Are you looking for a mortgage as if it were a commodity?

I’ve heard brokers say more than once that mortgages are a commodity, by definition a commodity is a basic good used in commerce that is interchangeable with other commodities of the same type. That doesn’t sound like mortgages to me.

While the core product is always the same, money lent that is secured by real estate, the nuances of a mortgage can vary a lot. When we look at what the client is looking to do with that property and what their life style is composed of, we have to be sure that we aren’t just placing them for the sake of placing them in a mortgage. We have a duty to the client to make sure that even though they are looking for that lowest rate that it doesn’t tie them into a mortgage they can’t get out of in a reasonable manner. I recently had a client whose parent had gotten a mortgage on a property that the kids were living in with the idea that down the road when the kids had some money they would buy the house from Mom and Dad.  Problem was that when I read the original commitment the bank representative had not explained that the sale had to be arm’s length sale; sorry kids you need to move out.

By some standards the comparison for commodities that a barrel of oil is a barrel of oil, when as an Albertan I already know that the heavy crude from Fort McMurray sells for a discount because while it is needed to toughen up the Texas oils, they just don’t need as much of it. By mortgage standards the same applies, if the rate is lower than the market there has to be a reason. The reasons can range from as simple as the yearly buy down is only 10% instead of 20% and range up to the office doing it pays their staff a salary and they use the extra money to buy down the rate.  Regardless of the reason we still need to make sure the product we recommend to our clients fits their needs and plans for the future. And if you have any questions, please contact your local Dominion Lending Centres mortgage specialist.

By: Len lane

Mortgage-Geek History

The average person if stopped on the street and asked; Are today’s low interest rates driving up house prices? Would likely say ‘yes’.
They would be wrong.
And we can let their lack of understanding pass, after all we can agree that math mostly sucks.
However to ask a Realtor, banker, or your Mortgage Broker this question and get the same answer is another story, for them to say ‘yes’ to this question is a large red flag.
Following are some basic numbers that might surprise you, unless you are a Mortgage Broker.

2007
A buyer with 10% Down and a $100,000 annual gross income.
At the time rates were ~4.99% and amortizations were capped at 40 years
Maximum mortgage amount?
~$630,000

Moving along…
2016
A buyer with 10% Down and a $100,000 annual gross income.
At the time rates were ~2.49% and amortizations were capped at 25 years
Maximum mortgage amount?
~$630,000

But then something happened, in response to rising prices and an apparent lack of understanding as to basic math, our Federal Government changed the rules.
And our average person on the street that answered that first question, they were totally cool with things being tightened down, until they went to apply for a mortgage themselves…and found this new reality:
2017
A buyer with 10% Down and a $100,000 annual gross income.
With rates still ~2.49% and amortizations still capped at 25 years.
Maximum mortgage amount?
~$508,500

The exact same household with $100,000 annual income, impeccable credit, a 10% down payment was told, in this very competitive market with a 0.27% arrears rate, a group of households that made it through the 2008/9 meltdown just fine, that now, in 2017, they needed to have their purchasing power cut back by ~$121,500.

If you have any questions, talk to a dedicated Dominion Lending Centres Mortgage Professional in your area.

By: Dustan Woodhouse

How to Interview a Mortgage Professional

This is the second part of a series over the next few weeks of things the average mortgage professional wished people knew so that they would not be held back by inadvertent missteps.

There is so much information about everything these days and quite frankly it is overwhelming to say the least. You want to make the best decision possible when it comes to the loan you are taking for your home but how can you be sure you are choosing the right mortgage professional to help you? Here is a list of questions you should be sure to ask. Even if you are working with your own financial institution you should take the position of buyer beware.
Do some online research ahead of time. Check out feedback from other people and take a look at the website. You can see what the best rates are in the open market to know if you are being offered the best deal.
Ask questions!! Here are the ones I think are the most important:
Start by asking them a bit about themselves.
• Do you do mortgages full time?
• What other accreditations do you have in your field?
• How long have you been in this industry?
• Do you regularly attend training?

