Improve your chances at getting a Mortgage

In the video Phil explains common mistakes people make with credit, how more credit is sometimes better, why a small limit is a bad thing, how to check your credit without it hurting your credit and what the banks expect for a credit score. Read below for the more detailed version.

Credit Score

The first thing banks or mortgage brokers will look at is your credit score.

Having no credit can negatively affect you. Meaning that if you only have one form of credit (or zero) then it wont look good to the bank. Phil recommends having at least two. This can be a car loan, student loan, credit card, line of credit or anything that will come up when you do a search.

Search your credit! Phil mentions Equifax. I have not tried Equifax, but in the past, I tried one that said 'Free Credit Check' but they forced me to input my credit card. I didn't think much of it until I noticed a monthly fee of around $20. Unfortunately, it took me many months before I noticed and the best they would do was delete the account. So, if any similar site asks for your credit card information to get your free report, don't do it.

I have used Borrowell for free for some time now and I have never paid for it. I am sure there are others that can also work, but this one has been perfect for my family.

I did notice that they offer me $5 if I introduce a friend. This site is free for you, but if you want to buy me a coffee, please use the following link and they will send me a $5 gift card (last time I got an ecard for Starbucks)

https://borrowell.com/free-credit-score?utm_campaign=Refer5&utm_medium=web&utm_source=refer2022-4123091

Phil also mentions that banks now offer something similar inside their apps/sites. if you prefer you could also see if your bank offers soft checks that would not effect your score by checking.

What is a Good Credit Rate?

So you checked your credit history and score, now what does it mean?

The minimum a bank looks at for a mortgage is a credit score of 600.

A lot of lenders want to see you above 700.

If you are around 600 you are considered a little higher risk so the banks will want to see more savings or a higher income.

Payment History / Credit History

Banks do look at payment history. Make sure you are making your payments ontime. Many services offer automatic payments and bank accounts offer scheduled payments. Use these or pay bills as soon as you get them if paying on time is an issue for you.

Why is a Small Limit a Bad thing?

This is a common misunderstanding that I used to have. I thought that the less credit you had the better, but that is not how the algorithm works.  33% of your score is based on utilization. This means that if you have a credit card for $1000 and you owe $900 on it, your credit score will go down as you have used 90% of your credit. On the other hand if you had a credit card for $9000 and you owed $900 on it you are only using 10%.

Using your credit and creating a good history is ideal, but anything over 50% usage looks bad. Below 30% is best. So, having a higher limit will help you.

In my case I had all my credit cards paid off and only had money on my line of credit owing. This was not a huge line of credit, so I was using probably 80% of it and contacted the bank to try to raise the amount and they also explained that if you are using a high percentage of it and not able to pay it off, they do not want to offer you more. When it comes to the algorithm it doesn't look at all credit you have an average it out, so try not to use over 30% of any of your limits.

Continue to Save!

We joked about getting a Sugar Mama (or Sugar Daddy), but a lot can be said about reducing your expenses or, if you can, increasing your income.

Personally, I would ask yourself how you will feel about your expense a couple years from now?    If it will create awesome memories you probably wont regret spending money it, but can you cut out some of the THINGS? Or even better spend less on bad food or things that are bad for you?

If you have any other questions feel free to reach out.

Please visit the following page to get Phil's details (Be sure to tell him that you found him through Derek's video)  https://dkeet.ca/guest-speakers.html

If you are looking to buy a property in Edmonton, Sherwood Park, or need advice on the current market contact Derek!

Derek is licensed for residential, commercial, and rural real estate, plus has many years of personal and business experience to be able to understand your needs.

If you are interested in buying or investing in Edmonton or the surrounding areas, click here to set up your own detailed search: https://dkeet.ca/map-search.html

Click here for more information on Derek Keet: https://dkeet.ca/about.html

Property inspections warning signs! Worst things to find in an inspection.

Basically, we are addressing the question of what is a bad inspection?  When should you run away? When might it be a chance to get a better deal due to small things that can easily be fixed?

To start, when the property inspector shows up to a property and the first thing they see is a sagging roof, or the grade of the landscaping around the house in a bowl shape it is clear that there are going to be moisture/water issues and possibly foundation issues.

Roof and Foundation (The big issues)

Roof and foundation issues are a definite concern. Downspouts are there to move the water away from the building and the grade of the area around the home is designed to shed and move the water also away from the house so that over time the foundation is not damaged by water.  A sagging roof can point to moisture issues to the structure or the attic.

If you are interested in hiring Josh Born, Please visit the following page to get Josh's details (Be sure to tell him that you found him through Derek's video)  https://dkeet.ca/guest-speakers.html

Josh is from Canadian Residential Inspection services here in Edmonton.

Lack of Insulation (relatively small issue to fix)

A little off the topic but lack of insulation can be clear when most roofs have snow on them but the snow on the roof of the property is all melted.

Also, where the roof meets the soffit, if there is a lot of ice there, that is called ice damming and that definitely means that there is a lack of insulation at the wall and ceiling connection. Warm air is getting up there in both cases and melting the snow which can wreck your shingles and in the case of the ice damming that can also wreck your gutters.

