Security & Relationship

I had the pleasure of speaking with a potential client last week. We chatted about the usual -> interest rates, products, term, strategy, etc. A big concern to my client was the ability to build a relationship with a lender (big 6 bank) to gain some leverage in the future. Their thought process was the more business I do with my bank, the more "breaks" I will get from them.

That makes sense to me initially, but lets think about asking for and actually getting these 'breaks' or 'discounts'; probably in 20 years or so. Everyone should value their time. Do a simple calculation of dollars earned and time worked. Now think of the money you'll save vs. the time spent to haggle with at least 2 bank employees (do they really care?). Are you ahead? Are the waived fees on your foreign currency transactions worth an ego boosting conversation of how your mortgage, RRSP, checking and savings account are at this bank? Maybe? How many times do these employees hear this story? I would venture to bet the banks have scripted replies for their "valued clients" for such conversation (Am I being to one sided here? lol). Is the lifetime of mortgage negligence, inflated renewal interest rate letters and zero follow up worth building this relationship? There are safe, secure options out there; simply open your mind to them. The banks love to make themselves and shareholders money, its a numbers game. For every one story you hear of the banks favoring their best customers, imagine how many others are getting ran over and don't even know it.

I'd love to hear your story, good or bad, about your current relationship with your bank.

Regards,


Chad
403-809-5447
chad@boomerangfinancial.com
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Self Fulfilling Prophecy

There seems to have been a shift in thinking in the Calgary real estate market. I think the root of the problem is consumer confidence. If you are putting off purchasing your first home because you're unsure of your income or employment situation, completely justifiable. Purchasing your first home is a large financial commitment and you have to be 100% ready to take on those challenges. However, if you are financially and emotionally ready to purchase your first home, but lack confidence in our current real estate market, this then becomes a "self fulfilling prophecy".

Here's what happens:

1. You hold off purchasing a home because you want to 'wait and see' where prices are in 6-12 months.

2. Because there are many people thinking this way (the herd) therefore sales slow, inventory rises, and sellers drop their prices to sell their home.

3. The media catches wind of this information (increasing inventory, decreasing prices) and reports it back to the market.

4. You now feel justified by holding off purchasing a home because everything you wanted to hear came to fruition. Now in your mind, you continue to wait, why not?

Do remember this; the media is a business and they generate income by selling advertising dollars to their clients. The more eyeballs on the screen, the more they can charge for advertising. Creating 'doom and gloom' or 'recovery' articles will attract the most attention. Read the article, not just the headline, and think about why they are writing this article and what information is in it.

So whats the point?
The herd mentality in 2006 & 2007 said it was a great time to buy. Now the herd mentality is saying wait until 2011 & 2012 to buy. Is the herd always right, no. Purchasing a home is a very personal decision and you must decide for yourself. Instead of me saying 'now is a great time to buy'; I am offering a real solution to your confidence issue = Buyer Protection Plan. With the right advice, at the right time you will make a better decision with more information.

Contact me today for my take on Calgary's real estate market.

Regards,

Chad
403-809-5447
chad@boomerangfinancial.com
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Value

Add 5 times the value people expect of you!

Since I have consciously decided to add more value to my business partners and clients, I have been using the word "value" more and more often. Similar to buying a new car, you'll notice that car everywhere on the road; I have noticed a lot of people saying they add value. But what does it mean? What is good value?

I believe good value is receiving more than what you expect. In an economic recovery, where competition is fierce and peoples expectations are changing, you need to add 5 times the value they expect. What do you expect from your financial planner, Realtor, mortgage broker; what do you expect from yourself? We all know, for the most part, what these named professionals "do", but are we adding value? If value is a personal expectation, then the perception of value is different for each individual. How does anyone insure we are always adding value then? We need to hold ourselves to OUR high level of expectations, which should be 5 times greater than what a regular (non-industry) person would expect.

Ok, how do I add even more value? Education!

