Category Archives: Mortgage Questions Answered

How Much Home Can You Afford?

Budgeting your Carrying Costs

Finding the right property at an affordable price can sometimes be a challenge.  When it comes to deciding just how much home you can afford, there are two kinds of expenses you’ll need to consider – the ongoing or ‘carrying’ costs of the home, and your closing costs.

The first step in determining your carrying costs is to get pre-approved for a mortgage.  By pre-qualifying for a mortgage, you can find out up front what your maximum mortgage payment might be, even before your home search begins.  Your lender will look at your earnings, credit history and any outstanding debt, and help you determine what size loan you qualify for, at what rate, and what your regular mortgage payments would be.  Being pre-qualified offers another advantage, since it puts you in a stronger negotiating position when you go into an offer with pre-approved financing.

Once you’re pre-approved, the next step is determining what you actually want to spend on your mortgage payments.  Remember, your pre-approved mortgage establishes the maximum amount of loan you’d qualify for, but you may decide that you want to aim at a smaller loan, with a lower payment.

Be realistic and think about your lifestyle.  Although it may seem feasible to handle a sizable mortgage payment at first, keeping it up may eventually require cutting back on other expenses, such as clothing, or entertainment.  Make sure that if you plan to make any concessions in these areas, you’re prepared to live with your decision until there’s a change in your income.  Owning a home can give you a tremendous amount of pleasure and personal satisfaction, as long as you plan for adequate resources to enjoy it with some peace of mind.

With your estimated mortgage payment in mind, the next step is to determine your total carrying costs.  Add up all your estimated monthly costs, such as the mortgage payment, property taxes, insurance, heating costs and other utilities.  Then add a figure to cover yearly maintenance and upkeep.  Consider both the interior and exterior of the house, as well as the garage, driveway, landscaping and all other aspects of the property when you arrive at this figure.

When preparing your budget, be sure that you also make allowance for a “contingency fund” to cover unexpected expenses such as a major repair or the replacement of a large ticket item, such as an appliance. Life sometimes has a way of surprising us, and you don’t want to start out with a budget that’s so tight, there’s no room for the unexpected.


“His and hers” homebuyer tips for couples  


For most couples, buying a home is the most significant purchase they will ever make together.  While the prospect of owning a home is an exciting one, it can often seem overwhelming, especially for those who are new to the real estate process.   From selecting a neighbourhood to deciding how to use a spare room, navigating the world of homeownership together requires some extra work. However, couples will be thankful they put in the additional time and effort when the “sold” sign is posted on the home of both of their dreams.

For those couples looking to purchase a home, Coldwell Banker offers seven simple tips for ‘His and Hers’ homebuying that will help to ensure a “harmonious house hunt” without rocking the relationship:

Get pre-approved for a mortgage. There are few things worse than finding the perfect home, only to find out that it costs more than you can afford. Before beginning the house hunt, Coldwell Banker recommends getting pre-approved for a loan. A pre-approval lets you know where you fall financially while informing the mortgage company that you’re ready to buy. Additionally, being pre-approved for a loan can help speed up the closing process once an offer has been accepted.

Set a budget. Beyond basic income and savings, there are a number of other financial elements to consider before setting a price range for the new home. Once a couple has decided on a location, they should consider its proximity to their family, jobs and children’s school and then gauge travel costs. The next step is to add up monthly bills, including the couple’s car payments, phone bills, insurance costs, groceries, and credit card payments. This total estimated cost of living should be factored into the couple’s overall budget.

Get on the same page. Whether it is a quiet neighbourhood or a two-car garage, everyone has their own “must haves” when it comes to the home of their dreams. For a couple looking for a home to share, it is important to discuss each of their essentials before beginning the search. Keep in mind that agreeing on all of the features of a future home will likely be impossible, so be prepared to compromise. Once the list of “must haves” is finalized, your Coldwell Banker real estate professional can help you determine if your expectations are realistic given the homes currently on the market. 

Allocate additional funds. The down payment on a new home is just one of the significant financial aspects of a move.  Even after both people’s belongings are combined there will likely still be a need to purchase furniture and other items like a washer and dryer which will require additional budget. The last thing a couple will want to do is start out their life together with nothing in the bank! 

