SEPTEMBER DATA CONFIRM THAT HOUSING IS IN FULL REBOUND

Statistics released today by the Canadian Real Estate Association (CREA) show that national home sales rose for the seventh consecutive month. Activity rose another 0.6% month-over-month in September to 512,000 units (seasonally-adjusted and annualized). This was the highest level in 21 months and 6.6% above the 10-year average shown in the chart below. Existing home sales were 18% above the six-year low posted in February 2019, but they remain 8% below highs reached in 2016 and 2017.

Activity accelerated in slightly more than half of all local markets, led by Greater Vancouver (GVA) and the Fraser Valley, which together constitute the Lower Mainland of British Columbia.

Actual (not seasonally adjusted) sales activity was up 15.5% year-over-year, reflecting the combination of slow sales in September 2018 and a rebound in activity this year. Transactions were up from year-ago levels in all of Canada’s largest urban markets, including the Lower Mainland of British Columbia, Calgary, Edmonton, Winnipeg, the Greater Toronto Area (GTA), Hamilton-Burlington, Ottawa and Montreal.

New Listings
The number of newly listed homes rose by 0.6% last month compared to 1.1% in August. The small increase in sales combined with the modest decline in new supply tightened the national sales-to-new listings ratio to 61.3% in September. This measure has been increasingly rising above its long-term average of 53.6%. At this point, this measure remains in balanced market territory but is favouring sellers more than buyers.

Based on a comparison of the sales-to-new listings ratio with the long-term average, three-quarters of all local markets were in balanced market territory in September 2019, including the GTA and Lower Mainland of British Columbia. Of the remainder, the ratio was in sellers market territory in all housing markets except Saskatoon and Southeast Saskatchewan.

There were 4.5 months of inventory on a national basis at the end of September 2019 – the lowest level recorded since December 2017. This measure of market balance has been increasingly retreating below its long-term average of 5.3 months.

This is not to say that things are solid across the board. Small month-over-month (m-o-m) resales declines in Calgary and Edmonton in September are a reminder that the recovery remains tentative in several markets where the economy is soft. Home prices are still down from a year ago in Alberta and Saskatchewan, and it will take a little longer for any recovery in demand to firm up pricing in those areas.

Home Prices
The Aggregate Composite MLS® Home Price Index (MLS® HPI) rose 0.5% m-o-m in September 2019, marking a fourth consecutive gain for the measure.

Seasonally adjusted MLS® HPI readings in September were up from the previous month in 13 of the 18 markets tracked by the index. (Table 1)

In recent months, home prices have generally been stabilizing in the Lower Mainland and the Prairies, where previously they were falling. Meanwhile, price growth has begun to rebound among markets in the Greater Golden Horseshoe (GGH), rejoining the ongoing price gains in housing markets located further east.

Comparing home prices to year-ago levels yields considerable variations across the country, with mostly declines in western Canada and mostly price gains in eastern Canada.

Home prices in Greater Vancouver and the Fraser Valley remain furthest below year-ago levels (-7.3% and -4.8%, respectively), although declines are becoming smaller. Elsewhere in British Columbia, home prices on Vancouver Island and in the Okanagan Valley logged y-o-y increases (4% and 1.1%, respectively) while they edged slightly higher in Victoria (+0.4% y-o-y).

Prairie markets posted price declines ranging from about 1% to around 4% on a y-o-y basis in September. Over the same period, y-o-y price growth has re-accelerated well ahead of overall consumer price inflation across most of the GGH. Meanwhile, price growth in recent years has continued uninterrupted in Ottawa, Montreal and Moncton.

All benchmark home categories tracked by the index returned to positive y-o-y territory in August 2019 and gains further increased in September. Two-storey single-family home prices were up most, rising 1.7% y-o-y. One-storey single-family home prices rose 1.4% y-o-y, while townhouse/row and apartment units edged up 0.4% and 0.7%, respectively.

Bottom Line

This report is in line with other recent indicators that suggest housing has recovered from a slump earlier, helped by falling mortgage rates. The run of robust housing data gives the Bank of Canada another reason– along with healthy job gains, higher wage rates and stronger than expected output growth in Q2 — to hold interest rates steady.