Then ask the following about the mortgage:
• Is it fully portable anywhere in Canada? What are the restrictions upon porting?
• How is the penalty calculated? Am I being offered a discounted rate which will come with a higher penalty if I end up breaking the mortgage?
• Will my pre-approval be fully reviewed or is it just a rate hold?
• Will you pull my credit prior to me writing an offer?
• Is this a collateral mortgage? Can you explain why that is in my best interest?
• How do you get paid? Are you a commissioned based position or a salaried one?
• What are the pre-payment privileges?
• Should I consider something besides the 5 year fixed rate?
• What other costs should I expect? Lender fee, appraisal, legal, title insurance
• Is life insurance mandatory with this loan?
• What paperwork will you require?
• What are your best rates?

Once you have taken the time to ask the above, you will be better educated and you will have taken the time to determine that this person is the right one for you. It is going to be hard and feel downright un-Canadian to be so forthright but you will be glad you did when the process is smooth and you avoid nasty surprises later on.

There are so many amazing Dominion Lending Centres mortgage professionals who are more than happy to answer your questions.

By: Pam Pikkert

A fresh start-Our House Magazine Spring 2017

The following is from the Spring issue of Dominion Lending Centres’ Our House Magazine.

Cara Brookins built a new home for her family from the ground up

A house is often considered more than just a place to live. It’s a place of memories, stability and safety.
No one understands this sentiment more than Cara Brookins. The Arkansas mother of four has recently garnered a lot of international attention for her story. Brookins, who had no experience and little know-how, built her five-bedroom house with little more than a small loan and YouTube videos. It’s a considerable feat for sure, but it’s what got her to that point and what she’s learned since that makes her story even more intriguing. Brookins had been involved in a couple of bad relationships, including being terrorized one of her ex-husbands for a decade. Her last husband appeared to offer protection, but he too became physically violent and the pair divorced. It was 2007 and Brookins, who worked a good job as a computer programmer and analyst, admits that she and her family were destroyed emotionally and financially.

Building a foundation

Instead of buying a small home or an apartment in her town of Bryant, a suburb of Little Rock, she got the idea to build the home she wanted—herself.
“At the time, it seemed like obviously what anybody in my position, who had been through what I had, would do,” she told Our House magazine. “In retrospect, I don’t think that’s what everybody would do. I felt this desperation that I had to do something quick to make [my children] feel more powerful and in control of their lives and give them some courage before they went out into the world. This was an opportunity to do something that would give us the house we needed in the end, but that would also give us some sort of inner strength and family strength.”
Brookins researched the local building codes, drew up plans and headed straight to the bank for a loan. She got turned down numerous times until a bank finally gave her what she wanted. Brookins was approved for nine-month, $130,000 construction loan. So, in December of 2007, as the cold Midwest winter set in, she bought an acre plot of land and started to build. That meant laying down the concrete foundation, installing plumbing and getting electricity to the building. With her older teenaged children, aged 17 and 15, by her side to help, Brookins went to her day job in the mornings and worked on the house in the evenings.
“I knew we could build a house. I absolutely knew we could figure out a way to put this together,” says Brookins, noting her days were often 19 hours long. “Once we started, I doubted it many times.” But Brookins and her young family persevered, finishing the 3,500-square-foot house in the nine-month timeline, getting all the occupancy permits and moving in by 2009. She said she really had no choice. “I knew once I spent all that money, there was no way out, but it also felt good,” says Brookins, adding that when there is that much pressure, it’s amazing what people can do.
Moving in, however, wasn’t a cause for celebration. Instead, she described it as a feeling of absolute emotional and physical exhaustion. Adding to it, the day the family moved in, Brookins’ mother had a blood clot and tragically died. It ultimately took months to settle in to the home and appreciate what she and her family had actually accomplished.

Sharing her experience

It also took years before Brookins told her story. Rather than boast about her accomplishment, she said she hid it from people out of embarrassment. She explains she was ashamed of the decisions she had made, which put her family in a situation where she felt no choice but to build a house on her own. An avid writer in her spare time, a few years later Brookins opened up about her experiences to an author at a writer’s convention. She was encouraged to share her story with the world. So she did, writing her memoir, Rise: How a House Built a Family. The book was released in January 2017. When Brookins decided to put pen to paper, she wanted to include her entire story, warts and all. “To really own my history, it took six years and several different versions of this book to do that.” Brookins says she never imagined people would be interested in her story, but it turns out she was wrong. She has now parlayed her experience into motivational speaking, more book writing and even a potential television show.

