Sep 12 | 2017

5 Terms Every Property Owner Should Know When Refinancing

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Whether 5 Terms Every Property Owner Should Know When Refinancingyou’re looking for more cash flow, want to lock in a good interest rate or just change the terms of your loan, you may be considering refinancing your home. One thing to keep in mind is that unless you’re already at the end of your loan term, there will likely be additional costs involved in the process. Before you move forward, make sure you’ve done all the calculations to check if the penalties and fees make the refinance worthwhile.

Once you’ve decided that refinancing is the best choice for you, it’s time to sit down with your mortgage broker or financial institution and go over your options. To prepare for your meeting, it’s important for you to understand the following terms and how they will affect you*:

1. Amortization period: This is the number of years it will take to pay off your new mortgage. While amortization periods can go up to 35 years, you should remember that even though your monthly payments are lower with a longer period, you’re paying more interest in the long run. It’s important to pay attention to this because if the Bank of Canada increases their rate, your lender may increase your amortization period in order to accommodate it.  Amortization period is often confused with the term of your loan, which is the period in which you commit to the interest rate and other conditions related to your mortgage with a specific lender – usually for about 5 years.

2. Debt-to-income ratio: To determine what products and services you may qualify for, a lender will check your debt-to-income ratio. This figure calculates your monthly expenses versus your monthly income and the resulting percentage is your ratio. It tells the lender how much more debt you can afford to take on. If you have a low debt-to-income ratio, you’re less of a risk to the lender.

3. Loan-to-value (LTV) ratio: This percentage refers to the amount of the mortgage divided by the value of the home. The maximum LTV ratio that lenders require to qualify for a mortgage/refinance is usually 80%. It determines whether you or your lender will need extra protection like mortgage insurance.

4. Portability: If you’re planning to move before your mortgage is fully paid off or you’re just not sure how much longer you’ll be staying, look out for the portability feature of your mortgage. It allows you to move your mortgage with the same interest rate and conditions to a new property with no penalty.

5. Prepayment penalties: With any mortgage, you will likely face a penalty if you pay it off before the term is up. It varies between lenders and depends on whether you have a fixed or variable rate. For instance, the penalty may be 3 months interest on a variable rate term but might be higher for a fixed term.  It’s important to find out the prepayment penalties before choosing a lender as some may have stricter rules and higher costs that make it harder to pay off.

Refinancing your home is not as simple as finding the best interest rate. The lowest rate doesn’t necessarily mean that you’re getting the best product. It’s important to evaluate all the other conditions that come with your new mortgage carefully before making a decision.

If you have questions about refinancing, you can always talk to your mortgage broker or lender.

*This is meant to provide a general overview only. Speak to your lending professional for more information.

 

Aug 16 | 2017

EasyFund is Now Available Directly Through
The Conveyancer®

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EasyFund is now available directly through The Conveyancer®At FCT, we’re always looking for ways to make real estate transactions more efficient for everyone involved. To do this, it’s important to ensure that any new innovation is integrated easily and seamlessly into the existing closing process.

Do Process shares our goals to streamline practices and provide innovative solutions to the legal community. We’re happy to announce that EasyFund is now accessible directly through The Conveyancer platform*. This integration is another way we can provide our customers with greater efficiencies in the closing process. They can now enjoy a truly end-to-end solution through The Conveyancer.

“FCT has found the Holy Grail for Canadian real estate lawyers: electronic transfer of funds between solicitors… and now they’re making it even easier.” Mitch Kowalski, author, advisor and innovator in the global legal services industry.

EasyFund was created in response to a need from the legal community to provide greater efficiencies in the cumbersome practice of paper cheques delivered between offices during a real estate funding process. It is a secure online service that offers legal professionals the ability to safely manage the transfer of real estate closing funds, effectively reducing the need for certified cheques, bank drafts, direct deposits and couriers. It allows legal professionals to manage the payouts of a transaction quickly and easily without leaving the office.

Now, through our integration with The Conveyancer, the payout process can be completed securely and even more efficiently in two simple tabs.

How will this integration benefit you?

  • It will eliminate the need to re-key client information which saves you more time
  • Provide you with an end-to-end solution to process your deals
  • You will remain in control of the entire process
  • You will gain access to a larger network of lawyers who use EasyFund, making your transaction process easier

Join the growing network of law firms who already enjoy easier and faster closings with EasyFund by enrolling now! Contact us at 1.877.313.0505 or easyfund@fct.ca for more information.

*EasyFund is currently available in Ontario only.
Aug 1 | 2017

Is Your Cottage or Investment Property Vulnerable to Fraud?

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Is your cottage or investment property vulnerable to fraud?While people may see the value of getting title insurance for their homes, it is equally important to title insure any property you own – a cottage, summer home or even an investment.

Fraudsters may target properties that appear vacant or are rented out, especially ones that are mortgage free, and can either illegally transfer the deed to themselves and sell it out from under you or take out a mortgage on it and escape with the proceeds.

In one instance, a young man decided to use some of his savings and invest in real estate. He purchased an investment property for $204,500.00, as well as an FCT homeowner title insurance policy. Two years after the purchase, he received a notice stating that the mortgage was in default and that the lender would be taking possession of the property. Confused, he went to a lawyer as he knew that his mortgage was in good standing. An investigation revealed that though the man’s original mortgage was not discharged, the title was fraudulently transferred from the insured homeowner and a mortgage in the amount of $165,000 had been registered on the title. Mortgage funds were paid to the fraudster, who was now nowhere to be found.

