Is Refinancing Your Mortgage a Good Idea?

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There are times when it makes sense to refinance your mortgage. It is, however, important to have a clear financial objective in mind to be able to choose the most appropriate loan.

Since interest rates are at a 40-year low, switching to a lower rate may save you a lot of money – possibly thousands of dollars per year. There are penalties for paying your mortgage loan out prior to renewal, however, these could be offset by the extra money you save through a refinance.

What's your goal?Before deciding whether or not to refinance, you need to determine what you want to accomplish. Remember, a refinance doesn't pay off the debt; it just restructures it, often at a lower interest rate and a different loan term than the current mortgage.

1- Reducing the interest expense is the most common goal of a refinance. But some homeowners also appreciate the ability to extend the loan back out to 30 years, reducing the monthly payment.

2- Debt consolidation is another goal of refinancing. If you have both a first mortgage and a home equity mortgage, combining the two mortgages into one fixed-rate mortgage levels out the payment over the loan term.

3- Getting cash from your home. The equity you have in your home can act like a savings account that you could access through a home equity loan or a cash-out refinance. This is usually done when you want to finance an important home improvement, pay for college or pay off high-interest credit card debt. Whatever your reason, this may be the right option for you.

When to refinance?After determining your reasons for refinancing, you need to consider whether the timing and circumstances make this the right time to get a new mortgage.

You may be better off to stay with your current mortgage. For example, if your current mortgage has a high prepayment penalty or if you plan to move from your home in the next few years or when the monthly savings gained from lower monthly payments may not exceed the costs of refinancing.

As a rule of thumb, it pays to refinance if you can get an interest rate at least two percentage points lower than what you are currently paying. Asking yourself a few questions may help you determine if you can save money:

• How much can I lower my current monthly payment? 
• How long do I plan to stay in the house after I refinance?
• How much will I pay in refinancing costs? 

How to refinance?Refinancing is similar to the process you encountered when you closed on your first mortgage. It requires an application, credit check, new survey, and title search, as well as an appraisal and inspection fees. As you know, this process can be quite lengthy and expensive.

Keep in mind, however, that by refinancing you may extend the time it will take to pay off your mortgage. That said, there are many ways to pay down your mortgage sooner to save you thousands of dollars. Most mortgage products, for instance, include prepayment privileges that enable you to pay up to 20% of the principal per calendar year. This will also help reduce your amortization period (the length of your mortgage), which in turn saves you money.

Improve Your Home's Curb Appeal with a Stone Veneer

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Whether you want to increase the resale value of your home, or you just want it to look its best inside and out, nothing does both like the look of stone crafted designs. Yet, natural stone can be prohibitively expensive.
 
Most new homes that appear to have a stone facade are actually stone veneers which are a manufactured stone that looks like a real stone. Stone veneer has become very popular because it weighs less eliminating the need for wall ties or footings and makes it cheaper to install. It also costs less and is available in a variety of colours and designs making it easier to coordinate with the style and colour or your new home. A quality veneer is also extremely durable, ensuring it will protect your structure with little maintenance giving your home lasting appeal.
 
You can create a striking, beautiful contrast by combining brick and stone. Brick endures longer than virtually any siding material and will maintain its beautiful look. Another benefit to brick is that it is more soundproof than other sidings to create a quiet and cozy interior.
 
If you’re performing a home renovation, a stone veneer can easily be applied over wood or stucco. The relatively simple upgrade adds tons of curb appeal and increases your resale value.
 
How to Install Stone Veneer Siding
Get the look of real stone without the high cost by following these easy step-by-step instructions:
 
Step 1: Create Your Design
First, create the pattern you want on your exterior by drawing it out on graph paper or using computer software.  Next, lay the veneer stone on the ground in the pattern you have designed to ensure you have enough stones.
 
Step 2: Create a Moisture Barrier and Add a Wire Mesh
If you’re covering wood you’ll first need to create a moisture barrier by applying roofing felt or house wrap over the surface with nails. This step is not necessary for masonry walls. Attach a wire mesh to the wall with nails or screws. This will become part of the base that holds the stone veneer to the walls.
 
