Trevor Hickey, B.A. - Calgary Mortgage Brokers | Mortgage Brokers Calgary | Calgary 2nd Mortgages

In my last article I made it known that I was of the opinion that lending guidelines should be static – and not change with the wind (you can read that article here Are Lending Changes Bad for the Housing Market?).  I finished off my last article with this note:
You may be saying, “Well, the economy was hot for a while and it is better to have the looser guidelines and have higher movement for a while than not at all.”
Then I asked you to read this current article to see why the above question harbours an incorrect theory.  Well, here it is:
Do you remember the NEP (National Energy Program)?  Our friend, Pierre Elliot Trudeau introduced that for us.  The long and short of the NEP is this: Trudeau believed that the oil-rich Alberta had too much money.  So, Trudeau decided that it was time to share the wealth and reduced the amount of money that the rest of the provinces would pay for oil from Alberta (this was significantly below market price).  It is estimated that the NEP cost Alberta approx. $99 billion.  Anyway – the purpose of this article is not to express opinion over who actually owns the oil, but rather, it is to determine the effects of the NEP.  The reason why the NEP was so toxic was because it was taking away something that had once been Alberta’s – everyone in Alberta was living based on the rest of Canada paying full price for our barrells of oil.  The moral of the story is this: if you must scale back, do so – but don’t increase/broaden the policies, then take it away later (that’s just teasing us).
So, should Trudeau have instituted the NEP? Maybe not, but the NEP was based on principle, if he had increased Alberta’s income, then taken it away – that would have been criminal (similar to what the government is doing to the market today).
Anyway, I still haven’t addressed the issue at hand, which was – is it better to make hay while the sun shines (even if there are sunny patches) or is it better to make hay slower, with an overall consistency in the illumination from above.  My opinion: the latter is the way to go (it gives the market more certainty and, I would guess, that it would result in more sales overall than loosening and tightening guideliness).  I think it would result in more overall sales because people know what to base the economy on – if the guidelines are being thrown around all the time, eventually the government’s loosening of guidelines are seen as so temporary that it is ineffective.

Trevor Hickey, B.A.

Mortgage Associate

Concord Mortgage Group Ltd.

#107 – 1905 Centre Street NW

Calgary, Alberta

T2E 2S7

Bus: (403) 290-1990

Cell: (403) 860-8738

Fax: 1-888-587-1426

Email: trevor@concordmortgage.ca

Website: www.mortgagebrokercalgary.info

Popularity: 10% [?]

Changes are bad for the market – fixed decisions are good – changes (that are in our control) are the product of indecision.  I heard once (from a Brian Tracy tape series) that there was a study done on store managers, some were very successful and others were not successful at all.  The study consluded that the main difference between the two types of managers (and what ultimately determined if they were successful or not) was their decision making.  It turned out that the lesser achieving of the two managers often made the right decision and the more productive of the two often made the wrong decisions – it was simply that the latter stuck to their decisions, rode out the consequinces, learned, and moved on.  The former managerial type would decide, ponder, then re-decide (never actually doing anything).  The lesson of the study is simply this: decide, then act – don’t decide, decide, and then decide.
The recent lending guideline changes are simply a product of the government’s indecision – back a few years ago, while the economy was motoring ahead, it was decided that the economy could handle 40 year amortizations and 100% financing.  Now, since the market isn’t so hot, they’re deciding against this.  Well, if the policies hadn’t changed in the first place, there wouldn’t have been a sudden “reigning in” that we just experienced.
You may be saying, “Well, the economy was hot for a while and it is better to have the looser guidelines and have higher movement for a while than not at all.”

See my other article on why that train of thought is incorrect: Is it better to make a fortune quickly – or over time?

Trevor Hickey, B.A.

Mortgage Associate

Concord Mortgage Group Ltd.

#107 – 1905 Centre Street NW

Calgary, Alberta

T2E 2S7

Bus: (403) 290-1990

Cell: (403) 860-8738

Fax: 1-888-587-1426

Email: trevor@concordmortgage.ca

Website: www.mortgagebrokercalgary.info

Popularity: 6% [?]

The name of this article is “Why Fluxuating Amortization and Down Payment Requirements are Bad for the Economy”; however, it should actually add “and why it gives inaccurate housing values”.  First of all – lets tackle the theory that this article is based on. 
The Theory: As amortization increases more people can afford houses (because payments are less and are more in reach). 
This would be great if amortization stayed the same (or increased; therefore, making the market broader and broader and increasing the demand & competition for houses and therefore increasing housing values).  BUT that isn’t the way it works – amortization flys all over the place, from 25 years to 40 years to 30 years…  The reality is this – unless you’re prepared to keep amortization the same, don’t increase it.  It just ruins the market by making the demand for housing higher, then lower, and those who bought in the high point are unable to get their money back out.

Suggested related article: Are Lending Changes Bad for Housing Market?

Trevor Hickey, B.A.

