As I sit here finishing off the last few mortgage transactions closing in 2013, I got to thinking of all the challenges we were presented with this past year, and where we have ended up.
2013 was the year that some economists took to ringing the alarm bells to warn us of a "Housing Bubble" about to burst....of course if you read further into their economic reports and predictions you would have found these warnings were only referencing the over inflated Toronto & Vancouver housing markets, not ALL of Canada.
Unfortunately the media failed to pass on that little tidbit so when they reported on these predictions locally the headlines read more like All of "Canada On Brink of Financial Catastrophe" or "Canada to Follow USA to Financial Ruin"...
Well, That didn't happen!
What did happen, was a tightening of mortgage rules in late 2012, rules that in my opinion should have only applied to the regions of major concern, (Toronto & Vancouver) not the rest of Canada. These rules combined with inaccurate media reports on the housing industry & real estate markets spread fear into potential home purchasers, and slowed our economy to a snails pace, exactly what most of Canada didn't need.... (NOTE- When I say most of Canada, I am now excluding Toronto & Vancouver)
Thankfully, the media finally got tired of beating the "Housing Bubble" that wouldn't burst, while borrowers and lenders adapted to the "New Mortgage Rules" and around August 2013 we started to see a resurgence of interest from home buyers no longer afraid to enter the housing market. The low house prices combined with low mortgage rates made a home purchase a viable and attractive option for many Canadians, even when hindered slightly by the "New" 25 Year Amortization limit for insured mortgages. Depending on who you listen to, some sources even say the 2013 real estate market equaled or even slightly surpassed 2012, but I will let our local realtors provide those statistics...anyone?
So, what should we take away from this year?
Basically the power of the media is unlimited, If the media reports it, it must be true...even when it isn't...
We the public are victims of the media, and many of us should spend just a little time doing some additional research before accepting what we read and hear as gospel
Economists had every right to be concerned of the Toronto & Vancouver markets, the prices are severely over inflated, but even strict new mortgage rules couldn't slow down consumer demand, so should we brace for even stricter mortgage rules to come? (the 30 year "conventional" mortgage is apparently the next item on the chopping block)
Tighter mortgage rules did limit Government and therefore tax payer exposure to Government mortgage guarantees...which is a good thing
As much as I detest some of the "New" mortgage rules, and think they should have been "regionalized", there is a reason the Canadian economy and our housing market in general, are still safe & secure...so I will tip my hat to our Finance Minister Jim Flaherty today, and probably resume complaining about him in the new year.
That's the way I see it anyways...
In speaking with several realtors the other day, I was surprised that many of them still didn't know the differences between a bank "mortgage specialist" and a TRUE Mortgage Broker....
So I thought I better put this in writing, so realtors, and borrowers, are properly informed when seeking mortgage advice and financing for their clients, or themselves.
Quite simply, a bank "mortgage specialist" is simply a bank employee, they have no provincially required educational requirements, and they are not regulated or licensed by anyone other than their employer. A bank "mortgage specialist" has only their employers mortgage product and rates to sell, be it RBC, TD, BMO or a local credit union. (these are the lenders with mobile "mortgage specialists" in our area) These bank employees provide borrowers with very limited product choices, only one set of rates, and let's not forget...they are still BANK EMPLOYEES! They are working for the bank's best interest, NOT the borrowers!
How do I know, and why do I care?
Well, I WAS a banker for 15 years before becoming a Mortgage Broker, and providing mortgage financing is pretty much all I have done for my whole 24 year career!
As a Mortgage Broker, I now work for the BORROWER, not the lender!....I have access to over 30 different lenders, all with slightly different rates, mortgage products, lending guidelines and rules, to provide borrowers the BEST chance of getting approved for the financing they require. I get paid a commission by the lenders for sending them a new client, and I only get paid once the mortgage is funded, so my client, the borrower, has to be 100% happy with the rates and terms I have arranged for them, or I don't get paid.
And let's not forget, if you are a Realtor, I have a vested interest in getting your client's mortgage request approved, so I have an obligation to YOU as well, to do the very best for your client, which ensures that you also get paid.
Look over the following list, and I think you will agree...a TRUE MORTGAGE BROKER (like ME) should be the only choice for your, or your client's financing needs!
So in summary....a Mortgage Broker can offer BETTER RATES, BETTER SERVICE, & FAR MORE OPTIONS, so why on earth would you entrust your, or your client's mortgage needs to a bank employee?
Please know that I am friends personally with many bank employees and bank "mortgage specialists", and they are all wonderful people, unfortunately their chosen profession simply can't offer borrowers everything that a TRUE Mortgage Broker can.
