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The Difference Between a Banker and a Broker

Tue, 26 Feb by Pauline Relkey
A mortgage banker works for a bank or similar lending institution which actually provides you the money for the mortgage. A mortgage broker works with many lending institutions to shop for a loan for a specific individual. The broker is a middleman between you and the lender.

The difference between a banker and a broker comes down to the products each can offer and where their allegiances lie.

While using a mortgage broker seems like it would save you money because they have access to many lenders and programs, brokers are paid commissions by the mortgage company and some lenders pay more than others or offer perks. When working with a Bank, that loan officer only has access to their own mortgage  programs and mortgage rates. A banker is paid by the bank, to make the bank money, by selling you services, while a mortgage broker is paid by the lender they choose for your mortgage provider.

Either way has its pros and cons.

Both have access to various mortgages. The broker might have more companies to work with, but banks and credit unions are becoming more flexible with their products in order to compete.  You still need to shop around. Word of mouth from a trusted friend or family or from your realtor is a good way to start. Friends and family do mean well, but as a Realtor I can tell you that I have come into contact with many bankers and mortgage brokers over the last 28 years and always try to find you the best match.

You will likely have to meet with either a mortgage banker or mortgage broker, as they need some basic info about you and your income and expenses.  You typically don’t pay either for their research or time. When you choose your mortgage and get it in place, either will then be paid.

You will still negotiate on terms and rates with either.

Renewal Time?

If you have a mortgage up for renewal, or you would like to refinance, it is always in your best interest to check around with a mortgage broker and/or with the lender who currently holds your mortgage. Just because they were the best option previously, that doesn’t mean they will be the best option in the future.

If you or someone you know is considering a new mortgage or renewal, let’s connect to get you the best mortgage options available!

Top 5 Things Buyers Should Know When Buying Real Estate

Thu, 15 Dec by Pauline Relkey

There are 9 million Canadian millennials, representing more than 25% of our population. Born between 1980 and 1999, the eldest are in the early stages of their careers, forming households and buying their first homes. Buying a home is a daunting process for anyone, but especially so for the first-time home buyer. This is the largest and most important financial decision you will ever make and it should be done with the appropriate investment in time and energy. Making the effort to be financially literate will save you thousands of dollars and assure you make the right decisions for your longer-term financial security.

1. Don’t rush into the housing market. (can you believe that I am saying that as a Realtor?)
Do your homework and learn the basics of savings, credit and budgeting.  Lifelong savings is a crucial ingredient to financial prosperity. You must spend less than you earn, ideally saving at least 10% of your gross income. Do your savings automatically, having at least 10% of every paycheck put into a savings account. Hopefully if you don’t see the money, you won’t spend it. Contributing to an RRSP, especially if you are fortunate enough to have any matching funds from your employer, is essential.

The Tax Free Savings Account (TFSA) is an ideal vehicle for saving for a down payment and now you can contribute as much as $10,000 per year.

400-07048228 © frenta Model Release: No Property Release: No Puppets with piggy banks and coins. Isolated over white

You also need to establish a good credit record. Lenders want to see a record of your ability to pay your bills. As early as possible, get a credit card and put your name on phone and utility bills. Pay your bills and your rent in full and on time. Do not run up credit card lines of credit. The interest rates are exorbitant and the only one who benefits is your bank. Keep your credit card balances well below their credit limit.

Do a free credit check with Equifax and TransUnion once per year to learn your credit score and to see if there are any problems. They do make mistakes and sometimes put someone else’s problems on your report. Or you might think that the problem you had is all taken care of and you discover that the company you dealt with did not inform these credit places of the situation. I have done this more than once for myself and it can be a pain, but you are responsible for your own credit report and it’s good to know what info these companies have about you and if it needs updating.  These companies track all of your credit history, which includes student loans, car loans, credit cards and cell phone bills. Then they grade you based on your responsible usage and payments.

Budgeting is also essential and it is easier than ever with online apps. You need to know how you spend your money to discover where there is waste and opportunity for savings. The CMHC Household Budget Calculator or any other online budget calculator helps you take a realistic look at your current monthly expenses.

