You may have noticed that there are many different terms for those of us who work in the mortgage industry besides “broker”.
Mortgage: specialist, expert, advisor, associate, officer, etc. I just want to clear up some potential confusion with all these monikers.
There are 2 main categories that these fall in to. Those that work for a bank to sell mortgage products available from that bank.
The other is for those like myself that work within a mortgage brokerage that has no direct affiliation with any one bank.
Each mortgage brokerage has agreements in place with multiple banks and mortgage lenders to be able to submit mortgage applications for consideration.
There are of course obvious differences between these but some may not be quite so apparent.

Mortgage Brokerage
All those working in the mortgage brokerage industry must be licensed by a provincial government agency, in Saskatchewan it’s called the Financial & Consumer Affairs Authority (FCAA).
While every province has their own set of guidelines, there are 3 different types of licenses offered by FCAA: mortgage associate, mortgage broker & principal broker.
The mortgage associate and broker are very similar as both advertise themselves to obtain clientele, work directly with the clients, mortgage lenders, mortgage insurers, realtors and lawyers in the service of their clients. The key difference is that an associate must work under a supervising mortgage broker to ensure they remain in compliance with FCAA regulations.
Each mortgage brokerage will have a principal broker (aka: broker of record) that oversees the operations of the brokerage as well as all the associates and brokers within the brokerage.
Most all those working in the mortgage broker industry are commission based. Our income is derived from the mortgage lenders that we submit mortgage applications to.

In order to apply for a license as a mortgage associate, applicants must complete an approved mortgage associate education course and provide a current criminal record check along with the required application documents.

Application for a license as a mortgage broker are the same as for an associate with the addition of a previous experience requirement.
The applicant must have been licensed as a mortgage associate for at least 24 of the previous 36 months.

In addition to annual applications for renewal, licensees must also:

Purchase and remain in good standing with professional errors and omissions insurance
Complete FCAA approved annual continuing education courses
Provide FCAA auditors access to mortgage files for review whenever requested
Advise FCAA of any changes to brokerage or contact information
Immediately advise FCAA of any offences under the criminal code (other that traffic offenses)
Bank Branch Mortgage
Those that work in mortgage lending for a bank are normally paid by the hour or are salaried and may have a performance bonus structure.
Entry level positions do not require any education beyond high school. Training is provided on the job by the employer with supervision by the branch manager and more experienced staff.
There are no licensing requirements by any provincial or federal governing body and errors and omissions insurance is not required.
Many banks have mobile mortgage staff that may or may not conduct business within the branch and are often paid on a commission basis rather than hourly or salary.

If you have any questions, contact your Dominion Lending Centres Mortgage Broker

P.S.
Download My FREE Mortgage Toolbox App https://www.dlcapp.ca/app/michael-distefano?lang=en

Michael Distefano
Mortgage Agent and Manager of operations
DLC BTB Mortgage Solutions FSCO 12039
Niagara’s largest Mortgage Broker
106- 5017 Victoria Ave Niagara Falls L2E4C9
T 905 357 5366 F 905 357 6654 C 905 246 5363

APPLY ONLINE ANYTIME

http://betterthanbankmortgage.com/mortgages/how-to-apply/

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The Canadian Press

The Bank of Canada is keeping its key interest rate unchanged as it releases a downgraded 2019 growth forecast that includes a prediction the economy nearly came to a halt at the start of the year.

The central bank also appears to be in no hurry to move the interest rate any time soon because, unlike recent statements, the announcement today removed all mentions of a need for future increases.

The decision leaves the trend-setting rate at 1.75% for a fourth-straight announcement — a pause that followed governor Stephen Poloz’s stretch of five hikes between mid-2017 and last fall.

The bank says the economy was operating close to full tilt for most of 2017 and 2018 before a sudden deceleration in the final months of last year, which was largely caused by a drop in oil prices and unexpectedly weak numbers for investment and exports.

In new projections today, the bank is predicting growth of real gross domestic product of 1.2% for 2019, down from its January forecast of 1.7%.

