Owning VS. Renting: Which Is Better For You?

It’s quite common to get frustrated when renting. After all, you’re paying often expensive rent each month, sometimes even putting work into the property, and while it does cover your accommodation, once you move out you’ve got nothing to show for it. If you own your home however, your monthly mortgage payments are similar to paying rent except they are going directly towards your own home: your own investment. Once you own your home outright, it’s a huge asset, especially in a city with such a high and competitive real estate market.

 Many people, if financially able, would choose owning a home as the money they put into accommodation goes directly into the property, their own investment. There are, however, considerations to take into account whether renting or owning. Depending on your lifestyle, owning may not be right for you even if you do have the cash for a down payment.

In this article, we’ll take a quick look at some of the pros and cons of owning versus renting.

Owning

Advantages to owning a home include:

    Owning a home gives you a sense of stability and of ownership. Many people grow up imagining they will one day own property. If you want to settle and start a family, owning a home can give you the stability to do so.

    Buying a house is likely the largest purchase you will ever make. While it takes time to pay off a mortgage, a home is a good investment, one which you can also keep in the family should you choose.

    If you own, you have more freedom when it comes to renovations and home improvements. No more dealing with potentially difficult landlords.

    There are certain tax deductions you can make as a homeowner, such as deductions on property tax and on interest paid.

Potential disadvantages include:

    You will have to spend more money. Even though your mortgage payments may be the same or less than paying rent, there are still considerable expenses, especially in the first few years of home ownership. This can include such expenses as utilities, insurance, and property tax. Make sure you fully understand the expenses before you buy. A mortgage broker can help advise you in that regard.

    Having a mortgage and owning a home is a big commitment, both financially and timewise. If you plan on moving around or travelling a lot, homeownership may not be right for you.

Renting

Advantages of renting property include:

    Renting can give you more flexibility. Usually after a year long lease, leases change to month-to-month which can give you the flexibility you need if you are unsure of your future living situation.

    As a renter, you will not have to pay for many repairs as those fall under the responsibility of the landlord.

    Rent is often cheaper than a mortgage, and you don’t pay property tax.

While disadvantages include:

    You must obey the landlord’s rules, which may, for instance, forbid pets.
    There are limitations on the appearance of the home and home decor.
    Zero return on your investment.

If you are considering making the move from renting to owning, consult a mortgage broker today. A mortgage broker can help you understand the market and assess your financial situation to help you determine if owning is right for you. Contact one of our mortgage professionals today to set up a consultation!

source: northwoodmortgage.com

Selling and Buying a New Home? Here are Your Options

For many homeowners, the purchase of a new home is dependant on the sale of their old one. While it would be ideal for the selling of your old home and purchase of your new home to happen at exactly the same time, the dates rarely line up like that. You may have sold your current home but are still searching for a new one. Or, you may have found the perfect property but are lacking a buyer for your current home. Selling and buying a new home can be daunting; fortunately, you do have options, and it can be done!

Sell First

There are some benefits to selling your home before buying a new one, the biggest one being that you will know exactly how much you can afford on the new home. If you don’t sell first, you may be overly optimistic about the value of your home and buy something you can’t actually afford. Or, you may lowball your new home and be disappointed when you find out what you could have had! Selling first will give you certainty about what you can afford, which is a great position to be in when buying.

Selling first means you’ll only have one mortgage payment—on the new home—rather than have to juggle two mortgages. However, some homeowners don’t like the uncertainty of selling their home without having somewhere else lined up. Selling first means you would have to find accommodation, whether with relatives, friends, or with a rental. You would also possibly have to put your belongings into storage, which can be a big hassle.

Buying First

Buying a home before selling your old home gives you lots of time to plan your move. However, buying first means you could end up paying two mortgage payments at once if your current home isn’t paid off. Whether or not you can afford this depends on your financial situation. If you can afford it, buying first is a good way to ease the selling process by taking the pressure off finding a new place.

