Your Home Value

Whether you’re purchasing a home or looking to refinance, determining a property’s value is an essential step in the mortgage application process. You can help by providing precise and accurate information about your property. The value of a property is determined by a number of different criteria, each of which can influence how much your home is currently worth. These criteria range from the square footage and the age of your home, to its location, construction quality, architectural features and even the number of bathrooms. It’s important to remember that a property valuation is not a fixed or permanent number – it’s simply a snapshot of what your home is worth today, in relation to current market conditions and what other, similar properties are selling for. This value can change over time based on improvements to the property, as well as changes in your neighbourhood and the overall housing market. Property valuation and mortgages When applying for a mortgage, you’ll be asked a series of questions about your property. This information will help establish the property value – a critical element for determining the amount of your mortgage loan. If you’re buying a home, your mortgage application will include the purchase price along with a detailed description of the property.

For refinancing, the lending value will be established after considering recent sales in your area, the latest municipal value assessment and any significant improvements you’ve made to the property. If you want to add the cost of any planned improvements to your mortgage application, be sure to provide all of your plans and cost estimates. To help the process go as quickly and smoothly as possible, use the Property Information Worksheet to identify and collect the information you’ll need to complete your mortgage application. Professional appraisal A professional appraisal may be required if a more in-depth assessment of the value of your property is needed. This process includes a professional assessment of the property’s physical and functional characteristics, a detailed comparison of the home to recent comparable sales in nearby areas and an assessment of current market conditions affecting the property. It’s important to allow the appraiser access to the property in a timely manner, in order to minimize the time required to obtain financing. From time to time, the property value assessment will not support the loan amount requested. Should this happen, we can explore all options available to you.

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Home Renovation Financing Options

There are many different reasons to renovate a home: to save energy (and save on utility bills), to make room for a growing family, to improve safety or increase the resale value of your home, or simply to bring a fresh new look to your home. There are also a number of different ways to finance your renovation. Explore your options Your own resources: For smaller renovation projects, you may consider self-funding material costs, especially if you plan to do the work yourself. Credit card: Likewise, you can use your credit card to pay for materials for smaller renovations. But be careful not to carry the balance for too long. Credit card interest rates can exceed 18%. Personal loan: With a personal loan, you pay regular payments of principal and interest for a set period, typically one to five years. You also have the option of a fixed or variable interest rate for the term of the loan. The interest rate on a personal loan is typically less than that of a credit card. Unlike a line of credit, however, once you pay off your loan, you’ll have to reapply to borrow any new funds needed. Personal line of credit: This is another popular choice for financing renovations. It’s ideal for ongoing or long-term renovations since it lets you access your funds at any time and provides a monthly statement to help track expenses. A line of credit offers lower interest rates than credit cards, and charges interest only on funds used each month. And, as you pay off your balance, you can access remaining funds, up to the line of credit’s limit, without reapplying. Secured lines of credit and home equity loans: These options offer all the advantages of regular lines of credit or loans, but are secured by your home’s equity. They can be very economical, since they offer preferred interest rates, but keep in mind that initial set-up costs including legal

and appraisal fees usually apply. Lines of credit are typically limited to 65%, while home equity loans are capped at 80% of your home’s value. Mortgage refinancing: When funding major renovations, refinancing your mortgage lets you spread repayment over a longer period at mortgage interest rates, which are usually much lower than credit card or personal loan rates. This type of financing can allow you to borrow up to 80% of your home’s appraised value (less any outstanding mortgage balance). Initial set-up costs including legal and appraisal fees may apply. Financing improvements upon purchase: If you’re planning major improvements for a home you’re about to purchase, it may be advantageous to finance the renovations at the time of purchase by adding their estimated costs to your mortgage. Canada Mortgage and Housing Corporation (CMHC) Mortgage Loan Insurance can help you obtain financing for both the purchase of your home and the renovations – up to 95% of the value after renovations – with a minimum down payment of 5%. Grants/rebates for energy-saving renovations Across Canada, renovation grants and rebates are available from the federal and provincial governments and local utilities, especially for energy-saving renovations. If you qualify, they may help pay for some of your project’s costs. CMHC Mortgage Loan Insurance for Energy-Efficient Homes: 10% CMHC mortgage loan insurance premium refund, and a premium refund for a longer amortization period (if applicable). ecoENERGY Retrofit — Homes: grants of up to $5,000 to offset the cost of making energy-efficiency improvements. Provincial and Municipal Entities Offering Grants and Incentives Rebates and Incentives for Selected ENERGY STAR® Qualified Products in Canada

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How Dominion Lending Agents can help

See how Dominion Lending Centres's David Cooke, your Calgary Mortgage Broker can help you

Becoming Mortgage-Free Faster

Regardless of how long you’ve had your mortgage or how large or small the current balance is, there are a variety of ways to make prepayments work for you to pay down your mortgage faster and, therefore, pay less interest throughout the life of your mortgage. After all, each extra payment amount will reduce your principal balance, which, in turn, reduces the amount of interest you’ll have to pay on your borrowed mortgage amount. Most lenders allow you to make a lump-sum payment of anywhere between 10% and 25% of the value of your mortgage per year. The lump-sum payment is based on either the original amount you borrowed or the amount currently outstanding. Since mortgages decrease with each payment, it’s best to negotiate a lump-sum payment option based on the original amount you borrow. That way, if you come into an inheritance, a bonus or save some extra money, you can pay down the largest amount possible. Another factor to consider is when you can make a lump-sum payment. Some mortgages allow prepayments throughout the year, while others permit them only on the anniversary date. Still others allow you to make prepayments on the day you make your regular payment. If you can’t pay the maximum prepayment amount, it’s still worth your while to at least make some form of extra payments, even if it’s a few

thousand dollars each year. That will still save you thousands of dollars in interest payments throughout the life of your mortgage. Another prepayment option involves taking advantage of flexible payments. Most lenders allow you to increase your regular payment up to a set maximum, such as 15%, while others allow you to double up your payments. If, for instance, you have a $1,000 per month mortgage payment and increase it by 15% to $1,150, you could shave off as much as five-and-a-half years on a $200,000 mortgage. Even rounding up your mortgage payments a few dollars each payment can help make your balance decline sooner. If you round up your mortgage payment from, say, $766 to an even figure such as $800, you can feel confident in knowing that every extra bit goes toward your principal. You can also pay off your mortgage faster by moving to a different payment schedule. Instead of making monthly payments, make them biweekly or even weekly. Using an accelerated mortgage payment plan – where you make payments every two weeks as opposed to twice a month – you actually make one extra payment each calendar year. By paying more and paying faster, you reduce your principal earlier, which lowers the amount of interest you pay. As always, if you have questions about paying your mortgage off quicker, or other mortgage-related questions, I’m here to help!

feel free to contact me with any questions at http://davidcooke.ca