If you can tell someone something profound or new or different, that changes their perspective and educates them, that is adding value. I believe in spending time with my clients, sharing my perspective on the mortgage industry and educating them. You can spend more time educating co-workers, staff, clients, friends or family. They will appreciate your time and information. Best of all... money is attracted to value!

Regards,

Chad
403-809-5447
chad@boomerangfinancial.com
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Monoline Lenders

Savings account please? Sorry, not available here.

By now you probably know, a mortgage broker works for you and not the bank. You may also have heard we have access to 30 or more different lenders; how could that be? Mortgage brokers have access to "mono-line lenders". These institutions deal in residential mortgages, for 'A' clientele. Some examples of mono-line lenders are: Street Capital Financial, First National Financial, Merix Financial or Mcap. Any of these institutions will lend to a qualified borrower, but they will not hold a checking or savings account for you. They strictly deal in mortgages.

Why would I submit your application to a mono-line lender and not a big 6 bank? The interest rate offered by different lenders at different times will vary marginally. I always try to find the best deal for my clients, so I will consider which lender has the best interest rate at that time. Based on what we discuss during your mortgage application, I will also consider the mortgage options important to you. Many people request pre-payment privileges, portability and assumability options. Having different mono-line lenders to choose from gives me the flexibility to tailor a mortgage product for you. Today I see a lot of "no frills" mortgages with ultra low interest rates. Be careful you completely understand what is in your mortgage commitment and how it may affect you in the future.

Remember, strategy will always beat rate. My Boomerang One Savings Strategy (BOSS) will solve problems you may not even know you have. This 'game' is all about perspective and information. If you would like a different take on your mortgage, email or call me anytime.

Regards,

Chad
403-809-5447
chad@boomerangfinancial.com
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Buyer Protection Plan

I am always striving to become better. I strive to improve myself to make others around me better. I believe in being the best, but even if you are, there is always room to improve.

There has been a definite shift in the Calgary real estate market in the past several months. We have seen variable interest rates increasing, long term interest rates decreasing, uncertainty in the US economic recover and a freaking media circus around everything. I am an industry professional and I am reading contradicting media reports every other day. I cannot imagine the possible confusion for a casual news reader.

I have chosen to take a proactive position in anticipation of a changing real estate market. I find there are a lot of Calgarians financially and emotionally ready to purchase a home, but are uncertain of real estate prices in the next 6-12 months. If you are one, nod your head; if you know one forward this blog post to them. At the end of September I will be rolling out a "Buyer Protection Plan". This plan has two parts: Part 1) My Boomerang One Savings Strategy (BOSS) which will protect you from increasing interest rates, future payment shock and inflation. This strategy is an absolute must for your next mortgage. If you do not have a plan or strategy in place NOW, register your mortgage renewal date with me @ yycmortgage.com. Part 2) Purchase the home you desire today and be protected from a 5% price decrease for one year! I can see the hamster in your head running full speed now, yes I said 5%. If you bought a $300,000 condo and the average price went down to $285,000 next year, you would be protected from that price decrease and get $15,000 back! I have hand picked exclusive Realtors, lenders, lawyers, and mortgage insurers to participate in this program. Don't worry about HOW I will be doing this; the details will be explained when you contact me.

If you (or anyone you know) are in the market to purchase a new home OR you are listing your home with no activity --> DO SOMETHING DIFFERENT. The BOSS and my Buyer Protection Plan are the answers to the problems you may not even know you have.

Contact me today

Regards,

Chad Moore
403-809-5447
chad@boomerangfinancial.com
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How to Increase your Credit Score

My passion is to keep the seemingly complex simple. I have created my website primarily as a resource tool for my current and potential clients to increase their mortgage intelligence. Credit is frequently used, sometimes abused, but more importantly it is misunderstood. Click to learn more on your credit report, increasing your credit score, credit myths, and our credit improving software Scoremaker.

Quick Background

Your credit score is a detailed history of how you have managed your past debts. Your beacon score or credit score or fico number (same report, different terminology) are all numerical summaries of your willingness to re-pay your debts at that moment in time. Think of your credit score like a little number floating over your head everywhere you go. It is constantly changing and is very important. Lets make that little number grow!