Step 3: Apply Mortar and Attach Stones
Once the wire mesh is attached, apply mortar approximately 1/16" to 1/8" thick with a trowel. Apply mortar to the stone and attach it to the surface working in a horizontal pattern and leaving a small gap. Hold the stone against the surface until it sets. Be careful not to get mortar on the surface of the stone.
 
Step 4: Finishing Touches
Since laying stones is a bit like putting a puzzle together, not all the pieces will fit perfectly. Use a power saw with a masonry blade or grinder to reshape the stone to fit. Fill gaps and small spaces with grout to prevent moisture from getting through.

Is it better to Rent or Buy? That depends ...

Contact me today and I will help calculate if you are better off renting or owning!  I can also provide advice on how you can own a home in the future if it can't be done right now ...

Buying a house can be the most rewarding purchase you ever make. However, depending on your current circumstance this may not be your best option. To help make an educated decision, try to answer the following questions first:

1. Do you really want to own your home?
Some would argue that this is the first question you should ask yourself. Homeownership, like everything else, is a matter of choice. Only you can decide whether or not homeownership is important to you. If it is then you may want to re-assess how you spend your money every month.

2. How often do you expect to move in the future?If you expect to be moving a lot (every couple of years or more) then you probably shouldn't buy your own home. Every time you buy or sell a home you incur significant costs. Unless you get lucky and the value of the home you purchased goes up by at least 10%, you'll be losing money.

3. How stable is your employment situation?You should only consider buying a home if your employment is stable. Homeownership requires a number of regular payments like the mortgage, property taxes, maintenance, insurance, etc. Missing any of these payments can trigger terrible consequences for a homeowner. Unless your employment is stable, your best option is "renting".

4. Can you afford to make the monthly payments?When qualifying for a loan, most mortgage companies will not allow your housing costs to be more than 33% of your gross income. Housing costs include your mortgage payment, property taxes, utilities, and 50% of condo fees if applicable. If your total debt servicing costs (housing costs plus all of your other monthly debt payments) exceed 40% of your gross income you will not qualify for a mortgage.

How much rent are you paying now? What is the maximum amount you are willing to pay?

If you buy a home, it is important to have some money set aside for "emergencies". You may not be able to save as much money as a homeowner as you did when you were renting, but it is important that you leave some room in your budget. If you have to stretch your budget too far, you should definitely reconsider your home purchase.

5. Do the mathHousing costs can be divided into shelter costs and investment costs. When you rent, you pay your shelter costs, and the landlord pays the investment costs. When you buy, you pay both, which is usually more. Ten years later when you sell the house, you will find that your investment did well and you saved a lot of money by buying.

From a purely financial standpoint, whether you should rent or buy comes down to your monthly budget and the cost of borrowing. If you have the down payment and interest rates are 5% or lower, it makes very little difference whether you rent or buy. At interest rates above 8%, buying will cost you 20% or more than renting.

Although it might seem that you will be spending more money on buying a house than renting, you need to consider your options and priorities. There are many more advantages to purchasing a home over renting.

Conclusion
Buying a house is an investment, and for many people, it is a good one. You can purchase insurance to help you manage any potential risks like fire, earthquakes, and thefts. Remember to take your buying/selling costs into account when considering selling your home. The strength of the real estate market in your area will determine the return on your investment.

Assuming that you can afford the increased costs of owning your home, the question of what's better, renting or buying a house, becomes one of personal preference. There is a certain satisfaction in owning your own home, but only if it is important to you.

If you are only staying somewhere for a short period of time (less than five years), renting is almost always better; the transaction costs of buying and selling houses will definitely make it less expensive just to rent.

For longer periods, buying a house is usually better. Although if you have the discipline to invest the difference between your rent and your potential mortgage and other buying costs in a reasonably high yielding investment, renting might be better. But that’s if you carefully figure out the difference and diligently invest that difference. If you can’t do that then buying is probably the better choice.

Buying a house is usually a sound long term investment as it helps you build equity vs. throwing your hard-earned money away as rent real estate generally appreciates; a house bought today is worth more a few years down the road.