Rent Your Old Home

If you feel you aren’t able to afford two mortgage payments but have found a new home you don’t want to miss out on, you could move into the new home and rent out your old property. While this requires the added pressure and stress of finding tenants, and being a landlord, it can be really helpful for paying off your mortgage and alleviating the financial stress of owning two properties.

These are just a few of the options available when it comes to selling and buying a new home. If you are considering selling and buying, speak to a mortgage professional to see what kind of potential expenses you can expect. Contact our experts today to set up a consultation!

source:  northwoodmortgage.com

Should You Negotiate Your Mortgage?

Finally thinking about joining the homeowner club – negotiation is a key trick of the trade when it comes to mortgages. If you know the power of negotiation, you will save yourself a lot of hassle, money and time in the end.

Becoming educated on the home buying process and the financial aspects of it, can give you the upper hand. Remember the lenders are competing for your business, you don’t have to just settle for what you can get, you can get the best if you know your stuff.

3 Tips to help you negotiate your mortgage

• Calculate your finances.
It’s important that you are fully aware of your finances. Know your credit score and how much money you have in the bank. If you have a high credit score, try to maintain it. If your credit score is on the lower end, speak with your financial agent to find out the best way for you to improve it. Your finances play a major role in the amount of money you will be offered by lenders and if you are confident with your finances, you will make a better negotiator. Use a mortgage calculator to check out payment and interest options.


• Shop around – visit different lenders and listen to their offers.
Be prepared to visit a few lenders to find the best deal for you. They should lay out all of the information in a clear and concise way, so you will be able to understand 100% of what they are offering.


• Don’t make any impulsive decisions.
Think of the big picture – don’t rush it. Take time to think about the offers and what looks the most attractive to you.

There are many mortgage terms that lenders are usually willing to negotiate, but two of the main ones are:

1. The Amortization Period
Let’s start with what the amortization period is on a mortgage: it is the period of time it will take to repay your debt (mortgage) in installments on a regular fixed schedule. The amortization period makes a huge difference when it comes to your mortgage payments and the amount of interest that you will pay on the mortgage life.


2. Interest Rates
These rates vary but lenders are able to offers some customers ideal rates.

Speak with one of the experts at Northwood Mortgage to find the best mortgage for you.

source: northwoodmortgage.com

What Options do Brokers Offer that Banks Don’t?

Brokers versus Lenders

A broker’s job is not just to provide a mortgage; it is to find the best possible mortgage for a client’s situation among multiple lenders.

A good broker will shop around between many different banks and credit unions to find the best mortgage product for the client. This is a fundamentally different service from banks or other lenders.

While a broker’s purpose is to find the best mortgage for a client, a bank’s purpose is to sell the client on the bank’s products.

Advantages of Going through a Broker

Mortgages are complicated affairs with many hidden costs. Many first-time home buyers choose mortgages strictly based on rates. However, they end up getting fleeced by fees, pay restrictions, and refinance policies.

This is especially true for people with variable income or bad credit, who need more flexible mortgage options. A broker can help find a mortgage product specifically designed for any needs.

Best of all, a mortgage broker has a good understanding of value, and can find the best new offers from a variety of lenders. Every time a new mortgage product is rolled out by a lender, brokers across the country analyze and evaluate its value for their clients.

Additional Options through a Broker

Specifically, the options provided by a broker, as opposed to a bank, include:

    Choice between different lenders
    Negotiation of rates with lenders
    Neutral consultations and assessments

Rising Popularity of Brokers

The recession may be over, but capital is still tight. Bank rates have continued to increase for the past few years. CRBC and TD in particular have both hiked their rates across the board. This has made homeownership very difficult for many Canadians.

The good news is that many brokers can still find the deals among the rising rates.

Lesser-known monolines, or dedicated mortgage lenders, have tried to gain an advantage over the big banks by providing lower rates. It’s difficult for laypeople to find the right monoline for them, but brokers have the skills to find monoclines with both lower rates and appropriate terms.