The Bank of Canada is projecting growth of just 0.3% in the first quarter of 2019, though it’s predicting the economy to pick up its pace in the second quarter on expectations of stronger housing activity, consumption and business investment.

Download My FREE Mortgage Toolbox App https://www.dlcapp.ca/app/michael-distefano?lang=en

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DLC BTB Mortgage Solutions FSCO 12039
Niagara’s largest Mortgage Broker
106- 5017 Victoria Ave Niagara Falls L2E4C9
T 905 357 5366 F 905 357 6654 C 905 246 5363

Instead of long paragraphs, we made it easy with just numbers for your understanding.

SCENARIO 1: Your current mortgage is a five-year fixed-rate term. Your rate is probably at or below 3%. Let’s use 2.89%, as many of my clients were averaging this rate back then. Five years ago, you were qualified using your actual rate. So, in this case, 2.89%. Let’s say you took a 25-year amortization with an original balance of $400,000, equaling $1,871 in monthly payments. Today, your balance is $340,000. How much income did you need to qualify back then? $73,000 per year.

Fast forward to today. It’s renewal time and you’re ready to shop for rates. Of course, your Mortgage Broker has contacted you or you’re going to call an experienced Mortgage Broker to ensure you’re getting the best rate and terms. Historically, we know that banks don’t offer their existing clients the absolute best rate at renewal time. This is just the way it has always been. But, it’s gonna get worse…

And now for some potentially bad news: Today, you heard about a better deal at a competing lender. Naturally, you’ll qualify given that you’ve paid your mortgage perfectly for five years, right? Well, not necessarily.

Today, you must requalify using your new rate (let’s use 3.59%, as this is a competitive rate today) plus 2.00% (infamous stress test) for a qualifying rate of 5.59%. Using this new higher qualifying rate, regardless of the now shorter amortization and lower mortgage balance, you’ll still need a higher qualifying income of $88,000.

Think your bank doesn’t know this? Guess again… they know and they love it. And, chances are, you won’t see the best rate offer come renewal time. (This is where I would strongly recommend speaking with an experienced Mortgage Broker. Having access to a variety of lenders in addition to banks.)

SCENARIO 2: It’s renewal time and you want to increase your mortgage to buy a car, install a new furnace/air conditioner, renovate, or even send your kids to school. Perhaps you took out a loan or used your line of credit for some expenses you accrued waiting for renewal time. (And, of course, you’re paying a higher interest rate as all non-mortgage debts have higher rates than your mortgage). Using the same example as above, your current mortgage balance is $340,000, but you want to go back up to a $400,000 mortgage to roll in those other higher-interest debts.

To qualify for this same $400,000 mortgage amount you originally started with five years ago, you’ll now need to earn $108,000 per year. That’s a $35,000 higher annual income – a 52% increase. Now, how does this make sense? It doesn’t, but it’s the new reality.

There are calls for the government to pull back on the stress test – and for good reason. The example above is playing out hundreds of times a day across the country.

Don’t despair. There is hope. And there are solutions. Your interest is my only interest.

P.S.
Download My FREE Mortgage Toolbox App https://www.dlcapp.ca/app/michael-distefano?lang=en

Michael Distefano
Mortgage Agent and Manager of operations
DLC BTB Mortgage Solutions FSCO 12039
Niagara’s largest Mortgage Broker
106- 5017 Victoria Ave Niagara Falls L2E4C9
T 905 357 5366 F 905 357 6654 C 905 246 5363

APPLY ONLINE ANYTIME http://betterthanbankmortgage.com/mortgages/how-to-apply/

Check out our full line of DLC Visa cards http://betterthanbankmortgage.com/visa-cards/

If you smoking pot in your home or want to grow a few plants, you could reduce the value of your home !

October 17th will be important day in Canada’s social history. It’s the day when we are going to have legalized marijuana across the country. We will be the second major country in the world to do this. How does this affect mortgage brokers like myself? When someone comes to me to obtain financing for a home purchase and the sellers have disclosed that they smoked pot in the house or grew a few plants , how will this affect their home purchase?

