Tuesday, September 25, 2012

Fall 2012 Newsletter Update

Summer is technically over, but it looks like we might have a few more weeks of sun, so enjoy the beautiful Vancouver weather while it lasts! Soon it will be time to pull out our boots for the Fall.  

It’s a great time for first time homebuyers to buy! Owning real estate is the foundation of financial freedom. It is a long-term investment but I believe it is worth it in the long run. Pay your own mortgage and invest in your future!

Our Current Mortgage Rates

*Rates and conditions, including prime and qualifying rates, are subject to change without notice.

Mortgage Brokers and Banks – The Major Misconceptions
When it comes time to apply for a mortgage, you might wrestle with the decision to go through a mortgage broker, or to go through your bank. The one you choose will ultimately be the one that’s best for you, but so many people automatically favour banks for their mortgages because they think bank mortgage loans carry more benefits than loans obtained through a mortgage broker. This is actually not true. You need to break through the major misconceptions before you make your choice. Here are the biggest misconceptions that homebuyers generally face.
  1. Mortgage Brokers are Going to Push You Into a Fixed Rate
  2. Banks Offer Discounts to Loyal Customers
  3. Banks have Better Reputations than Mortgage Brokers
  4. You're Better Off Doing it Yourself
Mortgage Brokers are Going to Push You Into a Fixed Rate
This is perhaps one of the biggest misconceptions, and one that is absolutely untrue. I prefer to understand my clients needs and personality prior to recommending a fixed or variable rate. Sometimes a fixed rate is the better choice for homeowners and other times a client may prefer a variable rate. A good mortgage broker will always go over all of your options and will give you informed advice on which route is best for you.

Banks Offer Discounts to Loyal Customers
This one has recently proved itself to be quite untrue. In a recent study of The Bank of Canada, it was found that new customers actually paid significantly less than customers who had their mortgage there for several years. The reason for this is that banks are always offering new discounts and cheaper rates to entice new customers to get their mortgage through their bank.

A mortgage broker on the other hand, looks through all the available mortgage packages out there and will find the one that’s the best for you. By comparison shopping, a good mortgage broker can save homeowners interest and identify the lender with the right flexibility/value tradeoff. The best brokers provide expert term analysis, proper deal structuring and helpful strategies to reduce a borrower’s amortization.

Banks Have Better Reputations than Mortgage Brokers
This isn’t at all true, and it’s not true that mortgage brokers have better reputations than the banks. Just like anything else, you need to judge each lender on their past reputation, whether they’re a bank or a mortgage broker. Sometimes you’ll find mortgage brokers that don’t have the best reputation, and sometimes you’ll find banks that don’t have good reputations when it comes to the mortgage packages they offer.  

You're Better Off Doing it Yourself
Good mortgage brokers provide counsel that saves the clients time and money. Do-it-yourselfers sometimes discount the value of advice, mesmerized instead by brokers/bankers who can save them a few basis points in rate. For most, that’s a mistake because:
  • Few individuals grasp the mortgage math needed to perform proper term selection. Term selection impacts borrowing cost far more than rate selection. A “good rate” alone does not equal a “good deal.”
  • There are lots of creative techniques that skilled advisors can use to help people whittle down principal quicker.
  • Lenders rarely disclose all of their mortgage restrictions until you sign their contracts. Brokers know the benefits and pitfalls of multiple lenders, and advise borrowers in advance.
It is possible to pick your own investments, do your own taxes or write your own will, but people still hire financial planners, accountants and lawyers. There’s only so much time in a day and we can’t specialize in everything. In all of those industries there are great and not-so-great practitioners. Brokers are no different. Interview several before picking one. Ask your friends for a referral or find someone you trust and respect and stay dedicated to the broker you chose. Remember that most mortgage brokers have access to the same rates, but not necessarily the same lenders and products. Ask questions like:
  • Which lenders they use most often and why?
  • How long they’ve been in business full-time?
  • Why their term recommendation is mathematically sound for your specific needs?
Sense if you can trust the mortgage broker you choose. If they seem to care about you, are competent and make you feel comfortable, you’ll be glad to have them on your side!

Call now for a free mortgage consultation 778.388.4240!

3 Year Firxed Rate Term vs. 5 Year Fixed Rate Term
No one can say what interest rates will be like in the next 3, 5 or 10 years ... so why not take advantage of today’s record setting low mortgage rates?

Do you want to save money now and for the next 3 years?
  • Save costly pre-payment penalties for breaking longer term mortgages early. On average a borrower breaks their mortgage in year 3 of a 5 year fixed term.
  • You will pay less interest over the next 3 years than with current higher longer term interest rates.
  • You can keep more money in your pocket  every month or make extra lump sum payments toward principal saving you even more money in interest and shortening the amortization of the mortgage.
CMHC Market Update
"Housing starts in British Columbia are forecast to increase gradually in the final quarter of this year and in 2013 to a level consistent with economic fundamentals and household formation... Although there is significant uncertainty, mortgage rates are not expected to rise in the short term and will remain low by historical standards.  According to CMHC’s base case scenario, for 2012,  the one-year posted mortgage rate is expected to be in the 3.2 to 3.4 per cent range, while the five-year posted mortgage rate is forecast to be within 5.1 to 5.4 per cent.  For 2013,  the one-year posted mortgage rate is expected to rise and be in the 3.5 to 4.2 per cent range, while the five-year posted mortgage rate is forecast to be within 5.0 to 5.5 per cent, reflecting more solid economic growth prospects as 2013 progresses." Read more of the CMHC Quarterly Housing Market Outlook  

and Promotions
There are new rebates available to you for 2012 if you’re buying a brand new home. For more information on the HST rebate click here and for information on the first time home buyers tax credit watch this video created by CRA.

Home ownership is not for everyone, and great consideration is required when you’re reviewing your options, budget, finances and your overall long term life plan. With knowledge, understanding and support, owning your own home is possible and will be a cornerstone of your financial freedom. It’s what we don’t know that costs the most! So before you rule out homeownership, speak to Laura MacCormack and discuss your options.

Call now for a free mortgage consultation 778.388.4240!