Be patient. A recent Coldwell Banker survey found that women are likely to make up their minds faster than men. Almost 70 percent of women surveyed decided the day they walked into the house that it was right for them, while 32 percent of men needed two or more visits. It will likely take multiple trips to the home before both members of the couple decide it is “the one.” If a spouse needs more time, be patient and try not to pressure them.

Take inventory of everyone’s belongings. Before a couple moves into a new home together, each person should make a list of the furniture they plan to keep and compare it with their partner’s. There may not be a need (or a place) for three televisions and two kitchen tables in the new house. Consider selling unwanted pieces of furniture online, or holding a garage sale.  The money made is sure to be put to good use on purchases for the new home.

Sign a contract. For a couple who has yet to walk down the aisle, it is important to contact a real estate attorney before closing on a home. A contract should be drawn up outlining who is responsible for what expenses and how assets will be divided in the event of a split.



The Mash Team Provides Consumers with a ‘Cheat Sheet’ to Understand Common Terms of the Trade

 Entering into the world of real estate can be very exciting, but often times, understanding the terminology can be complicated.  To help consumers better understand real estate terminology, the The Mash Team has prepared a short summary to assist home buyers and sellers in navigating their way through the housing marketplace. The following is a list of 10 common terms or phrases associated with the real estate process.

  1. Appraisal: A home appraisal is a survey of a home by a licensed professional for his or her opinion of the property‘s value (i.e., what a home will likely sell for on the open market). In most cases, an appraisal is done for a bank when a home buyer is applying for a loan for the home. The home appraisal is a detailed report that looks at such items as the condition of the home, the neighborhood and what similar homes in that neighborhood are selling for. An appraisal is not a home inspection (see #7 below). Appraisers only look for major concerns; they do not examine the home’s full condition (i.e., examine the roof, appliances, etc.). An appraisal also differs from a Broker’s Price Opinion (BPO) or Competitive Market Analysis (CMA), which provide an estimate of a home’s value by making comparisons to similar properties in the area and what they were listed and sold for.  This is usually done for free by the prospective listing agent.  To learn more about appraisals, visit the consumers section of 
  1. Commission:  Commission is the compensation or fee that a real estate agent charges for performing the agreed-upon terms under a brokerage contract.  The commission due for a real estate transaction is negotiable and usually paid from the seller’s funds at closing.  The fee is typically calculated as a percentage of the total sales price and commissions vary from market to market.  Commission is shared between the listing agent and the agent who represents the buyer, but the division is not always a 50/50 split. [Also, agents split their commissions with their brokers.] 
  1. Closing: Closing, or settlement as it sometimes referred to, is the final step in completing a real estate transaction.  The closing date, set during the negotiation phase, usually takes place several weeks after an offer is formally accepted. At this time, ownership of the property is transferred to the buyer and any costs incurred by either the buyer or the seller beyond the price of the property itself are paid.  These additional expenses are known as closing costs and might include recording fees, attorney fees, title insurance premium, etc. Closing typically takes three weeks to 45 days depending on variables such as delays in obtaining documents, clearing title defects, inspection repairs, etc.   
  1. Existing Home Sales: Existing home sales is an economic indicator of both the number and prices of single-family homes, condos and co-op sales over a one-month period – this figure does not include new construction.  Each month, the National Association of Realtors (NAR) releases statistics on sales and prices of existing single-family homes for the nation and four regions. The existing home sales report, which includes footnotes on how the numbers are derived, is available at 
  1. Home Appreciation: Home appreciation is the increase in value of a property over a period of time.  Short-term increases or decreases in value are triggered by factors such as employment rates, interest rates, housing supply, demand, affordability, crime rate, quality of schools in the area and proximity to a city.  Additional factors such as upgrading a home can also result in home appreciation.  What a home is worth depends on these elements, as they directly impact what a buyer is willing to pay for a particular property.While real estate moves in cycles and home values fluctuate regularly, real estate has consistently appreciated over the long term.
  1. Home Equity: Home equity is the value of ownership in a home that represents the current market value of the house — minus any remaining mortgage payments. This growing value is contingent on the property owner paying off the mortgage and the market value of the property appreciating.  When a home is purchased, every dollar put towards the down payment is immediately transferred to the equity in the home.  This is one of the many reasons why saving for a down payment is so important – a significant down payment helps homeowners build equity more quickly.   For example, a home buyer who puts nothing down needs a year of 20 percent appreciation to have as much equity in his property as a buyer who put 20 percent down in a stable market. 
  1. Home Inspection:  Home inspectionis a visual inspection of the structure and components of a home by a qualified professional to find items that are not performing correctly or items that are unsafe. A home inspector’s report will review things, such as the condition of the home’s heating and cooling systems, interior plumbing and electrical systems; the roof, attic, and visible insulation; walls, ceilings, floors, windows and doors; the foundation, basement, and visible structure. While the inspection is not meant to be a tool for re-negotiations, many times it becomes one.  Homebuyers should be sure to make a list of items they think should be addressed and present them to their real estate agent in a timely manner.  Often times, the seller will agree to have the problems repaired before closing or accept a new offer that deducts the cost of repairs.
  1. Housing Market: The housing market refers to the supply and demand for houses in a particular country or region.  Factors that affect the housing market include interest rates, the mortgage industry, economic growth, incomes, unemployment rates and population demographic trends.  More specific definitions of “market” include:
  • Buyer’s Market: A buyer’s market occurs when there is a larger inventory of homes available.  In some cases, home appreciation has slowed in the short term, which means that homebuyers have the opportunity to purchase a home at lower prices.
  • Seller’s Market: A seller’s market occurs when demand of for homes is great. In a seller’s market, potential sellers have the opportunity to sell their home at a higher price than in the past due to a limited amount of properties available and a large number of potential buyers demanding them at current prices.  Sellers and home owners are also likely to experience higher appreciation in a seller’s market.
  • Time on Market: The length of time in which a home is listed for sale is known as “time on market.”  On many MLS listing sheets, this is also noted as D.O.M. – Days On Market.
  1. Inventory: Housing inventory is the number of existing homes available for sale each month.  The most closely watched housing inventory measure is a months’ supply, which measures the latest housing supply in relation to housing demand.  A decrease in homes for sale is a sign that the housing market is on its way to recovery, while a large supply of homes still available gives potential buyers more options in choosing the home that best fits their specific needs and wants.
  1. Real Estate Agent:  A real estate agent is a professionally trained and licensed real estate expert who is involved in real estate sales and transactions. Though it is not required to hire an agent when buying or selling a property, the tasks an agent performs can be extremely complex and time-consuming. Therefore, it is in a consumer’s best interest to work with a seasoned real estate professional who can offer invaluable expertise and assistance, as well as insight into the local real estate market and neighborhoods of interest.    
  • A Seller’s Agent: An agent who is hired to sell a home is responsible for marketing the home to potential buyers as well as other agents who are working with buyers. The seller’s agent ensures that the property is in proper viewing order and that he/she is familiar with everything about the property.  Some specific responsibilities include:

o   Assisting the seller in pricing the property appropriately

o   Suggesting any necessary repairs to be taken care of prior to listing

o   Exposing the property to a maximum number of buyers; arranging showings and providing feedback from prospective buyers

o   Explaining all the contingencies, helping the seller to remain objective and make informed decisions based on current trends, market data, and individual needs

o   Presenting and negotiating offers on the seller’s behalf

o   Following through on the contingencies all the way to closing (e.g. making sure that the mortgage loan is applied for and granted within a certain timeframe, the home inspection is done according to schedule, and any necessary repairs are made prior to closing). 

  • A Buyer’s Agent: An agent representing a buyer will need to focus on what the buyer’s needs are, establish what amenities the buyer is looking for, what geographical area(s) are being considered, how prepared the potential buyer is to buy and how much he/she is willing to spend. A buyer’s agent must also have a firm grasp of the surrounding area’s real estate market so that he/she can recommend alternative properties to the buyer. Once the home buying process begins, a buyer’s agent will be responsible for the following:

o   Providing an honest analysis of each property, including both good and bad points

o   Preparing an offer to purchase the property with terms favorable to the buyer

o   Negotiating with the seller to obtain the property at the best price and terms for the buyer

o   Providing the buyer with an estimate of the costs involved in the transaction and assisting the buyer in contacting the professionals necessary to complete the purchase, including mortgage services, title insurance and escrow companies, and home inspectors

o   Monitoring performance of all others involved in the transaction to make sure all services are promptly and professionally carried out

o   Accompanying the buyer to the closing to verify that all terms and conditions of the purchase agreement are met

Reverse mortgages – what’s the scoop?

