Common Mistakes First Time Home Buyers Make

Buying your first home can be an amazing, but pretty complex and difficult experience. Without solid advice and careful planning, you might end up making mistakes that could cost you time, energy and money. It’s normal for first-time buyers to make a mistake or two, but knowing some of the more common ones will help you avoid complications when buying.

Proper financing is important when it comes to home buying. Most of the time, money problems are the culprit of a home-buying mess up. For example, you may think you have enough saved, but you may not be accounting for everything. A recent post from House And Co explains the common mistake of not considering secondary costs when buying a home:

Not knowing all the costs associated with buying a home

So, you’ve got your finance pre-approved, you have saved up for the deposit and now you’re ready to sign the dotted line and make your first home officially yours… right?

Just hold on a second – have you considered ALL the associated costs with buying your first home? Getting your finance sorted and saving for a deposit is just the tip of the iceberg when it comes to the costs involved in buying a house. You’ll need to consider how you will pay for stamp duty, building and pest inspections, insurance, legal fees and moving costs. There may also be council rates, strata costs and other expenses that may pop up, which could leave you feeling drained, both mentally and financially!

To avoid any surprises during the process, keep a spreadsheet of all your expenses associated with the purchase of your first home, or consult your financial consultant or mortgage broker to do the calculations for you. Read full article here…

It’s not enough to be prepared to pay for the home: it’s essential to be prepared for what comes after as well.

As a first-time buyer, it’s always a good idea to get advice from experts in the field. Going it alone may be appealing, but it can do more harm than good. Here’s what Columbia Real Estate had to say on the matter:

Not Using a Real Estate Agent

Yes, you can buy a home without a real estate agent, but it’s not wise, especially your first time around. Not only does an agent have better abilities to search for available homes and zero in on those that would meet your needs well, but real estate agents understand the process well and can guide you through negotiations and paperwork until the house is actually yours. Read full list here…

A real estate agent can help you in more ways than one, whether it be their experience with the market or their ability to find what you want.

One final common mistake we’d like to highlight, that you would do best to avoid is not getting a home inspection done. Sometimes home buyers get so emotionally attached to a potential home that they choose to skip it completely. All homes, from a rustic bungalow to a shiny new condo, need a home inspection so you can be sure you have the full story. Sherry Jenkins of wemortgage.ca details this mistake and its ramifications:

They skip the home inspection

Buying your first house can be an exciting and stressful time. There are so many things to consider that you can find yourself getting overwhelmed. Here are some common mistakes first-time homebuyers make when they are looking to buy a house.

That’s always a big mistake. Sometimes something really big could be wrong with a house that you can’t see yourself. That’s why you should always get a home inspection. A good home inspector will let you know whether the property is truly worth what is being asked and will give you a heads up about repairs that might need to be done in the future. Read full list here…

An inspection might give you the upper hand in negotiations and is designed to eliminate any costly surprises.

Being a first-time home buyer is an exciting experience, but it can be an expensive one if you aren’t aware of mistakes that others have made. Have tons of fun during this wonderful ride, but please be safe 🙂

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Why Interest Rates Are Going Up and What it Means For You

Today’s post is a guest blog from Eric Dunham, mortgage specialist at the Royal Bank of Canada (RBC®), here in Fort McMurray.

The Times, They Are A Changin’

For our Canadian economy to be healthy in the long-term, the prime rate should be in the 5% to 6% range. This is something I often tell my clients. What’s more, because rates are the primary tool that the Bank of Canada uses to control inflation, rates can move quickly. They’re not the only tool in Ottawa’s toolbox, however…

Over the last 10 years, our economy has been fragile. There have been several obstacles that Ottawa has had to overcome (or have been working to avoid).

In particular, there have been numerous rule changes for mortgage lending.

Remember the days when you could buy a home with 0% down payment and take a 40-year amortization? That was only 9 years ago!

So yes, the times are changing.

And times can change quickly.

A Recent History of Interest Rates

In January 2008, the economic outlook was poor, and the prime rate was 5.75%. By January of the following year, it had been dropped to 3.00%! This was to allow Canadians access to low interest rates for borrowing. The idea is that these borrowers then spend, thereby protecting the economy somewhat from recession. This drastic measure was taken in order to maintain an active economy and the rate has stayed super-low since then.

Canada’s booming economy is a prime factor in the interest rate hike.

Today, Ottawa’s forecasts show a potential growth of 2.2% for 2018 for Canada. This is roaring growth, not commonly seen in the West, so naturally the government is concerned about inflation. This has fortified the Bank of Canada to increase the prime rate by 0.25% on July 13, 2017 and then again on Wednesday (September 6, 2017) by an additional 0.25%. This brings lenders’ prime rate up to 3.2%. The consensus in banking circles seems to be that the Bank of Canada may look at another rate increase before the year is over.

The Impact on Canadians

How will this impact Canadians? The obvious answer is that any variable-rate mortgages, loans and lines of credit will be slightly more expensive, effective immediately.

But fixed rates will be affected, too. To show how, here’s the chart for 5-year Government of Canada bond yields over the last 6 months:

chart showing bond yields of the bank of canada from 2016 to 2017
(Geeks can find more fun charts on the official Bank of Canada site here)

The rise of variable rates continues to put a strain on the current bond market, which is where the majority of mortgage lenders receive their capital for the purpose of lending. With increases to the bond yields and long-term funding, we will also start to see lenders’ offers on fixed rate mortgages to increase as well.