The public is noticing the better mortgages obtained by brokers. Brokers now account for about one third of new mortgages. Among people who have already gone through the mortgage process with a bank, most choose to refinance using a mortgage broker.

source: northwoodmortgage.com

Do Mortgages Cover Home Repairs?

Yes, they can. Most mortgage terms will allow buyers to make initial major renovations or repairs to the property. Many refinancing options not only permit, but also insist, that all refinanced funds to go towards home repairs.

Either option will allow you to perform home repairs, under certain conditions.

Not only can mortgages be used to cover repairs, but often, they should! Mortgages are typically the lowest-rate options for financing repairs. Mortgages pay for about 15% of Canadian home repairs, making them the most popular form of credit used in renovations.

The Policies

The Canadian Mortgage and Housing Corporation (CMHC) provides the majority of mortgage insurance to first-time buyers.

CMHC policies allow for home buyers to build equity into their homes by renovating them after purchase. To obtain additional funds in a mortgage, you will provide an estimate, preferably with quotes by contractors, for all the repairs in your home.

If you already own a home, you can pay for renovations through refinancing.

Refinancing for Renovations in Canada

With most lenders, you can refinance your home for up to 80% of its value, minus any remaining debt on your previous mortgage.

Because you have more equity, a refinanced loan will often have a lower rate than your original mortgage. In Canada, it is common to find refinancing options with rates under 3%.

This makes refinancing a much more attractive option for homeowners than lines of credit, credit cards, or personal loans.

Most credit cards now carry an interest rate of 18%, while loans are almost always over 4%. The increased rates are not a huge problem for people who intend to pay off the renovations in a few months, but they are extortionate when spread out over years or decades.

Let’s look at an example:

Imagine a kitchen renovation costing $12,000 by a family with an extra $200/month in the budget that increases with inflation. They obtain a typical home equity line of credit rate of 5%, compounded annually. Assuming 2% inflation, this will cost about $2200 in interest and will take six years to pay down.

If the same family chose a refinanced mortgage at a typical rate of 2.7%, will cost about $800 in interest and will take slightly more than five years to pay off.

This difference becomes even starker with lower monthly payments. A line of credit at $100 + inflation per month will run the family $6000 in interest over 15 years, while the same with mortgage refinancing will cost about $2000 over 11 years.

Mortgage refinancing is the most affordable way to pay for home repairs. Contact Northwood Mortgage to consider your options.

source: northwoodmortgage.com

Foreclosure offerings in Nevada are hardly a steal, report finds

Buying a distressed home in Nevada was no bargain last year.

The average sales price of a home in some stage of foreclosure — such as having a notice of default or being bank-owned — was $126,521 in 2012, almost 6 percent higher than in 2011, according to a new report from RealtyTrac.

Also, the state’s average foreclosure discount of 19 percent — the price break compared with nondistressed homes — was well below the national average of 31 percent.

About 34,900 distressed homes were sold in Nevada last year, down 36 percent from 2011. Still, they accounted for 37.78 percent of all home sales statewide last year, the third-highest rate in the country.

California was No. 1 at 38.05 percent, followed by Georgia at 37.83 percent. Nationally, distressed homes accounted for 21.4 percent of all sales.

Las Vegas Valley home buyers and brokers say there is fierce competition for all homes, distressed or otherwise. That’s because of the limited inventory and the seemingly endless appetite of cash investors, who buy cheap homes in bulk to use as rentals.

Meanwhile, the number of short sales — in which a lender agrees to sell a home for less than what’s owed on the mortgage — soared by 86 percent last year in Nevada, RealtyTrac reported. They accounted for 33 percent of all home sales statewide, and the average amount owed was $121,977.

But just because short sales are a dominant force in the housing market doesn’t mean they’ve become any faster to process. It still can take six months to a year — if not longer — to complete a deal.

Nationally, short sales rose 4 percent from 2011 and comprised 22 percent of all sales last year. The average amount owed was $81,621.

source: vegasinc.com