Reverse Mortgages…Age Limit Lowered to 55
If you are contemplating a reverse mortgage, you should know that the minimum age limit has been reduced to 55 from 60. This is great news, especially if you’re 60+ but have a spouse that is younger than you. For more details on this please contact us today.
Is Buying a Student Rental a Good Idea for My Child?
If you have college/university aged students and are wondering about residence or finding an off campus rental for your child, have you considered buying the rental property yourself and having your student become the landlord? This may be something you want to consider before spending thousands of dollars in rent that you’ll never see again. Consider the math:
Let’s use $500/mo for your child to rent. And even though they may not be living there in the summer months, just about all landlords charge for 12 months. Over 4 years this would add up to $24,000. This money could go towards a mortgage for you instead.
Let’s say you purchased a 1 bedroom condo for $195,000 or a 2 bedroom for $240,000 and you put 20% down. With today’s low mortgage rates, the payment on the 1 bedroom could run about $600/mo with condo fees about $350/mo and property taxes about $180/mo. Total would be approximately $1130.
The mortgage payment would be about $732 for the 2 bedroom. Condo fees about $450/mo and property taxes about $300/mo. Total would be approximately $1482.
Now if you have another student rent the 2nd bedroom, this could offset your costs by about $500/mo. And if you buy a small house instead of the condo, you’ll save on the condo fees each month.
Although your costs might not necessarily break even each month, it could be quite conceivable that when you’re ready to sell the property, your value will have increased.
Many parents go this route and find in the end that it is a much more cost effective option. Be sure to check with your accountant so you’re aware of any tax implications up front.
If you’d like more information on this, please contact us today for your free, no obligation consultation.
Commercial Mortgages
If you’re in the market for commercial financing, now is a great time! The markets are much more liquid now and are recovering nicely from the sub-prime crash in the US. This means that commercial lenders are lending again!
If you’re looking to borrow against land, warehousing/office space, light industrial or development projects, there’s money available.
Canada’s commercial lending market is in a good position & growing. In addition to the institutional lenders, I have access to a lot of private lenders who are frequently able to close a mortgage that an institution can’t do. They often have the ability to be more creative to get a mortgage closed, and their investors are usually more risk tolerant.
If you are planning to finance a commercial property, give us a call today for a free consultation.
Reverse Mortgages…Good, Bad or Ugly
Used to be a time that no one knew what a reverse mortgage was. But in this day & age with our largest population segment being Baby Boomers or older, the reverse mortgage market is growing rapidly.
In addition the rates that are available now are comparable to those of a regular mortgage, whereas there was a time when the rates were quite high.
The reverse mortgage is an excellent option for people aged 60+ and looking to pull no more than 40% equity out of the appraised value of their home. There are no monthly payments required & the loan doesn’t need to be re-paid until the house is sold or the owners move out.
Lump sum amounts are available if desired.
If you’re 60+ and want to increase your cash flow, pay off debt or investment some money, the reverse mortage could be the answer. Call today for your free consultation.
Tips for Dealing with a Renovations Contractor
Here’s a very helpful article if you’re planning/thinking about renovations:
Since they rely heavily on word-of-mouth to spread their businesses, contractors are motivated to fully satisfy their customers and build a solid reputation. But because bad news travels faster and farther than good news, it’s far more common to hear stories about bad contractors than it is to hear about good ones. (You think your updated house looks great, but potential buyers may not feel the same way.
Hiring a top-notch contractor will pay off in the long run, even if the initial cost is a bit higher than if you simply go with the lowest bidder. If the job is done right to begin with, it will last longer and avoid the cost to correct shoddy workmanship. Plus, you save yourself a lot of time and aggravation because you’re dealing with someone you can trust.
The Search
Millard Blakey, cofounder of the remodeling company WreckCREATIONS, in Lexington, KY, says that it’s best to know the qualities you’re looking for in a contractor before you begin your search. Once you determine those qualities, use referrals from friends, family and neighbors to come up with an initial list of names. Interviewing at least three potential contractors before deciding to ask for a cost proposal is recommended, in order to ensure that you are comfortable with your decision.
Shaun Smith of Koru Landscape Construction in Louisville, CO says that the interview process works both ways. ”My experience lets me know very fast what they are really trying to achieve, and if I am the right contractor for them.” He encourages homeowners to contact local resources for a list of local contractors. This will help to narrow the search and support the craftsmen in your area. He also recommends touring nearby neighborhoods to find a few homes that are undergoing construction. ”Stop by and talk with the owners about how their project is coming along,” he advises.