Finding sanctuary

Now nearly 10 years since she hatched a plan to build a house with her own two hands, Brookins, 45, still lives in her home. Her favourite room is the library, which is her quiet sanctuary. Her eldest daughter and son have moved out and are embarking on careers of their own. Her daughter runs a successful business and helps mentor young entrepreneurs. Their success is something the proud mother never would have thought possible had she not brought them along in building a house. Brookins has no intention of building another house, except perhaps helping her own children if they ask. It was never her goal to be a contractor. When she shares her story with people, she said the point isn’t the house, but rather that anyone can follow their dreams.

By: Jeremy Deutsch

Industry initials explained

Many of us will remember the television show, Mork and Mindy.

Imagine that you have just moved to Canada and you overhear a conversation, “ I was watching NBC and they said that the FBI arrested a criminal at IGA.”

You probably wouldn’t understand what they said because we all use acronyms. We often replace the long descriptions for many organizations, institutions and government bodies with the initials or short forms in conversations. The show was based on Mork, an alien, misunderstanding terms, expressions and common traditions that we have in our society. It made for a funny show but it’s not so funny if you are new to Canada or want to make the largest purchase in your life.

Imagine this same person speaking to a realtor or a mortgage broker when they started using abbreviations for words used in their industry. As a public service to any of you who may have recently arrived from a foreign county or another planet, I am going to define a few expressions that we all take for granted.

AMORTIZATION – How long you have to pay off the mortgage on a home. Typically in Canada you have 25 years. In Japan it can be 99 years. Payments are spread out equally over the specified time period . If they were not, you would have huge payments in the first few years and very small ones in the last 6 months of your mortgage term.

DOWN –  short for down payment. A deposit of 5% minimum is required for a home purchase.

FLEX DOWN – a borrowed down payment program, where the repayment of the loan is included in the debt calculations.

PULL – “He pulled my credit before the loan approval “ – a pull is a credit bureau report inquiry.

TRADE LINES –  a trade line is a credit card or cellphone  account, a loan or mortgage that appears on your credit report.

DEROGS – short for derogatory , referring to late payments on your credit report.

20/20 – refer to your ability to repay 20% of the mortgage balance or increase your payment by 20% without incurring a penalty.

MIC – short for a Mortgage Investment Corporation – a group of investors who will lend you the money for a mortgage if a traditional lender will not due to unusual circumstances.

TERM – although mortgages have 25 year amortizations, Canadians traditionally take terms of 1- 5 years and then renegotiate their mortgages. 1-5 years is the TERM.

DEFAULT – failing to pay your mortgage on time puts your mortgage into DEFAULT

FORECLOSESURE – If your mortgage is in default you can make your payments up or the lender will put your home in FORECLOSEURE and you will lose your home.

OPEN MORTGAGE – a mortgage where you can pay out the mortgage at any time during the term.

CLOSED MORTGAGE –a mortgage where you have agreed to pay the lender for a specified period of time . If you wish to terminate the mortgage, a penalty will have to be paid.

PIT – principal, interest and taxes – an amount  used to calculate how much  you  can afford to pay monthly on your home.  Often heat is also included in this calculation (PITH) .

High Ratio – a mortgage where the buyer has less than 20% for the down payment and needs to pay CMHC fees to insure it.

CONVENTIONAL – a mortgage where the buyer has 20% or more down payment or equity in their home.

While I have not covered all the terms you may encounter I hope that I have covered most of them.

If you find yourself talking to a mortgage broker who is using business expressions you should feel free to remind them that you are not in the industry and would like to the terms explained. Any broker worth their salt will be very happy to explain these terms to you. There are many Dominion Lending Centres mortgage professionals who are more than happy to answer your questions.

By: David Cooke

Go long or short with your rate

With all the news about interest rates rising do you go long or short with your rate when you set up your mortgage?

