The clock is ticking for buyers and homeowners who want to grab a low mortgage rate in 2014. But if you stay on top of your game, keep your finances in order and act quickly, you can still grab attractive mortgage deals.
These 10 mortgage tips can help you with your mortgage decisions in 2014.
1. Document your finances. Lenders will be extra diligent when underwriting home loans in 2014, as new mortgage regulations went into effect in January. The rules put pressure on lenders to verify that borrowers have the ability to repay their loans.
Keep good records of your finances, including bank statements, tax returns, W-2s, investment accounts and any other assets you own. Be ready to explain any unusual deposits to your accounts. Yes, the $500 that Grandma deposited in your account for Christmas could delay your loan closing if you can't prove where the money came from.
2. Lock a rate as soon as you can. Rates will likely climb in 2014 as the Federal Reserve is expected to reduce the pace of the economic stimulus program that has long helped keep rates low. If you are planning to get a mortgage, lock in a rate as soon as you are comfortable with the numbers.
3. Refinance now - if you still can. Many homeowners lost the opportunity to refinance at a lower rate when rates jumped in 2013. But those who are still paying more than 5 percent interest on their home loans might still have an opportunity.
If you think you may be able to save with a refinance, but you are not sure, it doesn't hurt to try. Speak to a loan officer and take a look at the numbers to see if refinancing still makes financial sense for you after you consider how long it will take to break even with the closing costs.
4. Buyers, use your bargaining power. As mortgage rates climbed, lenders lost a big chunk of their refinance business. In 2014, they will turn their attention to homebuyers and will fiercely compete for their business. Buyers should take advantage of bargaining power they gain with that increased competition. Shop around for the best deal and look beyond the interest rate on the loan.
5. Learn your rights as a borrower. Mortgage borrowers will get many new rights as consumers this year when new mortgage rules created by the Consumer Financial Protection Bureau go into effect in 2014. If you run into issues with your mortgage servicer in 2014 or fall behind on your payments, make sure you are aware of your rights and put them to use.
6. Take good care of your credit. It's nearly impossible to get a mortgage without decent credit these days. That will continue to be the case in 2014. If you are planning to get a mortgage, monitor your credit history and score until your loan closes. The best mortgage rates usually go to borrowers with credit scores of 720 or higher. You may still get a mortgage with a score of 680, but lower scores will mean higher rates or higher closing costs.
7. Don't overspend. Lenders don't want to give out loans to borrowers who will have little money left each month after they pay their mortgages and other debt obligations such as credit cards and student loans. If that becomes the case, the lender will tell you that your DTI, or debt-to-income ratio, is too high and you don't qualify for a loan. Try to keep your monthly debt obligations, including your mortgage and property taxes, below 43 percent of your income.
8. Consider alternative mortgage options such as ARMs. Mortgage rates are rising, but there are alternatives to grab a lower rate, depending on your plans.
A homeowner planning to keep a house for seven to 10 years could take advantage of lower mortgage rates by choosing a seven- or 10-year ARM instead of the 30-year traditional fixed-rate mortgage. Rates on adjustable-rate mortgages can be as much as 1 percentage point lower than on fixed-rate loans.
If you are not sure for how long you plan to keep the house, a fixed-rate loan is probably the better choice.
9. Considering an FHA loan? Reconsider. FHA loans have long been popular among first-time homebuyers because they require low down payments and have somewhat less strict underwriting standards than conventional loans. But they come at a price. Mortgage insurance premiums on FHA loans are likely to continue to rise in 2014, and after recent changes, the borrower is now required to pay for mortgage insurance for the life of the loan. Try to qualify for a conventional loan before you apply for an FHA mortgage.
10. Don't panic. Yes, mortgage rates will likely climb in 2014. But don't panic, thinking you have to buy a home now to grab a low rate. If you are shopping for a home, do your best to move quickly, but remember that this is one of the biggest financial decisions of your life. Get your mortgage and buy your home when you feel ready.
