RomRealty

Tag: financing

  • Purchase Plus Improvements Mortgage

    Purchase Plus Improvements Mortgage

    Considering buying a home that could use an update? A purchase plus improvements mortgage might be the right choice for you.

    The purchase plus improvements mortgage is a customizable mortgage that will allow you to make home improvements as soon as you move into your new home by rolling the renovation cost into your mortgage. Improvements such as replacing the floors, updating a bathroom or replacing old wiring are some of the many ways to enhance the value of your new home.

    Affordability

    Even though there are some limits on what you can do, a purchase-plus-improvements mortgage is the most affordable way to finance a renovation. This is because of today’s low mortgage rates. A mortgage is the cheapest way to borrow. If you put an additional $40,000 on your mortgage, it will cost you far less than if you borrow $40,000 on a line of credit for renovations down the road.

    Timeline

    There are 90 to 180 day timeline on these mortgages, meaning you and your contractor must be prepared to finish any renovations promptly. The timeline is part of what makes this mortgage so great – you improve the value of your home and you get to live in it right away. The exact timeline will depend on your lender and your mortgage broker can help you navigate your options.

    How It Works

    The first thing you will do is work with your mortgage broker to be pre-approved for your maximum amount.

    Then the fun part – find a home you love! Once you have found a home and your purchase offer is accepted, you will get estimates for the improvements you want to make. Your broker can then pass along the estimates to your lender for approval.

    If your lender agrees that the renovations will improve the value of your home, they will send your broker an approval for the revised amount of your mortgage – the purchase price PLUS the cost of renovations.

    On your closing date, the amount approved for your renovation will go to your lawyer, to be held until you’ve completed the proposed renovations. You will receive the funds once your renovation is complete. This means you must pay the renovation costs up-front from your pocket. Some choose to use a credit card or line of credit to get through the renovation period.

    An appraisal will confirm that your renovations were completed within the agreed upon amount of time and then your lawyer can release the funds to you.

    It’s important to note that your minimum down payment will be calculated based on the total amount of your home’s assessed value – the purchase price plus the price of the approved renovations.

    Purchase-plus-improvements mortgages are the most affordable way to finance home improvements! Contact me today for more information – or if you have any other real estate question! I’d love to help!

  • SOLD!! RUTLAND FAMILY HOME FOR SALE!

    SOLD!! RUTLAND FAMILY HOME FOR SALE!

    SOLD: 1085 ELWYN ROAD, KELOWNA, BC

    $569,900

    SOLD!! 

    Family friendly South Rutland home for sale! This 2700 sqft home features 3 bedrooms, 4 bathrooms and a large rec room and bonus room in the basement. On the main level there is a large formal living and dining space. The open-concept kitchen and family room area gives access to the private, fenced-in backyard, perfect for entertaining. The double car garage has ample room for storage and there is also a large driveway with plenty of space for parking. This desirable location is close to shopping, schools, transit and many other amenities. Recent upgrades include a new roof and new washer and dryer. Great neighbours and the quiet, relaxing setting makes this a very desirable home!

    For more information or to schedule a viewing call Rom Houtstra at (250) 317-6405 or click here!

  • Rom’s Kelowna Real Estate Opinion for July 2019

    Rom’s Kelowna Real Estate Opinion for July 2019

    July 2019 Real Estate Report:

    *Click the images to enlarge

    Kelowna Real Estate Opinion for July 2019

    Every month I sort through the real estate market stats and I get the feeling that the information can feel repetitive after a while. The real estate market changes very slowly, especially compared to the stock market. This year, the market is considered “good flat’, albeit still flat. The Central Okanagan is having a good year as far as sales are concerned. Yes, they are down compared to the last three years. However, they really did need to come down. Click the yellow text below for a larger view of the market comparison of July 2018 to July 2019.

