6 Things to Avoid Before Buying a Home

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Buying a home is not an impulse buy. In most cases, you will have a few months notice before you actually go through with the sale. Planning ahead is crucial particularly if you don't have extensive financial resources. Since mortgage lenders will be sizing up your finances carefully, don't give them any reason to reject your application.

You never know what effect today’s actions will have on your mortgage application in three or even six months. Even something as simple as transferring money from your savings to your chequing account can negatively impact the mortgage process. So here are some suggestions on things you should avoid before buying a home:

1. Do not make any major purchases
Don't invest in any major purchases. Cars, weddings, jewellery, furniture, and electronics can all wait until you're settled in your new home. When you make a major purchase, you limit the amount of money available for your down payment and decrease the amount of liquid capital in your name.

If you do have to make a major purchase before buying a home, you might want to put it on a low-interest credit card until after your mortgage application is approved. Sometimes you can't control what life throws your way but think carefully about your options before making a decision.

2. Don’t move money around
When a lender reviews your loan application for approval, one of the things they are concerned about is the source of funds for your down payment and closing costs. To do so, they will request statements from all of your accounts that contain liquid assets.

Moving your money around, even if you are consolidating your funds to make it "easier," could make it more difficult for the lender to properly document and measure your finances. So leave your money where it is until after closing.

3. Do not make large investments
It is also not recommended to make investments just before buying a home; again, you're decreasing the liquidity of your assets. If you've come across a new stock in which you'd like to invest or if it's a great time to buy bonds, wait until after you've settled the finances on your home.

Furthermore, you'll have to disclose all of your finances before buying a new home, which means accounting for every withdrawal and deposit in all of your accounts. This can get quite tedious, especially if you're trying to dig up cancelled cheques for the new home theatre or HDTV you just had to have three months ago.

4. Do not change your bank 
Changing banks is always a hectic ordeal, so don't do it before buying a home. You'll have to provide information about previous accounts that are now closed, and therefore inaccessible. And if you diversify your money too much in money market accounts, savings accounts, chequing accounts, and other places, you'll have a harder time with the disclosure process.

If you're frustrated with your bank and want to change, tough it out a little longer and switch after your mortgage is approved and you've set up shop in your new home. This will save you hours of headaches and frustration.

5. Do not apply for a new credit card or line of credit
Even though the inquiry won’t hurt your credit too badly if you already have a good credit score, the additional credit card will cause the lender to question your financial stability for buying a home.

6. Do not change your job unless absolutely necessary
Try not to change jobs. Your employment is a key factor in the mortgage approval process, and if you can't show steady employment, you might be denied. Of course, you can't help matters if you've just been laid off or an opportunity presents itself that you can't pass up.

This could become more difficult if you become self-employed. In most cases, lenders want to see at least two years of self-employment before they will approve you for a loan. So if you can, wait until after buying a home to become self-employed. For part-time workers, changing jobs creates unpredictability in the number of hours you will work so the lender cannot determine your gross income to qualify you for a loan.

If you're going to change jobs before buying a home, wait another six months before going ahead with the real estate transaction. This gives you an opportunity to establish employment and to show a steady income from a single employer. This looks much better on a loan application than a long list of recent employers.

As mentioned above, there will be times when you can't avoid all of these things before buying a home, but know that it's in your best interests to wait until the dust settles. The goal should be to move into your new house with as few obstacles as possible.

Contact me at www.kimlouie.net to chat about real esate!

Home Theater? Here are some Decorating Tips!

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A home theatre has quickly become a must-have for practically every family. From the simple family room setup to a much more elaborate theatre-seating wonder, today’s home theatres aren’t just for the wealthy anymore.

The décor of a home theatre will eventually influence how well the room functions as an entertainment space as well as how it shows when the lights are turned on. Creating a functional and beautiful home theatre is easy to do on any budget.  Here are some ideas for creating a home theatre for all to enjoy.

Start by arranging the space. Choose an easy-to-clean surface or a dark colour carpet for the flooring, and select a dark colour for the walls and ceiling.

A home theatre would not be complete without its supporting cast, the furniture. If you plan on having a couch in your home theatre, get a curved sectional. Since the optimal viewing in a movie theatre is the centre seat, a curved sectional will simulate that effect for everyone viewing your television.

If you have a smaller space or prefer a more intimate area, purchase two recliners in dark leather or other fabric. A simple end table can serve as a shared table between the two chairs. Select comfortable and soft furniture which give luxury while absorbing sound waves to improve audio quality within the room.

Arrange the furniture for best viewing for everyone. If you have an HD television, your seats should be as far back as 3 to 4 times the width of the screen. This provides optimum picture quality and your guests won’t be straining their neck or eyesight to watch the screen.

Secondly, consider the lighting. You never want to be in a completely dark room when watching a movie as this can be a hard strain on your eyes. Use wall sconces or different dim background lighting at a very low level while watching the TV.

Another typical visual task in the home theatre is entertaining. So you need to have a layered lighting approach. Add some accent lighting in the room, some general lighting and some decorative lighting.  Remember to use separate controls for each of these layers so that you can change the look and the aesthetic feel of the space based on function.