Canadian Housing Outlook for 2020

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The Canadian housing market is expected to stabilize in 2019, particularly in Vancouver and Toronto, as we move into 2020. Healthy price increases are expected this year, with estimating a 3.7 per-cent increase in the average residential sale price.

Increased consumer confidence could be a key factor affecting the housing market in 2020. Most individual markets surveyed across Canada experienced moderate price increases year-over-year from 2018 to 2019. However, some regions in Ontario continue to experience higher-than-normal gains, including London (+10.7%), Windsor (+11%), Ottawa (+11.7%) and Niagara (+12.9%).

As more Canadians have adjusted to the mortgage stress test and older Millennials move into their peak earning years, it is anticipated that they will drive the market in 2020, particularly single Millennials and young couples. A recent Leger survey conducted by leading real estate franchises found that more than half (51%) of Canadians are considering buying a property in the next five years, especially those under the age of 45.

ONTARIO

Toronto is set to experience a strong housing market in 2020. Lower unemployment rates, economic growth and improved overall affordability in the Greater Toronto Area are expected to drive the market forward. The estimated average sale price increase for 2020 is six%, two points higher than the growth experienced between 2018 ($736,256) and 2019 ($766,236). The city saw 76,413 properties sold in 2019, up 12% from 2018 (68,064). While Toronto is experiencing its “busiest” construction season ever, the housing supply still falls short of the demands of the city’s rapidly growing population.

Cities such as Ottawa and Windsor are seller’s markets, showing substantial increases in average residential sale price at 11.7 and 11%, respectively. This strong growth is expected to continue into 2020, with Ottawa’s new LRT system impacting surrounding development and Windsor’s continued affordability attracting young professionals to the area. Buyers are also not burdened by the mortgage stress test, as they were in 2018.

The Niagara region is also showing strong growth, with average residential sale price increasing almost 13%, from $378,517 in 2018 to $427,487.50 in 2019. Value-conscious consumers from the Greater Toronto Area are buying in droves, with many choosing to live in the region while commuting to Toronto.

Southern Ontario is witnessing some incredibly strong price appreciation, with many regions still seeing double-digit gains. Thanks to the region’s resilient economy, staggering population growth and relentless development, the 2020 market looks very optimistic.

BRITISH COLUMBIA

Reduced foreign buyer activity has opened up more opportunities for local buyers in Greater Vancouver’s condo market. While average residential sale prices for all properties increased by two%, from $1,030,829 in 2017 to $1,049,362 in 2018, the number of sales dropped by 30%. The low absorption rate is expected to bring down average residential sale prices in 2019 by three%

Similarly, the number of sales year-over-year has dropped by 33% in Kelowna. Rising interest rates, government policy changes, and the mortgage stress test were all factors that contributed to the decline, which is expected to continue into 2019. Average residential sale prices increased by six% year-over-year from $674,930 in 2017 to $718,915 in 2018, with prices expected to decrease by three% in 2019.

The drop in sales in key markets across British Columbia can be partially attributed to Canadians’ increasing difficulty in getting an affordable mortgage in the region. The situation created by the introduction of the mortgage stress test this year, as well as continually increasing interest rates, means more Canadians will be priced out of the market.

THE PRAIRIES

Alberta continues to experience slowing economic conditions, which have contributed to a decrease in average residential sale prices in Calgary, from $478,088 in 2018 to $460,532 in 2019. Condos are the easiest way for first-time homebuyers to get into the market, with starter units going for as low as $150,000. While the city’s unemployment rate continues to remain high compared to the rest of Canada, the population is increasing, with more people moving to the city from other parts of the province.

On the other hand, Winnipeg has shown a small increase in the average residential sale price, both for freehold and condominium properties, by 1.5 and 0.8%, respectively. The number of properties sold also increased by 5%, from 8,139 in 2018 to 8,539 in 2019. Immigration to the city, in combination with reasonable prices and ample supply of inventory, is expected to drive sales going into 2020. Regina also saw the number of properties sold increased by more than 5% year-over-year, despite being one of the few markets where the effects of the mortgage stress test are still being felt.

