Open House November 21 2016
Open House is hosted by Steve Gregory, and features Paul Rushforth and Barb Kramer of MortgageBrokersOttawa.com
Air Date: November 21, 2015
Intro: Welcome to Open House. The Real Estate and Mortgage show on 580CFRA with Paul Rushfort of Paul Rushfort Real Estate and Frank Nepolitano of MortgageBrokersAutoIt.com What are you going to do with the time and money you saved? If you're buying, selling or just have a question about financing, give us a call at 521-TALK. That's 521-8255. Now, with Frank Napolitano and Paul Rushforth, here's Steve Gregory.
Steve: Well, it is the Help Santa Toy Parade Today.
Frank: It is.
Steve: You know what that means? That means Costco will be putting up summer furniture.
Barb: Good point.
Steve: Red Blacks game tomorrow. You're all—
Frank: —asking for. I'm all—
Steve: Are you ready for it, Red-Blacks?
Frank: Not showering, that's it. I'm staying in these clothes now until the game tomorrow, no.
Steve: Good. I'm glad I'm leaving at eleven.
Frank: Oh, yes!
Barb: Please shower before you come to work on Monday.
Steve: Barb is here and Lisa's in for Paul.
Lisa: Yes, I am.
Steve: We don't know where Paul is.
Lisa: I don't know. Hockey, I think maybe. He's not here.
Frank: A conference or something, I'm sure he's got a conference.
Steve: Probably a conference.
Frank: He's probably at a conference. He works hard, that guy.
Steve: Especially this time of the year.
Frank: That’s Lisa laughing, Paul, not me.
Lisa: He coaches hockey.
Frank: He hasn't sold his house yet.
Lisa: Hasn't, no, but it's ready. All the pictures are done. The drone's been in to take photos of everything so come this Spring it's going to be on the market.
Steve: The drone?
Lisa: The drone, yes. He had a lovely drone shot done of the grounds and his small Nordic Spa in the backyard.
Steve: I asked him a long time ago about drones, anyway. No, not really.
Lisa: Yes, but now he has a drone.
Frank: —have a drone.
Lisa: It’s Paul’s house. It works for Paul, so—
Frank: He’s going to your house too Steve, when you put it on the market.
Barb: I think drones are fantastic for estate properties.
Barb: For other ones, not so much.
Steve: Yes. Here's a townhouse. There's a roof.
Frank: You've got Google for that.
Steve: Yes, exactly.
Frank: Doesn't Google do the same thing?
Steve: Exactly. Anyway, how was your week, Frank?
Frank: It was a good week. Mortgage conference beginning of the week so Barb lifted it all the way at the office. She had a tough week. She's pretty tired.
Steve: Oddly enough she doesn't look great or anything.
Frank: No, not at all.
Barb: No? Okay. Get your jab in.
Steve: I would never do that.
Frank: You look like you just woke up, Barb.
Barb: I had my roots done this morning. At Inspire Hair Salon in Glen Cairn. Give Scotty a plug.
Frank: —a little plug. There you go.
Steve: Did you get a discount?
Steve: Wait, you don't say things like that without a discount.
Frank: Women don't expect discounts on their hair.
Barb: No. If it's good hair, you pay for it and you're good to go. Although, I did take insults when I arrived. Frank said, "What did you do to your hair?"
Frank: No, no. Did you do something to your hair?
Barb: Did you do something—
Frank: I thought you were doing something to your hair. Anyway, all for fun.
Lisa: I think you look lovely, Barbara.
Barb: Oh, thank you, Lisa.
Frank: You look so much younger today than yesterday.
Barb: Real estate mortgages.
Steve: How was it, the conference?
Frank: The conference was very good. Some fantastic speakers, a lot of networking. We're down there really for the networking, get to meet other mortgage brokers from across the country, get the sense of what they're going through, what their markets are going through. Clearly Alberta's a struggling market right now. Very few mortgage agents from Alberta actually came to the conference. Again, they're hurting a little bit this year. Their volumes are down. There's still some concern in Alberta obviously. Then you've got the opposite which is Vancouver and Toronto which are absolutely booming right now and Ottawa which is fairly stable and kind of gets boring but it's kind of nice. Ottawa's kind of just...