There are other YouTube videos that can go over adding insulation to your attic. I have done it before on my own home. We bought packs of Pink Panther insulation and rented a machine with a long hose on. Basically, one person wears the proper facemask and goes up in the attic holding the long hose while the other person stays outside, turns on the machine and puts the bails of insulation into the machine and it goes through the hose and is sprayed inside the attic. The cost was minimal, and it definitely wasn't rocket science.

Foundation Damage vs Foundation Crack vs Foundation Slanting

Water is the enemy of buildings, and it will find a way if there is a crack and generally will get worse over time.

There are different variations of foundation cracks. Small vertical cracks you are going to find in many older homes and isn't a huge scare, but if you have a large lateral crack or the foundation has a knee joint (looks like a knee or angle on it), that needs to be repaired and is a big deal.

If the foundation is on a slant or bowed, it isn't holding up the house properly and can be a major issue to fix.

Although there are some kits that can seal off vertical cracks and may work for around $250, it is recommended to hire a company as they also offer guarantees and will make sure it is done properly. Using tools that go into crack to insert the epoxy and fill the whole crack.  Also making sure the timing is correct as it should not be done when there is already water or moisture in there, or if the temperature is too cold.

Cost for fixing minor to medium cracks

It depends on the size and the location, but roughly $500 to $700 if you are doing the digging and hard labour.

Or $2000 to $3000 if you are hiring a company.

Or depending on the situation using an epoxy product for $200+ (which may be used without digging as it will go through the full crack if used properly) or digging down on the outside and using a tar product to block from the outside.

Stopping the water from getting too close to the home

The other point is making sure the water is not getting close. As mentioned your downspouts and eavestroughs are designed to move water away from the home along with the landscaping and grading.  Making sure your gutters are clear also prevents damage and allows for the water to flow in the way they are designed.

Renovations

Another point to note is that if you are planning on finishing or renovating the basement make sure the points mentioned are looked at.  The last thing you want is to finish your renovation and find out that water is getting under the floor or behind the walls.

Remember that the major issue for most homes is water related.

Derek has a long history of owning and renovating, buying and selling and managing his own properties as well as helping his clients.

If you looking to buy or sell reach out to Derek @ 587-598-3248

Do I really need a bank Preapproval?

You have surely heard about a bank pre-approval. Or if you haven't you most likely will if you are buying a home.

Whether it is in Edmonton or anywhere else in Canada, you will find many people will expect that you have one.

In the above video Derek goes over his opinion of bank pre-approvals, the pros and cons and if it is really mandatory to have a pre-approval before you can buy a property? Put an offer in on a property? Or simply needed just to work with a real estate agent?

Given Derek's history with vendor-take-back mortgages and private mortgages, part of him feels that real estate is about pushing the limits and finding a way to make financing happen.  In the past when he was asked if he was pre-approved, it was insulting.  Partly because of the way it was asked to him and the other part because of frustration from working with banks.

For seasoned buyers finding a way to make financing work may be a normal way of life and business (even then, KNOWING your finances is important).

Whether you need to be pre-approved or not, really comes down to how well you know your finances.  Real estate agents should let buyers know why a pre-approval is in the buyer's best interest. I have heard of many real estate agents that wont work with a buyer unless they get pre-approved, and with tougher bank regulations this will likely grow.

For first time home buyers, I have this picture of a couple about to be married, excited to buy a home, finally finding the ideal home and not being able to get financing, having their dreams crushed.

If you are interested in buying or investing in Edmonton or the surrounding areas, click here to set up your own detailed search: https://dkeet.ca/map-search.html

Click here for more information on Derek Keet: https://dkeet.ca/about.html

Variable Mortgage versus Fixed Rate Mortgages for Edmonton Home Buyers

In the past a variable rate was generally lower and a fixed rate was something that you paid a little more for but it gave you certainty. This is not always the case.

The question of what is the difference came up.

Investopedia.com defines:

A variable rate mortgage is a type of home loan in which the interest rate is not fixed. Instead, interest payments will be adjusted at a level above a specific benchmark or reference rate, such as the Prime Rate + 2 points. Lenders can offer borrowers variable rate interest over the life of a mortgage loan.

A fixed-rate mortgage has an interest rate that remains unchanged throughout the loan's term. So, your payments will remain the same each month. (However, the proportion of the principal and interest will change.) The fact that payments remain the same provides predictability, which makes budgeting easier.

Basically with a Fixed rate your payments wont change. As the mortgage gets paid off the amount of interest and principal you pay off will change but your payments stay the same.

The main advantage is that if interest rates go up then the borrower is protected from sudden or significant increases in the rate they are paying on their mortgage. Fixed rate mortgages are also easier to understand.

The disadvantage is that if interest rates go down you still pay the fixed rate that was agreed to and would need to refinance in order to potentially get a lower rate.

For variable rate mortgages, the rate is not fixed and changes if rates go up or down. This means that if rates go up, you pay more. If rates go down then you pay less.

So the factors to take into consideration is which are you more comfortable with and are you confident in predicting where interest rates will go?

Or, often a nudge of which of the two option is being offered at a lower rate right now can be the deciding factor.

When making any financial decision, get help from financial advisors.  As part of my team, I do have trusted mortgage brokers and many other professionals that I connect buyers and sellers to in order to support them in the often emotional process of buying or selling their home. We try our best to be a referral resource and support in simplifying the process.