Mortgage Associate

Concord Mortgage Group Ltd.

#107 – 1905 Centre Street NW

Calgary, Alberta

T2E 2S7

Bus: (403) 290-1990

Cell: (403) 860-8738

Fax: 1-888-587-1426

Email: trevor@concordmortgage.ca

Website: www.mortgagebrokercalgary.info

Popularity: 10% [?]

The lending guidlines changed again this week.  The changes are:
- 30 year amortization (maximum)
- Can only refinance to a maximum of 85% of the house value
There are more changes; however, these are by far the most potent.  Now, you may be wondering if this will affect the lending/housing market.  The answer…NO!
The reason why this won’t affect the market is simply because the changes were already in place before anouncing them.  There is a difference between what the “guidelines” are and what the reality is.  The truth is – CMHC has been implementing these policies for (in my experience) about 6-12 months.  The only way you would have received an approval from CMHC, lately, for a refinance of 90-95% and an amortization of 35 years, is if you were made of gold and, therefore, didn’t need it.

Just my observation!

Suggested related article: Why Fluxuating Amortization and Down Payment Requirements are Bad for the Economy!

Trevor Hickey, B.A.

Mortgage Associate

Concord Mortgage Group Ltd.

#107 – 1905 Centre Street NW

Calgary, Alberta

T2E 2S7

Bus: (403) 290-1990

Cell: (403) 860-8738

Fax: 1-888-587-1426

Email: trevor@concordmortgage.ca

Website: www.mortgagebrokercalgary.info

Popularity: 7% [?]

What is a home equity loan?  Well, it is basically a mortgage that is meant to extract equity from your property.  For example – if your house is worth $100,000 and you are only borrowing $50,000 today – you may be able to get a 2nd mortgage for about $25,000 (the difference between the house value and the amount that you have borrowed against it is called equity).
Anyways – you might wonder what you’d want to have an equity loan?  It would make sense to borrow money against your home (because house money is usually cheaper than any other kind of money) – and then use those funds to payoff more expensive debts. 
Anyway – if you are interested in borrowing (or lending) home equity loans in Calgary – please let me know – thanks!

 

Suggested article: Debt Consolidation Calgary

Trevor Hickey, B.A.

Mortgage Associate

Concord Mortgage Group Ltd.

#107 – 1905 Centre Street NW

Calgary, Alberta

T2E 2S7

Bus: (403) 290-1990

Cell: (403) 860-8738

Fax: 1-888-587-1426

Email: trevor@concordmortgage.ca

 Website: www.mortgagebrokercalgary.info

Popularity: 5% [?]

San Jose Real Estate in California has to cater to the housing needs of almost 30,000 students of the San Jose State University. The Post graduation students prefer living off-campus whereas many undergraduates manage to stay on campus. The city has tall apartments for residential purpose of the student population because the university alone cannot meet the housing needs of so many students.

You can find yourself an apartment according to you budget and accommodation need raised by San Jose Real Estate. You can stay in complexes in Almaden, West San Jose, Willow Glen and Cambrian at low cost, you can also find a one-bedroom apartment at 700 dollars a month to three bedrooms flat at 1600 dollars a month. This area is a highly industrialized area and so the technology students can find themselves highly salaried technical jobs, thus they can easily pay rents.

The climate in San Jose is also very pleasant as it gets the effect of the very near Pacific coast. You can enjoy outdoor activities as swimming, surfing, water sports and others; you can also stroll around in parks and gardens. If you stay near the university campus, you are more close to your peers so the San Jose Real Estate is coming up with more apartments.

Staying close to the university is beneficial as the apartment provide all amenities and the students can walk to the university and downtown. There are apartments with computer lab services, fitness centers, recreation rooms, libraries, swimming pool and even hot tubs. Staying in apartments close to the university is very helpful for the students with physical disability as they are provided essential facilities stated under regulations of ‘Americans with Disabilities Act’. So, renting apartments constructed by San Jose real Estate near San Jose State University is the best idea one should implement if you are a student there. Your student life becomes most simplified, hastle free if you r staying near the campus. So, reside near the university and wake up only 15 minutes before college in the morning without any worries!

Thank you to Daisy Williams for writing this post!

Popularity: 15% [?]

If you need money to do debt consolidation Calgary - fire me a quick email to see what we can do for you.  Consolidating debt is basically taking a number of smaller debt accounts and combining them.  Usually you would only do this if the overall interest rate dropped though. 

But, how to know when the overall interest rate will drop?  Simply follow this basic formula:
(debt balance 1 x decimal value of interest rate)+(debt balance 2 x decimal value of interest rate)+…

                                           debt balance 1 + debt balance 2 + debt balance 3 + …

HERE’S AN EXAMPLE:

Loan 1 balance: $10,000

Loan 1 interest: 10%

Loan 2 balance: $5,000

Loan 2 interest: 7%

Loan 3 balance: $7,500

Loan 3 interest: 6%

($10,000 x 0.10)+($5,000 x 0.07)+($7,500 x 0.06) =          $1,000 + $350 + $450          =        $1,800        = Average

($10,000 + $5,000 + $7,500)                                         $10,000 + $5,000 + $7,500             $22,500         (0.08) 8%

Basically – your average interest rate is 8%, and if you can beat that – then you should take a cheaper loan.