As a result of some apparent easing in trade tensions between the US and China, interest rates have risen sharply over the past month. The Government of Canada bond yield is now 1.57% compared to 1.42% a month ago. Mortgage rates have edged up as well. The federal election is a wild card. Promises made during the federal election campaign could heat things further. Proposed measures include an expansion of the first-time homebuyer incentive; an extension of the maximum amortization period for insured mortgages; an easing the mortgage stress test; and, an increase in the homebuyer tax credit. Such measures could ultimately boost demand at a time when supply is tight overall. We’ll be awaiting details and the timing of any housing-related announcements by the next government to gauge the full impact on the market.

–DR. SHERRY COOPER

BUILDING A REAL ESTATE PORTFOLIO

More and more Canadians do not have a defined benefits pension plan. Companies are moving away from this model due to the expense of maintaining enough in the fund to pay out until the employee and survivors die. Those who are self employed also do not have pensions beside the Canadian Pension Plan.
What can you do if you fall into this category? How do you save enough to have a comfortable retirement? The answer is, build up your own investments through a real estate portfolio.

In order to purchase a revenue property you need 20% down payment . This can be a huge sum to save and you could get discouraged as you see property prices rising. There is a legal work around that is an open secret that realtors and other property investors have used for years.

Purchase a starter home with a 5% down payment. While you are living in the property, it is considered as your primary residence and any increase in value is tax free. Start from Day 1 to save for your next home. You may purchase a condo as the prices are usually less than most detached homes in Canadian cities. When you have saved 5% or if your present home has increased enough in value that you have more than 20% in equity you can remove that extra equity with a line of credit or by refinancing your home you can now purchase a larger home. Now you move to House #2 and rent out House #1.

You are now on your way to building a real estate portfolio. If you repeat this every 3 to 5 years in 20 years you’ll have a portfolio of 4 or more rental properties Is this for everyone? No, if you aren’t handy and if you don’t want the expense of hiring a property management company you cold end up spending your free time on maintenance of several homes.

Talk to your financial advisor or accountant first and then meet with your local Dominion Lending Centre mortgage professional. We can provide answers to your real estate financial needs.

–DAVID COOKE

ROBUST CANADIAN JOBS REPORT IN SEPTEMBER

The Canadian jobs market continued to surprise on the high-side–on track for one of its best years on record. This provides further confirmation to the Bank of Canada that additional easing in monetary policy is not necessary. The economy added 53,700 jobs in September, well above expectation, taking the year-to-date jobs gain to just over 358,000, the most in the first nine months of a year since 2002. The economy added 70,000 full-time jobs in September, with part-time employment down 16,300. Canada has added almost 300,000 new full-time jobs this year.

In September, employment increased in Ontario and Nova Scotia, while it held steady in other provinces.
More people were working in health care and social assistance, as well as in accommodation and food services. At the same time, there were declines in information, culture and recreation, and natural resources.

The number of self-employed workers increased, as did the number of employees in the public sector. The number of private-sector employees was virtually unchanged, although it was up 2.3% year-over-year.

The outsized jobs gain reduced the unemployment rate to 5.5% from 5.7% in August, near its lowest level in the past forty years. One difference in the September report from recent trends is that most of the job gains reflected mostly lower unemployment levels rather than rising labour force participation. The number of unemployed Canadians fell by 46,900 in September, while the labour force increased by just 6,800.

Wage Gains Rose Last Month

Another positive underpinning for the Canadian economy was the sustained rise in household incomes. The total hours worked last month were up 1.3% from a year earlier. Hourly pay rose 4.3% year-over-year in September, accelerating from a 3.7% pace in August. The last few months have posted the sharpest year-over-year increases in wage rates in a decade.

Bottom Line: This report lends ammo to the Bank of Canada to buck the tide of global monetary easing, at least for now. Few economists and investors believe, however, the country will be immune to a slowing global economy. Many expect the Bank of Canada will eventually be forced to cut interest rates. Swaps trading suggests one cut is still priced in over the next year.