Please visit the following page to get Phil's details (Be sure to tell him that you found him through Derek's video)  https://dkeet.ca/guest-speakers.html

If you are looking to buy a property in Edmonton, Sherwood Park, or need advice on the current market contact Derek!

Derek is licensed for residential, commercial, and rural real estate, plus has many years of personal and business experience to be able to understand your needs.

If you are interested in buying or investing in Edmonton or the surrounding areas, click here to set up your own detailed search: https://dkeet.ca/map-search.html

Click here for more information on Derek Keet: https://dkeet.ca/about.html

Working with Buyers the question of inspections come up. It is something we always recommend (unless the buyer has their own team), it is also important for sellers to recognize what will likely come up when they have a buyer interested in buying their house.

The first part is expectation.  I believe when a buyer is educated it takes much of the frustration out of the process. 

You can click and watch the video and then take a look at the extended content here.

So, you are planning on putting your house up for sale (or you want to put an offer on a property) what are common things to expect for an inspection?

I was happy to have Josh (Edmonton local property inspector, carpenter and contractor) come to our Edmonton Windermere office to go over a handful of points that come up.

Edmonton Home Inspections Point1: New Furnace. New Hot Water Tank

Furnaces are tricky. Some furnaces last forever but if you have an original furnace in an old home, you do take on a risk of it breaking down. Or the expense of updating to a high efficiency model.  Obviously, you should look at the purchase price and what makes sense but I think in home ownership in general there is a chance that a furnace can breakdown. In an inspection they can check if there is a leak or a problem with the furnace. If there is no problem then the age may not be the biggest concern, all things considered.

For hot water tanks, the age does matter. Generally, if they are older than 10 years there is a high chance that they will need to be replaced.  If they are 20 years old, it is probably best to add the replacement into the purchase price or consider that cost. Working with different properties depending on the system the price changes but I have had them replaced for anywhere between $1000 and $1800.  So, if you are selling your home and you have an old hot water tank(s) expect that the buyer will either negotiate on the price or they will consider this when they are making an offer.

Edmonton Home Inspections Point2: Loose Toilets

As Josh explains this is not a huge deal.  Sometimes the bolt can be off so maybe simply tightening it won't work, or even a little caulking, but even then, you can get a wax and bolt set for $10 and just need help emptying the water, taking the bolts off and putting a new bolt and wax ring on, which isn't a huge job and a fairly easy DIY task.

Edmonton Home Inspections Point3: Loose cabinet handles

Usually, a simple fix with a screw driver. If you are selling your house and you know of small issues like this and feel overwhelmed, ask your real estate agent. We have many connections and if we cannot just give you a hand ourselves, we have a lot of resources and connections and with small things either we just help or we can connect you.

Edmonton Home Inspections Point4: Downspouts

For downspouts the cost of parts is not expensive but when it comes to roofing generally someone needs to be up on a ladder and some homeowners may not want to take that risk themselves.  The problem can also come when it is clear that the downspouts, gutters, roof, etc. are not set up well and in order homes, or rather over time, these issues can cause damage to the landscaping/sloping and eventually the foundation so when an inspector sees visible problems with the roof, the grading of the land or the downspouts they look more closely for foundation cracks, signs of flooding or water damage.

Edmonton Home Inspections Point5: Range Hood vent exhaust / Dryer Exhaust

For the range hood making sure the exhaust if connect properly is generally just making an adjustment without needing parts, or changing a carbon filter, etc.  If the dryer does not have a vent going outside, then generally this means that you need a special dryer or you need someone to drill the hole and vent the dryer exhaust to outside. In some cases, you may need to open the wall(s) or ceiling so this could be a slightly bigger project.

Last point on Old Homes with Vinyl slider windows

A simple fix for squeaking or harder to move slider windows is White Lithium Grease on the bottom track which allows it to move smoothly.

Special thanks to Josh Born from Canadian Residential Inspection services here in Edmonton. If you are interested in hiring Josh, Please visit the following page to get Josh's details (Be sure to tell him that you found him through Derek's video)  https://dkeet.ca/guest-speakers.html

If you are looking to buy a property in Edmonton, Sherwood Park, or need advice on the current market contact Derek!

Derek is licensed for residential, commercial, and rural real estate, plus has many years of personal and business experience to be able to understand your needs.

If you are interested in buying or investing in Edmonton or the surrounding areas, click here to set up your own detailed search: https://dkeet.ca/map-search.html

Click here for more information on Derek Keet: https://dkeet.ca/about.html

Mortgage broker vs going directly with the bank?

Do you need a mortgage for your new home you want to buy in Sherwood Park?

Wondering the cost or benefits of a going through a mortgage broker to get your mortgage in Edmonton?

Today we dive into this. I had Phil join and give some expert advice.

#1 = Rate

Everyone loves people who help them but when it comes to mortgages the top point people are thinking about generally rate. A mortgage broker is able to work with many banks and lending institutions. So let's say they have 30 that they work with that may be able to offer you a mortgage, in that case if rate is your biggest concern they are going through many of them to get you today's lowest rate. I also think that when they work with certain lenders the lenders may be able to give them some favourable treatment as well. Phil doesn't state that but I think that the banks also want the large amount of business they get through the mortgage brokers so if there is a hard situation they may be able to help a little more than usual.

