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First Rate
E-Newsletter for December
2007
Dear Home Buyer,
May your holiday season, as well
as the coming year, bring you boundless love, joy, prosperity
and peace. Wishing you and your loved ones very happy
holidays!
If you are a homeowner, potential
homeowner or a real estate investor, you know that your
mortgage is the single largest expense you'll ever have.
Keeping abreast of interest trends, mortgage innovations and
credit strategies will help lower your mortgage costs and
possibly build wealth for you and your family.
I have a unique approach to the mortgage business and that is, to provide my customers with the most comprehensive information and options available so they can make the best mortgage and home buying decision. I don't use any slick sales techniques or negotiation strategies. It's all about providing the right information and letting you make the decision- My job is done when you know your options.
You can learn about mortgages
through our
website, our
first time home buying seminars and monthly newsletters
and home buying CD.
Events - Home
Buyer Seminars
Be sure to attend our upcoming
home buyer seminars in Vancouver and Richmond.
Click here
to view our list of upcoming seminars.
In this issue:
Market commentary & Interest
rate trends
Yesterday, the Bank of Canada (BOC) unexpectedly
reduced the overnight interest rate by 1/4%. The bank cited
the sub-prime mortgage problems and the housing slump in the
US as risks to the Canadian economy.
Despite the drop in the BOC rates,
fixed interest rates remain unchanged. Most lenders are
still offering a 5 year term of 5.99%. Compare this to a
variable rate of 5.4% (or Prime less 0.6%) and the
variable rate option becomes a little more attractive.
Given the relatively small
difference in interest rates, the decision as to whether to go
fixed or variable rate is a close one. It will
primarily depend on your interest rate savvy and your
risk tolerance. To put this in perspective, for every
$100,000 mortgage, a typical borrower will save $34 per
month with a variable mortgage as against a 5 year fixed
rate mortgage.
Rates and Charts
Prime @ 6.0% for
some lenders (next announcement on Jan 22, 2008)
For a longer term view, click here to see the 3, 5 & 10 year best residential rate since September 2003 (updated monthly)
What are the closing costs when purchasing a home?
Most lenders will ask you to show
proof that you have the funds for closing costs. As you
can imagine, the last thing a lender (and mortgage broker)
would like to happen is that you go to your lawyers to close
and don't have enough money. Lenders require proof that
you have at least 1.5% of the purchase price to cover closing
costs. This is just a rule of thumb. At the
time of approving your mortgage, lenders will not know exactly
how much the final costs will be since these are calculated by
your solicitor.
The largest closing costs is BC's
Property Purchase Tax (PPT). This tax is equivalent to
1% of the first $200,000 and 2% of the amount over $200,000.
If you're purchasing a property for $350,000, the PPT would be
$5,000. First time home buyers can be exempt from
this tax.
Other costs include:
Gross Sales Tax (GST) - If you are
purchasing newly built property, you will have to pay GST.
Although you can pay this separately, most people add the GST
to the mortgage amount. Be sure to discuss adding the GST
to your mortgage with your mortgage broker. For lower
cost properties, you can get a rebate on GST.
To learn more about closing costs,
click on Bell Alliance's Buyer's Guide.
Should you have a pre-purchase home inspection?
A home is arguably lifes largest
and most important purchase. If you are looking for a home,
consider getting a pre-purchase inspection of the property you
intend to buy.
A home inspection is a visual
examination of the property to determine the overall condition
of the home. In the process, the inspector should be checking
all major components (roofs, ceilings, walls, floors,
foundations, crawl spaces, attics, retaining walls, etc.) and
systems (electrical, heating, plumbing, drainage, exterior
weather proofing, etc.). The results of the inspection should
be provided to the purchaser in written form, in detail,
generally within 24 hours of the inspection.
A pre-purchase home inspection can
add peace of mind and make a difficult decision much easier.
It may indicate that the home needs major structural repairs
which can be factored into your buying decision. A home
inspection helps remove a number of unknowns and increases the
likelihood of a successful purchase
You should be aware that in
British Columbia there is no licensing in place for home
inspectors. In actuality, anyone can open up a home inspection
business without any prior training or experience. In looking
for a home inspector, you need can start by visiting the two
major home inspection associations in BC - www.bcipi.net
and www.cahpi.bc.ca. Be
sure to ask your inspector whether you will be getting a
written report; whether you will be allowed to attend the
inspection; whether they have Errors and Omissions (E&O)
Insurance; and how long they intend to be at the property.
Lastly, be wary if your inspector
was referred to you by your realtor. Your realtor should offer
you a choice of 3-4 home inspectors to choose from so as to
avoid any conflict of interest.
Are you working with a
professional?
What exactly is a professional?
Here's my definition:
1) An expert in his field
2) Responds quickly to all emails
and phone calls
3) A person with the highest level
of integrity - Will only recommend products and services
that are in your best interest. If he doesn't have the
right product, he will point you in the right direction.
4) No pressure, hype or mind games
- only honest advice.
Relevant Links
Economic Research: TD
Economics / CIBC
World Markets
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