The answer will give you the decimal value of the overall interest that you are paying on those loans.  If you can get a cheaper loan/mortgage, go for it! 
Free tip: Don’t be afraid to look at mortgages/loans that are around 18% – I understand that many credit cards say that they charge 18%, and by that math you would not be saving anything – but, I have given people lots of 18% mortgages (when no-one else would lend) and my clients still saved alot of money.
Another way to tell if a new loan is going to save you money – simply add up the payments, whichever loan has the lower overall payment – that’s the one that will save you money.  BUT – be carefull not to move from a mortgage into unsecured credit card debt – even if the credit card payments are lower you will likely take WAY longer to pay it off (since mortgages typically have amortization and therefore ensure that the principle is slowly being paid off).
So – should you never use credit cards? NO – credit cards are a wonderful tool – they are great for:
- starting a small company (because you can access the money immediately AND you can pay it off without penalty)
- making quick purchases
- using points/Airmiles (even if you have the cash – sometimes it is better to pay for things on your credit card, get the points, then pay it off)

If you need any help – let me know – thanks!

Suggested article: Calgary Alberta Private Mortgage Lenders

Trevor Hickey, B.A. is a Mortgage Associate in Calgary, Ab with Concord Mortgage Group Ltd.  Trevor operates Calgary mortgage brokers (www.MortgageBrokerCalgary.info)

Trevor Hickey, B.A.

Mortgage Associate

Concord Mortgage Group Ltd.

#107 – 1905 Centre Street NW

Calgary, Alberta

T2E 2S7

Bus: (403) 290-1990

Cell: (403) 860-8738

Fax: 1-888-587-1426

Email: trevor@concordmortgage.ca

Website: www.mortgagebrokercalgary.info

Popularity: 10% [?]

You may be thinking: I applied for a mortgage, but I got declined – don’t the banks understand that I will start acting like a home-owner when I own a home!

You may be thinking:
I don’t save money because I don’t HAVE to save money.  I make alot though – so why doesn’t the bank just understand that I will save, when I have to?
Answer:
The bank thinks that practice makes perfect. If you don’t save in the past, you’ll have a tough time to do so in the future.
You may be thinking:
So what – I only hold on to a job for a few months at a time, but I always have another job lined up prior to quitting my other one.  What do they care as long as I make my payments?
Answer:
If you “job-hop” you are unlikely to progress beyond a beginner’s income and skill set.  The bank is lending you money based on your lowest point today (they want you to make more and then paying them back just gets easier and easier).
You may be thinking:
I need 5% for a down payment?  On $400k that’s $20k.  That is unreasonable.
Answer:
Borrowing is a privilege.  If you only had 5% down and you didn’t make your payments and they had to foreclose on the house – they’d never get their money out.
You may be thinking:
I work two jobs (but why won’t the bank use the income from both to qualify)?
Answer:
The banks always use a worst case scenario.  They don’t think people can work two jobs for a long period of time (unless they have proven that they have worked the same two jobs over a long period in the past). 
You may be thinking:
Why does the bank care if I am divorced or not?
Answer:
They want to know if you have to pay (or receive) support payments that would impact how much you could afford.
You may be thinking:
The banks want too much personal information.
Answer:
Again, borrowing is a privilege, not a right.  If you were lending out hundreds of thousands of dollars at a time, wouldn’t you want to know the details of your borrowers?
You may be thinking:
I am self-employed, why don’t the banks understand that my income is higher than it appears on my taxes?
Answer:
Unfortunately, although the argument makes sense, it was abused so badly recently that the overall term “stated income” (which means that you will tell the lender how much you make rather than show them) has been ruined.  Today – the banks opinion is “you either pay taxes or interest” but, you pretty much have to pay one of the two.
You may be thinking:
Why do I need to prove that I have had my down payment for 3 months?
Answer:
The bank wants to make sure you aren’t an assassin who killed a bunch of people and then got paid for it, threw your money in a briefcase and wanted to buy a house with it.  When they look on your bank statements they don’t want to see a large deposit of $80,000 showing up mysteriously – they want to see that you have saved it (like a normal person).

Related article: What to do if you’re turned down for a mortgage

Trevor Hickey, B.A.

Mortgage Associate

Concord Mortgage Group Ltd.

#107 – 1905 Centre Street NW

Calgary, Alberta

T2E 2S7

Bus: (403) 290-1990

Cell: (403) 860-8738

Fax: 1-888-587-1426

Email: trevor@concordmortgage.ca

Website: www.mortgagebrokercalgary.info

Popularity: 9% [?]