#2 = An Expert Able to Customize and Find the Right Product for you

My personal take on this is that like any field you want to find someone that will really take a look at your situation and the options that would best fit you. I think some mortgage brokers may not do much more than the minimum and some banks may go above and beyond.  I can say personally though that my bank experience in the recent years has been a lot of someone putting my numbers into the system making me feel like the algorythm was the one that was going to make all of the decisions.  A good mortgage broker will have access to a lot more products and the chances of a better fit will be greatly increased.

#3 Time & Credit Score

It is time consuming and exhausting going to many banks, plus each bank will pull your credit score which is a tick against your credit score. A mortgage broker only pulls your credit for you once.

Plus unless they are getting into private lending the mortgage broker is paid from the bank so they don't cost anything making them a free resource of support when you need a mortgage.

On the other end, I think there are some professionals at the banks that work very hard and if you have a good relationship with them, a bank is not a horrible place to get a mortgage.

It just seems that years in the past banks did not work on algorythms and it was the community personal touch. Like your son went to school with their son and they were able to push things through as needed. Those days seem to be gone.

Please visit the following page to get Phil's details (Be sure to tell him that you found him through Derek's video)  https://dkeet.ca/guest-speakers.html

If you are looking to buy a property in Edmonton, Sherwood Park, or need advice on the current market contact Derek!

Derek is licensed for residential, commercial, and rural real estate, plus has many years of personal and business experience to be able to understand your needs.

If you are interested in buying or investing in Edmonton or the surrounding areas, click here to set up your own detailed search: https://dkeet.ca/map-search.html

Click here for more information on Derek Keet: https://dkeet.ca/about.html

Saving Taxes for First time home buyers

How can first time home buyers save taxes?

The HBP Home Buyer's Plan through the Canadian government allows first time home buyers the ability to use up to $35,000 from their RRSP to be used for the purchase of their first home.

Please seek advice from your accountant for your individual situation, but this post goes through the basics.

An RRSP (Registered Retirement Saving's Plan) is a tax savings account geared towards helping people save for retirement. It allows you to not be taxed on the money you put into the account (for the tax year you put it into the account), and it brings down your total taxable income so hopefully bringing you into a lower tax bracket for the amount of your taxable income that is taxed.  (see the video for a basic example)

The government does expect you to repay (put the money that you took from the RRSP back into the RRSP) but gives you 15 years to do so.

A big point is that the money needs to be in the RRSP account for at least 90 days before it can be taken out. Usually the closing date is what the money is taken out and paid through the lawyer. This may be the day before the possession date but it is very close to the date that you move in to your new home, so don't worry too much about the date that you put in an offer or decide to buy a home, but be concerned about the possession date when you are putting in an offer as to make sure the money in the RRSP will have been in the account for 90 days before it is taken out.

Saving Taxes and money is important. We often work as a team. Mortgage brokers have a lot more pressure to get financing for our clients for the simple fact that we are one of the largest sources of referrals for mortgage brokers and if they cannot help our clients then they will lose a lot of business.  So, if you need connections for getting a mortgage or for buying your first home definitely reach out.

Usually the first step is to go through the whole process with you, make sure you are doing the right things as you plan to buy.

Feel free to reach out and set up your Free buyers consultation.

Derek is licensed for residential, commercial, and rural real estate, plus has many years of personal and business experience to be able to understand your needs.

If you are interested in buying or investing in Edmonton or the surrounding areas, click here to set up your own detailed search: https://dkeet.ca/map-search.html

Click here for more information on Derek Keet: https://dkeet.ca/about.html

What does a Real Estate Lawyer go through when processing the sale from the Seller's perspective?

Last month we did a blog and video for the process from the buyer's perspective.  You can find that here: https://dkeet.ca/blog.html/steps-for-buying-a-home---lawyers-guide-8273050

Selling your home sound easy to some people. Basically, you find someone that wants to buy it, sign a few documents and your all done, right?  The most complicated situations I have seen are with family but sometimes with family the process can be a fairly easy transfer.  In most cases the process involves more than that.

Understanding when and how the process works when the Real Estate Lawyer gets involved for the sale is important.  Being based in Edmonton Alberta, this information is specific to Edmonton and Alberta, but I assume the process will be similar in other areas as well.

Obviously, I am a real estate agent so saying, "it is better to use a professional" is biased.  That said using professionals statistically will get sellers a quicker sale at a better price.  Starting with what is your property worth? Also, very few people have sold many of their own properties and even if they have it is hard to know the market when you are not in it. So, educate yourself, but rely on professionals.

For selling you will need a lawyer or notary for at least part of the process regardless so using a real estate lawyer will save you a lot of headaches.

Before diving in

Part of the process with the lawyer is trying to make sure you have all of your ducks in a row.  

There is another video about the difference between getting title insurance vs the real property report (RPR), but before you sell, making sure you have your documents for your house in order, so that when it gets to the legal stage of selling you don't have issues popping up.

Making sure marital status is confirmed. This seems like a check box type question, but Dower Rights comes into play if someone was married, and the spouse or ex lived in the property in the past.  If they did then you won't be able to sell without them signing.  If they are out of the country this can cause a delay.