A few years ago, someone disclosed that their home had been a grow-op six years previously and their home insurance company cancelled their policy citing safety issues. We could see this happening with both lenders and mortgage default insurers like CMHC, Genworth and Canada Guaranty. A recent article by a member of the Canadian Real Estate Association suggested that both lenders and insurers might ask for a complete home inspection. It was suggested that sellers who have grown a few plants might want to get a head of a problem and have an inspection before they list the property. If there are any issues of mold or electrical systems that are not up to code, they can remedy this and have a quick sale.

We contacted both CMHC and Genworth Canada to find out if any policy changes are in the works. CMHC told me that there’s nothing planned beyond what is already on the books. If there’s been a grow operation it needs to be inspected and remediation done before they will insure. Genworth says that nothing has been announced as of yet. Any changes will result in an official announcement to all brokers.
Mortgage brokers may want to call their realtor referral partners and discuss this with them to see if local real estate authorities have any changes planned. If nothing else it will be good to touch base with your realtors to find out how the market is in your area.

If you are thinking about smoking pot in your home or want to grow a few plants or any other mortgage related questions , contact our local Dominion Lending Centres mortgage professional to find out if this could affect your  house value or sale in the future.

Michael Distefano
Mortgage Agent and Manager of operations
DLC BTB Mortgage Solutions FSCO 12039
Niagara’s largest Mortgage Broker
106- 5017 Victoria Ave Niagara Falls L2E4C9
T 905 357 5366 F 905 357 6654 C 905 246 5363

APPLY ONLINE ANYTIME http://betterthanbankmortgage.com/mortgages/how-to-apply/

Check out our full line of DLC Visa cards http://betterthanbankmortgage.com/visa-cards/

 A client would be hard pressed to find a Realtor to write an offer without a ‘subject to inspection‘clause, and for good reason. Similarly, client should be hard pressed to find a Mortgage Broker advising an offer without a ‘subject to financing‘ clause.

This is because no banker or Broker can give a client 100% assurance of financing without factoring in the actual specific property details. Until an appraisal is reviewed and approved, the application is not complete. And there are some properties that some lenders simply will not lend against.

There are the obvious examples that lenders tend to exclude;

• Properties containing Asbestos, Aluminium wiring, Underground Oil tanks
• Re-mediated former grow-ops
• Re-mediated drug labs.

There are also less obvious ones;

• live-work units
• row-homes (attached non-strata properties)
• properties smaller than 450 sq ft
• properties on lease land, Government, First Nations, or Private.

Regarding the appraisal process, there is more than simply the valuation question to be answered. In fact, valuation is rarely the challenge in our market, as many properties ‘auto-approve’ when the value is below $750,000. (This is not true of ALL properties below $750,000 by a long shot; many lenders condition all strata properties for instance for a full appraisal no matter the purchase price.)

What is being looked at other than value in the appraisal report?

A key complication is a little thing called ‘Remaining Economic Life or REL’ (as opposed to the ‘physical life’) of the home. This refers to how long this specific house is likely to remain standing on this property under the current care it is receiving.

Perhaps we have an otherwise perfectly habitable home for decades to come ─ lots of remaining ‘physical life’. The problem is that lenders are looking for remaining ECONOMIC life rather than the remaining physical life. The question is not “How long can that house be standing there?” it is “How long does it make economic sense for that house to be standing there given current market conditions?”

There may be a problem if it is located in a neighbourhood where many of the older homes are being purchased to be demolished and replaced with multimillion dollar homes. That leaves the purchase looking like a speculative land play or potential knock-down. As such, the remaining economic life is perhaps 15 years or less stated in the appraisal report.

Or maybe the property is a ramshackle house in a state of disrepair. It looks like the bargain of the age on paper, and perhaps the purchaser is a contractor planning to bring the home back into a wonderful state of repair. However the appraisal must view the current remaining economic life of the home ‘as-it-sits’ not ‘as-is-planned’. We have seen homes like this with REL as short as five years.

