We answered your Saskatoon mortgage questions on Talk to the Experts!

Saskatoon mortgage questions

This latest show we are featuring is the TRUSTED SASKATOON PERSONAL FINANCE SHOW
All of the questions on the show have been submitted by our wonderful Trusted Saskatoon Facebook Fans and one lucky fans question was chosen by Brent to win the Prize package submitted by the 3 Trusted Businesses worth over $350

Your Mortgage Now : $100.00 gift certificate that can be used at any of the Trusted Saskatoon Partners!

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We had the opportunity to answer your mortgage questions on 650 CKOM Trusted Saskatoon’s Finance Show. Make sure to listen to our show below as we covered topics on Mortgage Renewals, Fixed VS Variable Rates, Mortgage Broker VS The Bank, Home Equity and Rental Properties. Those who asked us the questions were also drawn for some great prizes!

To read our answers, you may also visited the Trusted Saskatoon Blog.

We’d like to hear from you! Please feel free to contact us today about your home mortgage questions.

Devin Cristo & Wes Will are Trusted Saskatoon Mortgage Associates of YourMortgageNow.ca

Mortgage Advice Buy a Home Sooner to Build Equity

It can be very beneficial to buy a home you can afford sooner rather than later. A home allows you to build equity and with every mortgage payment you make each month, you are building equity in a place of your own – unlike a rent payment.

Mortgage Advice Buy a Home Sooner to Build Equity Equity is the difference between the value of a home and your outstanding mortgage balance. The longer you stay in your home (and the more mortgage payments you make), the more equity you’ll have. Unlike most things you buy, a home will almost certainly increase in value over time – which builds even more equity.

Once you’re a homeowner, the payoff can be great. As the equity in your home grows, your financial flexibility also increases. Think of it as an extra source of financing for when the unexpected happens. An added benefit of borrowing money against the equity in your home, is it usually comes with a lower interest rate than other forms of credit, such as consumer loans, lines of credit and credit cards.

Here are some ways you can use the equity in your home:

  • Pay off other debts with higher interest rates (like credit card debt)
  • Renovate or repair your home – build a new room or put in a swimming pool
  • For important life events – a wedding, dream vacation or university tuition
  • Purchase a second home or vacation property
  • Emergencies – like a serious illness

Investing in a home can have a significant payoff over time. And the sooner you begin, the sooner you’ll start building equity.

 

Devin Cristo & Wes Will are Trusted Saskatoon Mortgage Associates of YourMortgageNow.ca

Are you a first-time homebuyer?

Purchasing your first home is one of the most exciting experiences you will have in your life, and is one of the largest purchases you will ever make. The act of homebuying involves considerable sacrifice in order to save up for the deposit and finding a home to suit your needs. While everyone is generally on a different path, knowing what the average first-time homebuyer in Canada looks like can certainly help in knowing whether you are ahead of the game or slightly behind.

The Average First-Time Homebuyer in Canada

If you are in your twenties, thinking about homeownership should definitely be something on your mind. While it may not be something you can afford to do for a number of years, starting to plan immediately will help you. The average first-time homebuyer in Canada has three unique characteristics:

  1. They are generally in their late 20s. In a study conducted by BMO in 2013, which surveyed 2000 first-time homebuyers, the average homebuyer was determined to be about 29 years old.
  2. They buy a home valued at $316,100 on average. This number is different in major cities, such as Vancouver where the average is $506,500, Toronto at $408,300, Calgary at $363,400 and in Montreal where the cost is less than the national average at $237,900.
  3. On average, a first-time homebuyer in Canada has $50,576 to put towards their down payment. This means that the average homebuyer has about 16% of the cost of the home, meaning they need to insure their mortgages with an insurer like Genworth (as mortgage insurance is required when a buyer has less than a 20% down payment).

The Average First-Time Homebuyer by Province

Homebuyers are vastly different based on the province they live in. The average home prices compared to the average amount spent by first-time homebuyers in a province helps to illustrate the cost of living and affordability in each of Canada’s provincial regions.

  • The average home in Atlantic Canada is $212,622, while the average first-time homebuyer spends $204,400.
  • The average home in Quebec is $263,661 while the average first-time homebuyer spends $222,300.
  • The average home in Ontario is $423,691, while the average first-time homebuyer spends $358,400.
  • The average home in Manitoba and Saskatchewan is $275,104 while the average first-time homebuyer spends $226,100.
  • The average home in Alberta is $407,540, while the average first-time homebuyer spends $364,700.
  • The average home in British Columbia is $611,688 while the average first-time homebuyer spends $430,300.

Other First-Time Homebuyer Statistics

The study also found out some interesting statistics related to first-time homebuyers.