The Bank of Canada’s next rate decision is October 30. There is so much geopolitical uncertainty in the world, emanating mostly from the US that no one can rule out a BoC rate cut sometime in the next year. The Canadian election results on October 21 will at least eliminate one uncertain issue, but a minority government were it to result, would only add to the uncertain stew.

–DR. SHERRY COOPER

MORTGAGES 101 – WHAT YOU NEED TO KNOW ABOUT MORTGAGES

Mortgage [ˈmôrɡij] NOUN
With a residential mortgage, a home buyer pledges his or her house to the bank. The bank has a claim on the house should the home buyer default on paying the mortgage. In the case of a foreclosure, the bank may evict the home’s occupants and sell the house, using the income from the sale to clear the mortgage debt.

Mortgages in a Nutshell
Since homes are expensive, a mortgage is a lending system that allows you to pay a small portion of a home’s cost (called the down payment) upfront, while a bank/lender loans you the rest of the money. You arrange to pay back the money that you borrowed, plus interest, over a set period of time (known as amortization), which can be as long as 30 years.

When you get a mortgage loan, you are called the mortgagor. The lender is called the mortgagee.

How Do You Get a Mortgage?
The companies that supply you with the funds that you need to buy your home are referred to as “lenders” which can include banks, credit unions, trust companies etc.

Mortgage lenders don’t lend hundreds of thousands of dollars to just anyone, which is why it’s so important to maintain your credit score. Your credit score is a primary way that lenders evaluate you as a reliable borrower – that is, someone who’s likely to pay back the money in full WITHOUT a lot of hassle. A score of 680-720 or higher generally indicates a positive financial history; a score below 680 could be detrimental, making you a higher risk. Higher risk = higher rates!

How Mortgages Are Structured
Down payment: This is the money you must put down on a home to show a lender you have some stake in the home. Ideally you want to make a 20% down payment of the price of the home (e.g., $60,000 on a $300,000 home), because this will allow you to avoid the extra cost of Mortgage Default Insurance which is mandatory with all down payments of less than 20%.

Every mortgage has three components: the principal, the interest, and the amortization period.

Mortgages are typically paid back gradually in the form of a monthly mortgage payment, which will be a combination of your paying back your principal plus interest.

1. Principal: This is the amount of money that you are borrowing and must pay back. This is the price of the home minus your down payment
   taking the above example, purchase price $300,000 minus $60,000 down payment to get a mortgage (principal) of $240,000.
2. Interest rate: Lenders don’t just loan you the money because they’re nice guys. They want to make money off you, so you will be paying them back the original amount you borrowed (principal) plus interest—a percentage of the money you borrow.The interest rate you get from the lender will vary based on: property, lender, credit bureau, employment and your personal situation.
3. Amortization means life of the mortgage, or how long the mortgage needs to be, in order to pay off the complete loan (principal) plus interest. Mortgage loans have different “amortizations,” the two most common terms are 25 & 30 years.Within the life of the mortgage (amortization) you will have a Term. The length of time that the contract with your mortgage lender including interest rate is set up (typically 5 years). After your term completes, you can renew your mortgage with the same lender or move to a new lender.

WHEN TO GET A MORTGAGE

First Step: connect with a Mortgage Broker for a mortgage before you start hunting for a home. You need to know what you can afford – especially with all the new government regulations.

Ideally you need a mortgage pre-approval, which an in-depth process where a lender will check your credit report, credit score, debt-to-income ratio, loan-to-value ratio, and other aspects of your financial profile.

This serves two purposes:

1. It will let you know the maximum purchase price of a home you can afford.
2. A mortgage pre-approval shows home sellers and their realtors that you are serious about buying a home, which is particularly crucial in a hot housing market.