Skipping forward a little so that we can focus on the legal aspects. 

So, your home is decluttered, staged as much as possible, certain things may have been painted or upgraded, your home was listed with a virtual tour and photos, marketed in a number of ways, you had an open house and had some showings, now if it was priced correctly, you should see an offer or offers (hopefully it can get into a multiple offer situation).

If you are lucky, you get unconditional offers. These are offers that a buyer writes out that have no conditions.

Conditions are generally financing, inspection, condo document review (if it is a condo). It can also be things like pet approval or the sale of the buyer's home, etc.

If the buyer is using a real estate agent, the paperwork is all created in a way that makes the lawyers process much easier.  I had a buyer that wanted to buy from a seller that did not want to use any real estate agents. In the end, the lawyer that they talked to, forced my buyer (she was paying me directly without telling the seller) to use the offer-to-purchase agreement from me. 

A term is something that must be done but if it is not then the other party can sue (or a hold back and be put in place and the lawyer can hold back money to make sure it is done). A condition is something that must be taken off the contract or else the offer falls apart. Conditions will have a date attached, so that the conditions need to be removed by a certain date for the sale to go through (or later an extension needs to be agreed on).

So, conditions are removed, and your realtor (hopefully me) has come over with a big smile on their face to give you a present and put a sold sticker/sign on the for-sale sign. 

The house is then considered "sold".

Now the lawyer gets engaged

Our office will send them a copy of the signed offer to purchase contract, Listing documents.

Usually both the real estate agent and the lawyer both need to pull the title from the Land Titles site and do our Fintract (filling out the documents for the government to help reduce fraud and money laundering).

Your lawyer will now contact you to set up a date to meet with you for signing.  Usually, you will need to be in the country.  They can do video confirmation but if they do that the original signed documents still need to make their way to the lawyer which depending on where you are can take weeks, or could get lost etc. so leaving time for that.

For the signing meeting you need your ID to identify yourself. When meeting or before the closing date the Seller(s) will instruct the lawyer where they want their money to go.  For example, giving the details of the bank account(s) they want money to be sent to and sign a document allowing the lawyer to deposit funds into their account.

Generally, you have different lawyers taking care of either side (buyer's side and seller's side). After meeting up for signing, the seller's lawyer will reach out to the buyer's lawyer.

The Seller's lawyer places the buyer's order on several conditions. These conditions are so that the Seller's lawyer can hand over closing paperwork. Relying on that lawyer, on the closing date, to deliver the cash to close with the balance of funds owing under the contract and any adjustments for property taxes.

They send the documents by courier. The Buyer's lawyer needs to review and accept the trust conditions.

Closing Date / Possession Date

95% of the time the Seller's Lawyer will receive the funds to close on the closing date (possession date) around 12 noon.

If there is a mortgage to pay out, the lawyer will contact the lender and confirm the exact amount that needs to be paid.

Making sure everything is legal and making sure the title is clear are the main jobs of the lawyer.  So, if there is anything on the title (like a line of credit, mortgage, lien etc.) the Lawyer needs to make sure it is paid off or removed so that the buyer can get a clear title for the property.

Once the lawyer receives the funds the lawyer generally makes all payments and distributes the funds on the same day.

So long as all the funds are received, the Seller's lawyer will contact the real estate agent telling them the keys are released (again usually at around noon on the possession/closing date). By the time the seller should have all of their things out of the house and left it in a fairly clean state and the buyer is free to move into their new home. 

And that is the simple, yet not simple, process. Of course, there can be issues along the way the lawyer, and real estate agents like me, would support and help.

If you have any questions, comments or have any suggestions on how we can explain this process a little more clearly, please comment below or contact me.

Please visit the following page to get Mark's details (Be sure to tell him that you found him through Derek's video)  https://dkeet.ca/guest-speakers.html

If you are looking to buy a property in Edmonton, Sherwood Park, or need advice on the current market contact Derek!

Derek is licensed for residential, commercial, and rural real estate, plus has many years of personal and business experience to be able to understand your needs.

If you are interested in buying or investing in Edmonton or the surrounding areas, click here to set up your own detailed search: https://dkeet.ca/map-search.html

Click here for more information on Derek Keet: https://dkeet.ca/about.html

Best Option for Tax Savings for First Time Home Buyers 

This blog and video came about mainly surrounding the advice I am giving my 19 year old daughter. I am writing this after I made another video with Phil Jungworth trying to get more of a gauge on a quick guide on what people can afford (that blog will also be coming soon), but the point is that this new generation is going to need all the help they can get to be able to afford buying a home.

Last year the Canadian government released the FHSA. Which stands for First Time Home Savings Account. This can still be used together with using money from your RRSP and you can come back and see the information on using RRSP money and how that works for First Time Home Buyers here: https://dkeet.ca/blog.html/tax-savings---what-canadian-real-estate-agents-recommend-to-their-chil-8273044

For my daughter she is eager to walk in my footsteps. Her current plan is to buy a 3 bedroom townhouse and have a few friends rent rooms and cover her expenses so that she can live for free. So at the moment she is putting as much as she can into an FHSA (expecting to hit the max $8,000 per year. This not only saves her the pressure of acting like most people her age and spending money on things that wouod not be considered investments by anyone's standards, it also is expected to be an asset to help her future where ever that may take her.