  • About one third (30%) of all first-time homebuyers are expecting some assistance from their parents or other members of their family with their purchase. In both Montreal and Vancouver, these numbers are significantly higher at about 40%.
  • 60 per cent of potential first-time homebuyers have had to delay their plans to buy, with close to 40 per cent of those people saying that the increasing cost of real estate has been the main reason for the delay.
  • Most first-time homebuyers (60%) set a fixed budget with a maximum amount they would want to spend on their home, but a third of them would be willing to spend more if they found a dream house outside of their set budget.

The question you need to pose to yourself is – how prepared are you? If you already have a larger deposit saved, perhaps you can invest in a slightly better property. If you are behind the average, consider services like Genworth’s down payment options.

Source: Genworth. Statistics for this post derived from BMO First-time Homebuyers Report unless otherwise stated. The poll was conducted by Pollara between January 24th and March 6th, 2014. 513 first-time Canadian homebuyers 18 years of age and older were polled. As a guideline, a probability sample of this size would yield results accurate to ± 4.3%, 19 times out of 20.

 

Devin Cristo & Wes Will are Trusted Saskatoon Mortgage Associates of YourMortgageNow.ca

 

Common Credit Score Myths explained by Your Mortgage Now

CREDIT SCORE MYTHS

Common Credit Score Myths

This three-digit number is surrounded by a lot of misconception and misunderstanding, we can help you better understand how your ‘credit score’ works.

For starters, your credit score is a prediction based on statistics of your credit risk at a specified point in time. The lower your score, the riskier you may appear to a lender, landlord, credit card company or car dealer.

Credit experts are used to fielding questions about credit scores and correcting misconceptions. According to Patricia White, executive director of Credit Counselling Canada, common myths about credit scores include:

Shopping for the best rate can hurt your credit score.
The reality? There may be features built into credit scores which identify a pattern but there are no penalties for shopping for the best interest rate.

Credit cards must be paid off in full.
The reality? What has a greater impact is having a few credit cards and managing them well. The amount of credit used should be no more than 35 per cent of your overall credit limit.

Credit scores treat people unfairly.
The reality? The scoring system is objective. Mathematically-based tools provide an unbiased assessment.

Closing a credit account will hurt your score.
The reality? If you closed a number of ‘old’ accounts this would decrease your available credit and your credit ratio would increase. Closing one account will only have a minimal effect.

Making frequent inquiries about your score will negatively affect it.
It can if you are seeking credit from a number of sources in a short period of time, such as several credit cards. If you are asking for a copy of your report, this will not impact your credit score.

It’s important to be aware of what helps and hurts your score. Your payment history, debts, how much credit you use, the length of your credit history, the number of new credit accounts you take on or inquire about, and the mix of credit types in your name all inform your score. We recommend ordering a copy of your score (from consumer credit reporting agencies; like Equifax) once a year; not only to keep yourself in check, but as a protective measure. Mistakes can be made, so ensure that your information is correct.

Need to improve your score? Paying your bills on time and repaying loans and credit card balances quickly will help improve your score but there’s no instant fix. Your score is based on past performance so building your scores will take time and diligence on your part.

 

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Devin Cristo & Wes Will are Trusted Saskatoon Mortgage Associates of YourMortgageNow.ca

5 Tips to Become Mortgage-Free Faster!

Your Mortgage Now shares 5 Tips to Become Mortgage-Free Faster

Budget for it first.

There are a number of strategies to help homeowners pay off mortgages quicker; all involve paying more money.

Your first step should be to determine if you have the flexibility in your budget to put more money toward your mortgage.

Balance everything – You want to be setting yourself up for a strong financial future by putting money away for things like your retirement and your kids’ education.

Accelerate your payments.

If you do have the extra budget room, consider adjusting your payment plan.

For example, if you go on a bi-weekly accelerated schedule, making a payment every 14 days, instead of twice a month, you’ll have made the equivalent of 26 payments, by the end of the year.

Smaller, more frequent payments will reduce your interest costs and get you mortgage-free faster. If you tie it in to your payroll, you don’t even miss it.

Increase your monthly payments.

Most financial institutions let homeowners make additional mortgage payments alongside their regular monthly payments.

Depending on the lender, a homeowner may be allowed to pay between 10 to 100 per cent of the mortgage payment and have it go directly toward paying down the principal, not the interest.

Make a lump sum payment.

Say you get a bonus at work or receive an inheritance – putting a chunk of that windfall toward your mortgage can make a difference.

Most lenders let clients pay lump sums between 10 to 20 per cent of the original mortgage, or the remaining balance. The full amount can be paid in one go or it can be made in instalments.

