Quotations by Sean Cooper

Could you earn more from investing? Maybe. But if you're anything like me, you may not sleep well as a mortgage holder. And nothing beats a good night's sleep. [2017] - Sean Cooper

Hiring the contract with the lowest quote can set you up for disaster. If you're doing major home renovations, get in writing quotes from at least three contractors. If a quote is a lot lower than the others, it may be a warning sigh that the contractor is cutting corners to save you money. Often it's best to choose a quote that's somewhere in the middle. [2017] - Sean Cooper

If you're a first-time homebuyer, you can claim the home buyer's tax credit (HBTC). This non-refundable tax credit is based on the amount of $5,000 multiplied by the lowest personal income tax rate (15% in 2016). In 2016, you'd pocket about $750 by claiming this credit. If you're buying a new home for less than $450,000 and it's your principal residence, you may qualify for the GST/HST new housing rebate, as well. [2017] - Sean Cooper

Closing costs are anything but a drop in the bucket, typically adding up to between 1.5% and 4% of a home's purchase price. Common closing costs are a home inspection, real estate lawyer fees, land transfer tax and appraisal fees, among others. [2017] - Sean Cooper

The offer includes important information, including buyer and seller information, offer price, deposit amount, walk-throughs of the property (usually three), conditions, chattels, fixtures, closing date and expiration date (how long the seller has to accept the offer). [2017] - Sean Cooper

A conditional offer has at least one condition that must be satisfied for the deal to go through. You can include conditions for just about anything, though the most common are financing home inspection and broom-swept and, for a condo, a status certificate review (the status certificate includes important details about your condo, such as the reserve fund, any special assessments or lawsuits, condo bylaws, rules, maintenance fees and utilities; ask your lawyer to review it.) Although they're not conditional per se, ask for three walk-throughs as well. Think long and hard before including conditions, as they could cost you your dream home. If you do include conditions, make the deadlines tight--two or three days for a home inspection and a week for financing are generally enough. [2017] - Sean Cooper

There is no hard-and-fast rule about deposit size. It depends on where and the type of property you're buying. Your deposit is typically anywhere from a few hundred dollars to 5% of the purchase price. Your agent comes in handy here; they should know the market well. Ask them how much of a deposit to make. [2017] - Sean Cooper

The gross debt service (GDS) ratio looks at the portion of your gross monthly income needed to cover your monthly housing costs (e.g., mortgage payment, property tax, heating and 50% of maintenance fees). Most lenders in Canada are looking for a ratio of 35% or below, although if you have a credit score over 680, some lenders let you go as high as 39%. Aim for a GDS ratio 30% or below (up to 35% in pricey real estate markets). The total debt service (TDS) ratio takes the gross debt service ratio a step further. It looks at the portion of your gross monthly income needed to cover your monthly housing costs, plus monthly debt payments (e.g., car loan, credit card debt, line of credit, student loan). Most lenders in Canada are looking for a ratio of 42% or below, although if you have a credit core over 680, some lenders let you go as high as 44%. Aim for a TDS ratio of 37% or below (up to 42% in high-cost cities). [2017] - Sean Cooper

When it comes to credit inquiries, there are two types: soft hits and hard hits. Soft hits, such as asking for a copy of your credit report, won't impact your credit score. Hard hits are inquiries that count toward your credit score. Whenever you apply for a credit, whether it's a credit card or mortgage, lenders ask for a copy of your credit report. When this happens, a credit inquiry is recorded--a hard hit. To protect your credit score, limit the number of hard hits. When shopping for a mortgage, apply only at lenders you're serious about. And try to apply for mortgages within a two-week period (these inquiries usually will be lumped together and treated as one). [2017] - Sean Cooper

You can obtain a copy of your credit report for free. The easiest and fastest way is to use Equifax and TransUnion's interactive phone services. You can also download and complete forms from the Equifax and TransUnion websites. You can now get your credit score for free online from fintech (financial technology) companies like Borrowell and Mogo. Best of all, it won't lower your credit score to check. [2017] - Sean Cooper

Being pre-approved means you're financially ready to buy a home; it doesn't guarantee you a mortgage. The missing piece of the puzzle is the property. Is it in fair to good condition, with an economic life of at least 30 years? Did you pay fair value? Does the home have asbestos or other environmental of safety issues? Your lender wants to know it's investing in a rock-solid asset before approving your mortgage. [2017] - Sean Cooper

Non-traditional lenders with a solid track record are worth considering, especially if it means paying down your mortgage sooner. [2017] - Sean Cooper

Through a broker, you can often get a rate lower than you would get if you went directly to a bank. Some lenders offer lower rates exclusively to brokers. Some lenders won't deal directly with brokers, so you may still need to shop the market on your own. [2017] - Sean Cooper

A slightly lower mortgage rate may come with restrictions like stiffer mortgage penalties, limited prepayment privileges and shorter closing times (some lenders offer a lower rate when your mortgage closes in 30 to 45 days). In some cases, it can actually make sense to choose a mortgage with a slightly higher rate (e.g., 0.10% to 0.20% higher than the lowest available rate). [2017] - Sean Cooper

In Canada, mortgage penalties depend on the type of mortgage. If you have a variable-rate mortgage, you'll pay three months' interest, but if you have a fixed-rate mortgage, you'll pay the greater of three months' interest or something called the interest rate differential (IRD). Ask how the IRD is calculated. Is it based on the posted or the discounted rate? If it's based on the lender's inflated posted rate, consider this carefully before signing up. Your mortgage penalty could add up to thousands of dollars. To reduce the mortgage penalty, prepay as much of the mortgage as you can before breaking it. [2017] - Sean Cooper

If you'd like to pay down your mortgage sooner rather than later, prepayment privileges are a must. Banks are pretty flexible with payment privileges. Most let you prepay, each year, between 10% and 20% of your original mortgage balance as a lump sum. This is only one prepayment option. Others include increasing your payment and doubling your payment. [2017] - Sean Cooper

If you believe interest rates are going up, you may be better off with a fixed-rate mortgage. If you're planning to pay down your mortgage in five years of less, a variable-rate mortgage may make the most sense, but if it will take you longer, a fixed-rate mortgage is worth considering. [2017] - Sean Cooper

It's the accelerate alternatives that save you the big bucks. When you pay weekly (52 payments per year) or biweekly (26 payments per year) instead of monthly (12 payments per year), the interest savings are minimal. With accelerated weekly (52 payments per year) and biweekly (26 payments per year), you're paying the equivalent of an extra month's payment every year. [2017] - Sean Cooper

Make lump-sum payments whenever you can afford to (most lenders let you do this on one of your regular payment dates during each year of the mortgage term) by tossing "found" money--tax refunds, bonuses, cash gifts--at your mortgage. Lump-sum payments go straight toward principal, saving thousands of dollars in interest and shaving years off your mortgage amortization. By shortening your amortization period, your mortgage payment will be higher, but you can save a ton in interest. Round up your mortgage payments to the closet $25 payment increment, so you're paying a few extra dollars a month toward your mortgage. [2017] - Sean Cooper

By increasing your mortgage payment as if rates are 2% or 3% higher then they are, not only will you pay your mortgage off sooner, you'll be prepared if mortgage rates are higher when your mortgage comes up for renewal. [2017] - Sean Cooper