FROM OUR JANUARY 2011 NEWSLETTER …

I know that the season’s buying frenzy is just starting to abate and that your credit card statements may be giving you some heart palpitations.  Are your holiday bills just a temporary fluctuation, or a sign that you are taking on more long term debt?

Are YOU one of the many Canadians whose debt load has increased by 7% or more?  If so, the following article might ring some bells for you!

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In recent news, The Bank of Canada governor Mark Carney is becoming concerned that Canadians are taking on far too much debt, and that they believe the easy ride on debt payments will be permanent. “(But) cheap money is not a long-term growth strategy,” he warned.
“Experience suggests that prolonged periods of unusually low rates can cloud assessments of financial risks, induce a search for yield and delay balance sheet adjustments.” Bank of Canada governor Mark Carney is issuing a broad warning to Canadians, firms and governments that the financial and economic crisis is far from over and they need to rein in their appetite for cheap money.
Carney told the Economic Club in Toronto that the global recovery is so weak that advanced nations may need to keep interest rates super-low for a long period, and the U.S. may have to resort to yet another round of printing money.
“Experience suggests that prolonged periods of unusually low rates can cloud assessments of financial risks, induce a search for yield and delay balance sheet adjustments.”

For Canadians, he noted with alarm that household credit has grown by seven per cent since the recession’s trough, compared to a 3.5 per cent decline in the U.S., perhaps an indication that Canadians believe the easy ride on debt payments will be permanent.

When the reckoning comes, he warned, it could be swift and brutal. The Bank of Canada will set interest rates based on inflation, not on whether a large swath of Canadians have taken on too much debt, he added. In fact, he suggested the bank may tighten even in a low-inflation environment to discourage risky behaviour.

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As always, should you have any questions or concerns, please do not hesitate to contact me.

CALL US NOW:  604-736-1855

In his market update, our friend Rod Zwick is asking

What’s Going on with the market?

Entering into October, a question that is being asked rather frequently is “Where is the inventory?”. While mainstream media has been talking about rising inventory levels and a full fledged ‘Buyer’s market’ for almost two months, the reality is that the statistics quite simply don’t support it yet. The number of active listings across the board has been dropping since May and has really just levelled off in September without any noticeable increases in inventory levels at all. I admit that I am in fact a bit surprised by this as I have been expecting inventory levels to start to rise in the Fall and, while it may still happen, the market seems to have settled nicely in a fairly balanced state of affairs. With interest rates remaining low, and without a noticeable increase in active listings, it appears that things may remain this way through to the end of the year.

Check out Rob’s Inventory Stats Charts for various Vancouver neighborhoods.

Since we have recently added a new baby Averbach to our family, babies are on my mind!

Yesterday, I read an article from the Globe and Mail,  Getting financially prepared for a maternity leave, which focused on how important it is to plan ahead.

The gist of the article is that even if you are eligible for maternity leave benefits your finances will take a hit. Are you planning for that hit?

One of the women interviewed said,

It will probably take two years to get back to our previous levels of savings,” she says. “I don’t stress about it much because overall our finances are okay and this is just something short term. I loved having the time to spend with my babies when they are little and I’m okay with the financial sacrifice.

Babies are expensive … Are you going to be able to make your mortgage payments, without over stressing your budget? Should you refinance? Are you planning on buying a new home or on renewing?   How will being on maternity leave affect getting new mortgage financing?

The sooner you plan for the new addition to your family the better!  Give us a call if you have any questions about how being on maternity leave may affect your mortgage financing.

According to the British Columbia Real Estate Association housing sales have declined, and there is a large inventory of available listings.

This means that home buyers are in the driver’s seat.  This would be a good time to consider purchasing your first home, or a vacation property. You’ll have time to look around and likely won’t get involved in any bidding wars.

Give us a call and we’ll make sure you are pre-approved for a mortgage so that you’ll know exactly what price range you can purchase within.  Pre-approval has the added advantage of letting sellers know you are a serious shopper!

Click here for BCREA’s Full Report (PDF will launch in new window).

Mortgages are normally rejected because of credit problems, such as being delinquent on your bills, employment problems, a heavy debt load, or not enough income.

If your bank turns you down, that does not mean you will end up paying rent forever.

As professional mortgage brokers, it is our job to help you present yourself in the best light. For example, your bank may have turned you down because the property you were hoping to buy was too pricey.  The first thing we would do is pre qualify you, so that you would know exactly what you can spend on a property.

We’ll also shop around for you. Other financial institutions may look at you differently. Each institution has different lending criteria and our job is to know where there may be a “fit.”

If your problem is your credit score, due to missed credit card payments or other credit history problems, we can advise you on what it would take to improve your credit score.

Other things that may make a difference between acceptance and rejection are:

A Guarantor: Someone who is able to financially back your application will help you get accepted. Of course you will have to convince THEM that you are a good financial risk, because if you default on your loan, they will have to pay. Parents, siblings, friends or even an employer may be willing to be a guarantor.

Borrow money: Increase your down payment by borrowing money. Again, parents, siblings, friends and employers may be willing to lend you money. Be sure to ask us how this will affect your application, it may not make a difference if you are near to, or over the 40% debt limit.

Get creative. If you are single, consider purchasing a shared space with a couple, or another single.

If you have any questions be sure to give us a call at 604-736-1855.

If you are planning on a home purchase, or on refinancing in the next six to twelve months, here are a few things you can do to positively affect your credit score.

Your credit score will impact how much of a mortgage you will qualify for as well as the rates you will be offered.

1. Be sure to pay off any loan or debt payments on or before their due date. Any 30, 60 or 90 day delinquencies on loans or debts will negatively impact your credit score.

2. IF you are having problems paying your debts, pay any loans or debts first. Then pay your credit card. Try to at least pay your minimum credit card payment. The lending institutions will first look at your payment history on loans similar to theirs (eg. car loans) and then will look at your credit card history.

3. Don’t max out your credit card.

4. Get rid of extra credit cards (including department store cards such as Sears, the Bay, etc).

5. Consider reducing the amount of your down payment, and paying down some of your consumer debt.

These actions will positively impact your credit score and may make the difference between being accepted for a mortgage, or not.