Frank: It just really is. You know what? We're just steady. We don't have the big ups; we don't have the big downs. They've got them, we don't. It's not bad. Interesting to listen to one of the economists who spoke there. How she's pretty adamant and she believes that the US will raise their prime rate by one full percentage point next year. She thinks that the American economy has come to the level where now they've got to start to increase it. She believes it could be anywhere to a half and one full percentage point next year. That being said...
Steve: Wow. In one shot?
Frank: No, a quarter point increments on a quarterly basis. That being said, she also said that just because the Americans going up one percentage point doesn't mean that Canada is because our economy is probably two or three years behind where the US economy is right now.
Steve: How did that happen? We were so far ahead.
Frank: Oil. Oil's a big part of our economy.
Steve: Yes, yes.
Frank: Oil's a huge part of our economy. The good thing she said that's happening in Canada right now is the fact that the dollar is where it is. If you're traveling, it stinks but from an export standpoint it's fantastic right now. For a manufacturing standpoint we're starting some lift in the manufacturing sector and we're starting a lot of exporting as well. There are some positive news despite the fact that if we're going down south like we're all planning to. When the winter comes, that's going to cost us more.
Barb: I think something else that comes out of that conference as well. I have been several times as well; didn't go this year. It is getting the feel for brokers and what our common issues are. Frank brought up a couple of points when he came back to the office. One of the big ones is lenders and documentations and approvals and how it's more of a challenge than it was. Everybody's feeling the same thing.
Frank: It's just more—You know what, I've been saying to customers, it's just going to be a little more painful than it was last time. Just be prepared for it. From a documentation standpoint it's just going to be a little more—
Steve: Does it take longer or is it just a matter of you have to get more paperwork?
Frank: Here's the issue: very similar, we've seen it in many industries over the last few weeks is the fact that they try to maximize profits. When you maximize profits the first thing that goes are bodies. What they do is they scout and staff it on the assumption that their numbers might not be as good as they are. When their numbers exceed they don't go out and get some more staff. They just go with the stuff that they have.
Barb: It's just more money in their pockets.
Frank: That's a big concern right now in our industry is where the banks and lenders are trying to keep as much as possible. By doing that they're not staffing anymore. When they get really busy, their turnaround time's changed.
Steve: Have you noticed that too, Lisa?
Lisa: That the turnaround time has changed? It's taken a little bit longer I find to get pre-approvals in place. That's a little bit as you know we talked about. Are you saying people getting pre-approved now for the coming year?
Barb: Yes, lots of pre-approvals.
Frank: Only because, the biggest reason I think is because rates have started to creep up.
Barb: They creep a little, yes.
Frank: When rates start now, I'm going to have my little rant. I'll follow them on markets and our markets haven't changed much. The only, I mean the banks have said and I asked last week, "What's going on with rates?" The variables gone from prime -75 down to some banks are prime -30. That's a big change. Then we've had the fix. A couple of banks this week go to 289 on a five-year fix. It's interesting. I've asked. They said, "Well, it will cost more tomorrow." It does? When did that happen?
Barb: How so?
Frank: We don't know. Again, I mean none of us can really figure out whether that's true or not.
Steve: See, and we were thinking—
Frank: That's an easy out for them.
Frank: It costs more to borrow.
Frank: We know the bond markets haven't gone up and they know that we have access to the bond market. We don't have access to everything else. From my perspective and it's my own opinion, great. They just want to make a little bit more. Banks are going into the first quarter. The fiscal year starts November 1st. Why not start off with better margins? Why not set the table maybe for margins to be this way moving forward for 2016. That's all. You know, rates are still good. Listen, from a consumer's standpoint, rates are still good. We see a lot of people coming up for renewals that five years ago the rates are 339, 349 and 359. They're almost three quarters to one percentage point ahead by renewing now. From that perspective, it’s very good. Still, it's disappointing to see rates go up when the markets haven't dictated the rates should be going up.
Steve: The rates hold since March now, isn't it?
Frank: Rate hold since into March, yes, so it's not bad at all. We're into the spring market now. There are a lot of people buying in January for a break, not as many. I mean, I think the market really heats up in—That being said—
Lisa: Actually my best months last two years in a row have been January, February.
Frank: Yes, that being said, somebody that's locking in a rate now knows that, "You know what, maybe I'll start looking in January and February and I move in March."
Steve: Maybe they're closing in March.
Frank: Yes, exactly. As opposed to waiting to start looking in February, March and then closing in May, June.