Types of Mortgages
How do you figure out which mortgage is right for you? Here are the 2 main types of home loans to consider:

1. Fixed-rate mortgage:This is the most popular payment setup for a mortgage. A fixed mortgage interest rate is locked-in and will not increase for the term of the mortgage.
2. Variable rate mortgage aka Adjustable Rate Mortgages (ARM) A variable mortgage interest rate is based on the Bank of Canada rate and can fluctuate based on market conditions and the Canadian economy. A mortgage loan with an interest rate that is subject to change and is not fixed at the same level for the life of the term. These types of mortgages usually start off with a lower interest rate but can subject the borrower to payment uncertainty.

How to Shop for a Mortgage?
Use a mortgage broker, a professional who works with many different lenders to find a mortgage that best suits the needs of the borrower.

Brokers specialize in Mortgage Intelligence, educating people about mortgages, how they work and what lenders are looking for. Everyone’s home purchasing situation is different, so working with us will give you a better sense of what mortgage options are available based on the 4 strategic priorities that every mortgage needs to balance:

• lowest cost
• lowest payment
• maximum flexibility
• lowest risk

Most Canadians are conditioned to think that the lowest interest rate means the best mortgage product. Although sometimes that is true, a mortgage is more than just an interest rate. You can save yourself a lot of money if you pay attention to the fine print, not just the rate.

Banks tend to concentrate on the 5 year fixed mortgage rate (since that’s the best option for them)… rates are important, however your Dominion Lending Centres mortgage professional will look at the total cost of the mortgage. Brokers will advise & explain mortgage options, help you understand the implications of your choice and help you avoid the pitfalls of choosing a mortgage based on rates alone.

–KELLY HUDSON

CLIENT SUCCESS STORY: CHIP REVERSE MORTGAGES

A retired couple on fixed pensions found themselves struggling to make ends meet each month. Both were in good health and wanted to maintain an active lifestyle. They had spent their working years paying off their mortgage and had little saved in their RRSPs.

Now both in their 70s, they’re mortgage free. They love their neighborhood and want to remain in their family home. Like many people who live in the Greater Vancouver Area, their house has increased in value significantly and is now valued at $850,000.

We were able to access the equity in the couple’s home and free up $300,000 in a reverse mortgage, which can be received as a lump sum payment or as monthly payments. These funds are tax-free and will not affect their CPP (Canada Pension Plan) or OAS (Old Age Security) payments.

The clients are now in a position to increase their day-to-day spending, undertake some home renovations, take a trip or use the funds however they desire. They’re not required to make any payments on the amount as long as they reside in the property for six months of the year.

Their fixed pension income was sufficient for qualification as it demonstrated there were enough funds available to cover the annual property taxes and insurance costs. The clients can now enjoy staying in their home, retaining ownership and continuing to enjoy the increase in property value.

The Details

Value of Home

$850,000.00

Amount of Funds Released

$300,000.00 was accessed by using equity in the couple’s home. No payments are required provided the clients live in the home for six months of the year.

LTV

64%

Income Documentation

CPP & OAS statement

Deposit of CPP & OAS with current bank statement

Credit Scores

712 & 745

Total Debt Services Ratios

38%

Mortgage Solutions

$300,000.00 was accessed by utilizing the equity in the client’s home. No payments are required provided the clients live in the home for 6 months out of the year—making these retirees happy and able to enjoy their retirement!

If you find yourself in a similar situation to the above, we would encourage you to reach out to a broker and find out what options are available to you. As always, if you have any questions about any mortgage product, or a CHIP reverse mortgage, reach out to your Dominion Lending Centres Mortgage Broker to learn more!

–GEOFF LEE

Canadians Need Guidance With Their Mortgages

That’s the takeaway from a national survey released this week by Rates.ca, which found half of Canadians aren’t aware of the mortgage options available to them.

Not only that, but Canadians are lacking in some other basic mortgage trivia, with an astounding 9 out of 10 respondents not knowing that mortgage interest is charged semi-annually:

• 28% think interest is compounded monthly;
• 17% think it’s bi-weekly;
• 17% think it’s annually;
• 28% just have no idea.

Should we be concerned?

Dustan Woodhouse, President of Mortgage Architects, and a former active broker who has written multiple educational mortgage books, thinks so.

