Tips, Advice, and Explanations from a Vancouver Mortgage Broker  

Posts Tagged ‘rowan smith’

Should We Worry About a US-Style Housing Meltdown?

Wednesday, December 5th, 2012

This is an article by Benjamin Tal, one of CIBC’s top economists who answers this question. I found it to be a great write up that expresses the differences between the US and Canadian housing economies.

“House prices in Canada will probably fall in the coming year or two, but any comparison  of the American market of 2006 reflects a deep misunderstanding of the credit landscapes of the pre-crash environment in the US and today’s Canadian market.

The Canadian housing market has more distinguishing attributes that separate it from the pre-crash US market. Yes, the debt-to-income ratio in Canada just broke the American record set in 2006, but comparing the three years heading into the US crash to the past three years in Canada reveals that the debt-to-income ratio in Canada has been rising at half the speed seen in the pre-crash US market. Even more important than the amount of debt is its quality. The distribution of the credit score in Canada has not changed dramatically in the past four years. That is very different than the experience seen in the US in the four years heading into the recession.

In the US an astonishing one-third of mortgages taken out in 2005 and 2006 were in negative equity position, and more than half had less than 5% equity. In Canada, the negative equity position is nil, and only 15-20% of new originations have an equity position of less than 15%.

In a final analysis, not all is well in the Canadian housing market. Home prices are overshooting their fundamentals, mainly in large cities such as Toronto and Vancouver. The recent slowing in sales activity will probably be followed by price adjustments in many cities across the country. But the Canada of today is very different than a pre-recession US. Therefore, when it comes to jitters regarding a US-type meltdown here at home, the only thing we have to fear is fear itself.”

No Reporting Credit on the Bureau – How to Fix it – By Vancouver Mortgage Broker Rowan Smith

Monday, April 30th, 2012

Transcript of Video Blog:

Hi everybody. Rowan Smith from the Mortgage Centre. I want to talk today about credit, specifically someone that doesn’t have a reporting credit score. I had a client call me this week who has tons of assets. They ran two different companies. The companies, the companies not her, have fantastic credit. The companies themselves have several hundred thousand dollars in clear assets cash. Now, she came into her bank before she spoke to me and the bank looked at her and said, “I’m sorry, we can’t help you. You don’t have a credit score.” She said, “Why not? I’ve got all these assets.”

Well, assets don’t report on your credit bureau. It doesn’t matter if you have $10 million in the bank. The credit bureau is about just that: credit. They want to specifically see that you know how to manage monthly payments without missing them, without falling into arrears or getting write-offs. If you’ve been paying cash your whole life for something I applaud that and think that that’s fantastic.

You haven’t had to borrow to live most of your life, certainly not the trend in Canada. Unfortunately, it’s not great for borrowing because you have no proof that you have a capacity to make payments or to manage a debt at all even though you’ve managed your savings fantastically. How do you get out of this trap?

First off, go and get a credit card. If you’ve got good assets and you’ve been paying everything with cash then your credit score will be nil for the most part. Apply to get a Visa. Start with that. Do you have to use it all the time? Not necessarily. Use it from time to time, make sure you pay it off. Try to keep that limit over $1,000, though. Ideally you want to get up over $5,000 because when the credit lenders look at you, especially if you’re applying for a mortgage, they want to make sure you can handle a payment that’s more than $50 a month.

If you’re looking to build and establish credit start with one card. You might want to get a couple. Don’t go crazy. 10 of them is not better than three or four and it just has more chances that one of those payments will get forgotten. Establish that score, get going on it, and then after a couple of years, or realistically even just one year of on time payments and reporting history, we should be able to get you into something.

That will establish that much needed credit history for vehicle loans, vehicle leases, commercial loans, all that type of thing.

If you need any help with this or if your bank is telling you you can’t get a Visa even though you’re offering to put your own money up as security I have a solution for you so please give me a call. It’s Rowan Smith from the Mortgage Centre.

Former Grow Op Financing – Explained by Vancouver Mortgage Broker Rowan Smith

Friday, March 30th, 2012

Transcript of Video Blog:

Hi everyone. Rowan Smith at the Mortgage Center. Going to talk today about my favorite topic and probably my most popular one on all of my blogs, former marijuana grow ops. I want to talk about a specific program that’s come out for these because in most of my prior posts I’ve described what’s required when you’re financing a grow op. I’m going to do so today and cover the new program.

First and foremost, if you’re looking at a property that’s a former grow op it must be fixed. It must already be fixed. It’s not something that you’re going to be fixed, it has to be repaired and what we call remediated. If it’s not remediated your really only choice is to either purchase the property in cash or to purchase the property through a private lender. Usually the rates are much higher in those circumstances.

Let’s assume that the home is fixed. How do you prove that? First off, if you walk into your average bank, Scotia Bank or TD or something, you’re probably going to get declined right off the get-go if you announce that it’s a former grow op, even if it was a former grow op 10 years ago. If it shows up on the property condition disclosure statement or in any of the documentation it was a former grow op, and the seller’s under an obligation to report that, then it will probably be declined in most circumstances.