2. Make a realistic projectory of your future household income and lifestyle and understand its implications for choosing the right property for you.
Millennials are likely relatively new to the working world. Lenders want to see stability in employment and you generally need to show at least 2 years of steady income before you can be considered for a mortgage. This also applies if you have been working for a few years in one career and then decide to change careers to something completely different. Lenders want to see continuous employment in the same field. If you are self-employed, it is more challenging, and you need professional advice on taking the proper steps to qualify for a mortgage.

Assess the stability of your job and the likely trajectory of your income. Millennials will not follow in the footsteps of their parents, working for 1 employer for 40 to 50 years. In today’s world, no one has guaranteed job security. Take a realistic view of your future. Will your household income be rising? Will there be one income or two? Are there children in your future? Will you remain in the same city?
The answers to these questions help to determine how much space you need, the appropriate type of residence, its location and the best mortgage for you. Financial planning is key and it is dependent on your goals and expectations.

3. This is not a Do-It-Yourself project: build a team of trusted professionals to guide you along.
You need expert advice. The first person you should talk to is an accredited mortgage professional. There is no out-of-pocket cost for their services. Indeed, they will save you money. These people are trained financial planners and understand the ever-changing mortgage market. Take some time with them to understand the process before you jump in and find your head spinning with all the decisions you will ultimately have to make. They will give you a realistic idea of your borrowing potential. Before you fall in love with a house or condo, make sure you understand where you stand on the mortgage front. Mortgages are complex and one size does not fit all. You need an expert who will shop for the right mortgage for you. There are more than 200 mortgage lenders in Canada and they will compete for your business.

It is a very good idea to get a pre-approved mortgage amount before you start shopping (mandatory in my books). Just becuase you work with someone at a similar job, this doesn’t mean that you will qualify for the same amount of mortgage as your co-worker.  One of you might have more debt or more savings than the other, or issues with your credit report. Getting pre-approved is a more detailed process than just a rate hold (where a particular mortgage rate is guaranteed for a specified period of time). For a pre-approval, the lender will review all of your documentation except for the actual property. There is far more to the correct mortgage decision than the interest rate you will pay. While getting the lowest rate is usually the first thing on every buyer’s mind, it shouldn’t be the most important. Six out of ten buyers break a 5 year term mortgage by the third year, paying enormous penalties. These penalties vary between lenders. The fine print of your mortgage is key and that’s where an expert can save you money. How the penalty for breaking a mortgage is calculated is key and many lenders have significantly more consumer-friendly calculations than the major banks. A mortgage broker will help you find a mortgage with good prepayment privileges.

The next step is to engage a great real estate agent.           pauline-yellow-jacket-2-relkey-7092rev-2x3-300dpi hint hint

The seller pays the fee and a qualified realtor with good references will understand the housing market in your location. Make sure the property has lasting value. Once you find the right home, you will need a real estate lawyer, a home inspector, an insurance agent and possibly an appraiser. Make any offer conditional on a home inspection and financing, among other conditions that your realtor will help you with.

4. Down payments, closing costs, moving expenses and basic upgrades need to be understood to avoid nasty surprises.
The size of your down payment is key and, obviously, the bigger the better. You need a minimum of 5% of the purchase price and anything less than 20% will require you to pay a hefty CMHC mortgage loan insurance premium, which is frequently added to the mortgage principal and amortized over the life of the mortgage as part of the monthly payment. Your lender will want to know the source of your down payment. Many Millennials will depend on their parents to top up their down payment. The down payment, however, is only part of the upfront cost. You can expect to pay from 1.5 to 4% of the purchase price of your home in closing costs. These costs include legal fees, appraisals, property transfer tax, GST on new properties, home and title insurance, mortgage life insurance and prepaid property tax and utility adjustments. These can amount to thousands of dollars. Don’t forget moving costs and essential upgrades to the property such as draperies or blinds in the bedroom.

5. Test drive your monthly housing payments to learn how much you can truly afford.
Affordability is not about how much credit you can qualify for, but how much you can reasonably tolerate given your current and future income, stability, lifestyle and budget. Most Millennials underestimate what it costs to run a home, be it a condo or single-family residence.