“Sounds about right. We know about what we pay attention to, i.e., The Kardashians,” he wrote to CMT. “The material concern in this is how easy it makes it for the government to over-regulate the industry, with clients blaming the banks—rather than the appropriate parties. This disconnect is deeply concerning.”

Perhaps even more concerning is the fact that only four out of 10 Canadians (39%) know they can avoid paying default insurance on their mortgage if they make a down payment of 20% or more.

With default insurance running anywhere from 4–5.85% of the mortgage value, we’re talking some serious dinero being spent—potentially unknowingly and unnecessarily.

So, what can be done? Woodhouse admits there are no simple answers, but says making mortgages more tangible to borrowers would be a good place to start.

“The root issue is making mortgages interesting and relevant to clients more often than when they need one,” he said. “It needs to be all about housing, not simply mortgages.”

Paul Taylor, President and CEO of Mortgage Professionals Canada, agrees.

“Unless you deal in mortgages, you only talk about them, generally, once every five years,” he said. “I’m sure at the time of signing, the borrowers understood what their payment obligations were and the schedule; after that, the rest of the information provided was likely filed under ‘nice to know but not relevant enough to me to retain.’”

Making the Case for Mortgage Brokers

With a growing trend towards “do-it-yourself” online mortgage shopping, we wondered if these survey results reinforce the need for mortgage brokers in guiding uninformed borrowers about their mortgage options.

“Big time…more than ever brokers are required,” Woodhouse said.

Taylor added that the stats “clearly demonstrate the need for professional and impartial advice at the time of purchase/renewal/refinance. And while some may suggest they are comfortable purchasing online without counsel, I think we can see that is inadvisable in almost all cases.”

Taylor pointed to the UK as an example. Following the crash of 2008, he noted the country adopted several policies by 2014, including disallowing borrowers to be able to self-declare income, and requiring mortgage consumers to be provided mandatory advice on mortgage products.

“The last point, I think, would likely begin to receive international discussion/attention if online sales begin to increase too quickly given the data this survey demonstrates,” Taylor said. “Given the size of these loans, the personal liability and the potential interest-cost difference for as little as a quarter-point in interest, I expect there may be some scrutiny on consumer outcomes for these self-serve options.”

Additional Survey Tidbits

The Rates.ca survey revealed some additional interesting findings about Canadians’ knowledge gap when it comes to financial products, including:

• Nearly 7 out of 10 Canadians (68%) aren’t aware that interest on credit cards is calculated daily.
• 30% admitted they are unlikely or somewhat unlikely to make the minimum monthly payments on their credit cards.
• 40% of respondents admitted to not knowing their credit score.
• 43% said they felt comfortable negotiating their mortgage over the internet.
• And 94% believe schools should place greater emphasis on teaching financial literacy.

5 WAYS YOU COULD USE A CHIP REVERSE MORTGAGE

Reverse mortgages are continuing to grow as a retirement solution for Canadians 55+. Homeowners 55+ are unlocking their home equity for tax-free funds that improve their cashflow and pay-off higher interest loans. Consider your own financial needs. Do any of these 5 common scenarios sound familiar?

1) You have missed a payment/made a late payment.
Credit card payments can become a vicious cycle; you make monthly interest payments and elongate the process of chipping away at that debt. Alleviate the stress of credit card debt by consolidating smaller loans with a reverse mortgage at a much lower interest rate. By consolidating your debt with a reverse mortgage, you can eliminate the stress of having to make monthly payments towards your loan and in turn, free up your monthly income.

2) You have asked to skip a payment or are accessing your investments earlier than you’d like.
If your debt has led to missing payments or touching your RRIF or retirement accounts, consider using a reverse mortgage to unlock up to 55% of your home equity. This way you can pay off debts while your investments keep working for you.

3) You want to start crossing things off your bucket list, yet can’t afford to.
Maybe your dream is to purchase a second home like a cottage, take a vacation, or even just dine out or attend the theatre regularly. A reverse mortgage can improve your retirement lifestyle by supplementing your monthly income without affecting your OAS and pension.