For many Canadians, the prospect of retirement holds more questions than it does answers. However, if you’re a homeowner, the equity you’ve built up in your property could provide the answer that helps turn your dreams of retirement into a pleasant reality. With a reverse mortgage, you can unlock the equity that’s present in your home and use it to generate an income to supplement your reduced earnings after retirement.

With a reverse mortgage, instead of paying the bank or lender, they pay you. The payment is based on a percentage of the amount of equity that’s present in the home. For example, if your home is valued at $300,000 and your mortgage is paid off, you have your home’s full value to work with. If you took out a reverse mortgage for 40% of your home’s value – in this case, $120,000 – this amount is then set up in a fund that pays you a stated amount, usually monthly. This regular payment – or annuity – can then be used toward your living expenses while you’re earning less money. There’s usually an age requirement – say 60 or 62 years of age to qualify, so you should ask your lender about this.

Eventually, your home equity is also used to discharge the loan. You don’t have to make loan repayments while you’re living in the property, since that would defeat the whole purpose of the loan. The reverse mortgage loan doesn’t come due for as long as you live in your home. You’re under no obligation to sell by any given time, but when you do, the reverse mortgage loan is paid in full from out of the proceeds of your home sale.

Wondering what your home is worth today? Your Coldwell Banker professional can help you determine your home’s worth in today’s market and how much equity you can expect to draw on. It’s all part of our full service philosophy. We want to be there to help with all your real estate needs and that goes far beyond the actual real estate transaction. Your local Coldwell Banker sales professional has developed trusted contacts in the financial sector and together they can offer you creative financing solutions to help you realize your goals. Whether you’re dreaming of early retirement, financing a higher education, renovating your home or even buying an income or vacation property, we can help. Why wait to make your dreams come true? Contact your Coldwell Banker professional for their expert advice, and start putting your home equity to work for you!

A low mileage strategy for homebuying 

Few experiences can equal the sense of satisfaction that comes from buying that one special home that’s just right for you and your family.  However, it can sometimes be a long journey before you get to that happy ending.  And with today’s spiraling gas prices, it can also be an expensive proposition if you don’t do some of the groundwork upfront.  Why not save yourself the cost of driving around and use online resources first? It’s an easy way to save time and money.

These days, the average Canadian homebuyer starts their property search on the internet.  Thanks to technology, today’s homebuyer can save on mileage by conducting online searches to find listings that match their own unique criteria.  Then, they can view properties of interest via virtual tours or slide shows and even commentary before coming up with a ‘short list’ for personal viewings. But buyer beware, all real estate websites are not the same.  By choosing the right website for your home search and by using helpful online tools to streamline the house-hunting process, you can cut your mileage to a fraction of what it would take just a few years ago.

The award-winning Coldwell Banker® website at offers Canadian homebuyers one of the most interactive and user-friendly real estate sites available anywhere.  In addition to thousands of Coldwell Banker listings and Open Houses across the country, you can customize your search with our exclusive property search engine Personal Retriever®.  You simply enter your “wish list” of what you’re looking for in your dream home – location, price range, features, and much more – and then Personal Retriever reviews your list against thousands of listings and emails you every time there’s a match.  Since Personal Retriever constantly monitors our listings database, you don’t have to keep checking to see if there are any new listings you might have missed.

Perhaps you know the type of house you want to buy, but you’re uncertain about what city, town or neighbourhood is right for you.  Our real estate website offers comprehensive information about your neighbourhood of choice through an innovative service called Community Profiles™.   With just the click of a mouse, you can review and compare the features of several communities across Canada.

After you’ve gathered all your online information, you’ll need the services of an expert advisor to help you interpret the data, analyze the market and develop a negotiating strategy that will get you the results you’re after.  When you’re ready to talk to a real estate sales professional, can help there too, with quick and easy search functions to help you find the most convenient office and the right salesperson for you.  Coldwell Banker will be there every step of the way, to help you make your dreams of home ownership come true.

In Canada – How Much Do You Need for Down Payment

85% of Millennial Canadians want to own a home, but 57% say that the biggest barrier to buying is saving for a large down payment.1,2 Although home prices are sure to change, the information below is intended to give buyers an idea of the amount they need to save and encourage buyers of all ages to adopt the sound saving habits essential to buying a first home.

