Mortgage Matters: Should I wait or should I do it now?
Mortgage Matters: Should I wait or should I do it now?By Bob Quinlan
Monday, March 02, 2009 03:56 AM
by Bob Quinlan
A lot of people are wondering if they should wait to buy, re-finance, consolidate, etc., or whether they should act now.
One undeniable fact is, property values are falling and will continue to fall for the next while. If you are thinking of buying and you aren’t fussy about the property you are going to purchase then waiting might be a consideration. But then, if you aren’t fussy about the property why are you considering buying anyway? So then, this message is primarily for those who are serious.
The greatest frustration I am hearing from people is due to the change in how the lenders are looking at their applications. I thought I covered this in my last few articles.
The lending guidelines are decidedly different depending on whether we are in an increasing or decreasing market. Since we are in a decreasing market, the lenders are going to not only look at your credit history and your job tenure, they will also be looking hard at your prospects of continued income.
Your ability to keep on making the payments. What happens if your job is terminated, you are laid off or if your hours are simply cut? What if you are self-employed or commission, performance paid? What are the projections for your industry? Do you have any savings to make the payments if the worst happens? Nobody doubts your integrity. At the time of signing the mortgage documents, we all get full points for making a sincere commitment to make all agreed payments. Just like everything else, we make plans and then life happens.
This is why the lenders have to come up with guidelines to protect their investors and shareholders. Remember, when a property goes into foreclosure…everyone loses, not just the borrower.
What I am trying to say is, today we know what the guidelines are. Tomorrow they could change…for everyone. The chances are in this economic climate they will get tougher and it will be more difficult to borrow. So, if you are thinking seriously about buying and you have found a home that you and your family will be very happy in for years to come, what are you waiting for? Make sure you check out your options thoroughly before you decide to walk away. Tomorrow, that opportunity may not be there.
The same principals apply for re-financing to consolidate your debts or even just to better your rate and reduce your payments and interest expense. If your application is dependent on the value of your property or maybe the type of property, that value may be reduced later and you may not qualify. This also could have a double whammy as I have talked to a number of people who have been surprised to find that the interest rates on their unsecured lines of credit have been increased without notice. Check the fine print of your agreement. Your bank may have the option to raise your rate if they think your situation to be a risk. Uncertain times translate into higher rates on unsecured (more risky) loans. Waiting may cost you on both ends.
All this talk about tough times and tightening economies don’t simply mean lower prices due to lower demand. They also mean all businesses have to make sure they make enough profit to stay in business. That means on both ends…revenues and costs. This also pertains to people who make sure they doing the same with their incomes and expenses. Those who do will be able to relatively sail through these times to come. This is a great country we live in but we are not “entitled” to all the luxuries the advertisers tempt us with and the media leads us to believe are ours to take. However, we do have the means to earn them.
The tools are all there for everyone, no matter your situation. I counsel people every day on how to make plans to improve their lives. Those who chose to make a consistent, concerted effort are successful. Those who don’t are the ones we hear whining “poor me”.
Find out what your options are, hang on to what you have. Make the best of your opportunities. Believe me there are many, you just have to look for them.
Bob Quinlan is a Mortgage Broker with Mortgage Alliance Prince George, you can reach him by email :bob@pgmortgages.ca or by calling the office at 250-564-9161
posted by Colin @ 8:16 AM
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