Deduct What You put into the Account from your Taxable Earnings for the Year 

The FHSA acts in the same way as the RRSP in that the government allows you to deduct the amount you put in against your earnings for the year. For example if you made $48,000 during the year and you put $8,000 into the FHSA then the government subtracts the $8,000 from your taxable income.  This means that you are not taxed on the $8,000 plus you reduced your taxable income so hopefully this can bring you down a tax bracket and the rest of the money you made will be taxed in a lower tax bracket as well.

Invest and Not Pay Taxes on your Earnings

The FHSA also acts in the same way as a Tax Free Savings Account (TFSA) in that you don't pay taxes on the interest or earnings that you make inside of the FHSA account. That means that if you invest in stocks or any other available investments from the account and make money, that money is not taxed. 

Of course benefits are reversed by Revenue Canada if you do not use the money to buy your first home.

Using a Low Fee Trading Platform

A good option for opening an FHSA is Questrade.

I am not an affiliate by any means but I think that using the low fee stock trading platforms is usually smart if you have are somewhat knowledgable.

I have found that most of the major banks tend to kill you with fees when you trade or make investments with them. At the moment Questrade is the only low fee platform in Canada that offers the FHSA account to trade/buy stocks from. Here is the link to Questrade: https://cutt.ly/veY27Gtp . (From that page, choose FHSA)

If you end up getting a Questrade account and want to use my daughter's referral code, the code is: 566531184468069

I am fairly sure it does not give you an added benefit but costs you nothing if you use this when signing up.

Who can Benefit/Open a First Home Savings Account (FHSA)?

To create an FHSA, you must:

1. Be aged between 18 and 71.
2. Be a current Canadian tax resident.
3. Not have resided in a property owned by you or your partner during the present calendar year or any of the preceding 4 calendar years.

Other Points to Consider

1. The annual contribution cap is $8,000, and any unused contributions can be carried forward to the next year. So, that means if you put in $6,000 this year that means you can put in $10,000 next year.
2. The lifetime contribution limit is $40,000.
3. Annual contributions are eligible for tax deductions when you file your income tax, similar to the process for an RRSP (Registered Retirement Savings Plan). But the difference is that you don't need to pay it back like in the case of using RRSP money it needs to be paid back within 15 years. With the FHSA you can just use the money when you buy your first home and then the account is finished and then closed.

Why are People in Edmonton Special?

Naturally they have Derek Keet there to help them buy and sell real estate.  

I'm half joking...

As it pertains to the FHSA, having a $8000 a year and $40,000 a year limit seems to be set based on the Toronto/Vancouver prices and my feeling is that the government would never had given this high of a limit for First Time Home Buyers to use if this account was only made for Edmonton.  So with Edmonton being having the lowest priced housing for a big city in Canada this is especially advantagous for First time home buyers in Edmonton.

It is always a good idea to contact your financial advisor and make decisions that will be best for your family.  I hope that this can make you think and take advantage of what you can though.

When you or your family are ready to invest into your first home, feel free to reach out.

Derek Keet

If you are looking to buy a property in Edmonton, Sherwood Park, or need advice on the current market contact Derek!

Derek is licensed for residential, commercial, and rural real estate, plus has many years of personal and business experience to be able to understand your needs.

If you are interested in buying or investing in Edmonton or the surrounding areas, click here to set up your own detailed search: https://dkeet.ca/map-search.html

Click here for more information on Derek Keet: https://dkeet.ca/about.html

I want to buy a home in Edmonton! how much do I need to make? How much money do I need to have saved? What about debt? Minimum Credit score? What does this mean for the Edmonton housing market?

Today we dive into these questions and give you a general calculation you can do at home.

Lately we have had a lot of buyers either go to their bank or to their mortgage broker and have been surprised at what their bank had to say. Either they didn't qualify, or they had to jump through hoops when they figured it would be a simple acceptance.

Today we try to narrow down what to expect if you are in a certain income bracket, how debt can change the formula, etc.

Income needed to buy a home

Lenders look at several things, but if they are looking strictly at income, a 5% to 10% down payment, then you are looking at roughly 4 times your income.

For a $300,000 home = roughly an income of $75,000.

This is with zero debt.

For debt, lenders look at payments. 

Debt Payments

Roughly for ever $100 monthly interest payment, you are lowering the mortgage amount you would get accepted for by about $10,000.

So that means if you had an income of around $75,000 with a $400 monthly payment, then the would be $300,000 acceptance amount goes down to about $260,000.

Condo Payments

In Edmonton when you get down to the $260,000 priced homes you are looking more at apartment condos or town house condos, which makes it tricky because then the bank looks at the condo fee payments as well.

What Credit score is needed?

Generally, lenders expect to see at least a 680 credit score.

If you are under 600 you should work on getting that score up.

Or at least have 20% down.

What Credit is needed?

Especially for first time home buyers, expect to have at least 2 forms of credit.

For example, two credit cards, a credit card and a car loan, a credit card and a line of credit, etc.

More than 5% down?

Good news is that if you are putting at least the 20% down then there are more programs and options to make things work.

If you are putting 20% down, then you are looking at 

Roughly 5X your income.

This would mean that the $300,000 home would need an income of $60,000.