After discussing your current life situation and answering some key questions with your Dominion Lending Centres mortgage broker you can make some decisions and set your mortgage rate and term to best fit your needs. There are many interest rate terms to choose from (1, 2, 3, 4, 5, 7, 10 year fixed and 3 and 5 year variable). If you are looking to lock in to a short or long term fixed rate, consider this:

A long-term mortgage makes sense if:

• If rates were on the rise and you could not take the hit. A long term rate gives you peace of mind.
• You don’t have a nest egg of savings or investments to fall back on
• You have little equity or net worth
• Your income could change based on a growing family or retirement for example

A short-term mortgage may be the way to go if:

• You expect to pay off large chunks of your mortgage or sell your home within the next three years
• You have a short remaining amortization (e.g. 5-6 years or less)
• Your credit is impaired and you need alternative lending till you repair your credit so you can qualify at a better rate in one year.
• You need to refinance in coming years to access your equity for education, investment purposes, etc
• You believe rates won’t rise soon and you have a short-term rate where you can make higher-than-required payments to maximize the reduction of your mortgage

With two year rates in the low two per cent, five-year fixed rates under three per cent and 10 year terms under four per cent there is enough of a spread that some borrowers can decide easily to go long or short with your rate. If you want flexibility go short. If you have little equity and want to play it safe maybe the long term rate for 5,7 or 10 years is for you. As rates shift upwards and the spread between the five and 10 year shortens you have to consider if a difference of .5 per cent in a rate may be so insignificant that locking in to a long term rate may make sense for some, while others will take the risk and continue to play the short game. We have seen the spread between the short and long term rates become slim which creates the opportunity for discussion. These are decisions you can only make once you run the numbers with your DLC mortgage broker.

Maybe it is time to add a call to your mortgage broker to review your mortgage plan.

By: Pauline Tonkin

Things Mortgage Professionals Wished Young Adults Knew

So we are going to do a series over the next few weeks of things the average mortgage professional wished people knew so that they would not be held back by inadvertent missteps.

This week we will look at young adults just starting out. Let’s outline five things you really need to be aware of to set yourselves up for true financial dominance.

1. Credit is not evil, it is necessary. If you grew up in a home where only the dangers of credit were discussed then you need to hear the flip side as well. Credit itself is not dangerous. The misuse and over extension of it, is. You have to have established credit to do almost anything from buying a home to getting a cell phone, from getting utilities to renting an apartment. Proper management of your credit will save you money as you will have a proven history and will receive the best offers for credit cards and mortgages.

2. Everybody starts out being given the benefit of the doubt. There are 2 credit agencies in Canada which all lenders of all things report to monthly. You will be graded on your ability to make your payments on time, stay within your limits and as to how much overall credit you have. Everybody is given a strong score at the beginning. It is up to you to keep it. Even the cell phone providers report to the agencies so make sure you pay that on time too.

3. The magic number for the rest of your life is 2! You need to have 2 types of credit, reporting for at least 2 years with a minimum limit of $2000. If you pay off a car loan, make sure you still have 2 types of credit. If you decide to stay home with your future family, still make sure you have 2 types of credit reporting in your name. One of the credit facilities should be a credit card. The way you manage this revolving access to credit is looked at carefully by potential lenders.

4. The onus is on you. Nobody is going to call you to remind you that a payment is due. If you move to a new area you are the one responsible to let the companies know where to forward the bill to. If you are offered a $13,000 line of credit and a $54,000 car loan and you accept, you cannot later blame them for ‘letting’ you get yourself into trouble. If you accept a mortgage, it is up to you to ask questions before you sign. A large credit balance and a high vehicle payment will dramatically affect your ability to purchase a home. That $13,000 line of credit or a $400 vehicle payment will each decrease your purchasing power by $100,000.

5. To keep your score strong:
• Make your payments on time
• do not exceed 50% of the available credit limit
• Be cautious in how many credit inquiries you allow

There you have it.  The things we wish young people knew so that when they are ready to move into the next phase of their life they will not be abruptly stopped and have to wait and wish someone had told them.  There are so many amazing Dominion Lending Centres mortgage professionals who are more than happy to answer your questions so ask away before you get stung.

Next week: Things That Mortgage Professionals Wish Those with Damaged Credit Knew

By: Pam Pikkert

How does the growth of our aging population affect Canadians?