The formal qualification guidelines used by lenders are two-fold:
1) your housing costs must be no more than 32% of your gross (pre-tax) household income; and,
2) your housing costs plus all other debt servicing must be no more than 40% of your gross income. Lenders define housing costs as mortgage payments, property taxes, condo fees (if any) and heating costs.
3) But homes cost more than that. In your planning, you should also other utilities (such as energy, power and water), ongoing maintenance, home insurance and unexpected repairs. Taking all of these costs into consideration, the 32% and 40% guidelines might well put an unacceptable crimp in your lifestyle, keeping in mind that future children also add meaningfully to household expenses and 2 incomes can unexpectedly turn into 1.
The best way to know what you can afford is to try it out. Say, for example, you qualify for a mortgage payment of $1400 per month and adding property taxes and condo fees might take your monthly housing expense to $1650. A far cry from the $500 you pay now to split a place with 3 roommates. Start making the full payment before you buy to your savings account and see how it feels. Do you have enough money left over to maintain a tolerable lifestyle without going further into debt?  Yes it might be a bit tight, but if you really want to be a home owner, you will make some sacrifices for that goal.  Keep in mind that this is not a normal interest rate environment. Don’t over-extend because there is a good chance interest rates will be higher when your term is up. Do the math (or better yet have your broker do it for you) on what a doubling of interest rates 5 years from now would do to your monthly payment. A doubling of rates may be unlikely, but it makes sense to know the implication.

Do Your Calculations Look Discouraging?
If so, here are some things you can do to improve your situation:
Pay off some loans before you buy real estate.
Save for a larger down payment.
Take another look at your current household budget to see where you can spend less. The money you save can go towards a larger down payment.
Lower your home price — remember that your first home is not necessarily your dream home.

Footnotes:
People break mortgages because of:
– job change,
– decision to upsize or downsize,
– decision to change neighbourhoods,
– change in family status (marriage/divorce)
– to refinance.
The last thing you want to discover is that discharging a $400,000 mortgage and only being 3 years into a 5 year term is going to cost you $15,000.

Lenders now also assess you on a 5 year term, presently at 4.64% even though you might be getting a lower interest rate on your mortgage.

Thanks to many mortgage professionals of Dominion Lending Centres who contributed to this report.

Why do Realtors Change Companies

Wed, 09 Nov by Pauline Relkey

Over my 26 years of selling real estate in Regina, I have watched several agents move companies.

I was usually disappointed to see some agents leave the company I was at because I thought they were good decent people and I hated to lose touch with them, but I felt that they had their reasons for moving and I wished them well.

I can only guess as to the reasons why other agents changed companies.  Maybe they felt they were in a sales slump and needed a change. What is that saying? “A change is as good as a rest”.

Maybe they were asked to leave the company.  Yes, this business has unscrupulous people as does most, if not every, other business out there.  Unfortunately these few bad apples spoil it for everyone else.  Goodbye to bad rubbish as another saying goes.

I was asked years ago by my past broker, what would it take for a company to offer me to move to their company?  My answer was “it’s not what they offer me, it’s what my present company wasn’t doing for me, that would make me leave.”

I planned on staying at the same company for years and years until I retired.  I consider myself to be a team player, whether it’s a company fundraiser for the charity of choice, or a fun event to let off some steam or an in-house contest to get us motivated and selling, or weekly sales meetings, etc.  I participated as much as I could, even including my spouse and children in conferences and some events over the years.  We could make a conference a family vacation with extra days taken either before or after my work convention duties were done.  This way my family could meet some other agents and hopefully understand my business a little better plus we could enjoy some fun family time together.  I think you always have guilt when you are working parent and try to do what you can to lessen that guilt.

I chose my first company 26 years ago after very carefully interviewing with 4 companies.  One broker told me point blank to go to the company I chose because they had the best training for new agents at that time.  One broker made me feel too much like his daughter and didn’t give me the right feeling as business associates.  One other broker seemed blown away by my interview answers and wanted to hire me on the spot, but I wasn’t ready to make my decision yet.  Plus this broker had me write his company’s real estate agent test.  I was supposed to hear back from this broker a few days later as to the results of my test, but when he didn’t call me, I called him instead.  He was a changed person because he said that the test showed that I wasn’t independent enough to be a good realtor.  Well, the company that I did go to work at, told me that they sent this broker a copy of my stats to show how much business I did (for someone that wasn’t independent enough).