(No bank employees or mortgage specialists were harmed in the creation of this post.)
Well, the Bank Of Canada says it does see improvement in our economy, but still not enough to raise the bank rate...and predictions from economists now suggest we may not see any increases until late 2014 or even early 2015!
What does this mean to you? Well, if you are a potential home buyer this is Great News! Mortgage rates will remain low to stimulate the economy and encourage you to buy, which puts you in the "drivers seat" as a purchaser, so get out there and start shopping! There will never be a better time to buy!
If you are trying to sell your home, prices will likely remain pretty flat, and still quite low in comparison to just a few years ago. I still wouldn't suggest waiting for prices to increase before you sell, because you may wait a very long time. CMHC has predicted only modest increases in the Okanagan Valley, suggesting 2% per year for the next 10 years will be the norm. And don't forget...price is all relative...you may sell for less than what YOU think your home may be worth, but the next home you buy should also be priced substantially lower....
In my mind the continued low interest rates, combined with some of the most attractive house prices we have seen in the past 4-5 years should really get our housing market moving in the coming year. I would love to hear your input, and if you have ANY questions or concerns with anything I post please contact me...there is a reply button right after this post, or my email and ph# are clearly posted on my website.
Truth be told, getting approved for a mortgage is pretty darn easy for most people when you deal with a qualified Mortgage Broker like myself...I have numerous lenders anxious to lend money to all sorts of people in all sorts of situations and circumstances.
Unfortunately the reason some people end up NOT getting the mortgage they want, is because they don't have, or can't provide the required paperwork requested by the lenders.
So, here I will list off the basic paperwork you will typically need when applying for a mortgage... Plus I will HIGHLIGHT the paperwork that causes borrowers the most headaches trying to find, or obtain, so that you can avoid that frustration when you want to get your own mortgage.
Employment Verification - When you apply for a mortgage I have to prove your income, which is usually done via an Employment Letter, and 2 recent payslips, this is typically very easy to get from your employer within 1 -2 business days....BUT ...some lenders also want your Revenue Canada Notice Of Assessments - this is the 1-2 page summary Revenue Canada sending to you each year after you have filed your income tax...more and more lenders are asking for these as they help confirm your income, AND they can prove you don't owe any income taxes...SO DON'T THROW OUT YOUR NOTICE OF ASSESSMENTS! When you are Self Employed, or have a job that is salary PLUS commission, we often require 2-3 years worth of these Notice Of Assessments, so again, KEEP YOUR NOTICE OF ASSESSMENTS...at least 3 years worth!
Proof of Down Payment - When buying a home I have to prove you have the required 5% Down Payment, plus whatever extra cash to covering closing costs...This is often done via a 90 day printout of your account(s) in which you have been saving your money....Most people use "Online Banking" so doing a 90 day printout of your accounts is easy...BUT...when you print this history rarely does your name show anywhere on the printouts...SO YOU MUST PRINT THE SUMMARY PAGE THAT SHOWS YOUR NAME AND LIST OF ACCOUNTS THAT YOU HOLD AS WELL, that way the account number shown on the 90 day printout can be matched to the account(s) shown on the summary page.
Proof Of Existing Mortgage Balances/Details - When refinancing, I typically have to verify any existing mortgage balance and terms... so, PLEASE KEEP ALL MORTGAGE RELATED PAPERWORK! Your mortgage details will either show on your monthly bank statements, or on an annual mortgage statement sent out by your mortgage holder, SAVE THESE!
Proof past Due Bills Have Been Paid - If you ever experienced credit troubles or accounting errors that resulted in past due payments on any of your accounts you can probably still qualify for a mortgage...BUT...I will have to PROVE that you either settled these accounts, or paid the accounts in full, SO KEEP YOUR RECEIPTS AND ALL CORRESPONDENCE WHEN DEALING WITH ANY SORT OF PAST DUE ACCOUNTS OR ACCOUNTING PROBLEMS. I have had numerous clients who have had past due accounts, (credit cards etc) then they made arrangements and settled or paid these accounts in full....only to find out a year or more later that this delinquent bill is still showing on their credit report as "past due" or "unpaid". Do NOT rely of creditors to clean up your credit history, KEEP YOUR RECEIPTS!
Thats really it when it comes to "basic required paperwork" and the paperwork that causes the most troubles for people when applying for a mortgage. Any questions, I'm just a call or email away!
With 27 years of direct mortgage lending experience, first with a major bank, then a local credit union and now as a Mortgage Broker, I have arranged mortgages on almost every type of property imaginable....even a 50+ ft fishing trawler!!