4) You want to financially assist your aging parents/kids/grandkids.
As the sandwich generation, you’re caring both for kids and aging parents. That can place huge financial stress on a household. A reverse mortgage can give both you and your aging parents financial independence and the ability to help your kids/grandkids pay for their education or even assist with a down payment for their home.

5) You are facing unexpected expenses.
Maybe it’s a leaky roof or a flood in your basement. Or you might have to renovate your home, allowing you to stay in your home long term. A reverse mortgage gives you quick access funds to pay for unplanned expenses without worrying about making any payments until you move or decide to sell your home.

If any of the above examples resonate with you, the CHIP Reverse Mortgage from HomeEquity Bank could be a great solution. Choose to receive funds as a lump sum or a monthly advance, depending on your needs. Your DLC Mortgage Broker can tell you more!

–ERIC BISAILLON

5 MORTGAGE TIPS TO HELP YOU AFFORD A HOME

Buying a home is more difficult now than ever—and this is not news to anyone! No matter where you live, the recent stress testing measures, increase in housing prices in major cities, and continued increase of the cost of living all combine to make home ownership a daunting task. But we do want to offer some help and solutions for young families looking to get into the market as we truly to believe it’s not impossible and have helped many families do just that!

1. Take a step outside of the downtown core. Typically, property right in the heart of the city is more expensive due to the location and the continued demand. Stepping out to one of the outlying suburban areas can offer more affordable options and can also lend you with an increased inventory of properties within your price point.
2. Consider finding a rent to own property. A Rent to Own (RTO) property can allow you to rent a property while subsequently saving up for a down payment.
3. Talk to a mortgage broker. Speaking with a broker and going through a pre-qualification process can help you by allowing you to see the areas in which you will need to improve to help make you more attractive to lenders. This can include things such as:
a. Increasing your credit score
b. Decreasing your overall debt or consolidating your current debt.
c. Looking at increasing your overall income options and the ways in which you can do that.
4. Consider using a co-signor(s) for your mortgage to start with. One solution we have found that works well for certain clients is having a co-signor(s) on the mortgage with a planned exit strategy to remove them once the client’s personal income increases or they are able to qualify for the mortgage on your own (ex. By paying down debts and/or improving their credit score). This solution is situation specific, so speak to your broker for more details.
5. Save, Save, and Save some more. We know this is common sense but speaking with a financial advisor can help show you ways in which you can save and make your money work for you. We can happily recommend a few as can your mortgage broker.

We know that the state of real estate can seem overwhelming and depressing at times. Keep in mind though that not all hope is lost, and you do have options available to you! Remember the “dream” of the white picket fence detached home is not for everyone…now more than ever multi-family properties such as townhouses and condos are offering more and more amenities and beautiful properties for less. The bottom line is considering all your options and work with a dedicated broker who can help you reach your goals—whatever they might be!

–GEOFF LEE

REVERSE MORTGAGES IN CANADA DIFFER GREATLY FROM THOSE IN THE U.S.

How much do you really know about reverse mortgages? Maybe you know that reverse mortgages can help Canadians 55+ access the equity in their home, tax-free. But there are many people who mistakenly think that Canadian reverse mortgages are just like those offered in the U.S. As Canada’s leading provider of reverse mortgages, HomeEquity Bank can help set the record straight.

Canadian reverse mortgages are an increasingly popular borrowing option for homeowners 55+.

Unlike in the U.S. where features and rates can fluctuate greatly between the many providers, HomeEquity Bank, the leading provider of reverse mortgages in Canada, is a federally regulated Schedule 1 Bank. This means that HomeEquity Bank has the same oversight and regulatory obligations that the big 6 Canadian banks have. With a trusted and secure bank backing the CHIP Reverse Mortgage, it becomes a great alternative to selling your home, and may be a better-suited lending solution when compared to a second mortgage or a line of credit. Homeowners can retire stress-free, without the worry of monthly payments. Plus, funds are tax free and don’t impact your OAS or CPP.

Here are some key differences that set our reverse mortgages apart from those of our American neighbours.