Internal report says Parks Canada buildings in worse shape than claimed
OTTAWA — Parks Canada’s crumbling forts, historical houses and other heritage structures are in much poorer shape than the agency estimates.
That’s the finding of an independent consultant asked to review a comprehensive inventory created by Parks Canada to determine how much repair work is needed for its varied infrastructure across the country.
The agency’s 2012 inventory found that 47 per cent of all its assets — from dams, bridges and roads, to old stone forts — are in poor or very poor condition.
But Opus International Consultants Ltd. said its own sampling of hundreds of assets pushed that overall level to 53 per cent.
And so-called cultural assets — the historical houses, fortifications, locks and other heritage gems from Canada’s past — are in even worse shape.
Opus estimates 61 per cent of these 2,000 structures are in poor or very poor shape, compared with Parks Canada’s more rosy assessment of just 33 per cent.
“Results indicate that at the portfolio level the value of (Parks Canada) assets in poor condition has increased from condition reported in the 2012 National Asset Review,” says the Opus report, which cost taxpayers $316,000.
A copy of the Dec. 16, 2013, document was obtained by The Canadian Press under the Access to Information Act.
Parks Canada has come under fire in recent years for weak management of its real-estate portfolio, which includes historic canals and archeological sites, in addition to campgrounds, access roads and visitor centres.
An internal evaluation in 2009 slammed officials for failing to maintain a reliable inventory of hundreds of buildings and other structures, estimated to be worth some $15 billion today.
In response, Parks Canada undertook a thorough review of all its assets in 2012 to set a baseline, estimating there was $2.9 billion worth of deferred repairs.
More than half the deferred work was earmarked for waterways, highways and bridges — so-called high-risk assets — but Opus found these structures were in better condition than Parks Canada estimated.
Instead, irreplaceable cultural assets were found to be the most neglected, with almost two-thirds requiring about $230 million worth of repairs and maintenance work.
A spokeswoman for Parks Canada said the agency is still reviewing the Opus report, which she said largely backs the inventory estimates about the cost of repair work.
“Parks Canada has invested an average of $119 million annually over the last 10 years on the recapitalization of its infrastructure,” Genevieve Patenaude said in an email.
“Investments include incremental capital resources announced by the government, the most recent of which was $19 million announced in Budget 2013 to address critical improvements to national park highways and bridges.”
Parks Canada, which operates more than 200 national parks, historic sites and marine conservation areas, has been hit hard since 2012 with budget cuts. The agency lost some 587 staff in 2012-2013, for example, or about 13 per cent of its workforce.
At the same time, 20.6 million people visited its sites in 2012-2013, a three per cent increase and the first rise in visitor numbers in four years.
That’s the finding of an independent consultant asked to review a comprehensive inventory created by Parks Canada to determine how much repair work is needed for its varied infrastructure across the country.
The agency’s 2012 inventory found that 47 per cent of all its assets — from dams, bridges and roads, to old stone forts — are in poor or very poor condition.
But Opus International Consultants Ltd. said its own sampling of hundreds of assets pushed that overall level to 53 per cent.
And so-called cultural assets — the historical houses, fortifications, locks and other heritage gems from Canada’s past — are in even worse shape.
Opus estimates 61 per cent of these 2,000 structures are in poor or very poor shape, compared with Parks Canada’s more rosy assessment of just 33 per cent.
“Results indicate that at the portfolio level the value of (Parks Canada) assets in poor condition has increased from condition reported in the 2012 National Asset Review,” says the Opus report, which cost taxpayers $316,000.
A copy of the Dec. 16, 2013, document was obtained by The Canadian Press under the Access to Information Act.
Parks Canada has come under fire in recent years for weak management of its real-estate portfolio, which includes historic canals and archeological sites, in addition to campgrounds, access roads and visitor centres.
An internal evaluation in 2009 slammed officials for failing to maintain a reliable inventory of hundreds of buildings and other structures, estimated to be worth some $15 billion today.
