Category Archives: FamilyLending.ca

February 2011 Housing Starts

 

CMHC annouced today:“The seasonally adjusted annual rate of housing starts was 181,900 units in February, according to Canada Mortgage and Housing Corporation (CMHC). This is up from 170,600 units in January 2011.“Housing starts moved higher in February because of increases in Ontario and the Prairies,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “The bulk of this increase was felt in the multiples segment. From last month, multi-family starts were up in Saskatchewan and in Toronto.”The seasonally adjusted annual rate of urban starts increased by 9.4 per cent to 161,000 units in February. Urban multiple starts were up by 14.5 per cent in February to 94,900 units, while single urban starts edged higher by 3.0 per cent to 66,100 units.

February’s seasonally adjusted annual rate of urban starts decreased by 24.7 per cent in Atlantic Canada, by 7.1 per cent in Québec, and by 5.9 per cent in British Columbia. Urban starts increased by 29.3 per cent in Ontario and by 26.1 per cent in the Prairies.

Rural starts were estimated at a seasonally adjusted annual rate of 20,900 units in February.

As Canada’s national housing agency, CMHC draws on 65 years of experience to help Canadians access a variety of high quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.”
Contact FamilyLending.ca for more information.

Understanding your Credit Score

 

We thought it would be helpful to pass along a little information about understanding your credit score and some do’s and don’ts to be aware of. How you handle your credit now can affect your ability to get a mortgage as well as the rate you will receive.
 

 

Understanding your credit score 101

 

Driven by the financial industries desire for an equitable method of comparing the credit worthiness of borrowers, Fair Isaac & Co developed a credit measurement tool in the 1950’s called the FICO® score.

Now considered to be the industry standard, the FICO® score is used by most lenders from across Canada and the United States to assess lending risk.

 

 

 

 

FICO® score, BEACON® score, EMPIRICA® score

The three most recognized credit reporting agencies include Equifax, Experian and TransUnion, with Equifax being the most recognized agency in Canada. Known as a BEACON® score at Equifax, EMPIRICA® score at TransUnion and the Experian/Fair Isaac Risk Score at Experian, all use formulas developed by Fair Isaac & Co.

How is a FICO® score determined?

*In general terms, the FICO® score evaluates five main categories of information:

 

Payment history (35% of the overall score)

  • Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.).
  • Presence of adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items).
  • Severity of delinquency (how long past due).
  • Amount past due on delinquent accounts or collection items.
  • Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any).
  • Number of past due items on file.
  • Number of accounts paid as agreed.
 

Amounts owed (30% of the overall score)

  • Amount owing on accounts.
  • Amount owing on specific types of accounts.
  • Lack of a specific type of balance, in some cases.
  • Number of accounts with balances.
  • Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts).
  • Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans).
 

Length of credit history (15% of the overall score)

  • Time since accounts opened.
  • Time since accounts opened, by specific type of account.
  • Time since account activity.
 

New credit (10% of the overall score)

  • Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account.
  • Number of recent credit inquiries.
  • Time since recent account opening(s), by type of account.
  • Time since credit inquiry(s).
  • Re-establishment of positive credit history following past payment problems.
 

Type of credit used (10% of the overall score)

  • Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.).
 

Add it up and you get…?

  • Each of the above noted factors, along with others, are assigned a value and a weight. The results of these factors are then added up and combined into a single number. FICO® scores can range from 300 to 800. The higher the number the better.

In general terms, borrowers with reasonable credit typical have FICO® scores, which range between 600 and 800.

Comments:
A score takes into consideration all these categories of information, not just one or two.
No one piece of information or factor alone will determine your score.
The importance of any factor depends on the overall information in your credit report.
For some people, a given factor may be more important than for someone else with a different credit history. In addition, as the information in your credit report changes, so does the importance of any factor in determining your score. Thus, it’s impossible to say exactly how important any single factor is in determining your score – even the levels of importance shown here are for the general population, and will be different for different credit profiles. What’s important is the mix of information, which varies from person to person, and for any one.
Contact FamilyLending.ca for more information.

Sell your Home for Top Dollar!

 

Following the steps below can help you maximize your selling price and put more money in your pocket. Avoiding some often over looked mistakes is easy and takes little time, cost and effort on your part. 
1.   Distress Selling: At times, selling quickly is unavoidable. That’s when knowing the right techniques to sell your home, without looking desperate and making yourself a target for low-bidders, really pays off. Know all there is to know about your market before listing and work hand-in-hand with the right real estate professional. Insure you are not selling for the first offer through the door.

2.   Best Home in the Neighborhood: Your home is one of your most personal possessions. Don’t be blind to flaws, unique personal preferences and needed cosmetic improvements. This will cause overvaluing of the home, hurting its chances of being sold for top dollar. Listing with the right agent gives you a well-informed “third eye” that will help you price your home at a fair market price.

3.   Limited House Viewing: Buyers want to view a home on their own time schedule. Unfortunately, their time schedule does not always coincide with your time schedule. Leave a lockbox or key with your agent so your home can be shown when you are not around. You never know if the one who got away was your next homebuyer.

4.   Restrain Emotional Decisions: Don’t let a few hundred dollars, which will mean very little to you in the long run, ruin a sale. Take a look at the big picture and react rationally. Use sound judgment!

5.   Make Cosmetic Improvements: Prospects make up their minds within the first twenty minutes. First impressions can make all the difference in the selling of a home. Spending $1200.00 on new carpet might add another $4,000.00 to the price of your home. Get an objective point of view from your real estate professional or interior design consultant. They can provide you with a list of items that will maximize the profitability of your home sale.