There are some lenders that I work with that offer the same rates as all the other financial institutions who have a much more open mind about former grow ops. They just want to make sure that they’re fixed and that there’s no potential problems in the future. Here’s what they want to see. First off, environmental air quality testing. Cost between $1,500 and $2,000 depending on where you get it done. There’s a couple of firms that I’d highly recommend over the rest because they’re more widely accepted amongst the financial institutions. If you need that information contact me.

You need the air quality testing. What they’re looking for is they want to see if there’s mold in the air and spores and whatnot. That will ensure that it’s a livable property. Depending on the city you’re in you may also need to get a re-occupancy permit. The city may have pulled the occupancy permit if it was a busted former grow op. Not all places are on-board with this system, though, so please speak to me if you think that may be an issue.

If the occupancy program is not in place then you’re also going to require, third, is going to be a letter from the city that confirms that your property confirms to all municipal bylaws. That’s essentially the same thing as the occupancy permit but a lot of times, in some cities, they don’t pull the permit. They’re not going to issue a letter that says the permit was never pulled. What they’re going to do is give you a comfort letter instead that says the property does not infringe on any bylaws.

Certain municipalities will also want some sort of letter from the electrical company saying things have been set back up and hooked back up to code. Again, you need to speak with me depending on the municipality you’re in. The bottom line here is that I don’t recommend trying to get these properties financed on your own. Chances are you’re going to walk in there and they’re going to either laugh you out of the property, out of the building, or they’re just not going to treat you with due respect, they’re not going to take it seriously.

Several former grow ops do have great value. They’re perfectly fine homes, especially when the grow op was out in the back garage, but to the banks if it’s in the garage or in the house or five years ago or last week, fixed or not, it’s a former grow op until you bulldoze it. That’s just the current state of the law right now.

The new program I’m talking about, effectively, if a property has been a former grow op more than five years ago and we can document that it’s been fixed and has been lived in for that period of time I have one financial institution which will waive a lot of those additional requirements I looked at. They may still want a full appraisal on the property and they’re still going to make sure you qualify under all normal guidelines. They’re still going to charge you full discounted rates but they’re not going to ask for that expensive air quality testing which often is the deal killer for many people.

Again, property must be fixed, environmental air quality, occupancy permit if it got pulled, if it did not get pulled comfort letter from the city, any other municipal bodies such as the hydro company that explains what’s been done, and chances are you’re going to need a full appraisal in all circumstances regardless. If it’s been over five years, we can chop that list down by a big amount, make it much more simple.

If you or someone you know is looking into a former grow op don’t go walking into your bank alone. Please call me. I can at least offer you solutions and suggestions on how to get this approved. There is no fee for my service so please call me. I’ll help you out. It’s Rowan Smith at the Mortgage Center.

What Properties are Hard to Get a Mortgage On? Vancouver Mortgage Broker Rowan Smith Explains

Sunday, March 25th, 2012

Transcript of Video Blog:

Hi everyone. Rowan Smith from the Mortgage Centre. I want to talk today about properties that are difficult to finance. I’ve run into a whole bunch of these in the last couple of weeks so I thought it would be pertinent putting out an actual post to explain properties that you may or may not have problems with.

First off, log homes. A lot of lenders just have a policy they don’t lend on log homes. I don’t really know why it is. I guess they view it as a slightly inferior security or a fire risk or what have you but log homes can present a problem. There’s lenders that will still do them, though.

Former marijuana grow ops. Another big one. There is lenders that will still do those. Check my other posts on the side. There’s plenty I’ve done on what you need to for a former grow op. Another property that often appears very, very appealing to investors but are difficult to finance are residential homes that have more than four living units. Anything with four units or less is generally considered residential. As soon as it hits five it’s considered a commercial mortgage or commercial property.

If you’ve got a home that’s got two basement suites, a loft, and a main floor that’s residential. They’re all over Vancouver. If you’ve got something that’s got two in the main, two lofts, and two basement suites that’s six. Again, there’s several of these older, larger character homes throughout Vancouver. It’s technically a commercial mortgage. You’ll have a lot of problems with the banks.

Properties that are sitting on large parcels of land, acreage, or they’re very rural. Banks don’t want to be sitting on something in foreclosure for months and months or years and years and years. If something’s massive acreage and if the land makes up a disproportionately large percentage of the value it can be tricky to finance those as well.

Float homes, mobile homes, manufactured homes, homes that are sitting on concrete blocks even if it’s the norm in the area are all quite difficult to finance in many cases. Commercial properties, whether it’s a strata property or whether it’s a massive commercial industrial process you need to be dealing with a commercial bank, commercial lender, or commercial mortgage broker for those.

That’s an example of some properties that can be difficult to finance for one reason or another. If you know any people that have properties like this they’re looking at, they’ve fallen in love with, and just because the bank doesn’t think it’s a great idea doesn’t mean it’s not a great purchase and not perfect for you. It may well be.

In those circumstances, please give me a call. I may have a solution or a lender that you’re unaware of and still get you that same great rate that you see on TV. My name is Rowan Smith at the Mortgage Centre.