(Note: the lump sum contribution is over and above the amount you are allowed to contribute in additional bi-weekly payments.)

Reduce your amortization.

The principal-to-interest ratio on a mortgage leans more heavily toward interest in the first part of the mortgage term.

If you’re taking a shorter amortization, you’re tipping the scale a little bit so that a bigger portion of your payment is going towards your principal for that portion.

The strategies outlined earlier – making accelerated, additional and lump sum payments – can effectively reduce your amortization period, while still giving you financial flexibility.

 

Devin Cristo & Wes Will are Trusted Saskatoon Mortgage Associates of YourMortgageNow.ca

First Time Home Buyer: Saving Money!

Want to be a First Time Home Buyer?

You’ve been saving money to buy your first home for so long and it’s one of the most significant purchases you’ll make in your life. But with all the details and parties involved, it’s easy to get confused or blindsided by hidden costs and fees. We can help – here are some tips to ensure you get the most for your money.

  1. Resolve credit issues before applying for a mortgage
    Your mortgage rate is partially determined by your consumer credit score, so fix what you can before you apply. Even little things like late payments or errors on your record (it happens!) can jack up your mortgage payments.
  2. Budget wisely and save for a down payment…even if it means waiting a little longer to buy
    It’s hard to be patient, but a decent down payment means more reasonable payments, saving you thousands over the duration of the mortgage.
  3. Shop around for mortgage rates
    Don’t assume the offer made to you by your bank or broker is set in stone. It will vary, especially if you make it clear that you’re comparison shopping! Closing costs and fees can also be negotiated – use them as bargaining chips.
  4. Don’t take listing prices at face value
    Found something you like? Research house values in the neighbourhood to be sure you’re dealing with a fair price. Your real estate agent can help, but you can also search for nearby listings online or attend open houses in the area.
  5. Use your RRSPs
    In Canada, first-time homebuyers can take advantage of a federal government program called the Home Buyers Plan (HBP) which allows you to take up to $25,000 from your RRSPs, tax-free.
  6. Don’t be scared to low-ball your offer
    New buyers can be timid when it’s time to buy, but unless you know you’re headed for a bidding war, low offers can be countered. So you may as well give it a shot!
  7. Make your offer contingent on closing dates
    It’s easy to overlook small details like closing dates in the rush of making an offer. But don’t risk the cost of paying for temporary accommodation and putting items in storage if you run into last minute changes.
  8. Get a list of fixtures and fittings included in the sale
    Check the details to avoid opening the door to your new home and finding it stripped of light fittings, cables and appliances. Also, pay attention to what you’re paying for: the seller may list the price they paid for an appliance, but from how long ago? Would it be more cost-effective for you to exclude it from the offer and buy a new one?
  9. Review your closing statement carefully
    With all the details that go into buying a home, it’s not unusual to find mistakes in the fine print. Be sure you check the math prior to closing, so you don’t overpay based on a simple clerical error.
  10. Opt for bi-weekly mortgage payments
    Paying monthly means that you make 12 payments per year. But if you pay half that amount every two weeks, you’ll make 26 payments, which means you’re paying down your mortgage faster.

Devin Cristo & Wes Will are Trusted Saskatoon Mortgage Associates of YourMortgageNow.ca

Buying a House With a Friend is Becoming the New Trend!

With house prices rising, it can difficult to afford a home on your own. You and a friend might be in the same situation and feel that if you pool your resources, you can invest in a home instead of throwing your money away by paying rent. What all parties have to realize is that this is a business partnership and should be treated as such.

What is involved with Buying a House With a Friend

Before you buy, it is important to look at the big picture and answer these questions:

  • Are my friends in a stable financial situation? Can they afford to split mortgage payments, utilities and come up with their share of a down payment? Ask them straight out, to avoid any issues in the future.
  • Do we share the same values? Are you both neat freaks? Couch potatoes? This can lead to tension as unlike a traditional business you are living with each other. People are used to doing things a certain way, are you ready to compromise?
  • Does everyone agree that this is an investment? Eventually, people’s lives change, they meet someone, relocate for a job. Have you talked about what will happen to the property when one person inevitably needs to sell their share?

Now that you have decided that this deal is going to work, you have to look at getting a mortgage. Is everyone involved going to be listed on the mortgage? All parties will have their credit ratings looked at and generally the person with the lowest credit rating will set the bar as to what a mortgage will be approved for.