No home theatre is complete without refreshments. If space allows, install a built-in or freestanding bar. A complete home theatre bar should include a microwave and mini refrigerator stocked with water, juices and your preferred drinks.

If your budget allows, consider adding acoustic wall treatments to balance the acoustic properties of a room. You want to be able to crank up the volume while watching your favourite movie without disturbing other people in your home. There are many commercial products available and you can even buy ready to install treatments.

Most wall or ceiling mounted treatments are really just a wooden frame filled with sound absorbing or diffusing material. The material is then wrapped in an attractive sound absorbing fabric of your choice. You can also hang wall treatments from your ceiling to help control floor to ceiling reflections.

Finally, when selecting the focal point of your home theatre — the equipment, keep in mind that you can easily find speakers that are installed into the walls for a clean, less cumbersome appearance. The exteriors of these in-wall speakers can be painted and treated to blend seamlessly. If a drop-down projection screen isn’t in your budget, large standard television with surround sound will do nicely. Add a tuner and some speakers for maximum sound quality.

A home theatre is a fun, relaxing place for families to spend time together as well as to entertain. The décor of the room should be about comfort and subtly allow you to enjoy favourite movies or programs in the welcoming retreat of your own home.

Contact me at www.kimlouie.net to chat about real estate!

The Value of Using a Mortgage Broker

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Finding the right home may seem like the hard part of a real estate transaction, but in reality, getting the best financing can be much harder. This is partly because we have so many options nowadays for mortgage loans and so many places to find them. A mortgage broker or your local bank can provide your options clearly. They will be armed with what you want in terms of the loan term, ideal rate, targeted monthly payments and other items that you may not have considered. If you're smart, you will talk to them before you decide on purchasing your home so you really know your price range.

Using a mortgage broker is by far the best way to go about finding and arranging the very best mortgage to suit your specific needs. Trust in a specialist that knows how to package your application, what pitfalls to look out for, and how to protect your interests when dealing with the banks. Sure, you might get the same rate that a broker could get for you, but what you won’t get is all the facts about the mortgage that you have shopped for.

A mortgage broker/specialist navigates you around those banks with mortgages that appear to be the best deal out there, but fall short of your expectations. Brokered mortgages may not be as “flashy” on the exterior, but they will have all the “nuts and bolts” built into them to protect you from unforeseeable circumstances that often arise.

The benefits of using a professional mortgage broker include:

Reduce your stress and frustration. There are dozens of lenders from which to choose, so why not let an expert handle the application process for you? These days the forms and other data that are required for a loan application can be quite complicated, so it is wise to hand the entire process over to a professional.

Fewer complications. A seasoned mortgage professional will have years of experience, and that will help you navigate the tricky loan application waters that lie ahead. Let a broker’s know-how work to your benefit.

Help you get the best deal possible. Although you may be tempted to apply for the mortgage on your own, by hiring a professional you are assured of getting the best interest rate, the best payment plan, and the best deal in general.

Save your time. The most valuable of all commodities. A broker has the experience to make sure you get the best package for your individual needs.

Real personalization. Since the mortgage broker works for you (not the lenders), he or she offers you unbiased advice and helps you select the mortgage that's absolutely right for you. You get the personal service you just cannot get from a bank.

Service at no cost. Not only will a broker obtain the best mortgage rate for you, but broker services also cost you nothing.

Contact me at www.kimlouie.net to chat about real estate.

Moving? You May Have Tax Deductions!

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Have you recently moved to a new location? Do you know that you can deduct certain moving expenses on your next tax return, including transportation, packing and storage costs?

Many people never realize these tax benefits because they don't know what can be deducted. If you are preparing to move, it's best to be informed beforehand so you know which receipts to keep. You may find it worthwhile during a move to pay for various services that are tax-deductible rather than doing them yourself. A typical move involves a number of costs including hiring a company to transport personal effects and furniture, hotel stays and meals (if the move involves driving a long distance to a new home), and service fees to disconnect and reconnect utilities. In addition, renters who leave on short notice may have to pay the cost of breaking a lease.

Homeowners will incur closing costs and commissions on the sale of their home as well as legal and other fees on the purchase of their new home. This article provides information regarding tax-deductible moving expenses.

To claim moving expenses on your taxes, your move has to meet the following conditions:

• You moved to your new home or new apartment to start a job or a business, or to attend full-time post-secondary courses at a university, college or other educational institution
• Your new place of residence is at least 40 km closer to your workplace or school than your previous home.
• You moved from one place in Canada to another place in Canada.

Two groups are eligible to deduct a portion of their moving expenses: students moving away from home to attend school and people moving to a new area for a job or relocation by their employer. There has been a challenge to the rules regarding eligibility for the self-employed as you'll read later in this article.

Students

Students must fulfill two main qualifications: the distance between your home and school must be at least 40 km (by the shortest public route) and you must be a full-time student. A full-time student is defined as someone who regularly attends a college, university, or another educational institution in a program at a post-secondary school level (whether in Canada or not) and is taking at least 60% of the usual course load during each semester.