Lisa: Yes, I've got New Year closings in February, March already set for coming out. I'm saying to people now if you're looking to buy a house, go ahead and buy it now. There are a bit better deals for buyers. People don't want to carry them through the winter. You don't want to be competing with the New Year prices. As soon as people hit in the New Year they're going to raise their price by one to two percent trying to test the market to see if we've reached that level or not. It's a really good time to go out and buy what's on the market now.
Barb: Plus, as we've said before if people are coming to look at your house in January, February, trudging through the snow—
Lisa: They're serious.
Barb: They're serious.
Steve: Trudging through the snow...
Frank: If rates go up by a quarter point, by the spring, on a standard morning, just about three or $4000 more, it's worth it, maybe the buyers will buy a little earlier.
Frank: That's all. I mean—
Steve: That's it.
Lisa: That is all, yes.
Frank: That's it. That's all.
Barb: Thanks, Frank.
Steve: 521-TALK. 521-8255. If you've got any questions, we'll be right back.
[00:09:21 music and program ID]
Steve: Welcome back to the show. Guess what time it is? It's time for Barb's "Did you know?"
Barb: Did you know?
Frank: What's not here today? It's about your hair.
Barb: I'd give Scott another plug.
Barb: Did you know that if you are mid-term in your mortgage you can switch for a lower rate? The receiving institution will pick a portion of the cost. It can be advantageous if your penalty, if you're with a mono-line and your penalty is small. I'm working with one now, the penalty is $1400 and they're going from I think 359 to 269. The savings that they're making more than makes up for the penalty that they're going to pay. They're getting a better rate now for the next five years.
Steve: I knew that. Did you know that, Frank?
Frank: I kind of knew that.
Lisa: It's fascinating. Did you know that, really?
Frank: I did actually.
Barb: Okay. It's actually interesting if you are in a 10-year mortgage, Frank, and I was talking about this. If you're in a 10-year mortgage it can really make sense. You're at 369, 379, 389, it can really make sense.
Steve: As long as you're beyond the five-year mark.
Barb: Yes. One is three months interest.
Frank: It could be. The interesting thing about the 10-year is that even if you're three years into a 10-year, it's the higher interest rate the differential through month's interest. The interesting part about it is that the banks had, it was about two years ago or three years ago we did a whole bunch of 10-year mortgage. We really had this—
Barb: I think it's more.
Frank: —promotional rate of 359, 369, 379, 389. For many people that were coming up for the five-year fix that were the fours and the fives, they said, "We'll take the 10-year." We really thought the rates were going up, too. I mean, everything pointed to all rates going up and then all of a sudden they came back down with the Europe crisis. Interestingly enough, there are people that have 10-year mortgages that have seven years on it because the interest rate differential right now and the rates that the monolines and the banks have on their 10-year mortgage is not very aggressive right now. The possibility is there but we get out before the five-year. The interest rate differential is not going to be that much more than the three months' interest because they have to use the posted rates. The posted rate is fairly high on a seven to 10-year right now. Therefore they've got to use the seven-year one and therefore the three months' accounting might come into place.
Barb: It's worth the call. If you have one of those mortgages, make the call to see what your penalty is. Give us a call. We'll help you out.
Steve: What is the seven-year posted rate now?
Frank: I don't know. I'll have to check but I'm going to say that the seven-year posted problem—
Frank: No, the discounted.
Barb: Oh, right.
Frank: The posted is probably in the fives somewhere. The five-years are 464 so, 459, so it will be in the five—
Steve: See, I never look at the posted rate because I'm always in your website.
Frank: The other thing that I would say about interest rates, for consumers out there that are getting renewals, there is one specific bank that's sending out what's called this teaser mortgages. What a teaser mortgage is, they have something like, for the first nine months you get this rate which is a phenomenal rate. You might get the first nine months at 1.99% and they get you so caught up with that 1.99% that you lose perspective on the other four years and three months which is a 3.29%. They make it sound, and again, people get caught in the initial 1.99% and forget the biggest part of the mortgage and the longest part which is at 3.24 or 3.29 which is absolutely crazy. If you do the average on those mortgages is the bank will tell you one number but if you truly do the average and you do the math on, go on our website and do the math on it, just do $250,000. Do nine months at X amount and then do four years and 3 months at the other amount and look at what your total is at the end and you'll see the big difference. You're way better off to take a straight five-year fix. Don't get caught up in these teaser mortgages. They do nothing for you and they do very well for the banks.