In Canada:

• Eligibility amount is up to 55% of your home’s value. Our conservative lending amount serves two purposes: Firstly, the amount you qualify for increases with age as the cost of living is expected to increase and other sources of retirement income deplete. Secondly, we provide a No Negative Equity Guarantee which ensures the loan balance doesn’t exceed the fair market value of your home.
• Closing & administrative closing costs are $1,795. There are also standard legal and appraisal fees payable to third parties, as with any mortgage.
• No monthly payments are required.

In the U.S.

• Eligibility amount is up to 80% of your home’s value, according to the Federal Housing Authority.
• Closing & administrative closing costs to a max of $6,000. A lender can charge the greater of $2,500 or 2% of the first $200,000 of your home’s value plus 1% of the amount over $200,000. HECM origination fees are capped at $6,000.
• Monthly payments are required.

Tens of thousands of Canadians are already using the funds from a reverse mortgage to supplement their monthly income, pay off debt, travel, purchase a second property and more. To see how a reverse mortgage could work for you, contact you Dominion Lending Centres  Mortgage Broker today!

–SUE PIMENTO

5 MISTAKES FIRST TIME HOME BUYERS SHOULD AVOID

Buying a home might just be the biggest purchase of your life—it’s important to do your homework before jumping in! We have outlined the 5 mistakes first time homebuyers commonly make, and how you can avoid them and look like a Home Buying Champ.

1. Shopping Outside Your Budget
It’s always an excellent idea to get pre-approved prior to starting your house hunting. This can give you a clear idea of exactly what your finances are and what you can comfortably afford. Your Mortgage Broker will give you the maximum amount that you can spend on a house but that does not mean that you should spend that full amount. There are additional costs that you need to consider (Property Transfer Tax, Strata Fees, Legal Fees, Moving Costs) and leave room for in your budget. Stretching yourself too thin can lead to you being “House Rich and Cash Poor” something you will want to avoid. Instead, buying a home within your home-buying limit will allow you to be ready for any potential curveballs and to keep your savings on track.

2. Forgetting to Budget for Closing Costs
Most first-time buyers know about the down payment but fail to realize that there are a number of costs associated with closing on a home. These can be substantial and should not be overlooked. They include:
• Legal and Notary Fees
• Property Transfer Tax (though, as a First Time Home Buyer, you might be exempt from this cost).
• Home Inspection fees
There can also be other costs included depending on the type of mortgage and lender you work with (ex. Insurance premiums, broker/lender fees). Check with your broker and get an estimate of what the cost will be once you have your pre-approval completed.

3. Buying a Home on Looks Alone
It can be easy to fall in love with a home the minute you walk into it. Updated kitchen + bathrooms, beautifully redone flooring, new appliances…what’s not to like? But before putting in an offer on the home, be sure to look past the cosmetic upgrades. Ask questions such as:
• When was the roof last done?
• How old is the furnace?
• How old is the water heater?
• How old is the house itself? And what upgrades have been done to electrical, plumbing, etc.
• When were the windows last updated?

All of these things are necessary pieces to a home and are quite expensive to finance, especially as a first- time buyer. Look for a home that has solid, good bones. Cosmetic upgrades can be made later and are far less of a headache than these bigger upgrades.

4. Skipping the Home Inspection
In a red-hot housing market, a new trend is for homebuyers to skip the home inspection. This is one thing we recommend you do not skip! A home inspection can turn up so many unforeseen problems such as water damage, foundation cracks and other potential problems that would be expensive to have to repair down the road. The inspection report will provide you a handy checklist of all the things you should do to make sure your home is in great shape.

5. Not Using a Broker
We compare prices for everything: Cars, TV’s, Clothing…even groceries. So, it makes sense to shop around for your mortgage too! If you are relying solely on your bank to provide you with the best rate, you may be missing out on great opportunities that a mortgage broker can offer you. They can work with you to and multiple lenders to find the sharpest rate and the best product for your lifestyle.

Remember, when you are buying a home, you are not alone! The minute you decide to work with a Dominion Lending Centres Mortgage Broker you are bringing on a team of individuals who are there to help you through the process from start to finish.

–GEOFF LEE