I enjoyed my first 23 years at the company I chose, learning and growing as an agent.  I met other agents and lots of clients, learnt a lot, increased my business every year and won a bunch of awards based on production and also on client and peer recognition.  I loved what I did.  Yes I put a lot into my work and got a lot back.

But then in the last 2 years, I wasn’t happy.  Things had changed.  These changes were probably meant to be better for the company but I wasn’t feeling it.  Too many chefs cooking.  Not sure who to turn to in times of need.  Questions were left unanswered.  Were they too busy, or too busy for me, or did they not care anymore?  I wasn’t enjoying myself.  Things were happening that I didn’t agree with. I felt like a past client who wasn’t being acknowledged for all the business I had given them.  The emphasis was on getting new agents to work at the company and us ‘oldies’ were forgotten about.  This isn’t what we were taught to do with our clients, yet the company was doing it to their agents who were the company’s clients.

Then one day it hit me like a bolt of lightening.  I could change companies.  I had talked to various brokers over the years.  Not that I was planning on moving companies back then, but I feel that it doesn’t hurt to talk to others and keep abreast of what is out there, just in case.  It was like a huge weight was lifted off my shoulders when I made this decision to move.  I felt that I still had quite a few years left in me to keep on working and I should be happy doing it.  Was it an easy decision? Yes and no.  I cried a few times because it felt like I was ending a relationship and it hurt, even though it was the right decision to make.

real-estate-logos

Is the grass greener on the other side of the fence? Maybe, maybe not. But I do know it needs the same watering and cutting and fertilizing that the other grass needed.  I’m happy I made my move.  Life is what we make of it.  Make yours great today!

cutting-grass

Things that Sellers shouldn’t reveal during home showings

Thu, 15 Sep by Pauline Relkey

I believe that sellers should be out of their property when it is being shown, but if for some reason you HAVE to be home when a showing occurs and if you want to improve the odds of selling your home quickly, there are some details you may want to keep to yourself. You don’t want to reveal information that could put you in a compromising situation when offer time rolls around.

Here are some things you shouldn’t divulge if you want to ensure a smooth sale that works to your advantage:

1. Motivation for selling
Revealing too much information as to why you’re selling your home may give buyers the impression that you’re desperate to leave your property behind (hate my neighbours, noisy dog next door, divorce, road noise, etc). When asked why you’re selling, keep your response short and sweet (downsizing, change of plans, etc). A lack of urgency on your part will hopefully eliminate the possibility of a buyer low balling you with an offer simply because they think you’re eager to sell quickly.

2. Things you planned but never did
Always wanted to renovate the kitchen or bathroom, but never got around to it? That’s not the type of information you want to share with home buyers. This might give the impression that the home isn’t move-in ready and that there are many issues with the home that could require costly renovations. Instead, highlight what you have done to the property for upgrades and maintenance and what you love about the home, the street and the area. A good Realtor will ask you these questions when listing your property.

3. The number of showings you’ve had
Sometimes potential buyers will ask you how many people have visited your home. This is their way of determining how much interest there is for your home. While it may be tempting to provide them with a high number, don’t. Since the amount of people who have visited your home doesn’t directly influence whether or not a potential buyer will make an offer, you’re better off remaining vague and saying you’ve had “a few visits.”

4. Number of interested buyers
Revealing that there are a slew of interested buyers (calls and emails and showings) may deter someone from making an offer simply because they feel the competition is too much. On the other hand, saying that there has been no interest in your property could create doubt and cause a potential buyer to believe that there is something wrong with the home. You are not obligated to discuss how many buyers have shown interest in your property.

5. Verbal negotiations
As a seller you could be liable for verbally negotiating and sharing information.  Should a potential buyer ask you if you are willing to negotiate, be very cautious with your response. Only communicate your intentions (and follow through) in writing with the guidance of a real estate agent, in order to protect your interests. Isn’t this one of the many reasons you have hired a Realtor to help you with the sale?