Steve: Now, real estate.
Lisa: Yes. I'm still here.
Barb: Oh, yes, Lisa's here.
Lisa: Hi, I'm still here.
Steve: I didn't want you to fall asleep. She's got her feet up.
Lisa: I am relaxing.
Steve: We're on the slow period, right?
Lisa: Yes, we're starting to hit the slow period but I find that the market has dragged out a little bit long because we don't have snow yet which is advantageous to us for sure. There are still a lot of showings happening. I'm still getting offers. Like I said they're closing into the New Year. Seeing a lot of people coming through the office with other agents in the office things are closing in December. There are some fast closings happening. We've got one that closes this week in one week time. People are trying to get in and done before Christmas. The other thing we're seeing is people wanting fast closings or late closing so there's snowbirds. They want to close on their house before they leave for Florida or they want to close in April. You're going to see those offers coming in along with those closing period.
Steve: The one-week closing. That's kind of risky.
Lisa: That one's a really tight crazy one. We'll see how that comes together. Generally we want to give two to three weeks. If we're going short, three weeks being better. The only thing we want to say about that is it depends on the lawyer. People right now if you're thinking about closing around the Christmas time, call you lawyer and ask them about what their holidays are. A lot are leaving.
Barb: That's good advice.
Lisa: December 17th to January 4th they're gone. You can't get a hold of your lawyers. If you want to find out who's back up for them, who you're going to go in and sign with, that becomes a problem every year. We're searching down the lawyers to find out where they are.
Steve: There are lawyers out there that are working between Christmas and New Year.
Lisa: Oh, absolutely.
Steve: It just may not be your lawyers. Do not make the assumption.
Lisa: It may not be yours, so yes. Find out who's covering their business and how is this going to be taken care of. The other thing is we do get closer to the holidays. Condition periods are longer because banks are closed so you know we're losing December 25th, 26th and then the New Year Day as well.
Steve: Inspection's the same thing.
Lisa: Well, inspections, everything drags along. It's quite important to have that timing in place and what your lawyer can do. If you're buying a condo, the Condo Board, because we're ordering status documents so there might be some links to your time in there as well.
Steve: Now, do you find that early in January things are a little backed up, too, between banks and inspections because people are—
Lisa: Absolutely because the New Year they've flown away or gone to see family over Christmas so everything's linked. It starts kicking back to normal by the second week of January. The timelines regulate. That's important when you're doing your offers.
Barb: We've seen a few quick closings, too, in the last couple of weeks.
Steve: Quite a few.
Frank: I got a couple in this week. One's December 1st, one's December 7th. They're mad and they're closing December 1st and December 7th.
Steve: They want to leave before Christmas, right?
Frank: It's fairly certain, you know what I mean? You know, from that perspective, you talked about quick closes. The other thing that we're starting to see, we're starting to ask realtors, is the five-day financing, home inspection, is tighter. It's just too tight at times.
Lisa: I'm putting in ten.
Frank: Yes. Instead of asking for an extension, why not go and I say to most customers, I said, "Listen, we can get you the financing in less than five days. That's not the issue. You may want to do your home inspection until you have your financing in place.
Frank: If the financing incorporates, which we're seeing a lot of banks and lenders now ask for appraisals, if you want the appraisal report to come back before you do your home inspection, it coming back in five days to financing and the appraisal coming back in five days is pretty slim.
Lisa: So many more insurers are requesting appraisals. I'm seeing one of those a week now which is just—
Frank: Yes, it's not even—
Lisa: The insurers sell them but now it's now a regular thing.
Frank: We saw one on agent court. A nice house, MLS-listed, no red flags anywhere and the insurer wanted an appraisal. I was dumbfounded by it but they wanted appraisal. It took three days to get the report back saying that, yes, fair market value.
Steve: That's only assuming that people come out to appraise the house within the year.
Frank: Well, they started to do it. Jenworth used to just drive by and that's it. Now they're actually going into the process.
Lisa: We're not part of the process. When it's the insurer, we're not part of the process. We don't— It's not direct contact.
Barb: It's 72 hours once the appraisal's involved.
Lisa: Yes, and there's no nudging. You can't rush.
Lisa: You can't rush the insurer.
Steve: We can't rush you either, apparently.
Steve: 521-TALK. 521-8255. We'll be right back.