So, these rate changes will eventually, for a lot of people, increase their monthly debt repayments.

We will also see increased interest rates for savers.

Okay, So What Does This Mean for ME? What Options Do I have?

If you are already a homeowner or you’re looking to purchase a home in the near future, now would be the time to sit down with your mortgage advisor to have a discussion around your current and future goals and review what might be the best options for you.

Historically, over the life of a mortgage, you’re more likely to pay less interest on a variable term, however we are coming out of a unique time with mortgage rates being at the lowest we have ever seen them, which also presents you with a potential opportunity relative to variable rate mortgage holders. Perhaps accepting a fixed rate in a rising interest rate environment may save you money over the next 5 years of your mortgage term?

Let’s look at an example:

I was speaking with a client on the day of the rate change who had come into the RBC® Stoneycreek branch to withdraw funds for his down-payment on a mortgage he was receiving from another financial institution.

After inquiring about his mortgage offer, I learned that he was going to be taking a variable rate at prime minus 0.45%, which at the time of his approval was 2.40%. Based on the September increase, his rate will increase to 2.65%. I had advised the client to go back to his lender and review what their offer was said regarding the fixed terms when he was originally pre-approved and that even if the fixed rate offered at that time was 2.74 – 2.94%, he might do better in the coming years to choose a fixed term and revisit the variable term at his renewal in 5 years.

If you are a current homeowner, you might want to have another conversation with your mortgage advisor. How will the increase in fixed and variable rates will impact your mortgage cost and payments at the time of renewal? Can you start building and implementing strategies within your current mortgage to help cushion the shock when renewing from a 2% rate to a 4% rate in the future?

Please feel free to share this article with friends and family if you found it helpful. Also, stay tuned for next Saturday’s blog, in which Tom Albrecht with The A-Team (MS Economics) will discuss the possible implications of the increasing rate environment for the housing market and your real estate decisions.

You can learn about me, and how I can help you with your mortgage, right here.

The post Why Interest Rates Are Going Up and What it Means For You was first published on The A-Team YMM Blog

Around Town: Fort McMurray News (Week of September 8)

Every Friday, the A-Team rounds up some important news from Fort McMurray into a convenient post, and today is no different. Here’s what we found for this week:

The resurgence of the Canadian economy was shown to be continuing this week, as Statistics Canada revealed the national unemployment rate had decreased from July to August. However, the unemployment rate for Wood Buffalo actually increased in that span of time, according to Jenna Hamilton of My McMurray:

Unemployment rate rises 0.3%

Unemployment in the Wood Buffalo — Cold Lake region rose 0.3 per cent, from 7.4 in July to 7.7 in August.

The total employed people in the region increased slightly to 72 per cent.

Nationally the labour market posted its ninth-straight month of job gains in August to give the economy its longest monthly growth streak since before the financial crisis nine years ago.

Statistics Canada says last month’s increase of 22,200 jobs also helped nudge the unemployment rate down from 6.3 per cent in July to a nine-year low of 6.2 per cent. Read more…

The local economy is still feeling the effects of the oil price crash so the loss of jobs isn’t unexpected.

The Labor Day weekend has come and gone, signaling the start of the school year. It’s another step in recovery for Fort McMurray, as the last schools that were closed due to the wildfire are now open. As a result, enrollment is expected to increase to pre-fire levels. An article on the topic by the Fort McMurray Today describes the changes taking place:

Schools see return to pre-fire enrollment

Many children born between 2009 and 2012 – when local birth rates averaged 34.8 births per 1,000 women compared to Alberta’s 26.8 – are still in the community and now old enough to attend school. Other families that did not return to Fort McMurray last fall are coming back now.

To cope, the public district has plans to expand Ecole McTavish Junior High into a school covering grades 7 to 12. When it opens in 2019, the building will be the first public high school in Timberlea.

A modernization project at Composite High School will also continue throughout the year, although classes will continue as normal.

The district also celebrated the opening of two new schools Tuesday, with Christina Gordon Public School in Timberlea and Dave McNeilly Public School in Parsons Creek. Both schools teach students up to Grade 6. Via fortmcmurraytoday.com

Busy schools are a big indicator of activity in the community.

First day of classes at Beacon Hill School. Credit: Vincent McDermott

It’s not just primary schools that have something to talk about this year, though, as Keyano College received a $100,000 donation from Finning Canada. The fund is meant to inspire students to reach their goals, but the talking point is the novelty of the method of payment. A Keyano executive explained the donation to MIX News:

Keyano College Receives $100K Donation From Finning Canada

Meanwhile, Vice President of External Relations and Advancement at Keyano Jason Demers tells Mix News this donation is unique in the way money is being sent to the college.

“Typically, what donors do is fund the endowment and it takes years for that interest to accumulate and build up to the $100,000 and the thing Finning is doing is contributing $8,000 per year that will immediately benefit the students until the endowment gets to the point where the full value of their gift is realized.”

For the next four years, the fund will provide students, who are eligible, with four interim annual awards of $2,000. After that, four endowed awards will be provided to students annually – with a grand total of $1,250. read more at mix1037fm.com

The donation continues a wave of good news for the institution, which also completed the first phase of a renovation this summer.

That’s all for this weeks’ roundup. Check back on The A-Team blog for more news and updates on the Fort McMurray area!

The following article Around Town: Fort McMurray News (Week of September 8) Find more on: https://www.ateamymm.ca/