    12 Month Comparison JULY 2019 PDF (1)

    We have to try and deduce what the high paid economists are thinking by the changes they make to the lending institutions. There is more evidence that the markets, both local and national, are inching towards a modicum of positive energy. The CMHC has now dropped their qualifying rate for the Stress Test to 5.19%. Interest rates continue to inch down. On September 2, the CMHC is rolling out its first time buyer’s equity plan to allow some exceptions to what they call a “First Time Buyer”. For the first time in months, Toronto and Vancouver are reporting a slight increase in sales and prices of certain property types. Locally, we continue to reap the benefits of the big city prices as they push home buyers into the Okanagan.

    My prediction is that my monthly real estate stats reviews will continue to be “boring” until the end of the year. But, that is just the Real Estate World according to Rom.

  • Watch Out for Banks Offering You to Skip Mortgage Payments

    It’s no secret that Canada’s major banks offer their clients the opportunity to skip mortgage payments. While this can work to their advantage, industry experts are not big supporters of the option.

    Bank customers are attracted to this method because no additional fees are required. Not surprisingly, the banks have been actively promoting the skip-a-payment option.

    “In most cases, there is no fee for this option, and your payments won’t change during the term of your mortgage,” explains Marcel Greaux, a broker with Mortgage Alliance.

    Although consumers enjoy the comvenience it provides for them, skipping payments can potentially create a treacherous situation for them long term.

    “Any skipped interest is added to the principal balance,” Greaux explains. “This is where it gets dangerous, as the increase costs start to compound and ultimately work in favour of the lender, not the borrower.”

    Despite his understanding of the skip-a-payment option, Greaux believes mortgage brokers should not recommend it to their clients.

    “I would say the option is convenient to have available, but should only be used in an absolute emergency,” he says. “Skip-a-payment is more like defer-a-payment due to the interest compounding at a later date.”

    He adds that “a more prudent measure to access funds may be to make use of a line of credit, if available.”

  • Low Mortgage Rates till 2016?

    The Bank of Nova Scotia has reforecast its outlook on the Bank of Canada and now believes the bank will hold off on hiking its overnight rate until 2016.

    “The Bank of Canada probably now envisages spare capacity remaining into 2016,” the report stated. “It could well push out its forecast to return to the two per cent inflation target in the October 23 statement and MPR.”
    Prior to the latest forecast, which was researched by Derek Holt and Dov Zigler of Scotia’s Capital Markets Research, many believed the rate will be changed in 2015 – including the aforementioned two.
    “We have changed our house forecast for the Bank of Canada to show no rate change throughout 2013-14. As such, the overnight rate is forecast to end 2014 at an unchanged one per cent,” Zigler and Holt intimated in their prior February 2013 forecast.
    Of course, that forecast was actually a reforecast as well.
    “Our prior print forecast was that the Bank of Canada would remain on hold until 2014 Q1 and so we are therefore now pushing that out by about a full year,” the February 2013 report said. “While I have long spoken about how the fat tail risks to our print forecast are skewed toward later rather than sooner, this is a pretty sizeable forecast change that merits delving into some of the key reasons.”
    This newest forecast is the result of increased speculation that the Bank of Canada will hold off on hiking rates until its American counterpart, The Federal Reserve, raises its own.
    “The Bank of Canada until now has forecast a return to the two per cent inflation target by around mid-2015,” the report said. “Delaying this guidance would be consistent with leaving rates on hold throughout all of 2013-15, with the Bank of Canada lagging the Federal Reserve either in timing and/or magnitude under current Fed guidance.”

  • End of Rent to Own?

    A number of mortgage brokers are among those applying more scrutiny to rent-to-own deals following yet another investment horror story.

    The viability of the rent-to-own market took another hit last week following news that an Ottawa-based company is facing $2 million in lawsuits from unhappy investors. Golden Oaks Enterprises, the company at the centre of the scandal, had reportedly promised high returns in exchange for loaning cash and investing in the property.

    “Stories like these do scare buyers from this market,” says Deepak Bansal. “From my own experience, there have been a lot of bad rent-to-own developments and this is just another.  There are some good obviously, but the risks and costs in general are too high for many.”

    Elizabeth Kelly, VP of Sandstone Management Inc, says all industries have “bad apples” and as with all home purchases, buyers need to carry out substantive research and due diligence beforehand. The same applies to property investors considering this platform as a way of diversifying their portfolios.