6. Disclose Property Flaws: Property disclosure laws require sellers to list any flaws of which they are aware. If you are unaware of flaws or attempt to cover them up, you risk losing the sale or finding yourself in court. Get professional assistance from an agent, who can introduce you to qualified inspectors and insure the smooth sale of your home.

7. For Sale By Owner: Most homeowners who decide to sell their own home, do so because they believe they can save the commission paid to the real estate agent. Everything has a price, and selling a home carries a high one. The enormous amount of time and effort required to sell a home often surprises the For Sale by Owner. Furthermore, many costly mistakes can be avoided with the right guidance. Lower prices and more time on the market could be the largest costs.

8. Refusing to Trust Your Agent: Would you tell a physician that you’ve decided to run your own tests and come to your own diagnosis? By choosing the right agent, you can relax and trust their judgment. The right agent is a valuable team member, who will protect your best interests and make your sale as profitable as possible.

9. Know Your Market: Most homes that do not sell during the first listing period are priced too high. You need to understand your market and evaluate the value of your home based on fact, not gut instinct or conventional wisdom from friends and family. A professional agent knows the market, just as you know your market for your work place.

10. Choosing an Agent Based on Personal Relationships: Home sellers often pick a friend or family member as their agent. Choose and agent with a strong track record and aggressive marketing plan. A top producer knows their market well and can generate many buyers. Selling your home is one of the most important decisions you’ll ever make! Base it on good, sound business sense and the rewards will add up.

Before you make one of the most important decisions (who to list your home with), shouldn’t you become as informed as possible? By aligning yourself with a top agent, you insure that all the important issues and seemingly insignificant, yet very important, details are handled professionally. Your home sale should not be a grueling ordeal. The more informed you are, the better chance you have of making a sound business decisions.

We sincerely hope these tips and ideas are of value to you. If you are in the market to purchase a new home please let us know and we can assist you in not only arranging your financing but also recommend a Realtor or home inspector.  Please call or email FamilyLending.ca for a personal, no obligation consultation.

Home Energy Checklist

 

We recently put together this Home Energy Efficiency Checklist to help homeowners optimize their energy consumption and reduce their energy bills. We designed it as an easy-to-use guide for periodically examining your home to find energy-wasting trouble spots. It also includes some preventative maintenance tips that will help you avoid problems before they happen.

If you have any further questions about how to maximize your home energy efficiency, or if you would like us to provide you with our list of home energy experts, please call or email us. And if you hear of anyone who’s looking to buy or sell, please keep us in mind.


ANNUALLY:
Check your heat and A/C systems.

Check windows and outside doors for drafts.

SEASONALLY:
Check furnace switch, fuse and breakers.

Check furnace blowers, oiling motor and changing belt if necessary.

Check thermostat accuracy by taping thermometer to wall next to it.  If discrepancy, have it re-calibrated by a technician.

Check central air condensing unit for obstructing leaves and debris, and hose out if necessary.

Keep shrubs pruned back to maximize airflow.

Check room A/C condensate drain outlet for plugging.

MONTHLY:

Check and clean/change room A/C filters.

Check room A/C condenser coils and intake vents for obstructions.

Check furnace filter and change if clogged.

GENERAL:

Check insulation for type/thickness, beginning in attic/top floor.  Upgrade if inadequate.

During humid weather, check central A/C condensate drain to ensure it is carrying off excessive moisture.
Contact FamilyLending.ca for more information.

Fixed Rate Mortgage or Variable Rate Mortgage?

 

Before we answer that question, it’s important to understand the difference between a fixed rate mortgage and a variable rate mortgage.


Fixed rate mortgage – A fixed rate mortgage is a mortgage where the rate of interest is fixed for a specific period of time. Generally known as the mortgage term, it usually ranges from between 6 months and 25 years. As time goes on, more of the mortgage payment goes towards the principal and less of the payment goes to the interest.


Variable rate mortgage – A variable rate mortgage is a mortgage that has fixed payments, but the interest rate fluctuates with any changes in interest rates. If interest rates go down, more of the payment goes to principal and if interest rates go up, more of the payment goes towards the interest.

So, which one is better?

Determining which one is better is as simple as looking at your ability to handle risk…


Here’s an easy test…

If you lose sleep worrying about the possibility of a .25% increase in the interest rate or get stressed thinking about the impact on your monthly budget if your monthly mortgage payment changes, then a fixed rate mortgage is for you.

You should also take the same test when choosing the length of the fixed rate mortgage term. If you breathe easier knowing that your mortgage payment is fixed for the next 5 years then a 5 year term is right for you.

It’s pretty simple, if you don’t like risk, then a fixed rate mortgage term is right for you.

Now if risk is not as much of an issue, then a variable rate mortgage is the way to go. Here’s why…

Based on a detail study completed by Moshe AryeMilevsky of interest rates from 1950 to 2000, consumers are better off, on average, financing a mortgage with a short term floating (prime) interest rate, compared to a long term fixed rate mortgage. A consumer with a $100,000 mortgage and an amortization period of 15 years would have paid $22,000 more in interest payments by borrowing and then renewing at the 5 year rate as opposed to borrowing at prime and renewing annually.

The bottom line:

Long term stability has a price, but if you can’t sleep, what good’s the money?

Don’t forget if you, a friend or family member have any questions about mortgage financing we are here to answer those questions and to work with you to arrange the best product to fit your specific needs and comfort levels.
Contact FamilyLending.ca for more information.