Smith warns against contractors who try to convince you they are the only one for your job. He says that their work should speak for itself, and a strong portfolio, good references and pictures of previous jobs can often say more than the answer to any interview question can.
Contracting
Many homeowners get into trouble because the work they want done isn’t clearly defined at the outset. Then, as the work progresses, they change the scope of work causing additional costs to the contractor that are passed on to the owner. That’s not the contractor’s fault, but he often gets the blame. The way to avoid this is to produce a thorough remodel plan that completely covers every aspect of the job, including the specific materials to be used. A good contractor will let you know if your proposed project and budget is realistic. (Some renovations will mean a bigger sale price on your home, while others will just cost you.
Get everything written down in the form of a contract that includes cost, schedule, materials, bonding and insurance information and a list of subcontractors. For the homeowner, a fixed-price contract is preferred over paying by the hour, because it locks in the maximum liability. However, this leaves you open to price increases if you change any of the work content.
Contractors are entitled to a reasonable down payment in order to cover their initial labour and material costs. This is negotiable, depending on the nature of the job, but should usually not exceed one-third of the total contract amount. The balance of the money can be allocated to completion milestones that incentivize the contractor to stay on schedule. For example, discrete milestone payments could be made upon completion of the framing, plumbing and electrical installations. Hold a sizable amount of money for the final payment that is contingent on your personal inspection and satisfaction of the finished project.
Responsibilities
Perhaps most important is to keep the lines of communication open. A failure to effectively communicate may be the reason for many failed relationships between homeowners and contractors. Whether the issue is money, jobsite cleanliness, finish expectations or even how to deal with additional work, it’s critical to discuss these matters as soon as they arise. If you believe the work being done is unsatisfactory, approach the contractor immediately and attempt to get a resolution. Most contractors will work with you to try and solve the problem.
The Payoff
The importance of hiring the right contractor can’t be overstated. A good contractor will save you money by doing the job right the first time, and will not only save you money in the long run, but also eliminate stress by ensuring a quality finished product. http://ca.finance.yahoo.com/news/Tips-dealing-renovations-investopediawp-3489575795.html?&mod=pf-sp14d
Variable Rate Spread Shrinking
A few financial institutions are decreasing the spread on their variable rate mortgages, meaning a higher rate for the consumer. This is due to the higher cost of variable money for the institution. The good news however is that not all have done that yet. There are still some great rates to be had, but you’d better hurry.
Bank of Canada Leaves Rate Alone
The Bank of Canada met today & left the over night rate alone. So prime remains unchanged at 3%. Most economists are in agreement that rates will remain status quo until at least the summer.
If the price of oil continues to climb, this could have negative ramifications on the US economy, and by default, the Canadian economy. It will be interesting to see how this plays out.
More than 50% of Young Adults Waiting to Purchase a Home
According to a recent RBC survey, more than 50% of young adults aged 18-34 are waiting to purchase their first home. This is due to rising house prices & salaries that aren’t keeping pace.
About half of the people in the survey who already owned a home felt that their mortgage was eating up too much of their income.
The national average home price rose 8.8% year over year to a record $365,192 in February. This was due in part to Vancouver’s hot market, where the average home price was $790,380.
It’s important to get expert advice from your broker beforehand so you know what you can comfortably afford.
Your Chance to Win $25000
This year we are celebrating our 500,000th mortgage client, as a company. If you’d like the opportunity to win $25000, simply click on the link below to enter the contest. Good Luck!!
Investment Properties Options
If you’re considering purchasing an investment property, don’t let the changes the government made last year to the mortgage rules deter you. There are some aggressive lenders who want your investment business and they have some great offers.
Believe it or not, you can still get a 40 year amortization! And some lenders will allow you to borrow up to 85% of the value, instead of the 80% that the government legislated in 2010. In addition some lenders are quite aggressive with their rental offset amounts. In other words, anything that CMHC insures can only have 50% of the rent added back to offset the mortgage & other liabilities. But some lenders will use a different approach (Debt Coverage Ratio) to rental addbacks, meaning a more favourable situation for borrowers.
If you’d like any further information on investment properties, please contact our office.
