The merits of re-mortgaging given the current interest rate conditions

In the last couple of weeks, I’ve found myself answering a lot of questions regarding the merits of re-mortgaging given the current interest rate conditions.  If you have not spoken with a mortgage advisor in the past couple of months – MAKE IT A TOP PRIORITY TO DO THIS TODAY!!!!

Low interest rates (as low as 2.2% if you have a solid credit score) will in many cases make it worthwhile to pay the penalty (customarily 3 months’ interest costs) to break your current mortgage and re-mortgage your property.  Many people will look at combining this with taking some equity out of their property to disburse other, higher interest loans, or provide funding for educational or other family priorities.

Your credit score is one of the key ingredients of your eligibility to negotiate good financing terms.  Make and work your plan to pay all your bills a week in advance of the due date, and always pay at least 50% more than the minimum payment.  Use Transunion.ca to monitor your own credit score at least a couple of times a year, and IMMEDIATELY action any issues than are impacting your score.

The other key element of a mortgage re-financing is the value of the property.  There are a number of ways to determine this, and I would love to spend some time discussing your property’s value with you –jJust call me to set up some time.

A simple or direct way to determine property valuation is to examine the selling prices of other comparable properties in your area.  There are also a number of Valuation tools available in the Ontario Land Registry system.  These reports cost about $30 to $50 depending on the level of detail, and I will run your property’s valuation for you at cost.

The most thorough way to value a property, and the mechanism used by lenders to validate mortgage loan applications, is the formal appraisal.  This is a detailed estimation of the value of the property conducted by a professional Appraiser.

It has become more important to have a real estate appraiser when looking to purchase or sell a home than ever before. However, if you have never worked with a real estate appraiser before, you might not be able to tell the markers of a high quality one from an average or even a poor one.

The use of an Appraiser is of even greater importance if you are purchasing an investment property, particularly with partners whom you are syndicating the deal with.  This will take all the personal opinions out of the picture and provide an objective, professional third party evaluation.

Here are the five things I’ve found to be of key value when hiring a real estate appraiser.

The first thing to look for when seeking out a real estate appraiser is that he or she has the proper and necessary certification by the province in which he or she practices. In Ontario, the Ontario Association of the Appraisal Institute of Canada, or the OA - AIC, is the biggest of the real estate appraiser organizations. More broadly, real estate appraisers receive either the Accredited Appraiser Canadian Institute or the Canadian Residential Appraiser from the Appraisal Institute of Canada.

When you enlist the services of a real estate appraiser who has both of these designations, then you know that he or she has met the highest industry standards of the profession of real estate appraisal in Canada. You will know that he or she is likely to perform high quality work in valuation within his or her specialized field. While it is important to keep in mind that certification or licensure will not always indicate the real estate appraiser's work will always be of the highest quality, it does provide you a benchmark for comparison by informing you that the person has met particular standards and has received authorization by the province to conduct real estate appraisals.

Second, do not be afraid to ask a potential real estate appraiser for a copy of his or her license. A high quality appraiser will not hesitate to provide this information to you, as copies of licenses will often be requested by loan officers as well as by banks and mortgage brokers.

Third, ask the real estate appraiser who you are interested in working with what percentage of his or her work is performed in the neighborhood where the property of interest is located. This is important because if an appraiser does much of his or her work in a particular area, they will usually have a good amount of knowledge of how much properties are worth in that area.

Fourth, ask them if they have experience performing real estate appraisals for individual consumers, or for commercial companies. You will want an appraiser who is used to working with individuals, as he or she will be in a better position to meet your unique needs.

Fifth, look for a real estate appraiser who is easy to stay in touch with, whether this means by physical, face to face contact, or by phone call or email. An appraiser who you can reach is likely to deliver services that please you.  In this way, a good Appraiser is like a good Real Estate agent – an ongoing source of expert advice and consultation.  A key part of your team.

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