What is this ‘Remaining Economic Life’ exactly?

Economic life is the total period of time which the improvements (house/buildings) contribute to the overall property value. The total economic life of a typical Lower Mainland home is generally accepted to be 65 years. Economic life and physical life can differ widely and physical life usually exceeds economic life. Renovations and updates can increase a property’s physical and economic life, and poor maintenance can shorten it. Increases in land value can also have a negative impact on remaining economic life. As older homes are torn down to make way for new ones, it makes less economic sense to keep the older one standing.

REL is the estimated time period which the improvements continue to contribute to property value. An appraiser estimates REL in part by interpreting the economic conditions, attitudes and reactions of buyers in the market.

The REL is calculated by subtracting the Effective Age from the Total Economic Life.

Economic Life – Effective Age = Remaining Economic Life

For example:

A 40-year-old home that has had substantial renovations may have an effective age of 30 years.

65 years – 30 years = 35 years Remaining Economic Life (REL)

How lenders view Remaining Economic Life (REL)

Few lenders will lend on a home with a remaining REL of less than 15 years. Also, the effective amortization will be set at the REL minus five years, which drives payments sky high, and often leaves client unable to qualify for such large mortgage payments should they even want to sign on for them.

Clients can run the risk at this point of their own awesomeness being part of the undoing of the mortgage approval. Clients with significant liquid assets and strong incomes buying a smaller, older home on the street of newly built monoliths will be viewed as most likely planning to knock the home down and build a new one.

The immediate thought: ‘But the land value alone… ’

Lenders are not in the business of writing conventional AAA-rate mortgages on properties that will be torn down. Instead this is viewed as ‘speculative’ or ‘investment/business’ lending with which come undeniably greater risks. Wherever one finds greater profits there are greater risks. Lenders price accordingly, which is why land/construction financing carries higher rates and additional fees.

A property with a habitable home standing on it is unquestionably easier to market and sell ─ and thus recover the loan balance from ─ should the lender have to step in and take over. And foreclosure is the last thing any Canadian lender wants to contemplate.

It will take on average 18 months of no payments before a lender has gained control of and sold a property through the foreclosure process. And at the end of it said lender must seek out the defaulting client and write them a cheque for the remaining equity that was in the property, all the while honouring the original interest rate in most cases.

It is nothing like the US system at all. (which is a wonderful thing for us)

So lenders avoid any whisp of risk, preferring security. Ideally in the form of a habitable home on a lot that is going to look decades from now much as it does today.

Clients would be wise to also minimize risk, by either writing offers that contain a ‘subject to inspection’ and a ‘subject to financing’ clause, or by having a detailed conversation with a skilled Broker well in advance of writing a subject-free offer.

If you have any questions, contact me today 877 357 5366

There’s little doubt, the biggest purchase in your life will be a home. So when you’re embarking on what can be both an exciting and stressful journey, you want the best professionals by your side. When it comes to picking a broker to handle your mortgage, it’s not always easy to decide who to choose.

There are roughly 18,000 mortgage professionals in Canada. While most are honorable and great at their job, it’s important to find the broker that works best for you.

Nowadays, there’s plenty of information or reviews on any given broker at your fingertips. While those searches can give you pretty good insight into a potential broker, there’s a few things you also might want to consider that can help make that decision a little easier.

I know it’s tempting to choose a broker who has an abundance of clients and years of experience in the industry. While it’s never a bad idea to go with the established, be open to picking someone who might be newer, hungry and striving to be better. Also, with a busy firm, you may end up being a small fish in a big pond, and not get quite as much attention as you’d like.

As brokers, we spend a lot time using our industry jargon because it comes natural to us. We work in it every day. But for the average person, some of the terms in a mortgage can be downright confusing. And in a lot of situations, people don’t want to speak up because they don’t want to sound dumb. Look for a broker who is going to keep it simple for you, so you understand exactly what you’re getting in your mortgage.

Ultimately, it comes down to the mortgage product. But don’t be blinded by a broker who is selling you on a rate and making promises to pay for fees. It’s a big red flag. If they say they’re going to pay for everything, they’re desperate for anything.