According to the latest Statistics Canada’s 2016 census data released last month, Canadian seniors now outnumber children for the first time, with 5.9 million Canadian seniors compared to 5.8 million Canadians 14 years of age or younger. The number of Canadian seniors is expected to continue to grow because of the gains in life expectancy.
As the only financial institution in Canada working exclusively with seniors, we often conduct research studies to get direct insight into the behaviour of the Canadian aging population. HomEquity Bank’s latest research study (May 2017), The Home Stretch: A review of debt and home ownership among Canadian seniors indicated that 91% of Canadians over 65 prefer staying in their home throughout retirement, however 78% have savings and investments, and only 40% of those have less than $100,000 set aside.

What does this mean for aging Canadians?
Canadian seniors are getting more comfortable with their debt, with many financing their lifestyle with debt. In this study by HomEquity Bank using Equifax data, it shows that among Canadian seniors, 15% still carry a mortgage, 30% carry unsecured lines of credit (LOC) and 10% have a home equity line of credit (HELOC). The total debt average for seniors is $29,973, which translates to $15,493 per Canadian senior.
On a geographical basis, British Columbia has the highest debt balance for seniors with an average of $41,054 per person compared to the national average of $29,973. This is due primarily to a higher mortgage debt. On average mortgage debt per senior mortgage holder in B.C. is $128,338 compared with the national average of $95,737, with 17.7% of the senior population in B.C. still holding a mortgage.
Moreover, Canadian seniors now rely heavily on government and other retirement benefits during their retirement.
– 77% rely on the Canada Pension Plan as their primary expected source of income;
– 73% rely on Old Age Security; whereas only
– 57% are drawing upon their RRSPs;
– 48% have a work pension; and
– 48% have savings

How can a CHIP Reverse Mortgage help?
The growing senior demographic in Canada prefers to age in place in the comfort of their home, despite their limited savings for retirement. The CHIP Reverse Mortgage from HomEquity Bank, provides a way for Canadians aged 55+ to unlock the value of equity in their home. Seniors can consolidate their existing debt and finance their retirement while continually protecting a portion of that equity, and they can help relieve the financial burden on their children.
Unlike a loan or conventional mortgage, the CHIP Reverse Mortgage from HomEquity Bank does not require any monthly mortgage payments, not even interest payments, and is only repaid once the homeowner(s) no longer live(s) in the home (when they move, sell or pass away). A reverse mortgage is a great solution that provides access to tax-free cash when Canadians need it the most and best of all, they get to remain in their memory filled homes for the remainder of their lives.

To read the complete HomEquity Bank and Equifax study on Debt and Homeownership from May 2017, click here.

For more info, contact your Dominion Lending Centres mortgage specialist.

By: Yvonne Ziomecki

“Mr. Mortgage Broker, please give me the best rate!”

In the past, it was easy to give our clients the best mortgage rate available. Unfortunately, new government regulations have created a fragmentation of interest rates that make “giving you our best rate,” more complex.
It’s important to distinguish between what is “insurable” and “uninsurable.” An “insurable” mortgage is approved at 25 years amortization and at a higher rate than what a borrower would actually be paying (called the qualification rate – at time of this article, it is 4.64%). An uninsurable mortgage is any refinance, mortgage on rental properties, mortgages approved at 30 years amortization, and properties worth more than $1 million.
Below is some information that outlines which scenarios allow you to get the best interest rate available, and what type of lender can provide these rates.
Please note: I am assuming average to above average credit in the scenarios below.

Best Rates – Monoline Lenders
Insured Mortgages
• On all purchases with less than 20% down payment, insurance is mandatory
• On purchases with 20% down payment or more, insurance may also be obtained
The absolute best rates are for mortgages that are insured by one of the three Canadian mortgage insurance companies: CMHC, Genworth or Canada Guarantee. When your mortgage is insured, the insurance company provides mortgage pay out to the Lender in the event of foreclosure and tries to recuperate the money from the sale of the property. An insured mortgage is inherently a lower risk for the lender than a mortgage that is not insured.

Great to Best Rates – Monoline Lenders
Insurable, low loan to value Mortgages
• You have a large down payment
• Your mortgage is for a purchase on a property under $1 million in value
• Your mortgage is approved at 25 years amortization at 4.64%
When your mortgage can be insured, Monoline lenders take it upon themselves to insure your mortgage for you, making the mortgage less risky to them so that they can provide you with the lowest rates. However, insurance costs for lenders increase with mortgage loan to value. This increase in insurance cost is transferred to you, the borrower, providing you with slightly higher interest rates.