ATLANTIC CANADA

In Atlantic Canada, Halifax and Saint John have experienced a solid price appreciation of six and five%, respectively. Affordability continues to attract many buyers in the region, most of whom are buying single-family homes. At the same time, the region’s multi-family and condo market is being driven by retirees. Conversely, the real estate market in St. John’s is expected to recover in 2020, with increased consumer confidence expected to bring about stabilization. However, the city’s aging population and high rate of outbound migration is expected to have an impact on housing market activity at some point.

Market watch - Strong Recovery in Sales Activity in 2019

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We certainly saw a recovery in sales activity in 2019 in many areas around the country, particularly in the second half of the year. As anticipated, many home buyers who were initially on the sidelines moved back into the market place starting in the spring. Buyer confidence was buoyed by a strong regional economy and declining contract mortgage rates over the course of the year.

Ontario - Strong recovery in Sales Activity in 2019

Toronto, 07 January 2020 -- Toronto Real Estate Board President Michael Collins reported that December 2019 residential sales reported through TREB's MLS® System by Greater Toronto Area REALTORS® were up by 17.4% year-over-year to 4,399. Total sales for the calendar year 2019 amounted to 87,825 – up by 12.6% compared to the decade low 78,015 sales reported in 2018. On an annual basis, 2019 sales were in line with the median annual sales result for the past decade.

"We certainly saw a recovery in sales activity in 2019, particularly in the second half of the year. As anticipated, many home buyers who were initially on the sidelines moved back into the market place starting in the spring. Buyer confidence was buoyed by a strong regional economy and declining contract mortgage rates over the course of the year," said Mr. Collins.

While sales were up in 2019, the number of new listings entered into TREB's MLS® System was down by 2.4% year-over-year. For the past decade, annual new listings have been largely in a holding pattern between 150,000 and 160,000, despite the upward trend in home prices over the same period.

"Over the last ten years, TREB has been drawing attention to the housing supply issue in the GTA. Increasingly, policymakers, research groups of varying scope and other interested parties have acknowledged that the lack of a diverse supply of ownership and rental housing continues to hamper housing affordability in the GTA. Taking 2019 as an example, we experienced a strong sales increase up against a decline in supply. Tighter market conditions translated into accelerating price growth. Expect further acceleration in 2020 if there is no relief on the supply front," said Jason Mercer, TREB's Chief Market Analyst.

The MLS® Home Price Index Composite Benchmark was up by 7.3% on a year-over-year basis in December 2019. From June 2019 onward, the annual growth rate in the MLS® HPI Composite Benchmark accelerated. The average selling price in December 2019 was $837,788 – up almost 12% year-over-year. For the calendar year 2019, the average selling price was $819,319 – up by 4% compared to $787,856 in 2018.

Ottawa - Record-Breaking 2019 Closes Out Decade

Ottawa, January 6, 2020 -- Members of the Ottawa Real Estate Board (OREB) sold 761 residential properties in December through the Board’s Multiple Listing Service® System, compared with 660 in December 2018, an increase of 15.3%. December’s sales included 534 in the residential property class, up 13.9% from a year ago, and 227 in the condominium property class, an increase of 18.8% from December 2018. The five-year average for December unit sales is 720.

“December’s statistics reflect the same story we’ve seen all year – historically low supply yet higher unit sales than in previous years. Days on market continued to decline, especially in certain pockets of the city, as properties that came on the market were snapped up by prepared buyers,” states Dwight Delahunt, Ottawa Real Estate Board’s 2019 President. “Unit sales in the condominium class consistently led the way, offering lower price point options for homebuyers that simply weren’t available in the residential category,” he adds.

The total number of residential and condo units sold throughout 2019 was 18,622, compared with 17,467 in 2018, an increase of 6.6%. Residential property class sales went up by 4.7% with 14,038 properties exchanging hands last year compared to 13,411 in 2018. Condominium property class sales increased by 13% with 4,584 units sold in 2019 versus 4,056 in the previous year.