So, with the average Edmonton Single family home at roughly $490,000, with 20% down you would need an income (or combined income) or roughly $100,000.

or if you are looking at 5% down you would need roughly $125,000 for your household income.

Of course, this is not set in stone and it is always good to check with your mortgage broker. That said, these are great general calculations you can do at home.

Please visit the following page to get Phil's details (Be sure to tell him that you found him through Derek's video)  https://dkeet.ca/guest-speakers.html

If you are looking to buy a property in Edmonton, Sherwood Park, or need advice on the current market contact Derek!

Derek is licensed for residential, commercial, and rural real estate, plus has many years of personal and business experience to be able to understand your needs.

If you are interested in buying or investing in Edmonton or the surrounding areas, click here to set up your own detailed search: https://dkeet.ca/map-search.html

Click here for more information on Derek Keet: https://dkeet.ca/about.html

What does a Real Estate Lawyer go through when processing the sale from the Buyer's perspective?

Whether you have done the process before or it is your first time buying a home, understanding when and how the process works when the Real Estate Lawyer gets involved is important.  Being based in Edmonton Alberta, this information is specific to Edmonton and Alberta, but I assume the process will be similar in other areas as well.

If you are looking to sell rather than buy, or simply want to see that version you can see our blog/video from the Seller's perspective here: https://dkeet.ca/blog.html/steps-for-selling-your-edmonton-home---lawyers-guide-8273049

Before I get started, I want to share a personal story. I decided I would process my own title change when I bought my own property. At that point I did not need a lender and the seller was family so I thought it would be a good learning experience.  There are many things that a lawyer protects you from but in this case the title was supposed to be clear, and the seller assured me it was clear. But, in the end, it wasn't and later when I went to get a line of credit I had to go through a long, frustrating experience trying to get a lien removed from my title. I would not have had to do that if I had gone through a lawyer. On top of that there was a small error on the paperwork I submitted, and the titles office sent this back to me through regular mail. I didn't check my post box and the deadline passed.  Luckily the ladies at the Edmonton titles office were very nice and I just needed to make the small correction and bring it back downtown to resubmit it, but it could have been worse. The other point was that even though I processed my own title transfer I still needed a lawyer to sign the documents in front of, and I also needed to pay the titles office as well, so it wasn't as big of a savings that I had originally thought. I guess the point is that just because you have the right to process things like this yourself, you may not want to.

Let's dive into the process with the lawyer that you go through when you are buying.

The first point is that conditions should be removed before the lawyer would get involved.  Generally, conditions would include options like having an inspection, confirming with the bank that they will give you a mortgage, and in the case of a condo often buyers will want to have a professional review the condo documents. Basically, these are steps that if you don't like what you see (or cannot get the financing) then the buyer can decide to not go through with the purchase of the home.

Conditions have dates attached to them. Two weeks would be a normal amount of time that a buyer would take to confirm and 'waive" these conditions.

So, conditions are waived/removed.  In realtor terms, the home is now SOLD! Yeah!

Then the Lawyer gets involved.

The Lawyer gets a copy of the (Offer to Purchase) contract.

When an offer is made on a property it includes all of the details and timing of the purchase including things like the amount, the date the buyer would take possession/move in, what is included, all of the property details, etc.

Also, any other relevant documents like Dower Rights documents (when a spouse has lived in the property but is not an owner on the title).

The lawyer must also receive any mortgage instructions. 

If the buyer is using financing to buy the property, then this should be confirmed. In the case the money is coming from a bank then the lawyer would confirm the details with the bank.

The lawyer needs the actual formal instructions, so they know how to prepare the mortgage paperwork.

Next the Lawyer will do their initial searches and inquires, then prepare the documents for signing and have the buyer come to their office to sign. Generally, this happens 4 to 5 days before the closing date.

In the case there is a mortgage involved the buyer would still have a down-payment that needs to be paid. The balance of the downpayment would be the full down-payment amount (what ever the buyer is not getting finances for) minus the deposit that they would have made earlier when they made the offer (or shortly after).

There are also other costs. The legal fee and disbursements, which is often $1,500 to $1,600 which needs to be brought in together to the lawyer with the balance of the down-payment.

Also, there is a tax adjustment that is done. Taxes for the year are due on June 30th. So, depending on what has been paid already by the seller, the buyer will either receive money from the seller (and be responsible for paying it) or they need to pay back money to the seller if the seller has paid more than their share of the taxes for the year.

Often since the amounts are higher, Lawyers will not accept cash and the buyer needs to get a certified check or bank draft and bring that to the lawyer. Of course, the lawyer will let the buyer know the amount and breakdown of what needs to be paid before they go to their office.

Funds received must go into the trust account. Which is a separate bank account that cannot be mixed with other payments and is only for holding deposits. These accounts are government regulated on how they must be used to keep the money safe.

When there is a mortgage involved the Buyer's Lawyer needs to send an interim report to the lender. From there the lender will let the Lawyer know if there are any missing documents or any outstanding conditions.  

Next, the Buyer's lawyer notifies the seller's lawyer that they are ready to close.

The Seller's lawyer needs to hand documents to the buyer's lawyer, which includes a signed transfer of land. They are delivered between lawyers on the basis of a number of formal conditions called trust conditions restricting the buyer's lawyer, at the risk of losing their license, only being able to use those documents if they are ready to pay the balance of the purchase price on the closing date.