[00:18:01 music and program ID]
Steve: Welcome back to the show. What do you ladies laughing at?
Barb: We're good.
Steve: Well, you can't take them anywhere. Hey, Frank?
Lisa: I think my face is red.
Barb: We had a shared moment, okay. I like Lisa.
Steve: This is a real estate and mortgage show. How has the market been over the last couple of weeks, a little soft?
Lisa: Again, still getting showings, still seeing. People want those fast closings. I've seen less listings coming up in the market for sure. People are hesitant to put their house on the market knowing that December to be a quiet month. Like Barb was saying people who are looking during those months are serious buyers but you're going to get less of that buyer.
Barb: Are people taking their homes off the market just for Christmas or is that a strategy?
Lisa: We start seeing that probably the second or so of December.
Lisa: Some people would hold off the market.
Frank: Do you guys do that like if somebody's got a listing and they say to you, "You know what, we've got family coming in. I mean ideally we'd like to—
Frank: —leave it on the market but no showings between—
Lisa: No showings. Generally what we'll do is we do a short suspension. We'll suspend it on the market and hit it back on so say second week of January, whatever suits you best. Again, a lot of people leave town as well.
Lisa: With the family and everything.
Frank: That's not bad. If they're leaving town it's not bad as long as you have access to the home, right?
Lisa: You do have a little access but they don't want to be running off for a reason. You're doing all that crazy stuff while they're away.
Frank: Yes, but that's part of—
Lisa: I know.
Frank: You know your house is on the market; you've got to look at it no matter where you are.
Lisa: I'm trying to remind people, when you are listing your house you have to allow us to have showings. Please have your house ready. Nothing's more frustrating than listing your house and then being extremely restrictive about the times that we can get in and show it.
Barb: I would think if you're a motivated seller then that's a gimme.
Lisa: You are but I think sellers feel like, "Well I don't want anything, things disrupted too much." I understand you need some notice for your showings, that's fair but please allow them in as much as you possibly can. I do try to book showings. I have had listing where people will not allow showings between this and this time. It's so restrictive; I can't sell your house.
Steve: Yes, you're handcuffed.
Lisa: Yes, that just can't happen.
Steve: You can't miss your TV shows.
Barb: I think the young families, too, you know.
Lisa: Young families...
Barb: Babies that go to bed and that kind of thing.
Lisa: Well, and so there are restricted times. Sometimes past seven you don't want showings. That's happening now with our daylight saving anyway. If you can, as a buyer, go and see a house during daytime.
Barb: It's so much better.
Lisa: We work a bit earlier. It is better. Otherwise you've got to book a second showing just to see the yard space and everything that's going out there.
Barb: The light shows in the house as well.
Lisa: It makes a lot of difference. You're going to see foundation right now without the snow. You get to see the roof. You don't see that during the day time.
Steve: I would get there at 3:30.
Lisa: 3:30 is nice.
Steve: As it gets dark, you get the best of both worlds.
Lisa: Same with your inspections. Make sure when you're booking your inspectors, I had an inspection on one of my listings yesterday and they booked the inspection for four that went till seven. I don't know what that inspector saw in that house I mean—
Steve: Clearly just the first part, the outside I would think at four o'clock.
Lisa: Yes, you've got a half an hour window there it is.
Steve: Still, that's not much.
Lisa: That's not much time.
Barb: What happens in the winter if I'm buying a rural property and there's well and septic? How are those inspections?
Lisa: Oh, you missed that show, Barb.
Barb: Oh, did I?
Frank: Sorry, I already asked that question.
Steve: Get it done now.
Lisa: If you can, get it done now so you have the documents to show a buyer. Also put some caps over your well and access to your septic system so that it's much easier for an inspector coming during the winter time. Right now everybody should have done that already but we are hitting that freezing point. Make sure you've winterized all your pipes. There's, often we hear in the wintertime some burst pipe stories. I had one co-agent, a good friend of mine, went into a listing to show buyers last year, I think it was January, deep freeze happening. Coming over the loft railing on the second story was a waterfall.
Lisa: The pipe had burst in the walls. Vacant property; the owners have not been back to check the property and it all burst. The house was destroyed.
Barb: Which is tough for insurance as well.
Lisa: Yes, your insurance won't cover you. There are a few insurers that will. You are going to pay sometimes a bit of a premium but there are rules about having people go in to check those vacant properties.