In response, Parks Canada undertook a thorough review of all its assets in 2012 to set a baseline, estimating there was $2.9 billion worth of deferred repairs.
More than half the deferred work was earmarked for waterways, highways and bridges — so-called high-risk assets — but Opus found these structures were in better condition than Parks Canada estimated.
Instead, irreplaceable cultural assets were found to be the most neglected, with almost two-thirds requiring about $230 million worth of repairs and maintenance work.
A spokeswoman for Parks Canada said the agency is still reviewing the Opus report, which she said largely backs the inventory estimates about the cost of repair work.
“Parks Canada has invested an average of $119 million annually over the last 10 years on the recapitalization of its infrastructure,” Genevieve Patenaude said in an email.
“Investments include incremental capital resources announced by the government, the most recent of which was $19 million announced in Budget 2013 to address critical improvements to national park highways and bridges.”
Parks Canada, which operates more than 200 national parks, historic sites and marine conservation areas, has been hit hard since 2012 with budget cuts. The agency lost some 587 staff in 2012-2013, for example, or about 13 per cent of its workforce.
At the same time, 20.6 million people visited its sites in 2012-2013, a three per cent increase and the first rise in visitor numbers in four years.
Hundreds of Canadian Credit Cards Hacked By Infected Terminals, Firm Warns
A new strain of computer malware infecting payment card terminals in restaurant and gas station has compromised nearly 700 credit cards in Canada, a computer security firm says.
The viral code, JackPOS, infects point-of-sales terminals, a security breach similar to other highly publicized recent cases that struck victims such as the Target retailing chain or the White Lodging hotel management firm.
According to a map released Monday by the California security firm IntelCrawler LLC, JackPOS stole data from 400 cards in Vancouver and from 280 other cards at a location in Longueuil, Que., south of Montreal.
IntelCrawler said the infection appeared about three weeks ago.
In an e-mail to The Globe and Mail, IntelCrawler CEO Andrew Komarov said the point-of-sales terminals were breached through remote access, by hackers who created a large list of possible passwords (such as POS1, Administrator or 123456789) and then “brute-forced” themselves into the systems.
“It provides them good results, as the security in this sector is surprisingly really very poor,” M. Komarov wrote.
Other countries affected by JackPOS include Brazil, where data for 3,000 cards in Sao Paulo were stolen; India, where 420 cards were compromised in Bangalore; and Spain, where 230 cards were pirated in Madrid.
The two outbreaks in Canada likely happened at a gas station, said Richard Henderson, a Vancouver-based security strategist for Fortinet's Threat Research Labs.
“In Canada we’re lucky that the vast majority of our transactions done day-to-day are with chip-and-PIN, which are much more secure,” he said, adding however that some gas stations’ pumps are still relying on the old magnetic-swipe method that is more vulnerable to hacking.
JackPOS appears to be a variation of a previous malware, Alina. Both are known as RAM scrapers, which capture card data when it is transmitted from the sales terminal to a payment-processing centre.
Mr. Henderson said JackPOS’s key feature is its ability to hide on a machine by pretending to be a version of Java, a programming platform used by some computer applications.
“That’s a really neat obfuscation technique by the malware to make it look like it’s a legitimate piece of software.”
According to a global security report by the anti-cybercrime firm Trustwave, victims of point-of-sale hacking tend to be merchants or franchises who have to outsource their IT work and rely on contractors who access their systems remotely. Weak passwords and remote access make it easier for hackers to breach POS systems.
Most of the breaches can be attributed to three criminal groups, with the data being dumped in Russia, Ukraine or Romania, the Trustwave report said.
The rollout of chip-and-PIN cards in Canada and Europe have made fraud harder. However, the report said cyber-thieves still go after POS targets in hotels and premium retailers, because those businesses attract an international clientele that does not have chip-and-PIN cards.