Of course the rate matters, but the characteristics of your mortgage matter more and could end up costing you in the long run.

You want a broker who’s going to listen to you and ask you about your needs and future goals. Why are your plans five or 10 years from now so important? Consider that nearly 70 per cent of mortgages are broken within three years. Even if you’re sure of today, life happens and tomorrow could be different. You need to at least consider the penalties for ducking out of your mortgage early, or if it’s even portable.

The best mortgage brokers in the business will make sure they’ve got all of your bases covered, and you’re fully aware of what you’re signing onto.

Michael Distefano
Mortgage Agent and Manager of operations
DLC BTB Mortgage Solutions FSCO 12039
Niagara’s largest Mortgage Broker
106- 5017 Victoria Ave Niagara Falls L2E4C9

miked@beatthebankmortgage.ca
T 905 357 5366 F 905 357 6654 C 905 246 5363

APPLY ONLINE ANYTIME http://betterthanbankmortgage.com/mortgages/how-to-apply/

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4 KEY THINGS YOU NEED TO KNOW ABOUT A SECOND MORTGAGE

Many homeowners are vaguely aware of the fact that you can take out a second loan on your home. You hear your friends mention it or perhaps a family member close to you has gone through the process—but do you truly know what it means to take out a second mortgage? We have taken all the questions we get asked about second mortgages and compiled it into four key points.

A SECOND MORTGAGE IS BASED ON THE EQUITY IN YOUR HOME
The total loan amount that the second mortgage lender will offer you will depend on the equity that has been built up in your home. Second mortgages allow you to access up to 95% of the equity you have in your property. For instance:

House Value $850,000
95% LTV (maximum mortgage amount) $807,500.00
First Mortgage $550,000.00
Amount Available Through Second $257,500.00

INTEREST RATES WILL VARY AND BE HIGHER THAN YOUR FIRST MORTGAGE
This is because when a lender agrees to a second mortgage, they are taking a higher risk as he gets second priority in case of default. With that being said, we have options and solutions such as working with private lenders that can help you obtain a reduced rate and the right product for your mortgage situation. Typically, you can expect an interest rate of 6.95%-19.95% with lender and broker fees included.

YOUR PAYMENT CAN BE AS LOW AS INTEREST ONLY PAYMENTS
One of the advantages of selecting to use a second mortgage is the fact that the payments are attractive. You can pay interest only payments or you can also select to pay the interest plus the principle loan amount. You can work with your mortgage broker to discuss options and what would work best with your situation.

THERE ARE ADDITIONAL FEES TO CONSIDER
Since we want to have you understand ALL the fees associated, it is important to know that setting up a second mortgage will require you to pay: *note dollar amounts are approximations

An appraisal fee to assess the value of your home: $300
Legal fees to set it up: $2,000
Lenders & Broker fees: 1-5%

Second mortgages are a great option for many and may be a better solution than a refinance or a Home Equity Loan (HELOC). If you are interested in learning more or want to find out if a second mortgage is right for you, talk to your Dominion Lending Centres mortgage broker. We can guarantee they can guide you the process from start to finish!

Michael Distefano
Mortgage Agent and Manager of operations
DLC BTB Mortgage Solutions FSCO 12039
Niagara’s largest Mortgage Broker
106- 5017 Victoria Ave Niagara Falls L2E4C9
T 905 357 5366 F 905 357 6654 C 905 246 5363
APPLY ONLINE ANYTIME http://betterthanbankmortgage.com/mortgages/how-to-apply/
Check out our full line of DLC Visa cards http://betterthanbankmortgage.com/visa-cards/

CMHC CHANGES TO ASSIST SELF-EMPLOYED BORROWERS

As a self-employed person myself, I was happy to hear that CMHC is willing to make some changes that will make it easier for us to qualify for a mortgage.
In an announcement on July 19, 2018, the CMHC has said “Self-employed Canadians represent a significant part of the Canadian workforce. These policy changes respond to that reality by making it easier for self-employed borrowers to obtain CMHC mortgage loan insurance and benefit from competitive interest rates.” — Romy Bowers, Chief Commercial Officer, Canada Mortgage and Housing Corporation. These policy changes are to take effect Oct. 1, 2018.