Steve: Yes, you have to have somebody in at least once a day.
Lisa: You do. You want somebody there or insurance will find a way not to insure you. This house was destroyed. It was only two years old.
Lisa: It's un-sellable as well. Make sure—
Steve: What did they do in that instance? Do they have to tear all the drywall?
Lisa: They tear it. The hardwood floors were destroyed. The drywall, you're going down to joist like it was extreme water damage that it's just destroyed.
Lisa: Winterize your house well. Make sure that you've got salt, everything on hand for when people are coming and see your house. We may not have snow but we will have slippery sidewalks starting.
Lisa: That's all quite important to a buyer. You don't want them breaking their ankle on your front step. Get everything ready. Get all your lawn stuff put away. Don't leave that out through the winter. Put it away neat and tidy because it starts to make your house a little trashy this time of year when everything's all brown and gray. You've got things lying around.
Steve: Do what Paul does. He puts it all away and then decides, well, I've got to stage my house.
Barb: Paul just hired somebody to do that.
Lisa: Oh, he actually did that one himself.
Barb: Oh, he did?
Lisa: Yes, I think Rhonda got the, I'm going to say the whip out. He got that all staged again and worked his butt off but it would have been nice to have some summer shots, though.
Steve: We've talked about it. For eight years we've talked about it.
Frank: Yes. That's why he's not here. I think he's sore from doing all that work.
Lisa: He's sore from all that work.
Frank: He's taking a vacation.
Steve: It's not too late. Take some pictures of your house now.
Lisa: Still do, especially if you have a pool deck. Get pictures of your deck for the backyard, things that are going to be covered with snow. Even if you think you're going to be listing when there's snow, if you put a new roof on, it's great to get some shots of that new roof so that you can show people the—
Barb: Oh, that's a good point before it's covered in snow.
Lisa: Right. I have some people going to go and their roofs need to be done and they're like, "Well, we'll just list this when snow happens." Well, we know that it's curling and we'll probably be disclosing it has a couple of years yet.
Barb: Is that one of the things that's covered off in the SPIS?
Lisa: SPIS is a whole other, most I would say we're now probably looking about 70% of people aren't providing SPIS just because of the liability behind them, the seller property information statement. You're seeing lawyers are viewing them as too much liability on the seller. We still require disclosure but because there can be a lot of interpretation on how to answer those questions people aren't filling them out because of the liability.
Steve: Now when you talk about disclosure, are you asking those questions?
Lisa: For my buyer, the listing agent asks the seller for sure. We need to ask those questions. If we notice anything that's questionable we do need to explore that further and find out. As a buyer agent I'm asking the listing agent all those questions. I did have a listing buyer recently who I asked the agent about some water damage because the neighbors disclosed that the bad turn of the yard to do some work. The agent's response was, "My people didn't fill out an SPIS. They don't have to tell you anything."
Lisa: It's wrong. You absolutely do. If I ask you a question about water damage, your answer to me when you say there is no answer or I'm not telling you is the answer I need then we walk away from the deal. If you're refusing to disclose—
Barb: You're hiding something.
Lisa: You're hiding something. It makes people suspicious.
Steve: Yes, and you can't do that.
Lisa: You really shouldn't do that.
Barb: It's not morally respectful either.
Lisa: Well, it's a whole bunch of legal problems down the road.
Steve: Plus nine out of ten times the agent will know.
Lisa: The agent will know. Once you disclose it, if they had said, "Yes, we had this but here's what we did to fix it," we're satisfied with that. Provide documents, everybody's happy. Same when you guys are mortgaging. You know, if there's been severe damage and you get paperwork that insurance say you ought to fix it, you're more likely to offer some mortgages.
Frank: Don't put that in the listing.
Frank: Tons of damage.
Lisa: Actual damage, we'll just say, "Call listing agent."
Steve: Like you were saying Frank, I mean—
Barb: There will be an appraisal required.
Steve: Now they're really looking at the lenders, right?
Frank: The lenders, I can tell the lenders absolutely are looking at the MLS. They're Googling. They're going far, far further than they used to from a perspective of doing, even on people. Even on, you know, if it's a— Again if we go to a bank and there are customers at the bank, they do less. If they're brand new customer anywhere they're Googling the name. I mean, we had one where, it was a couple of years ago where the bank, and it wasn't our company that had it, but I was with the underwriter of Scotia Bank and their security, this was on a Friday night, at nine o'clock on a Friday night. I've got an email from their security department saying, "You've got an approval in place for this person. It's not going to happen. We've done a search and we're not willing to lend to this person."
Frank: Then he did a little more investigation into it and the guy had a criminal record and they will not do it. For fraud, criminal for fraud.
Steve: Oh. Yes, I can kind of understand.
Frank: Yes, yes. Therefore, nope, we're not lending for this person. Again, we're seeing more and more of it. For realtors we always ask from the mortgage end, if you're going to put TLC, be very careful. TLC might just mean a little bit of touch up here and there. We'd rather see more specifics now. Is the TLC because the kitchen is dated? That's okay. Dated kitchen is okay.
Barb: We have purchase plus improvements.
Frank: Right, but from a lender's perspective, TLC might mean a house is a mess. Like, it's not livable and therefore this is we're seeing more appraisals happen. We're not seeing this much anymore, the appraisals happen. I know there was an issue about a year ago where realtors are complaining there were lots of last-minute appraisals happening. We're not seeing that as much now. I think the reason we're not seeing it as much is because they're asking for it upfront.
Steve: Where does it put the buyer who's pre-approved but not pre-approved on that property?
Frank: Well, that's why they're only pre-approved at this point. The concern was a year ago where the customer has waived their financing and now the bank was asking for an appraisal the week before closing. Well, the customers waived. Like they're hooked. At that point they're committed to buying that house.
Frank: If something went wrong with the appraisal they're going to be on the hook. It doesn't have to be that house doesn't need the guidelines. It could be that the appraiser's come back and said, "Well, they paid 400 but we think it's only worth 390." Now the customers have to come up with the extra $10,000 for the down payment. It's awkward. We're seeing less of that now. From a company's standpoint mortgage brokers alwaystry to hold the lenders accountable. If they'd come to us and they've not asked for it, you can have an appraisal but just know that we're going to fight you if there's an issue because one wasn't needed and the customers waived. We wouldn't have advised the customer to waive had we known that there was an appraisal still standing.
Steve: Appraisal every time on a private sale, right?
Barb: Private sale.
Frank: Private sale looks pretty well carte blanche. The only exception is sometimes we won't need it on a mutual deal. The last questions like do they know who the vendor is, like the last of the questions.
Barb: What's the relationship?
Frank: Yes, is there a relationship there? That's the kind of things we'll see.
Steve: What do they care about the relationship?
Frank: They want to know what's going on, right? They want to know if there's something fishy where they're selling a property that maybe is only 300 but they're selling it for 330. That's the kind of stuff that happens on privates more or less.
Steve: I was talking husband and wife.
Frank: Yes, I know.
Steve: 521-TALK. 521-8255. We'll be right back.
[00:29:56 music and program disclaimer sequence… The advice and recommendations in this program are those of the participants and not necessarily those of Bell Media or this station. Listeners are advised to obtain personal consultation, should they wish further information.
We return to open house, the real estate and mortgage show on Newstalk Radio 580CFRA. If you have any questions about mortgages or real estate, give us a call at 521-TALK, that’s 521 8255.
Steve: Haven't asked the question. Haven't asked it in a little while. Variable or fixed?
Frank: Very well, let's fix it.
Steve: Fixed now.
Frank: Well, so now banks are down to prime -.3. If you're looking for instant savings, it's not there like it used to be. When you're down to prime -.3, prime -.4 we have one of .45 we've just announced this morning that on Monday it's going to be .4. When you're going to that level and now you're looking at 2.3% to 2.4% for a five-year variable versus 2.69% for a five-year fix, the gap is so small that if you're concerned in any way that the rates are going up, then you might as well take the five-year fix because you don't have to worry. It's only a quarter point savings at this point. That's the difference. I mean, you know we do the show for eight and a half years, there'd been times when it was one and a half, one and three quarters percent difference between a variable and a fix. That's a tremendous amount especially with the treat of rates not going up then that's a tremendous amount of money to save in a short time or period. Well, it's only a quarter point, not to say that the variable is wrong, I just think that the fix is a safe bet right now. You can secure that rate for five years and not worry about it.
Steve: Two-year mortgage?
Frank: Two-year mortgage, great rate—
Steve: Bad choice.