Luckily for the young man, he was protected by an FCT title insurance policy. We coordinated and retained a lawyer on his behalf, and ultimately paid out $12,548.09 in legal fees to remove the fraudulent mortgage from title and rightfully transfer title back. The young man was able to keep his investment property, while being spared the time, expense and hassle of having to defend himself against the fraud.

While it’s not feasible to prevent fraud from taking place, the easiest way to protect yourself is to purchase title insurance. It will ensure that you are able to defend and retain the title to your property without experiencing all the stress and the costs associated with it, in addition to protecting you from a host of other title and non-title issues.

Have any questions about fraud protection? Share it with us in the comments section!

Jul 14 | 2017

Why Jack Smith* was Glad he had E&O Extra® with Protection+

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E&O InsuranceWhen Jack’s clients were slapped with a $47,000 development charge, they were astounded. Jack made an honest mistake in failing to advise them about this charge and that there was no cap on it.

To maintain their reputation and keep their clients happy, the law firm was able to negotiate with the builder to reduce it to $10,000. Looking at a reasonable industry standard, the purchaser of a new home could expect to pay $7,500 in development charges so the firm covered $2,500 from their own pocket and the clients paid the remaining amount.

Luckily for Jack, he was protected by his E&O Extra** with Protection+ insurance. He submitted a claim to FCT and was reimbursed for the $2,500 paid to smooth things over with the client.

If you were in a similar situation, would you have been protected?

FCT understands that mistakes happen. We offer insurance products to complement your mandatory E&O insurance. We provide reimbursement for losses resulting from claims against your mandatory E&O insurance for residential and commercial real estate transactions. This includes your standard deductible payment and any increase in premium***.

For additional coverage, like Jack’s, you can add Protection+ to your E&O Extra policy for a minimal fee.  It offers you the ability to settle smaller claims directly with your client and avoid going through your mandatory E&O coverage. It covers up to $10,000 per policy year or a maximum of three claims (whichever comes first).

Contact us to learn the different ways we can protect you and your reputation.

 

*The name has been changed to protect the privacy of our clients.
** E&O Extra does not cover dishonest, fraudulent or criminal acts of omissions.
*** Standard deductibles, premiums and coverage amounts vary by region.
Insurance by FCT Insurance Company Ltd. This material is intended to provide general information only. For specific coverage and exclusions, refer to the applicable policy.
Jul 7 | 2017

3 Tips to Stay Healthy When it Gets Busy

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Tips to stay healthyWhether you’re a lawyer, lender, mortgage broker or realtor – working in the real estate industry can be unpredictable. Before you know it, things get hectic and you can slip into bad habits like skipping meals, not exercising and working on just a few hours of sleep. This will eventually take a toll on your health and even your mood. But when you’re busy, it’s even more important to maintain peak performance.

Here are three simple ways you can stay healthy and energetic all year round.

1. Make healthy food choices

Not that you can’t enjoy the occasional pizza party, but think of it this way, nutrition fuels your body and you’ll get the most out of premium gas. If you skip meals, you may end up making bad food choices out of hunger. Try to stash healthy snacks like fruits, nuts and pre-cut veggies at your desk. This way you won’t need to rely on candy bars and fast food to get you through the day.

2. Keep active

You may be sitting hunched over a desk all day or behind the wheel of a car – going to client meetings or rushing from one property to another. Take some time in the day for a quick stretch break or better yet, start a fitness challenge with co-workers. Getting other people on board is a great way to ensure you all stay moving and motivated.

3. Set expectations and priorities

At the end of the day, you’re only human. Make sure your clients and co-workers have reasonable expectations of you. Create a list of priorities for the day to help you get organized and let people know when they can expect deliverables.

Do you have any other tips to get through busy periods? Share it with us in the comments section!

Jun 16 | 2017

Title Insurance: What Every Homeowner Needs to Know

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Title Insurance: What every homeowner needs to knowYou combed through websites, apps, maybe even the papers and visited dozens of places until finally! You found the perfect house! Your biggest achievement, your biggest asset – how do you keep it safe? Or like in this case, how can you even make sure that it’s all yours?

Before you purchased your home, the property may have changed hands several times leaving room for mistakes like an incorrect survey, a non-existent permit or title-related issues. Even with a new build, somewhere along the way there may have been an error that could affect your ability to sell, mortgage, or lease your property in the future. These are the types of things that a title insurance policy can protect you against.

What exactly is title insurance?

Title insurance is a unique form of insurance. Unlike home insurance where you are insuring the structure and contents, title insurance protects you, the homeowner, against losses related to the title (ownership) and other defects relating to your property. Plus, it may cover fixing issues or legally defending your ownership, which can be very costly and stressful.

Do you automatically get a title insurance policy when you purchase property?

It’s a common misconception that homeowners automatically get a residential title insurance policy when buying property. While a lender policy is required on every purchase, a homeowner policy is not. It’s up to you to make sure that you have the protection available to you through title insurance.

Does the lender or loan policy cover you?

No, a lender aka loan policy covers lenders only  and protects their interests when it comes to priority and enforceability of your mortgage, title and survey defects, municipal issues and title fraud.

What does a homeowner title insurance policy cover?

A typical title insurance policy covers common issues that may have happened both before and after you’ve purchased your home. This is sometimes referred to as pre- and post-policy because the day you take ownership of your home is generally also the effective date of the policy.

The main areas of coverage in the Homeowner Policy are:

  • