to pay for something better.

There is hardly anything in the world that some man cannot make a little worse and sell for a little cheaper, and the people who consider price only, are this man's lawful prey"
JOHN RUSKIN (1819-1900)

Variable rate discounts may not be decreasing

About a week ago I had talked about lenders trying to decrease the discount off of prime.

One major lender, one of the largest mortgage lenders in Canada, had tried hoping that others would follow suite.

Well it didn't happen, or hasn't happened as of yet. Some of the lenders that moved slightly are back to where they were just prior.

I believe it was this one lenders kick at the can to try and slow down the variable business as for the lenders they're not huge money makers as a fixed rate is. Currently they are way offside with their variable discount and I can only imagine that they will soon be back to normal.

Deposits on a home purchase

When you purchase a property you will need to have a certain amount set aside for subject removal that will go towards your down payment on completion.

This money, whether it be $10k or up to $100k+, depending on the value of the home being purchased, has to be provided at the time of subject removal. This can be within a week or two of writing an offer and the offer being accepted.

What you need to know is that you have to come up with this money. Lenders do not generally lend you this money.

You should have the discussion about the deposit with your Realtor as early as writing the offer so you can determine what an amount is appropriate and attainable.

CAAMP Spring Survey - Interesting Facts

This is the fact sheet for the CAAMP Spring survey that was just released. There's some good information.



There is currently $855 billion in mortgages on principal residences and $215 billion in Home Equity Lines of Credit (HELOC)

• Individuals with HELOCs only have an average 65 per cent equity in their homes

• HELOC prevalence is highest among middle age homeowners

• Equity takeouts amount to $26 billion annually, with most funds used for renovations ($9.4 billion), followed by investments ($5.0 billion)

• The average down payment for a home purchased in the last 12 months was 30%, up from 26% for homes purchased two years ago

• Among all borrowers, 63 per cent have fixed rate mortgages, 30 per cent have variable rate mortgages and 6 per cent have a combination of both

• Less than a quarter (22 per cent) of all borrowers have amortization periods longer than 25 years

• 34 per cent of those who most recently renewed or renegotiated their mortgages did so before their term expired. The average time to pay off a mortgage is 7.4 years less than the original amortization

• 200,000 homeowners paid off their mortgages in the last 12 months

• The average mortgage interest rate discount is 1.44 per cent for those who chose a five year fixed rate mortgage in the last twelve months with the average mortgage rate being 4.04%

• Of those who renewed their mortgages in the last twelve months, 65 per cent are paying lower rates than previously

• 66 per cent of all mortgage borrowers can tolerate a monthly mortgage increase of $300 or more

• Among borrowers who took out a new mortgage in the last 12 months, 27% obtained it from a mortgage broker. Overall mortgage broker share stands at 23%


• Canadian appetite for home buying has returned to pre-recession levels, following a slide over the past three surveys. Almost 60 per cent respondents thought that now was a good time to buy

• Optimism is returning to the market with almost half (46 per cent) of those questioned saying that they expect prices to rise

Here's the final report

It's NOT always about the lowest rate - Follow up

To start off. I am in no way putting down any one lender or financial institution. All I'm doing is simply giving you the facts so you, the public, are more cognisant of what truly lies behind a mortgage.

This is some of the not so good that lie behind one lending institutes great low rate mortgage. That is, if you can even obtain that great low rate.



• Interest rate premiums will apply when certain debt servicing requirements are not met and if your credit score isn't as high as they want. (with other institutes I have access to, the rate you see is the rate you get)

• No transfers of your mortgage to a new home without a penalty. The lender will only do a refinance meaning the client must pay their own legal fees. (this is not good. You should be able to take your mortgage with you and do a blend of rates with no penalty. They show you a great rate, however, you may end up paying much more in the end. If you took the rate slightly higher with this option then you would end up way ahead)

• Registers all mortgages as Collateral Mortgages. (See here why these are not good http://gitersos.blogspot.com/2011/04/collateral-mortgages.html)

• Lender does not collect property taxes on the client’s behalf.(Not necessarily a bad thing, however, I would highly recommend this option as making small payments to build up a property tax payment is much easier than waiting until the end of the year to pay one large lump sum)

• Pre-payment privileges are 20% on the anniversary date ONLY. (Most other lenders allow you to prepay up to 15-25% with as many payments a year as needed with a minimum payment of $100 a time. This option is much better as you are continuously paying your mortgage down which means that you are pay less interest overall)

• If the mortgage amount is less than 65% of the homes value then they may be able to waive an appraisal. An appraisal comes with a cost of $250(most lenders I deal with will not need an appraisal. The only time an appraisal is a must is when you put 20% or more down, and it's a rental property or your going under a self employed, stated income program.

• Pre approvals/rate holds are only 90 days not the typical 120

• The branch will do a call and try and sell extra products i.e. life insurance prior to funding

• Clients have to go to the branch and set up an account prior to closing adding extra steps to the process and taking up your time

• The lender may request you to pay out and close revolving credit product(s) i.e credit cards. I've seen an instance where a young client had to CLOSE her only two revolving credit cards with a mere $2,500 limit/balance on each. The credit bureau will be impacted negatively when you close accounts. And then she'll need to re-apply for a new credit card to keep her credit in check, which will then take more points off her score and take up time to do so.

I've also had another client with a line of credit and NO balance and the lender wanted it closed.

Variable rate discounts decreasing?

Yesterday we had a major lender reduce the discount off of prime by .25%. We also had one other major lender say something similar is coming down the pipe and to be prepared.

In my career, which is 7 years, this is only the second time I've seen this. I'm curious to see if other lender will follow or if it's a blip with this particular lender.

There's too much competition out there that now they've put themselves out of the market.

The bank is claiming there profit margins are diminishing.

Lenders have always disliked variable mortgages for this very reason.

I'll keep you posted!

It's NOT always about the lowest rate.

First off this blog is in no way being written to bash any lender or bank out there. Every lender serves their purpose and are the right fit for someone. This blog is to make you, the consumer, aware that it's not always about the rate you see on paper. It's about the flexibility and options that you need in a mortgage. I like to say to people, "do you want the best rate or the best product". With the options of a mortgage broker you can get that best product!

Here's just a couple of many examples:

Yesterday I opened up my local paper and saw Prospera's "myStyle' low rate fixed mortgage product that offers free legals, appraisal and inspection or $1,500 cash back. Sounds great right? In theory it is great, however, the small print that comes along with this mortgage is a bit alarming. The biggest thing that stands out to me is the 12 month interest penalty...yes 12 months. That's 9 months more than standard. There is only a 10% increase in payments per year and no lump sums as well. http://bit.ly/e5ywbA All this to get their 'best rate'. That $1,500 doesn't sound very good anymore.

On the variable product they do something as well that some lenders do that is NOT GOOD. They don't allow your payment to increase when prime goes up. What essentially happens, especially now that we're in an increasing rate market, is that more of your payment goes to interest and the principal portion diminishes. This leads to negative amortization. I've seen a 25 year amortization jump to almost 40 years before. The person was quite upset when I explained to them what the bank was doing.

There's also the Vancity product that is quite low on the fixed rate. This isn't offered unless you take 2 other products with them i.e., RSP's, insurance etc. If you're not a member, prepare to pretty much move everything to them to get this rate.

As mortgage brokers we know the lenders that not only have pretty darn good rates, but they also have all the features that you have come to expect. You can't always find this with one particular bank or lenders' products. Remember it's not always about rate. Planning and working a mortgage around your needs is what's important.

Make sure that you at least give a mortgage broker a shot to see if they can help you make the right decision. You owe it in yourself to do so. We don't charge for a consultation and unless you're obtaining private money (seconds etc) we do NOT charge a fee to help out. The lender/bank compensates us.

Again, know that I'm in no mean going after any one lender or banks products. This blog is solely to make you aware to read the fine print, it could mean a lot.

Collateral mortgages

I really feel strong about the consumer, you, knowing about these collateral charges.

I sat with a realtor today and explained the difference of a good rate and a low rate and one is this collateral charge. She was blown away wi the differences. Always talk to a mortgage professional. One who has options and is not tied to one lender.

This video blog may not make perfect sense to you and if it doesn't, please ask me for more clarification. I just couldn't say what I wanted in a short video blog!

Here's the other two blogs:
'follow-up-on-collateral-mortgages'
'collateral-mortgages-yes-or-no'

Where did all my friends on FB go?

Ever wondered why you don't see all your friends on your personal or fan pages anymore? I did and found out why. My conclusion is that FB makes way TOO many changes TOO frequently and doesn't tell anyone. It's kind of annoying.

Anyways, I had to create an event with this...


PLEASE READ:
THIS IS VERY IMPORTANT TO EVERYONE WHO USES FACEBOOK FOR BUSINESS OR PERSONAL REASONS AND WISHES TO STAY IN TOUCH WITH THEIR CONTACTS!!

Have you noticed that you are only seeing updates in your newsfeed from the same people lately? Have you also noticed that when you post things like status messages, photos and links, the same circle of people are commenting and you are not hearing from anyone else?

...The problem is that a large chunk of your contact list can't see anything you post and here's why:

The "New Facebook" has a newsfeed setting that by default is automatically set to show ONLY posts from people you've recently interacted with or have interacted the most with (which would be limited to the couple of weeks just before people started switching to the "new profile"). So, in other words, for both business and personal pages, unless you or your friends/fans commented on one anothers posts within those couple of weeks - you are now invisible to them and they are invisible to you!!

HERE'S THE FIX:
On your homepage click the "Most Recent" title on the right of the Newsfeed, then click on the drop down arrow beside it and select "Edit Options". Click on "Show Posts From" and change the setting to "All Of Your Friends and Pages" (you can also access the "Edit Options" link at the very bottom of the Facebook homepage on the right)

Note: Business pages do not have a newsfeed. Owners of business pages should adjust the settings on their personal accounts.

The good news is:
You can now view all of your friends and fans again.

The bad news is:
YOU ARE STILL INVISIBLE to a large portion of your list. If you want to re-establish contact, you will need to get the word out to ALL of your contacts by inviting them to this "event" or creating one of your own so they can read the post and adjust their settings.

To invite your friends:
Click on "Attending" at the top and then you will see an option to invite your friends under the smiley face. It’s public so everyone who logs onto Facebook can view it and even the friends who can’t see your posts WILL see the event invitation. You can also tweet about it, create a blog post or send out an email to your subscribers in hopes of reaching them all.

Purchase plus improvements

Purchase plus improvements transactions allow the purchasers to finance the costs of immediate renovations or improvements through the mortgage loan by using the “Estimated Market Value”; value after these renovations or improvements have been done.

Here's how the program works at one lender which is pretty much standard across the board.

Conventional Loans – In addition to the standard purchase requirements, the
following criteria apply:

• Appraisal will be required. The appraisal report should indicate both values e.g. “Current Market Value” and “Estimated Market Value”.
• Lending value must be calculated using the lesser of the “Estimated Market Value” or the “Total Cost to Improve Value”.
• A quote outlining the work to be done, the cost of improvements and expected completion date must be obtained and reviewed prior to completion.
• Work must normally be completed within 90 days after completion
• An amount equivalent to the cost of improvements must be held back. The hold back should be released once the work has been completed, inspection report provided and any lien period has passed.
• No maximum threshold for the cost to complete renovations / improvements.
• Progress draws are allowed when renovations / improvements are major and progress draws requirements apply.

CMHC Insured Loans – CMHC will insure mortgages for purchases plus improvements.

• The loan to value is the lesser of the “purchase price plus direct costs associated with the improvements” or the “Estimated Market Value”.
• A quote outlining the work to be done, the cost of improvements and expected completion date must be obtained and reviewed.
• Appraisal is not required. Originator and underwriter are expected to ensure reasonableness of the “Estimated Market Value”.
• Purchase advance based on the property’s “Current Market Value” and additional advances to cover improvements based on the “Estimated Market Value”.
• Work must normally be completed within 90 days
• If the increase does not require Progress Advances, the hold back may be released upon confirmation that the work has been completed. The following documentation should be obtained prior to releasing the funds:
• letter from the applicant confirming renovations / improvements have been completed
• receipts showing invoices have been paid.
An inspection report confirming the renovations / improvements have been done may also be acceptable

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Even though the program is out there it is not widely used. Most people don't like the short time lines used and most people are capable or know someone very capable of doing the work themselves.

Follow up on collateral mortgages

Just doing a little follow from a previous blog ( http://gitersos.blogspot.com/2010_10_01_archive.html ) in regards to how collateral mortgages are not the best as another scenario came up again today.

Clients bought a town home for $320k last year. I did not do this mortgage. They went to their Credit Union. I received their Land Title Form B today and saw that this CU registered a value of $700,000. That's right 2.5 times more than what they bought the place for.

Now the CU or bank will tell you it's a good thing as you can pull money out later on without having to go through a lawyer. Well the blog post from previous is one example of why it's not a good thing. I know you may think this will never happen to you, however, you NEVER know. It's best to avoid the situation up front.

The other reason why I don't like them is that the only way out of a collateral mortgage is buy doing a full reregistration of your title, meaning lawyer costs of up to $750-800. If your mortgage is up for renewal your ‘free agency’ is no longer, as you can not do a straight transfer to a new lender without paying new legals. (straight transfer on renewals the new lender will pick up the small cost) Meaning your current lender may not be inclined to give you the best deal as they know you’re stuck and would not want to pay the new lawyers. Their hands are deeper in your pocket!

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Support brokers. We're needed in this industry to let the consumers know what's out there and how the banks are trying to find ways to get more out of you. With out us and broker only lenders we would ALL still be paying posted rates. We're competition to the big banks.

Credit scores

Here's a break down of how credit is calcculated

35% is based on your payment history -
Do you have a record of late credit card payments, delinquencies or bankruptcies? The more late payments on record and the more recent they have been, the more negatively they will affect your score.

30% is based on the amounts you owe -
This not only includes how much you owe but how much of your available credit you have used. If you consistently use 75-80% or more of your available credit (for example, keep your credit cards at or near the maximum), your score will be lower than if you are using a small percentage of the credit available to you.

15% is based on the length of your credit history -
How long you have had accounts and credit, factor into your credit score. Credit cards that you have held for a long time give you a higher score than new credit cards.

10% is based on how much new credit you have requested -
If you have requested a lot of new credit in a relatively short period of time, you are considered to be a higher risk than someone who has applied for less credit.

10% is based on the types of credit you use -
This includes mortgages, loans, and credit cards. If more of your debt is high interest credit cards, you may be considered a higher risk than someone whose biggest debt is their mortgage.

I'm getting tired..

I'm getting tired of all these articles in the news lately saying we need to change the mortgage rules and make it harder to qualify etc.

This is absolute nonsense. Why does the government not want people to have an appreciating asset, yet they don't seem to come down on credit card companies, or banks that are giving out lines of credits.

Just the other day I was sitting at home and a guy from my local CIBC called. 'Hi Christos this is so and so from the Langley CIBC, I'm calling today to let you know that you're approved for a LOC and an increase in your credit card'

I started to laugh a little and said 'with consumers across Canada being upwards to 150% in debt to their household income, you're calling people trying to get more money out to them. Thanks but no thanks I don't need anything.' He in turn laughed back and said 'are you sure you don't want it, maybe for a rainy day or something.'

What I'm trying to say is that we do NOT need more stringent mortgage rules. They're tough as it is already. The market has been strong here in CDN and with the insurance, CMHC Genworth and Canada Guaranty, lenders are protected on higher risk files. (CMHC being the most commonly used and it's a crown corp. go figure! This is for a whole other discussion!)

CDN needs to come down harder on the unsecured debt and the credit card companies. These are where the issues lie. I've had, in the last year, a few people come to me saying I need a refinance, I've racked up credit card debt and they don't seem to stop giving me more. How much debt was there? Over $100k!

Here's a quote I found and it's completely true: "Regulators need to wake up & see that unsecured debt is the issue. I have clients that barely qualified for their mortgage, but the bank had no problem whatsoever in giving them an unsecured line of credit for $50,000 after their purchase closed."

I've had my rant for today!!

On title and not on the mortgage?

As this came up again today and is putting an extra damper on all parties involved, I thought I'd write a little blog about it.

When you're purchasing a home and you're married, have a common law, or a partner that you'd like to put on title remember one thing. They can not just go on title at the time of completion.

You can not be on the asset (the home) and not be on the liability (the mortgage). The opposite is allowed. This would be called a guarantor or co-signor.

You also want to make sure that you're mortgage approval and purchase contract is written up with the other persons name on it. This can cause big problems when you're about to complete as I'm experiencing today. All the documents need to be rewritten and there needs to be an addendum drawn up for the sellers to sign. They may not always be willing, which I've experienced.

Moral of the story, be up front right from the start and be certain of whom will go on title so no major hiccups happen later on.

Benchmark rate at 5.44%

If you want a 1 to 4 year fixed term or a variable you're qualifying at 5.44% as of yesterday morning.

This is a high rate and does put a variable, my favourite product, out of touch for some people.

If you want a 5 year fixed or higher i.e 7 or 10 year, then you qualify on the contract rate. Which today is in around the high 3's to low 4's. Big difference from the 5.44%

If you are going conventional, putting 20% or more as a down payment, the non bank lenders will allow you to still qualify for the 1-4 and variable at their discounted 3 year rate. Which is mid to low 3's today.

This with the new changes to 30 year amortization, could definitely put some people out of the market.

I'm only sure better times are ahead. Once confidence is back, a little more lax on lending policies will follow.

A rate hike seems imminent

Looks like the days of under 4% five years are going away soon. The bond yields keep creeping up which means the banks need to keep their margins in tact to keep profits up.

This can be a good thing for some and a not so good thing for others.

The reason it can be a good thing for some with a fixed rate is, if you're looking to make a change in respect to your mortgage, i.e refinance or move, then you can look at getting yourself booked with a rate right now for 120 days, wait for rates to go up, and then order a discharge statement at the lawyers and there you go, you've just decreased your penalty and received the lower pre rate increase interest rate!

The bad news is, if you're wanting to get in the market in the Spring, you'll have a possible harder time obtaining the home you want. Due to higher rates and the cut from a 35 year amortization to a 30 year amortization.

Best thing is to get a rate hold now for 120 days. Even if you're not 100% certain you'll be ready in that time frame.

Call me today!

Pension Incomes

Just some interesting info. on the amounts paid out for pensions.

Maximum Income Security Benefits Effective January 1, 2011

CANADA PENSION PLAN (JANUARY - DECEMBER 2011)
Retirement Pension (at age 65) $960.00
Disability Pension $1,153.37
Death Benefit (maximum lump sum) $2,500.00
Survivor's Pension (under age 65) $529.09
Survivor's Pension (age 65 and over) $576.00
Children of Deceased or Disabled Contributor $218.50
Combined Pensions
Survivor\Retirement (retired at age 65) $960.00
Survivor\Disability $1,153.37
Yearly Maximum Pensionable Earnings (YMPE) for year 2011 $48,300.00


OLD AGE SECURITY PROGRAM (JANUARY – MARCH 2011)
Basic Old Age Security pension $524.23
Guaranteed Income Supplement (GIS)
Single $661.69
Spouse of non-pensioner (does not receive OAS) $661.69
Spouse of pensioner (receives an OAS pension) $436.95
Spouse of Allowance recipient $436.95
Spouse's Allowance (SPA)
Regular $961.18
Widowed $1,065.45

OAS 15% clawback commences with an income above $67,688. The full OAS pension is eliminated when a pensioner's net income is $109,607 or above.
The Spouse's Allowance stops being paid at $29,376, while the GIS stops being paid at $38,112.


Further information can be found on the Service Canada website at the attached link:
http://www.servicecanada.gc.ca/eng/isp/statistics/rates/pdf/janmar11.pdf

Changes effective March 18, 2011

CMHC was just in my office updating me on the new rule changes brought down by the Ministry of Finance for March 18, 2011.

The main thing to know is that if you have written a purchase contract prior to this date, you are still eligible for the 35 year amortization.

On a refinance, if you have a committed application with the lender, and is set to close past the March 18th date, then you're ok. So you're still allowed to refinance to 90% if needed.

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To clarify the new most important changes.

The maximum amortization for high ratio, and most like conventional (still hasn't been confirmed however, the head at CIBC told me the other day it's most likely for both) will go from 35 years to 30 years.

The maximum equity you can take out on your property for a refinance is a mere 85%. If your home is worth $400k. The most you can take is $340k

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Why I don't like these changes.

90% of my clients that have been put into a 35 year amortization do NOT need it. We use it as a strategy. Do one of two things: Keep the payments higher to whatever AM you'd like and in case something was to ever happen, you can always reduce your payments to increase your monthly cash flow.

Or you can take the extra, whatever amount, and start building your investment portfolio. At the end of the year, you should reduce your tax amount and/or receive a tax credit back which you can either reinvest or put on your mortgage as a lump sum to reduce your over amortization.


For the refinance- I don't like it as, a lot of clients that I have refinanced to 90% or 95% now or in the past, do not do it for debt reduction, they do it as they can take advantage of a lower rate and ONLY roll in their penalty to their existing balance. This doesn't allow those people to do this now which in turn is telling the client they have to pay higher and more interest. Doesn't seem fair to me.

Variable rates to stay low through 2011

Variable mortgage rates:

The Bank of Canada will hold off on increasing interest rates during the first half of 2011. This means variable mortgage rates will also remain at low levels during this time and then gradually increase from there. As the Canadian economy continues to recover, the sluggish progress in the US and the frailty of the EU, tasks the Central Bank with maintaining a tricky balancing act.

"Governor Carney and his people will be trying to thread the needle on interest rates trying to balance the rising loonie against low interest rates that encourage further consumer indebtedness", says Dr Ian Lee, Director of MBA Program, Sprott School of Business, Carleton University.


Fixed mortgage rates:

The decreased demand for mortgages and relatively stable bond yields, leads us to believe that fixed mortgage rates will remain unchanged for the month of January. However, this outlook is susceptible to change with additional defaults in Europe or poor results on upcoming US economic indicators.

Also, ultra low interest rates for the past few years have fueled a borrowing frenzy creating concern about mounting debt levels for Canadian consumers. It wouldn't be a surprise if the government made a policy change to address the debt problem by adjusting the mortgage rules, likely spurring a change in fixed rates as well.