The viral code, JackPOS, infects point-of-sales terminals, a security breach similar to other highly publicized recent cases that struck victims such as the Target retailing chain or the White Lodging hotel management firm.
According to a map released Monday by the California security firm IntelCrawler LLC, JackPOS stole data from 400 cards in Vancouver and from 280 other cards at a location in Longueuil, Que., south of Montreal.
IntelCrawler said the infection appeared about three weeks ago.
In an e-mail to The Globe and Mail, IntelCrawler CEO Andrew Komarov said the point-of-sales terminals were breached through remote access, by hackers who created a large list of possible passwords (such as POS1, Administrator or 123456789) and then “brute-forced” themselves into the systems.
“It provides them good results, as the security in this sector is surprisingly really very poor,” M. Komarov wrote.
Other countries affected by JackPOS include Brazil, where data for 3,000 cards in Sao Paulo were stolen; India, where 420 cards were compromised in Bangalore; and Spain, where 230 cards were pirated in Madrid.
The two outbreaks in Canada likely happened at a gas station, said Richard Henderson, a Vancouver-based security strategist for Fortinet's Threat Research Labs.
“In Canada we’re lucky that the vast majority of our transactions done day-to-day are with chip-and-PIN, which are much more secure,” he said, adding however that some gas stations’ pumps are still relying on the old magnetic-swipe method that is more vulnerable to hacking.
JackPOS appears to be a variation of a previous malware, Alina. Both are known as RAM scrapers, which capture card data when it is transmitted from the sales terminal to a payment-processing centre.
Mr. Henderson said JackPOS’s key feature is its ability to hide on a machine by pretending to be a version of Java, a programming platform used by some computer applications.
“That’s a really neat obfuscation technique by the malware to make it look like it’s a legitimate piece of software.”
According to a global security report by the anti-cybercrime firm Trustwave, victims of point-of-sale hacking tend to be merchants or franchises who have to outsource their IT work and rely on contractors who access their systems remotely. Weak passwords and remote access make it easier for hackers to breach POS systems.
Most of the breaches can be attributed to three criminal groups, with the data being dumped in Russia, Ukraine or Romania, the Trustwave report said.
The rollout of chip-and-PIN cards in Canada and Europe have made fraud harder. However, the report said cyber-thieves still go after POS targets in hotels and premium retailers, because those businesses attract an international clientele that does not have chip-and-PIN cards.
How Higher Rates Might Affect Your Mortgage
Interest rates have been so low for so long that we barely raise an eyebrow about the warnings of higher rates ahead. But long-term interest rates might tick upward this year as the U.S. Federal Reserve cuts back on its economic stimulus which has kept rates low.
For the past five years, the Fed has been buying U.S. Treasury bonds every month by creating the money. It writes a cheque to buy the bonds which has expanded consumer credit, making it cheaper to borrow money.
The impact of the Fed’s action on Canadian homeowners is a gradual increase in long-term mortgage rates. This includes the five-year fixed rate mortgage, now among the most popular. In 2013, 82 per cent of new mortgages were fixed rate terms, according to the Canadian Association of Accredited Mortgage Professionals.
“We expect long-term rates to rise later this year, which will impact five- and10-year mortgage rates in Canada,” said Benjamin Tal, deputy chief economist at CIBC.
A homeowner who chose a five-year mortgage in 2012 would have paid 2.99 per cent. In 2013, the average was 3.29 per cent. That’s why it’s a good idea to take a look at how you might be affected by higher rates, especially if your mortgage will soon come up for renewal.
The idea is to prepare for the worst, says Robert McLister, editor of Canadian Mortgage Trends.
“At the very least, folks should run a couple of rate hike scenarios through a stress test calculator,” McLister said.
The goal is to ensure you can afford payments at that higher rate come maturity time.
“If the results look ominous given your budget, the time to strategize is now, well before maturity,” he said.
Here are some examples:
If you have a $300,000 mortgage at 3.49 per cent and rates rise by two points at renewal time it will cost you $274 more a month. At $400,000 it’s $365 more per month.