1. The maximum beacon score anyone could ever have is a perfect 900. Your repayment history is the most important, and biggest influence on your credit report. 35% of your total credit score is determined by your re-payment history. Therefore your repayment history accounts for 315 points out of a possible 900. Always make your payments on time, even if you only make the minimum payment. Sometimes you may miss a payment, which will show on your credit report. When you are in the process of purchasing a home make sure to disclose any past delinquencies to your mortgage broker. CMHC reports there are mistakes in 30% of all credit bureaus pulled in Canada. If there is a collection, or missed payment in your bureau that you did not mention, we need to handle it immediately. Bottom line; make your payment on time and in full if possible.

2. The outstanding balance relative to your credit limit accounts for 30% of your credit score. This is a possible 270 points out of 900. If the outstanding balance of your credit card is $4,750 and the limit is $5,000 you are using 95% of your available credit. You have used your credit (good job), but now you need to show you can manage that debt and repay it. The lower your credit balances are, relative to your credit limit, the higher your beacon score (more of the possible 270 points added to your score). To immediately increase your credit score, lower your balances to 75%, or 50% (or pay it off!) of your credit limit. *IMPORTANT* If you have several credit cards or lines of credit with zero balances, this will not effect your monthly obligations. Pre qualifying through a mortgage broker requires a minimum repayment of 3% a month of your outstanding balance on revolving credit (not the limit).

Thank you for spending 5 minutes with me. Learning about credit is never ending, but these are the two major influences you can take control of today. There is more to learn at Equifax and Trans Union. Now take control of that invisible floating number over your head and make it grow.

Chad Moore

C:403-809-5447

chad@yycmortgage.com

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Bank of Canada Rate Hike

The Bank of Canada (BoC) increased their over night or key lending rate by 0.25% or 25 basis points (bps) to 0.50%. This is still an absurdly low interest rate in historical terms. Some great articles by The Globe and Mail and Financial Post explain the reasoning.


The BIG question is "What does this means to you"?
Like everything else in society; this will affect your pocket book. Here is one simple example...


Now don't get scared by all these numbers, this is easy...Our 5 year closed variable rate mortgage was 2.25%(prime) - 0.60% or 1.65%. The BoC increased the rate by 0.25%; prime is now 2.50% (That's easy, right?). Our new 5 year closed variable rate mortgage is 2.50%(prime) - 0.60% or 1.90% (Rate hike, :(). Therefore, a $250,000 mortgage, 25 year amortization and a rate of 1.65% = $1,017/mo. The same mortgage @ 1.90% rate will cost you $1,047/mo. Calculations done HERE.

Last Paragraph...
The difference in monthly payment may not seem like much, but over the term of your mortgage the amount will add up. If you have questions about qualifying for variable or fixed rate mortgages I would love to hear them. Comments are welcome too! Help yourself make an informed decision, contact me through the medium of your choice anytime.

Thanks for your time,

Chad Moore
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Mortgage Calculators

Many of you reading this will be first time home buyers and should take a minute and play around with the all of the mortgage calculator found at www.yycmortgage.com under the tab 'Loan Calculators'. 89% of all Canadian first time home buyers did research online (awesome!). Here is a brief overview of how to enter the correct information for the Mortgage Qualifier

Mortgage Qualifier - yycmortgage.com > Loan Calculators > Mortgage Qualifier

Interest Rates
Refer to our posted interest rates on the left hand side of the home page at yycmortgage.com. Today our best 5-year interest rate is 4.39%. If you choose any term shorter than a 5-years, use the interest rate of 6.25% (Call Chad for details).

Income
Use the your total gross income (before tax amount) of the parties involved who are purchasing the property. Remember, whoever you add for income also add their liabilities to the equation.