Traditionally self-employed borrowers will write as many expenses as they can to minimize the income tax they pay each year. While this is a good tax-saving technique it means that often a realistic annual income can not be established high enough to meet mortgage qualification guidelines.
Plain speak, we don’t look good on paper.

Normally CMHC wants to see two years established business history to be able to determine an average income. But the agency said it will now make allowances for people who acquire existing businesses, can demonstrate sufficient cash reserves, who will be expecting predictable earnings and have previous training and education.
Take for example a borrower that has been an interior designer with a firm for the past eight years and in the same industry for the past 30 years, but just struck out on his own last year. His main work contract is with the firm he used to work for, but now he has the ability to pick up additional contracts from the industry in which he has vast connections.
Where previously he would have had to entertain a mortgage with an interest rate at least 1% higher than the best on the market and have to pay a fee, now he would be able to meet insurance requirements and get preferred rates.

The other change that CMHC has made is to allow for more flexible documentation of income and the ability to look at Statements of Business Professional Activity from a sole-proprietor’s income tax submission to support Add Backs of certain write-offs to support a grossing-up of income. Basically, recognizing that many write-offs are simply for tax-saving purposes and are not a reduction of actual income. This could mean a significant increase in income and buying power.

It is refreshing after years of government claw-backs and conservative policy changes to finally see the swing back in the other direction. Self-employed Canadians have taken on the burden of an often fluctuating income and responsible income tax management all for the ability to work for themselves. These measures will help them with the reward of being able to own their own home as well.

Michael Distefano
Mortgage Agent and Manager of operations
DLC BTB Mortgage Solutions FSCO 12039
Niagara’s largest Mortgage Broker
106- 5017 Victoria Ave Niagara Falls L2E4C9
T 905 357 5366 F 905 357 6654 C 905 246 5363
http://betterthanbankmortgage.com/
APPLY ONLINE ANYTIME http://betterthanbankmortgage.com/mortgages/how-to-apply/

Check out our full line of DLC Visa cards http://betterthanbankmortgage.com/visa-cards/

There are quite a few online services that help you locate people in the home maintenance and repair business, including:

HomeStars: A database of contractors and tradespeople, with reviews. There were mixed comments about the experience of using this service. One reader said he’s had good success using HomeStars, while a couple of others said good reviews do not necessarily mean you’ll be happy with the work.

Houzz: A website offering reno design ideas and a way to connect with construction pros.

Jiffy: Quickly connects you with home maintenance people, with pre-set rates.

ProjectUp: Launching this month, ProjectUp offers the opportunity to post your project on the website and have contractors bid on the project.

https://setter.com/: Bills itself as a “personal home manager” that will help you find people to tackle all your household jobs.

Referrals from neighbours, family and friends: A few people mentioned that they used contractors who had already done work for their neighbours.
Community Facebook pages: These are a great place to ask for referrals. Google and Yelp ratings: They’re worth checking before you hire someone.

Once you found someone to get you renovation done, give us a call to assist with the financing 877-357-5366

****NEW OFFICE LOCATION****
106- 5017 Victoria Ave Niagara Falls L2E4C9

Michael Distefano
Mortgage Agent and Manager of operations
DLC BTB Mortgage Solutions FSCO 12039
Niagara’s largest Mortgage Broker
106- 5017 Victoria Ave Niagara Falls L2E4C9
T 905 357 5366 F 905 357 6654 C 905 246 5363
APPLY ONLINE ANYTIME http://betterthanbankmortgage.com/mortgages/how-to-apply/
Check out our full line of DLC Visa cards http://betterthanbankmortgage.com/visa-cards/

Story Credit
PERSONAL FINANCE COLUMNIST
OTTAWA
rcarrick@globeandmail.com
http://www.robcarrick.com/