Here are some options if your payments are too high for you to carry at renewal:
Refinance: If you have to, extend the amortization. If you’ve worked it down to 20 years, say, increase it. This option generally requires at least 20 per cent equity in the home and it means you’ll be increasing your interest bill over the life of the mortgage. It’s a last-ditch thing to do, McLister says, but “it’s better than defaulting on your mortgage.”
Take a payment vacation: Some mortgages have a skip-a-payment feature. This is an alternative to extending your amortization.
Go shorter: Choose a shorter term with a lower interest rate and payment. That assumes you can handle the risk of rising rates when it comes time to renew again, but if you’re having cash flow problems, there’s a good chance you can’t.
Downsize: A last resort, maybe. But consider selling or renting out a portion of your home.
McLister says that if you find yourself in this position then maybe it’s time to sell and avoid the stress.
“If your budget is stretched, something will happen to stretch it further. It’s Murphy’s Law of borrowing,” he said.
While long-term interest rates may finally head up this year, the Bank of Canada remains committed to keeping short-term rates low. As the spread between long- and short-term interest rates widens, variable rate mortgages become more attractive.
“When long-term rates rise, more and more people look at variable rate mortgages,” said Tal.
For the past five years, the Fed has been buying U.S. Treasury bonds every month by creating the money. It writes a cheque to buy the bonds which has expanded consumer credit, making it cheaper to borrow money.
The impact of the Fed’s action on Canadian homeowners is a gradual increase in long-term mortgage rates. This includes the five-year fixed rate mortgage, now among the most popular. In 2013, 82 per cent of new mortgages were fixed rate terms, according to the Canadian Association of Accredited Mortgage Professionals.
“We expect long-term rates to rise later this year, which will impact five- and10-year mortgage rates in Canada,” said Benjamin Tal, deputy chief economist at CIBC.
A homeowner who chose a five-year mortgage in 2012 would have paid 2.99 per cent. In 2013, the average was 3.29 per cent. That’s why it’s a good idea to take a look at how you might be affected by higher rates, especially if your mortgage will soon come up for renewal.
The idea is to prepare for the worst, says Robert McLister, editor of Canadian Mortgage Trends.
“At the very least, folks should run a couple of rate hike scenarios through a stress test calculator,” McLister said.
The goal is to ensure you can afford payments at that higher rate come maturity time.
“If the results look ominous given your budget, the time to strategize is now, well before maturity,” he said.
Here are some examples:
If you have a $300,000 mortgage at 3.49 per cent and rates rise by two points at renewal time it will cost you $274 more a month. At $400,000 it’s $365 more per month.
Here are some options if your payments are too high for you to carry at renewal:
Refinance: If you have to, extend the amortization. If you’ve worked it down to 20 years, say, increase it. This option generally requires at least 20 per cent equity in the home and it means you’ll be increasing your interest bill over the life of the mortgage. It’s a last-ditch thing to do, McLister says, but “it’s better than defaulting on your mortgage.”
Take a payment vacation: Some mortgages have a skip-a-payment feature. This is an alternative to extending your amortization.
Go shorter: Choose a shorter term with a lower interest rate and payment. That assumes you can handle the risk of rising rates when it comes time to renew again, but if you’re having cash flow problems, there’s a good chance you can’t.
Downsize: A last resort, maybe. But consider selling or renting out a portion of your home.
McLister says that if you find yourself in this position then maybe it’s time to sell and avoid the stress.
“If your budget is stretched, something will happen to stretch it further. It’s Murphy’s Law of borrowing,” he said.
While long-term interest rates may finally head up this year, the Bank of Canada remains committed to keeping short-term rates low. As the spread between long- and short-term interest rates widens, variable rate mortgages become more attractive.
“When long-term rates rise, more and more people look at variable rate mortgages,” said Tal.
Subscribe to:
Posts (Atom)