6. Trepidation about selling
Even if it’s your first time selling a property and a month has passed without an offer, don’t let your nerves get the best of you. Stay focused on the fact that you are receiving inquiries and visits which is a good thing. Keep your head up, project confidence and the right buyer will come knocking.img_5203

Preparing Your Home for the Home Inspection

Wed, 06 Apr by Pauline Relkey

PREPARING YOUR HOME FOR THE HOME INSPECTION home inspection

A home inspection is a common request for most home buyers. The inspection is a visual inspection only. The inspector will not open walls or move your contents in the home. A proper inspection will leave the home in the exact condition it was in prior to the inspection.

Every attempt should be made to ensure the inspector and buyer have full access to the home. By restricting the inspection, you are allowing the imagination of the buyer to conjure up any number of problems for the unknown area of the home whereas the true condition of the home is almost always less dramatic than what is imagined. Also a request by the buyer, after the initial inspection, to access the restricted area will often cause delays in removing the home inspection condition on the offer and additional expense to the buyer for the inspector to return to the home.

• Ensure the attic access is accessible If located in a closet, remove the contents and shelves in the closet. If the access is sealed shut, cut the seal, as the inspector will not damage any part of your home.

• Any crawlspace access should be made accessible.

• Clear away contents in front of the electrical panel, furnace and water heater.

• Ensure the sump pit is accessible.

• If the appliances are included in the sale of the home, ensure the washer is empty as the inspector will not test this unit and risk damaging your clothes.

• If the home is vacant, ensure the water is turned on and the furnace/water are also operable. A home inspector will not operate water shut off valves or light pilot lights.

• Light the fireplace pilot light and test the unit. If the fireplace has not been operated in some time, disclose this to the buyer or hire a qualified contractor to service and start the fireplace.

• When the buyer is meeting with the inspector in the home, don’t be there. You want the buyer and inspector to be comfortable discussing all aspects of the home. Any questions that may arise during the inspection can be handled by the realtors after the inspection.

• When in doubt, ask your realtor. They are there to assist you in all areas of the sale of your home.

Thanks to Ryan Spriggs, owner and operator of Spriggs Inspection Inc. for providing this important information.

Know What You Sell

Wed, 21 Jan by Pauline Relkey

what you need to know

Once in awhile I get a newer agent asking me questions about selling properties that they have no expertise in selling.

One example on the sale of an acreage – “What do I need to have for a water test? What is a septic tank and why do I need to have it inspected?”

Other questions that can come up:

“I have a buyer who wants to rent a church in the area that does not have the designated zoning. “What do I have to do to get the zoning changed?” and, “Why does it take so long?”

These are a few of the questions that I have come across from other agents. I have no issues with agents asking these questions, but am mystified as to why agents would venture into areas of real estate that they have no experience in. Our provincial watchdog states that we should exercise “duty of care” and that if we have no experience in that field of endeavour, we should stay away from it.

What usually happens is the agent confronts other agents or their manager with the issues AFTER the fact. And that’s where the problems start.

Looking at provincial stats on real estate fines and penalties, I see a few cases like this.

I recommend that, in addition to the regular courses that are required in most provinces, agents should consider investing time and money learning about these specialized fields. Alternatively, agents should seek a mentor to assist in real estate activities that are beyond his/her normal area of experience.

The result of testing the waters in areas other than regular residential real estate can be financially burdensome.  Just check out some of the fines and penalties that provincial authorities have charged. Errors and omissions insurance will only cover the agent so far and in most cases will not cover the agent or the brokerage in cases like this.

I have always been an advocate for learning and furthering our education. The most expensive lessons come when you practice real estate in areas beyond your current knowledge.

All one has to do is look at the stats and determine not to become one of those who has earned fines and penalties.

So if an agent does not know something, they need to ask and/or refer to someone who does know.

The data included on this website is deemed to be reliable, but is not guaranteed to be accurate by the Association of Regina REALTORS® Inc.. The trademarks REALTOR®, REALTORS® and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used under license.