Home Ownership 

 ..... Step by Step .....

Past questions of the week ......

 #1   Should I hire a Real Estate Agent when I'm ready to start looking to buy a house?  

The biggest mistake buyers make is buying with their heart instead of their head.  It is your agent's responsiblity to work in the best interest of you .... the home buyer, assisting you in negotiating the right home for the right price.  

When choosing a Real Estate Agent .....  

• get references from people you trust and interview at least 3 agents
• ask about the professionals they work with including home inspectors & insurance agents
• ask about their knowledge of the area you are interested in including neighborhood amentities
• check out their websites

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#2   Is home ownership right for me?
Buying a home is truly one of the largest financial decisions you will ever make. There are pros and cons to purchasing a home.

• You need to have money management skills ... you'll have to work out a budget   
• and be financially stable with full-time employment
• there are costs of owning a home to consider, including mortgage payments ... principal, interest and municipal taxes ... as well as upkeep, maintenance and repairs.  

You have to take into consideration the extra time involved in the home maintenance ...

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#3   Would now be a good time to lock in my Line of Credit or variable rate mortgage?
With a great rate of 3.85% for 5 years, now would be an excellent time to lock in your mortgage ... 

• for the next 5 years, you'll know exactly how much your mortgage payment will be each month ... 
• no worries about whether the mortgage rates "will go up" ... 
• budgeting for groceries, utility bills and other necessities will be easier ... you'll always know how much your mortgage payment will be ... 

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#4   Is this Great Rate available to everyone or just Fort Erie Credit Union members?

Everyone is welcome to join our credit union community; so yes, this great 3.85% rate is available to everyone!

We provide a full range of financial products and services based on our cooperative principles for the benefit of our members and our Fort Erie community. 

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#5   I'm definitely interested in a mortgage with Fort Erie Credit Union ...... how do I apply?

We are Fort Erie's community credit union ..... established in 1951 and this year, we are celebrating 60 years serving our community offering a full range of products and services including loans and mortgages.   To apply for a loan or mortgage, make an appointment with one of our Loan Officers ...

 By being prepared, you will find the right home and the right mortgage for the right price.   

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#6   How long is this great rate going to be available?  I'm looking for a house but I haven't found one yet ... 

We are committed to offering this great rate ...

3.85 % for 5 years

until the end of July.  To apply, just make an appointment with one of our Loan Officers ...

• Patti Carpenter at our Garrison Road location, call #905-994-1201
• Maureen Murphy at our Jarvis Street location, call #905-871-1552

Credit Unions are a smarter choice for all your banking needs ..... 

 Our Lending Team is here to help you to achieve your goals and dreams ..... today!

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#7   How much do I need to save for a down payment? ... and what will my payment be?  

When saving to buy a house, you have to be able to see that the end result

  ... a home of your own ...

is worth the sacrifice.  Once you start saving, the satisfaction of reaching even the smallest milestone can be very gratifying ... start by saving just $75 each week ... 

• in just 3 weeks, you'll have $225
• in just 3 months, you'll have $900
• in less 3 years, you'll have more than $11,700

enough for a 5% down payment on a home worth $140,000, including the lawyer's fees and your monthly mortgage payment will only be $650! 

Talk to us today ... we'll show you how easy it is to save when you know your goal.  

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 #8   $650 a month for a $140,000 mortgage sounds reasonable ... how do I figure out if it is affordable for me?

When discussing your mortgage options with our lending team, your overall financial situation is taken into consideration during the approval process.

• gross annual income ... how much $$ you make during the entire year
• municipal taxes on the property
• heating costs (for CMHC insured mortgages)
• payments on all your other debts including loan payments, credit card payments and child support or alimony payments

Our lending team will guide you so that you understand the mortgage approval process ...

• your housing costs (mortgage & municipal taxes) cannot exceed 30% of your gross income
• all your debt payments added up together cannot exceed 40% of your annual gross income

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 #9   How long will it take me to pay off my $140,000 mortgage if my payment is $650 a month? ...  How do I pay it off faster? 

At today's great 3.85% rate, the payment is calculated for an amortization of 30 years.  This means that if the interest rates remain consistent and you want to keep your payment around $650 a month, it will take the full 30 years to pay off your mortgage.  

However, at Fort Erie Credit Union, we encourage you to increase your payment and decrease your amortization whenever possible ...   

• paying weekly or biweekly will help you to pay off your mortgage faster ...  
•  annually increasing your payment by up to 10% of the original payment can significantly decrease your amortization ...

Make an appointment to ask us about all the options available ...

• by putting 10% down at the time of purchase, your $650 payment would be calculated with an amoritzation of only 27 years ... effectively shaving 3 years worth of payments right off the top ...  
• by increasing your monthly payment from $650 to $720, you will cut 5 years off your mortgage and pay it off in just 25 years ...

Ask our lending team to help guide you so that you understand the entire mortgage process. 

Talk to us today ... looking for your first home is more fun and much less stress when you know what you can afford.   

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#10   Is a home inspection recommended when I buy a home?

Yes, it should always be a condition of your offer to purchase. An experienced certified home inspector can save you thousands of dollars and anguish for an investment of roughly $500.

We are people helping people to achieve their goals and dreams ...

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#11   Is now really a good time to buy a home instead of renting?

Absolutely ... for a number of reasons:

1. renting isn't such a great deal ... over the past few years, unrest in the economy and fewer renters having the financial stability to purchase has increased rental prices (as much as 5% in 2011 alone).

2. mortgage rates continue to remain at historic lows ... purchase a home for $140,000 with a 5% down payment and your mortgage payment can be as low as $650 a month.

3. there are lots of homes currently for sale and less buyers in the market ... this means that you are more likely to negotiate a better price with an eager seller than ever before!