What Makes a Broker Different Than The Bank – Vancouver Mortgage Broker

Thursday, March 22nd, 2012

Transcript of Video Blog:

Hi everyone. Rowan Smith from the Mortgage Centre. I want to talk today about what differentiates me, a broker, from just walking into your bank. If the only thing in the world you care about is rate then perhaps the bank is the best place for you to go. They may not have the best rate for you, though. I’m just saying that if that’s the only concern you can shop with them first.

However, there’s often many other things that we need to look at. We need to look at prepayment privileges. We need to look at can you get out of the mortgage if you need to? We need to look at how does that stack up against the competition in other financial institutions. We need to know if you’re going to live there for the next few years or if you need a line of credit as part of your package.

We need to know the sources of your income to know if you fit under specific programs that will get you additional discounts. We need to know a lot more information than just what is the best rate. There’s many questions that you can ask us as brokers and what is your very best rate while it is one of those questions it’s often not the most important.

I’m going to give you a case in point. Today I had a client come to me who had been chomping on a couple of different mortgage brokers and was getting pulled in a lot of different directions. When I looked at the situation I realized that many of the options that they were being offered didn’t even apply to them based on how they reported their income. I clarified the situation for them, had the deals packaged and arranged within a couple of hours, sent off to my lenders, and already received a response in the same day.

Now, I can’t promise a same day response every time. There’s just a number of factors that prevent that depending on individual deals. It is possible in a very clean situation. What I can do and the value I provide is not just a great rate, although I’m always going to try to get you the best rate, it’s also advice on the other elements of the mortgage and on your lifestyle. We, as mortgage brokers, are specialists on the debt side of the equation.

We’re looking out for your best interest in a fiduciary duty to try to get you the best terms, rate, and product to satisfy your needs. We’re not product salesmen. We don’t just sell the best rate like a canned product that we take off the shelf and hand to everybody. If everybody qualified for the best rate all the time they wouldn’t need us. There’s a lot of us out there for a reason and that’s because we can help provide an immense amount of value in selecting a good lender or getting a deal done in a timely fashion or under specific guidelines or times of day that your bankers can’t match.

If you or someone you know would like additional advice and would like an independent third party, which is what we are, to look at the situation please have them see me. It’s Rowan Smith from the Mortgage Centre.

Bank of Montreal BMO 2.99% Rate Special – Explained by Vancouver Mortgage Broker Rowan Smith

Monday, March 19th, 2012

Transcript of Video Blog:

Hi everybody. It’s Rowan Smith with the Mortgage Centre. I want to address Bank Montreal’s 2.99 percent offer that’s on the market and to explain some of the restrictions that people need to be aware of, some of the fine print. First off, yes, it’s one of the lowest rates historically ever offered, but it comes with some restrictions such as you can only have a 25 year amortization. Now, many people don’t think that this is a problem because they think I only want a 25 year amortization anyway and across a lot of Canada that is still absolutely the practice. Read the rest of this entry »

Line of Credit At Renewal – As Explained by Vancouver Mortgage Broker Rowan Smith

Thursday, October 13th, 2011

Transcript of Video Blog:

Hi, everybody. It’s Rowan Smith from the Mortgage Center. I want to talk today specifically about lines of credit. More importantly I want to talk about lines of credit that you want to keep but you maybe want to renegotiate maybe the mortgage in front of it. This is something that comes up from time to time. Read the rest of this entry »

Renovation Financing Explained by Vancouver Mortgage Broker Rowan Smith

Tuesday, October 11th, 2011

Transcript of Video Blog:

Hi, everyone. Rowan Smith from the Mortgage Center. I got a call today about a client who wanted to do some renovations on the home when they bought it. And they said to me, “But I don’t have the money for doing the renovations I’d like it built into mortgage. Is that possible?” Yes, there’s a few different ways to do it. One of the most common programs is “Purchase plus Improvements”. And under that program, the way it works is, you borrow money. Read the rest of this entry »

Former Grow Op Updated – By Vancouver Mortgage Broker Rowan Smith

Thursday, October 6th, 2011

Transcript of Video Blog:

Everybody, Rowan Smith from the Mortgage Centre. I’m here today to talk again abut a topic that seems very popular among my blogheads, which is former marijuana grow ops. Can you finance them, or how to finance them? The answer is, “Yes, you can,” and the way to do it is this. There’s typically going to be extra underwriting that’s going to be required. Not all banks are going to be willing to do that… Read the rest of this entry »

35 and 40 Year Mortgages – Recent Updates

Friday, September 30th, 2011

In this video, I look at who is still offering 35 or 40 year amortizations and explain some recent changes in the market place.

Video Transcript:

Hi, everybody. It’s Rowan Smith from the Mortgage Center. It’s been a while since my last post and I wanted to provide an update on a couple of things that I get constant questions about in our market place.

Back in April when the changes the government handed down took effect it got rid of what most people thought would be all of the 35 and 40 year amortizations. So the question is, is a 35 or 40 year amortization still available? Short answer, yes. Now, the longer answer is a little more complicated… Read the rest of this entry »