Frank: Risky because two years from now it's expected the rates would be higher. Now you're setting yourself up for a renewal in two years as opposed to waiting five years and getting that rate. Listen, again, the difference in a two-year and a five-year is half a percentage point, give or take, perhaps a percentage point isn't worth risking that mortgage coming up for renewal two years from now. Again, if you plan on holding the house long term.
Frank: If you're selling and not getting another house in two years, well then the two years make a lot sense.
Barb: I always say to people, "I wouldn't want to renew in two years." You know what, I renew in two years.
Frank: That's your circumstances.
Barb: That's my circumstance.
Frank: You got the house three years ago. I mean, that's the difference.
Steve: Have you checked your penalty?
Barb: Oh, yes. I've checked my penalty, unfortunately.
Frank: Unfortunately, Barb, with the bank as opposed to monoline lender and that's—
Barb: At that time it was the right thing for me to do.
Frank: Not only that, but at that time, the penalty, the clauses were not out there as they are today. Now, we've become aware of the way the banks have started to word it. They did that about three years ago. They worded, so that they used the discount that they give you as opposed to before it used to be the interest differential based on the rate they had versus the rate that they were offering. Then they changed the wording three years ago and they apply it to term remaining. That's when the whole thing changed.
Steve: I still don't know how they figured it out.
Barb: Plus, it's a product thing. I wanted the mortgage line of credit mixed. At that time there aren't monolines offering that but there is now.
Steve: You must have been, yes, just have to mean it.
Barb: No, because you just came up for renewal.
Steve: Yes, but I'm saying you have two years left, right?
Barb: Yes, two years in May.
Steve: You got your house shortly after I got my mortgage.
Steve: First Line had that service available when I got mine.
Frank: Yes and there are still a lot of customers in that, right?
Frank: First Line registered it quite uniquely. They registered it as a standard mortgage as opposed to a collateralmortgage which is very very rare.
Barb: That was the nicest thing about First Line.
Lisa: I had the First Line with the line of credit.
Barb: Katrina came to me this week and said, "Five year—" Katrina's working our renewals. "Five years ago, did you guys use anyone else besides First Line?"
Frank: Yes, they have that good of a product.
Barb: Yes, it was a great product. They were a great lender to deal with.
Frank: Fortunately now they've converted to CIBC so now you're going up to the CIBC bank rules and the renewals have that little clause in there so this is where, and again they're the ones that offer those little teaser mortgages.
Steve: Yes. Birthdays?
Frank. Wow. Leo Myer. Reno had his birthday this week.
Frank: Happy birthday to Leo. Go Red Blacks.
Steve: Wait, wait, wait. Somebody else had a birthday this week.
Frank: Yes, but that's five days ago. It doesn't count anymore.
Steve: No, no, no, no because we missed it last week.
Frank: It was good. I was kind of hoping to stay under the wire.
Barb: Mr. Napolitano, last Monday.
Lisa: Happy birthday.
Barb: Happy birthday.
Frank: Forty-nine again. Forty-nine years old and forty-eight months, that's what I am.
Steve: Tuesday you and I are going to the Bay for the discount?
Frank: Why? I got to go with you because I still ... I'm not there yet. I'm not at your age. I'm not at your number yet. Thank you.
Steve: Lisa, how do we get hold of you?
Lisa: You can get hold of me at the office, 613-788-2122. I just want to say there's a Stitsville Parade of Lights happening next the 28th at six o'clock and Bar Haven as well. This Sunday at 5:30 we're going to be in those parades. Then Orleans on the 28th, that's six o'clock. At Orleans we set up bleachers, give you a hot chocolate and cookies so come on in and say, "Hi."
Steve: Yes, I've been on a few times for that. It's really—
Barb: It's fun.
Lisa: Yes, it's fine we have a huge crowd. We have the elf guy there. What's his name?
Barb: The elf guy?
Lisa: Buddy! Buddy the Elf.
Frank: Really? He's going to be there?
Lisa: Yes, we got Buddy the Elf.
Frank: What about the author of the book there, that they get the ideas from on the movie Elf? I love that guy. Anyway—
Lisa: Oh, Bob Newhart?
Frank: No, Bob Newhart is the dad.
Steve: You guys want cookies here or what?
Lisa: Oh, that guy! James Cameron.
Frank: Off the air.
Steve: Computer radio show is next. Have a great weekend.
Frank: Have a great weekend everyone.
Barb: Have a good weekend.