After all of these questions have been answered and you have decided to go forward it is recommended that you find a lawyer. Once again, treat this investment as a business arrangement. Sit down with legal council and have a written agreement compiled that includes things such as:

  • Who will cover the down payment, property taxes, bills, and repairs when they are needed.
  • What will happen to the home if one of the owners is killed or incapacitated.
  • When can someone sell or leave the partnership? Do they need to give notice? Can the other partners buy out their share?

Sitting down with a lawyer will make sure that everyone fully understands how situations will be handled as they come up.

The last thing you may want to talk to your new business partner about are the house rules. Set out guidelines regarding pets, parties, noise and guests.

Purchasing a home with a friend can be an excellent way to start building your equity. As long as all of the people involved have been upfront with each other, there should be no surprises along the way to jeopardize the partnership. Let us help you when it is time to apply for that mortgage. We are here to answer any other questions that you may have when planning on buying a home with friends.

Devin Cristo & Wes Will are Trusted Saskatoon Mortgage Associates of YourMortgageNow.ca

How can Bridge-Financing Fill the Gap Between Home Closing and Buying?

You have just found the home of your dreams and can’t wait to make an offer but you still have your own home to sell. There are options as to what you can do so that you don’t miss out on this opportunity, depending on your situation.

 

What is Bridge-Financing

One of those options is called bridge financing, and it is useful when a person needs funds to close the deal on a new home but have not closed the sale on their current home. This option can be expensive if you are not in a position of having a lot of money saved but can also be worth it as a short-term solution. Bridge financing usually carries a higher borrowing rate than your traditional mortgage (ex. prime + 1 or 2%). But remember, this loan should be paid in full in only a few days or weeks which means your expenses could range from hundreds to a couple of thousand dollars depending on the amount borrowed.

Not all banks allow for bridge financing and you should check into this before adding this to your options. If this sounds like an option you can afford, you should also keep in mind the costs of having to carry two mortgages, property taxes, home insurance and utilities on both properties as well as the temporary bridge loan. The only problem that could arise in this situation is if the sale of your house falls through and you have to deal with all of these expenses on a long-term basis.

With all of this in mind, bridge financing can still be the best way to deal with two different closings that don’t match up. If this is something that might work for you please contact us so that we can help you make that decision or find an option that will work for you.

Devin Cristo & Wes Will are Trusted Saskatoon Mortgage Associates of YourMortgageNow.ca

Where Can I Find a Down Payment?

Thinking of buying a home but not sure where to start when it comes to finding a down payment? The minimum down payment in Canada is 5% of the home purchase price with the average range for most down payments being 5 to 20%. As of July 9th, 2012, all homes over $1 million dollars will require a 20% down payment. With this in mind, remember, the more you put into your down payment the less your overall mortgage payments will be.

There are different sources that you can look at to help you fund a down payment.

Traditional sources include:

  • Setting aside a fixed amount each month from your pay cheque
  • Selling stocks, bonds, property and other investments
  • Receiving help from immediate family

Non-traditional sources include:

  • Borrowing funds
  • Gifts from non-family members

An option for the first time home buyer is the RRSP Home Buyers’ Plan (HBP). This program allows a person the opportunity to withdraw up to $25,000 from their Registered Retirement Savings Plan (RRSPs) tax free. Many people realize the potential of this program and set up an RRSP account in advance. That way when the time comes to purchase a home they have this resource available to them. Remember though, this withdrawal is considered a loan and needs to be repaid within 15 years.

Each of these options has their own unique benefits and we will gladly sit down with you to discuss which might be the best for you.

6 Inexpensive Ways to Reduce Your Energy Bill

Is a budgeting plan apart of your new year’s resolution? Why not start with lowering your energy bill…

There are a lot of little things you can do to make a big difference in your heating or cooling bill. Here are just a few examples:

  1. Turn down the thermostat a couple of degrees in winter. (And turn it up a few notches in summer.) Chances are, you’ll hardly notice the difference in comfort, and you’ll cut your heating/cooling costs by about 5%.
  2. Do you need the air conditioner on all the time during the summer months? Consider turning it way up, or completely off, at night when it’s cooler outside.
  3. Invest in a programmable thermostat. That way, you’ll be able to set up a schedule that uses less heating/cooling energy while you’re out of the house.
  4. Let the sunshine in through windows in the winter (and block the sun where possible in the summer.) “Passive heat gain” can contribute to up to 20% of the heat in your home. Best of all, the sun is free.
  5. Use energy efficient lights throughout your home. These can cut the cost of lighting by up to 40%!
  6. Be careful with outside lights, which can use a lot of energy! Turn them off before you go to bed or, better still, use programmable outside lighting that can be set to turn off automatically.

These are just a few ideas for reducing your energy bill. If you do some research, you can probably discover many other ways to cut your costs. It’s worth the effort!