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#12    How do mortgage rates increase ... what will happen to my payment if I don't take advantage of the 5 year rate at 3.85% and the rates rise to 4.50% or even 5.50% ?

Mortgage rates fluctuate based on the bond market ... bonds are issued by governments and big business. For example, Canada Savings Bonds are just one type of government bond.

The 'yield' of the bond is the annual rate of return. These yields can be volatile and fluctuate in response to various political and economic factors ... inflation, unemployment, changes in the stock markets and financial unrest in the global economy.

Long-term mortgage rates (3 years and longer) are based on these bond yields, but are less volatile because financial institutions ... including our credit union ... absorb daily fluctuations in order to create stable mortgage rates.

Having said all of that, when the rate increases, the mortgage payment must also increase to offset the higher interest that is being calculated ... if your mortgage payment is $650 at 3.85% ... your payment will increase to ...

• $700 at 4.50%
• $745 at 5.00%
• $780 at 5.50%

Imagine if rates increased to ...

• 6.50% ... $865 or 7.50% ... $960

which is what 5 year mortgage rates were just 10 years ago in 2002 and 2001 respectively.

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 #13   Is now a good time to buy a house? Yes, now is the time to ...

... come in to the credit union and get preapproved for the mortgage you can comfortably afford

... find a real estate agent and look at homes in your price range

... hire a real estate attorney; ask what their fees will be including the cost of the land transfer tax

For more information about a mortgage that you can afford, contact

Loan Officer Patti Carpenter at #905-994-1201

Loan Officer Maureen Murphy at #905-871-1552

Be an informed buyer!

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#14   Why should I bank with Fort Erie Credit Union?

There are a number of great reasons to bank with us ...

1. we are Fort Erie's community credit union; established in 1951 ...

2. we have been providing members with financial products and services for 60 years ...

3. many of our members have been banking with us for over 25 years ...

4. we want your business ... your 1st car loan, the mortgage when you buy your new home, the TFSA savings for your 'rainy day fund' and the RRSP savings for retirement ...

5. our great 5 year mortgage rate ...

3.85%

has been extended until August 31st ...

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 #15   Should I choose a fixed rate or variable rate mortgage?

Choosing mortgage options that are right for you can be confusing. Here are some mortgage facts made simple:

•  on a closed, fixed rate mortgage, your interest rate and payment will not change throughout the duration of the term; buyers who like to budget are often better suited to closed fixed rates mortgages.
• with a closed, variable rate mortgage, your interest rate fluctuates with the prime rate so it can change from month to month; this feature will continue throughout the term of the mortgage and may not be as attractive as it sounds.
• open, variable or fixed rate mortgages can be paid off at any time during the term; please note - you will be paying a premium on your rate for that privilege. Open mortgages usually attract buyers who plan to make lump sum payments or are considering selling in the near future.

We're here to answer your mortgage questions ... make an appointment today with Patti Carpenter at our Garrison Road location or with Maureen Murphy at our Jarvis Street location.

Banking with Fort Erie Credit Union is the best choice; just ask our members, they'll tell you!

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#16   What is the 'Home Buyer's Plan?

The Home Buyer's Plan (HBP) is a program sponsored by the federal government that allows you to withdraw up to $25,000 from your RRSPs to buy or build a qualifying home for yourself or for a related person with a disability.

Your RRSP contribution must have been in the RRSP plan for at least 90 days prior to withdrawal under the HBP to qualify for the income tax deduction and all withdrawals generally have to be paid back to the RRSP plan over a period of no more than 15 years.

For more information, visit www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer and clic on the Home Buyers Plan (HBP) tab.  

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 #17  What else do I need to know about buying a home other than getting my mortgage preapproved at Fort Erie Credit Union?

It's always a good idea to ... 

• schedule a final inspection of the property shortly before closing to ensure that the home is in the same condition as when you signed the offer to purchase ...
• arrange Fire Insurance ... well in advance of the closing date ... for the full replacement value of your new home ...
• be prepared to deliver funds to your lawyer in the form of a certified cheque including the balance of the down payment, any miscellaneous closing costs, the Land Transfer Tax & your lawyer's fees ... 
• contact the cable, telephone & utility companies to arrange installation or to transition the service to yourself upon closing ...

Banking with Fort Erie Credit Union is your best choice; just ask our members, they'll tell you!

 Ask us for a copy of CMHC's Homebuyer's Guide ... Step by Step ... a comprehensive, yet easy to understand guide to helping you make a wise homebuying decision; for more info, visit http://www.cmhc-schl.gc.ca.

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 #18 I'm still looking for a house ... how long will the credit union hold this great rate for me?

We've decided to extend our mortgage rate .... 3.85% for 5 years, closed ... for another month until the end of September 2011.

 Make an appointment with Patti at Garrison Rd or Maureen at Jarvis St for preapproval ... the credit union will guarantee the rate for up to 60 days following the day you were preapproved.

• if the rates decrease during the next 60 days, you will automatically be approved for the lower rate
• if the rates increase during the next 60 days, your rate will not increase

Talk to us today ... looking for your own home is more fun and less stress when you know what you can afford.

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#21 I'm having trouble saving my down payment ... are there any tips that the credit union can help me with?

Focus on your goal ... home ownership ...

• make an appointment with Patti or Maureen for preapproval to discuss a mortgage that you can afford & the down payment you need to save
• once you have determined the amount of downpayment ... be realistic ... figure out roughly how long it will take you to save; set up a transfer to a separate savings account that is not accessable by your membercard
• review your daily spending habits ... if you save the $5 that you spend on a coffee & bagel each day, an extra $100 each month could be deposited to your 'downpayment account'
• consider using your RRSPs ... you can pay them back over 15 years

Make an appointment to talk to us today and you could be saving $$$ for home ownership by Christmas!