    Still, much of the criticism of rent-to-own is focused on the buyer/renter. Those agreements are increasingly touted as a good alternative for those who cannot afford a down payment or have poor credit ratings or are unable to qualify for a high-ratio mortgage under the new mortgage rules, introduced one year ago.

    “The main flaw in this market is how some developers are valuing the property once the rent-to-own term has finished,” warns Bansal. “I am aware of some cases where, for example, after three years of paying into the fund, the developer turns around and says the property’s value has gone up by 20,000 to 30,000.”

    Kelly, however, says such cases only arise when legal issues are not ironed out from the start.

    “Education and communication is central in rent-to-own, especially when it comes to the application process,” she says. “The only problems I have seen with regards to this market are when people sign up for a rent-to-own informally and no agreements are in place.”

    Source: Canadian Real Estate Wealth Magazine

  • How the Mortgage Approval Process Works

    COMPLETING A MORTGAGE APPLICATION – this entails getting your basic information and you providing supporting documentation such as T4’s, notices of assessment, job letters, pay stubs, confirmation of downpayment etc. The reason we gather this information at the onset is to ensure that we have a complete picture of your situation which will save you stress in the long run.

    GETTING A PRE-APPROVAL – generally, a pre-approval without supporting documentation simply means you have a rate hold which can happen when shopping with a bank especially if you walk out but have not given them anything except a signature on an application form. There are any number of variables in regards to source of income, downpayment etc. that can turn your “approval” into a decline once you have a live contract in place and all the documentation is finally presented to the bank for review.

    When we work with you, we want to make sure you have a true pre-approval so will ask you to provide the documentation up front.  P_l_e_a_s_e_ _n_o_t_e_ a_t_ _t_h_i_s_ _p_o_i_n_t_ _t_h_e_ _l_e_n_d_e_r_ _m_a_y_ _a_p_p_r_o_v_e_ _y_o_u_ _a_s_ _p_u_r_c_h_a_s_e_r_s_ _b_u_t_ _t_h_e_y_ _m_u_s_t_ _s_t_i_l_l_ _a_p_p_r_o_v_e_ _t_h_e_ _p_r_o_p_e_r_t_y_ _y_o_u_ _a_r_e_ _b_u_y_i_n_g_ _s_o_ _w_e_ _w_o_u_l_d_ _c_o_n_s_i_d_e_r_ _t_h_i_s_ _a_ _“c_o_n_d_i_t_i_o_n_a_l_” _p_r_e_ _a_p_p_r_o_v_a_l_._ _

    SHOPPING WITH YOUR REALTOR – you are now ready to go shopping with your realtor to find the home you love. Should you find a home with a rental suite, we can usually use this income to help qualify you whether or not it is a legal suite.

    YOUR OFFER IS ACCEPTED – once your offer has been accepted, your realtor will send us a copy of the purchase agreement. Once the deal is approved, it is not uncommon for the lender to come back with additional requests for information. The faster we send this in, the faster we will then be given an “unconditional” approval. We will be working with a subject removal date which is the date that all subjects, including financing, need to be removed. This date is chosen by you and your realtor but is typically 10 to 14 days after the offer is accepted. At that point, we will also have documents for you to sign.

    CLOSING – about a week before closing, the lender will send instructions to your lawyer/notary and the lawyer/notary will be contacting you to set up a time to go in and sign. They collect your downpayment money at signing which also includes the deposit that you gave to your realtor when the offer was accepted. This money was held in trust until your closing date. There will be closing costs which your lawyer will clarify with you and if you have specific questions regarding legal costs, property transfer tax etc., please discuss with your lawyer/notary as things may vary depending on your personal situation. An accountant would be a good source of information for questions regarding capital gains.

    CONGRATULATIONS – YOU ARE A NEW HOME OWNER!

    So now it is up to you to find the place that you want to call home. We will do our part to make sure the process is as stress free as possible for you!

     

    Compliments of Belle Sproule & Karen Shale, INVIS Mortgage Brokers