Then the Buyer's lawyer is able to take the documents and submit the application to the Edmonton land titles office (so that they can process transferring the land ownership to the new buyer(s). For Alberta, there are two land titles offices. One is located in Edmonton which handles the northern area, and one is located in Calgary handling the southern area of Alberta. 

Once the Buyer's lawyer gets the updated title back from the land titles office then they can issue their final report.

Generally, the lawyer will make sure the payment is made to the seller's lawyer by noon on the closing/possession date. Once funds have been received and everything is complete the Seller's Lawyer will contact the buyer's realtor and let them know that the keys can be released.

From there the Buyer would get the keys to their new home.

And that is the simple, yet not simple, process. Of course, there can be issues along the way the lawyer, and real estate agents like myself, would support and help.

If you have any questions, comments or have any suggestions on how we can explain this process a little more clearly, please comment below or contact me.

Please visit the following page to get Mark's details (Be sure to tell him that you found him through Derek's video)  https://dkeet.ca/guest-speakers.html

If you are looking to buy a property in Edmonton, Sherwood Park, or need advice on the current market contact Derek!

Derek is licensed for residential, commercial, and rural real estate, plus has many years of personal and business experience to be able to understand your needs.

If you are interested in buying or investing in Edmonton or the surrounding areas, click here to set up your own detailed search: https://dkeet.ca/map-search.html

Click here for more information on Derek Keet: https://dkeet.ca/about.html

Knowledge from the Edmonton Property Inspector

Today we dive into mice and insects. (Or inspects)

This is something that has come up with buyers when they get the property inspection. Should a buyer run away?

I think knowledge helps, many years ago if I saw water leaking from a toilet I might have thought that the house has a huge plumbing issue, where now I am not happy to see something like this, but knowing that if you take two bolts off, take the toilet off and put a new wax seal on it is a $10 fix makes a huge difference.

Getting back to the question, should you run. First, how bad is it? How could it be fixed? Follow that closely with can you buy something without such problems for the same price? If not, how much could you save or negotiate off the price?

First, how bad is the mice or insect problem?

If the main beams in the house are almost hollow because of bugs, it is probably not safe being in the house and you may just want to look at the lot value. While on the other hand if 10 years ago there was a couple mice that were there, left some droppings that can be vaccumed out, you may not want to demolish the house.

If you see one running around there is probably a few. If you see 10, then call an exterminator.

For things like cockroaches or bedbugs, those are usually immediate issues that will generally only get worse.

How could the mice or insect problem be fixed?

First, mice are attracted to food. So, if there is food, whether it is bags of rice they can easily get at, bird feed or just kids that leave food under the stairs, then the chances of them coming and staying increases. Make sure there is no food for them.

Josh mentions bounce sheets around an RV and steel wool if you have a mouse hole or space of some kind that you think they may get in from.

On Amazon you can find different traps with different ratings, from humane traps where they fall into a bucket and later you can figure out what to do with them.

Or some people may just get a cat, snake or a ferret (note that some cats won't be effective and having a snake in your walls might be a worse issue).

I had a place that I was selling that had old mice droppings and the buyer demanded an inspector come. The cost was $150 plus tax for them to come and inspect. They didn't find any mice (only old droppings that were then vacuumed up) and the issue was solved.

What to do if you find Mold?

In a similar sense to mice, it is going to depend on how much.

Some companies make a good amount of money profiting from people's fear. Josh mentions that there are many types of mold and most are not toxic for humans.

That said, most grow and should be cleaned up.  If there is a little mold, some bleach or a cleaner can easily get rid of it. Wearing a mask and using rubber gloves can't hurt.

That said, usually it is not the mold clean up that is a huge concern (unless they pull the baseboards off and find the walls are full of it). A little mold can easily and safely be cleaned.

It is important to understand WHY there is mold. Is all the ventilation closed off with no air movement? a leak or reason for too much moisture? Overuse of a humidifier? Stopping the issue is important.

Can you buy something without such problems for the same price?

If you can, obviously don't be bothered and buy the other place.

How much could you save or negotiate off the price?

I guess the point here is questioning, what is it worth? Let's say you can negotiate a lower price or that your competition is walking away, and you are getting the place for $20,000 less than what you would of.  Or, if it is going to cost you $500 on an exterminator but you are saving $10,000. Is that worth it?

For some people, maybe not. Maybe just the thought of thinking that mice was once living there would not be worth it. Other people might say, bring on the mice poop!

Special thanks to Josh Born from Canadian Residential Inspection services here in Edmonton. If you are interested in hiring Josh, Please visit the following page to get Josh's details (Be sure to tell him that you found him through Derek's video)  https://dkeet.ca/guest-speakers.html

If you are looking to buy a property in Edmonton, Sherwood Park, or need advice on the current market contact Derek!

Derek is licensed for residential, commercial, and rural real estate, plus has many years of personal and business experience to be able to understand your needs.

If you are interested in buying or investing in Edmonton or the surrounding areas, click here to set up your own detailed search: https://dkeet.ca/map-search.html

Click here for more information on Derek Keet: https://dkeet.ca/about.html