As a student, you can only deduct eligible moving expenses from award income (scholarships, fellowships, bursaries, prizes, and research grants) that you report on your return. Your moving expenses must be greater than your award in order to deduct any moving expenses. As Revenue Canada's website reads, "If your moving expenses are more than the award income you report for the year, you can deduct the unused portion of those expenses from the award."

Although many students will not earn award income and will therefore not be able to deduct moving expenses, tuition fees themselves are a tax deduction. If a student has a part-time job, tuition can reduce taxes paid on those earnings. Students who meet the qualifications and have received award income can deduct the costs of travel, shipping, and transportation of belongings, as well as items listed below under 'Expenses you can deduct'.

Employees

If you are moving for work (e.g. a company relocation or new job), are employed and establish a home at least 40 km closer to a new job than your old home, then you qualify to deduct moving expenses. Similarly, if you are self-employed, and you establish a home at least 40 km closer to your new operational business than your old home, you also qualify to deduct moving expenses.

According to Revenue Canada, you must establish your new home as the place where you and members of your household ordinarily reside. For example, you have established a new home if you have sold or rented (or advertised for sale or rent) your old home.

Employed and Working from Home: an Exception to the Rule

Until recently, employees who work from home and move have faced some restrictions regarding moving expenses. In the court decision Gary Adamson v. the Queen, Mr. Adamson had incurred moving expenses as an employee who was required to provide his own office in his home.

Expenses you can Deduct:

1. transportation and storage costs (such as packing, hauling, in-transit storage, and insurance) for household effects, including items such as boats and trailers;
2. travelling expenses, including vehicle expenses, meals, and accommodation, to move you and members of your household to your new residence (you can choose to claim vehicle and meal expenses using the simplified method);
3. costs for up to 15 days for meals and temporary accommodation near either residence for you and the members of your household (you can choose to claim meal expenses using the simplified method); and
4. the cost of cancelling a lease for your old residence, except for any rental payment for the period during which you occupied the residence.

When your old residence is sold as a result of your move, eligible moving expenses also include:

• legal or notaries fees for the purchase of the new residence, as well as any taxes paid (other than GST/HST or property taxes) for the transfer or registration of title to the new residence, if you or your spouse or common-law partner sold the old residence, and
• the cost of selling your old residence, including advertising, notarial or legal fees, real estate commission, and mortgage penalty when the mortgage is paid off before maturity.

Expenses that are not Deductible:

• expenses for work done to make your home more saleable;
• any loss from the sale of your home;
• expenses for house-hunting trips before you move;
• the value of items movers refused to take, such as plants, frozen food, ammunition, paint, and cleaning products;
• expenses for job hunting in another city (such as travelling expenses);
• expenses to clean or repair a rented residence to meet the landlord's standards;
• expenses to replace personal-use items such as tool sheds, firewood, drapes, and carpets;
• mail-forwarding costs (such as with Canada Post);
• costs of transformers or adaptors for household appliances; and
• costs incurred in the sale of your old home if you delayed selling for investment purposes or until the real estate market improved.

Remember to keep receipts and documents supporting your claims, you do not have to include these documents in your tax claim but Canada Revenue Agency may want to see them at a later date.

Keep in mind that this article is for information only. The tax laws are frequently modified. We recommend that you visit the Canada Revenue Agency's website for specific details about which moving expenses you can claim or consult a professional accountant to maximize your tax return.

Contact me at www.kimlouie.net to chat about real estate!

Frigid Februrary Leads to Frigid Home Sales

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There were 343 residential sales in February through the Multiple Listing System (MLS® System) of the Kitchener-Waterloo Association of REALTORS® (KWAR), a decrease of 8.3 per cent compared to February 2018.

The series of winter storms in February not only kept buyers indoors and off the roads, but also away from open houses and viewings. This was the lowest amount of sales we’ve seen in February in a long time, but it really isn’t surprising given the wild weather we experienced last month.

 

Total residential sales in February included 178 detached (down 14.8 percent), and 105 condominium units (down 11 per cent) which includes any property regardless of style (i.e. semis, townhomes, apartment, detached etc.). Sales also included 23 semi-detached homes (down 8 per cent), 36 freehold townhouses (up 112 per cent). 

 

The average sale price of all residential properties sold in February increased 3 per cent to $490,668 compared to February 2018.  Detached homes sold for an average price of $597,965 an increase of 3.9 per cent compared to February of last year. During this same period, the average sale price for an apartment style condominium was $319,536 for an increase of 20.5 per cent. Townhomes and semis sold for an average of $395,331 (up 2.6 per cent) and $448,123 (up 14.4 per cent) respectively.  

 

The median price of all residential properties sold last month increased 6.9 per cent to $465,000 and the median price of a detached home during the same period increased 2 per cent to $533,500. 

 

Despite the chill we saw in the number of sales last month, the price gains reflect that demand continues to outpace supply.

Contact me at www.kimlouie.net to chat about real estate.