Good to Great Rates – Banks and Credit Unions
Uninsurable Mortgages or insurable, high loan-to-value Mortgages
• On refinances
• On mortgages that require 30-years amortization
• On mortgages where properties are over $1 million in value
For uninsurable mortgages, our normal go-to lenders have higher interest rates because they are forced to insure their mortgages, making them pass the extra costs to you, the borrower. On the other hand, banks and credit unions are not required to insure their mortgages, making them the best fit for higher loan-to-value mortgages.

Good Rates – Monoline Lenders, Banks, and Credit Unions
Rental properties and stated income
• Rental properties
• Stated Income
Most lenders will increase your interest rate on rental properties because they see these mortgages as having a higher risk than ones on owner occupied homes. Also, lenders may also increase interest rate for self-employed individuals who need to prove a higher income than what they have stated on their tax returns.

Highest Rates – Private Lenders
Mortgages that cannot be approved through regular lenders
• Stated Income B Side
• Equity Mortgages
When a stated income cannot be insured, lenders increase their interest rate to offset the risk of someone who cannot prove their income. An equity mortgage is one where a client has down payment or equity but no income shown. Lenders look at these files as having the highest risk.

Call a Dominion Lending Centres mortgage professional today to see how we can help you get the best interest rate on your mortgage so you can buy your dream home!

By: Eitan Pinsky

Bullying Ends Here Update for June 2017

Well, what a year it has been. Of course I refer to ‘year’ being the school year. With June now upon us, schools are winding down, just as Bullying Ends Here is about to take a few months to catch our breath and plan for an amazing 2017/18.

To wind down this year, Dominion Lending Centres played a big role in helping us reach thousands more. In April, Mark Goode and his team worked hard to setup a couple of presentations in his community of Orillia. Based on the feedback, I suspect that I will be returning there at some point to share the program with many more!

Another DLC’er that deserves much recognition is Jeff Brown from Belleville. Jeff put together one heck of a day for us, however due to some unforeseen circumstances beyond anyone’s control, the day did not proceed. I know that Bullying Ends Here will be in his community at some point. We wont give up Jeff!

With our school presentation schedule now complete, we are so proud to share with you the following milestones;

– spoke to over 100,000 youth all across the Country (a total of over 350,000 since 2012)
– spoke to the National Conference on Bullying in Orlando, FL.
– received more than 10,000 emails and thousands of messages through social media
– released an updated version of the book Bullying Ends Here – My Life
– created a bookmark proudly showing the DLC logo to all that purchase the book
– about to launch our brand new electronic quarterly newsletter
– working on introducing a Youth Advisory Board to the program
– created short commercials showing the support for our program from Rick MERCER, Naheed NENSHI, Steven PAGE, Brad MAY, Brian BURKE and Prime Minister Justin TRUDEAU!!! Stay tuned for many more in the works.
– launched our 3 minute commercial to showcase our program and what we really do…feel free to take a peek on our homepage.
– launched our revised format of our website bullyingendshere.ca
– presented over 100 times

Most importantly, we are now credited with saving 43 lives!!!

I can not state enough how this truly is teamwork. From those that plan the presentations that form the schedule, to the schools/communities that believe in us, to the volunteer work of our team at Bullying Ends Here to Dominion Lending Centres generous annual donations that assist us in being able to reach everyone. Its a team that makes it all come together. With over 100 requests waiting for the next school year, including many from overseas, its going to be the best one yet!

This is why I always say ‘Together we will not only change lives, but SAVE them!’

Our Bullying Ends Here Coin Award is going full steam ahead. We want to recognize those in our country that go above and beyond to help make our world a better place. We want to continue to spread Jamie’s message of acceptance and understanding and know the importance of highlighting the work that others are doing. If you know someone who stands out above the rest, of any age, please nominate them on our website.

I know that 2017/18 is going to be the best one yet. I am proud to announce that I will be starting the presentation schedule off with a TEDX talk in Vancouver in September. What a humbling honour this will be to showcase our message to potentially millions around the world. Until then, its time to kick back, relax and catch our breath. Its going to be one heck of a ride starting in September and we cant wait to bring you along with us.

By: Tad Milmine