“2019 was a record-breaker in both the number of sales as well as average prices, with the residential property class reaching $500K in several months during the year. This price growth is warranted due to the fundamental economic principle of supply and demand playing out, with limited supply putting upward pressure on prices. However, even with these increases, Ottawa’s real estate market continues to remain one of the most affordable and sustainable in the country,” Delahunt stresses.

December’s average sale price for a condominium-class property was $310,675, an increase of 11.5% from a year ago while the average sale price of a residential-class property was $500,306, an increase of 10.3% from December 2018. Year-end figures show an average sale price of $486,590 for residential-class properties in 2019, an 8.9% increase from 2018 and $304,203 for condominium properties, up 9.3% from last year.*

OREB’s 2020 President, Deborah Burgoyne, forecasts Ottawa will continue to experience limited supply and reasonably increasing average prices this year. “Supply issues will surely persist into 2020, and I don’t expect the inventory will be able to recover in the near future,” she suggests.

“Builders do seem keen on constructing luxury rental units, which is something we haven’t seen much of before. These could potentially add inventory to the residential class, as boomers will have decent options if they are considering entering a different lifestyle than homeownership. However, even if supply increases, high demand has shifted market values upwards in various neighbourhoods and prices are unlikely to go back down – this is our new reality,” concludes Burgoyne.

Alberta - MLS® Sales and Listings Up to Close Out 2019

Edmonton, January 3, 2020 -- Total residential unit sales in the Edmonton Census Metropolitan Area (CMA) real estate market for December 2019 increased 9.88% compared to December 2018’s 769 sales and decreased 23.25% from November 2019. The number of new residential listings is up, increasing 5.87% from December 2018. Overall inventory in the Edmonton CMA fell 10.83% from December of last year.

For the month of December, single-family home unit sales are up 9.80%, and condo unit sales increased by 3.21% from the same period of time last year.

All residential average prices are down slightly at $353,657, a 2.29% decrease from December 2018, and are down 0.05% from November 2019. Single-family homes sold for an average of $411,317, a 4.08% year-over-year decrease from December 2018, and a 2.22% decrease from November 2019. Condominiums sold for an average of $226,943, a 7.93% increase year-over-year, prices are similar to the previous month, down 0.51%. Duplex prices dropped 5.73% from December 2018, selling at $325,068, which was a 0.85% increase from the previous month.

“The Edmonton market prices remained stable this month while we saw an increase in year-over-year residential listings and sales,” says REALTORS® Association of Edmonton Chair Jennifer Lucas. “There have been about 75 more sales than we had in December of last year, and single-family home pricing decreased 4.08%, duplexes are down 5.73%, and condos are up 7.93% year-over-year.”

Single-family homes averaged 64 days on the market, a five-day decrease from last year. Condos saw no changes at 77 days on the market while duplexes averaged 75 days on market, a one day decrease from December 2018. Overall, all residential listings averaged 69 days on market, a 4.17% decrease year-over-year, and did not change from the previous month.

British Columbia - Housing Markets Flat in 2019 After Strong Second Half

Vancouver, January 13, 2020 -- The British Columbia Real Estate Association (BCREA) reports that a total of 77,331 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in 2019, a decline of 1.5% from the 78,516 units sold in 2018. The annual average MLS® residential price in BC was $700,460, a decline of 1.6% from $711,564 recorded the previous year. Total sales dollar volume was $54.2 billion, a 3% decline from 2018.

“Housing markets across the province staged a strong recovery in the second half of 2019,” said BCREA Chief Economist Brendon Ogmundson. “This sets up 2020 to be a much more typical year than what markets have experienced recently.”

A total of 5,218 MLS® residential unit sales were recorded across the province in December, up 48.9% from December 2018. The average MLS® residential price in BC was $755,165, an increase of 8.7% from December 2018. Total sales dollar volume was $3.9 billion, a 61.8% increase year-over-year.

Total active residential listings were down 10.6% to 24,691 units in December. The total inventory of homes for sale has declined more than 10% on a year-over-year basis for two straight months.