Click Here for Full Article How Much  Do You Need to Save for a Down Payment

Are Lower Interest Rate Coming?

Saw this on the Toronto Star, thought it was a Great Article

Bank of Montreal slashes 5-year mortgage rate to 2.99 per cent

Finance minister Joe Oliver says he was called in advance to avoid any angst such as that caused former minister Jim Flaherty, who rebuked the bank.

Federal finance minister Joe Oliver says he got a call from the head of the Bank of Montreal before it slashed its five-year fixed mortgage rate to 2.99 per cent.

This comes a year after Oliver’s predecessor, Jim Flaherty, publicly rebuked the bank for making the same cut amid rising concerns over household debt loads.

“Bill Downe, the BMO chief executive, called me to say what they were doing and why,” finance minister Joe Oliver told the Star Thursday.

Oliver, who succeeded Flaherty in the role a week ago, says he reminded the bank chief that Ottawa is focused on protecting taxpayers and reducing consumer indebtedness.

“I made the point that government is, over the longer term, reducing its involvement in the mortgage area, because we’ve focused on protecting taxpayers and reducing consumer indebtedness. Those are our overarching objectives,” Oliver said in a wide-ranging phone interview with Star personal finance columnist Ellen Roseman.

But when asked if he would intervene in BMO’s plans and ask it to raise its key mortgage rate, the finance minister said, “No.”

The government “will continue to monitor the market closely,” Oliver said in a separate statement issued by his office.

The bank declined to comment.

“Our conversations with any government are always confidential,” Paul Deegan, BMO vice-president government and public relations, said in a statement.

Ottawa has intervened in the mortgage market four times since the financial crisis of 2008, as record-low interest rates sent household debt load and real estate prices soaring.

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BMO, which made the cut late Wednesday, is the first big bank to lower the key rate below three per cent, a level that caused Flaherty to publicly address BMO in March 2013, saying he disapproved of the rate and discouraged other big banks from following its lead.

At the time, he said he believed in “responsible lending,” and said he was concerned such low rates would work against his attempts to slow the momentum in the housing market.

“This rate change is driven solely by the fact that bond yields have fallen and we are in what has traditionally been the busiest season for buying a home,” BMO’s Deegan said in an emailed statement.

BMO’s rate had been at 3.49 per cent before the move.

Other Canadian banks have also recently cut their rates — TD Bank reduced its four-year fixed-rate mortgage to 2.97 per cent earlier this month, while Scotiabank lowered its rates across the board while issuing a four-year special rate of 2.94 per cent.

Industry observers say BMO’s rate cut likely has more to do with falling bond yields and the bank’s efforts to gain more mortgage market share than it does with Flaherty’s departure.

“We’ve seen bond yields drop over the past six months so it’s a reflection of their cost of funds lowering,” said Kelvin Mangaroo, president of online comparison site “And, secondly, we have the big spring home buying season coming up, so it’s a push by them to gain some market share over the next few months.

“I don’t think Flaherty leaving is a factor,” Mangaroo said. “I think Flaherty was just a coincidence.”

The big banks are also facing increased competition from alternative mortgage suppliers, he added.

“We’ve had mortgage brokers offering 2.94 per cent for a few weeks now,” Mangaroo said.

The spread between BMO’s rate and a five-year bond is just 130 basis points, below the industry average of 150, another industry observer noted.

“It’s an aggressive move but it’s not surprising. Mortgage growth in general has been trending below the long-term average. The banks see the spring housing market as their best opportunity to pick up mortgage volume,” said Rob McLister, editor of online publication

The special BMO rate comes with quite a few strings attached, McLister noted.

One economist warned the banks are playing a dangerous game, as are homebuyers who jump into the market with home prices at record levels.

“This is short-term thinking,” David Madani, chief economist at Capital Economics Canada, said. “But it doesn’t change the long-term situation and that means the correction when it comes is going to be much more pronounced.”

The super-low borrowing rates are expected to be temporary, said Madani.

Bond yields have dropped in recent months, but with the U.S. economy improving and the Federal Reserve tapering its bond purchases, yields are projected to start rising again later this year, which should push up long-term rates.