Tax
The tax amount for each property is different, depending on the cities assessed value and provincial tax rate. To find a good estimate of the property tax rate for a neighborhood you are considering to purchase run the numbers for this equation: Property Tax Bill= City assessed value X Total tax rate. To find a properties assessed value in Calgary visit http://bit.ly/9hFHLl. The 'Total tax rate' for Alberta in 2010 is 0.0058734. A safe estimate for a property tax bill is $1,500/yr if you like.

Liabilities
When entering in your liabilities (what you owe) remember these tips: if your loan payment is an installment type (principle + interest) enter in that payment; if your liability is revolving (credit cards & lines of credit) enter in 3% of your current outstanding balance. For example, if you have a vehicle loan with monthly installments, use that payment. If you took out a line of credit and purchased a vehicle, enter in 3% of your outstanding balance.

Condo Fees
As part of condo ownership, there are condo fees. A great estimate for condo fees is to find a similar property (same building) for sale on the MLS which usually posts the condo fees. The calculation will only consider 1/2 of the condo fees you enter, enter the full amount.

Closing Costs
Closing costs are also a variable expense depending on the professionals you decide to use. Typically you will want to have your new home inspected and appraised. If your down payment is less than 20% of the value of the home, the bank will pay for your homes appraisal. Our brokerage will also reimburse you up to $250 for your homes appraisal if it is a conventional mortgage. A home inspection can cost between $400-$650, make sure you are referred to one from myself or your Realtor. Another closing cost is your legal fees (See future posts on legal fees). This can be between $800-$1,200, again make sure you are referred to a lawyer and shop around.

Heating
Estimate your heating bill; a safe amount to use is $90/month. Make sure you consider the age of the property, heating type and style of the property (condo, town house, single detached house).

Tips
If your down payment is less than 20% of the homes value, check the mortgage insurance box. There are rebates in Alberta if you decide to purchase a new home, call Chad for details. Condo fees usually include heating.

Have fun playing around with the different chart selection options and how the calculation is created. Enjoy!

Thank you for reading this blog post. If you have learned something here with me, share it with others. Please refer to my web page for more information on the mortgage industry at www.yycmortgage.com.

Cheers,

Chad

Mortgage Broker Basics

Many of you reading this will be wondering what exactly is a mortgage broker? I hear the names of some other industry professionals and I wonder the same about their work titles too. You may have seen this link on facebook and are wondering, "why are you trying to help me? I can go to my bank for a mortgage". Well as you read, you will find out that may not be the best solution for you.

So what is a mortgage broker?

A mortgage broker basically negotiates the terms of your mortgage on your behalf. A good mortgage broker will tell you how to become mortgage free sooner, explain how to keep more money in your pocket and help you plan a mortgage strategy moving forward. There is much more involved to this profession as you will read about in future blog posts, stay tuned.

I have access to many different lenders and banks that will lend you money to buy a house. Each of these institutions are competing for your business. A major attraction for people looking to purchase a house is the interest rate on their mortgage. When lenders want to attract more business they will typically lower their interest rates. *You should not be strictly driven by interest rates when obtaining a mortgage*. This will be a topic in future posts, stay current. There are different qualifying criteria, lending programs, restrictions and easements from a suite of different banks and lending institutions. This allows me to match each persons unique financial situation to a lender that will accommodate them.

I am always working for you and with your best interests in mind. I am paid a referral fee from the chosen lender, so no money comes directly out of your pocket for my service. My compensation is priced into the interest rate of your mortgage; remember nothing in life is free. I am compensated differently for the term or type of mortgage you obtain. I am transparent with my compensation, so you know I am strictly motivated to help you. I do not receive bonuses or any other incentives from the lender we choose for your mortgage. I want to keep more money in your pocket and add to your bottom line, not the banks. Ask me how to become mortgage free sooner.

If you have made it to this point, thank you for spending 2 or 3 minutes with me. Visit my website yycmortgage.com for more information on saving money or contact me directly at 403-809-5447.

Cheers,

Chad Moore
403-809-5447
chad@yycmortgage.com
yycmortgage.com
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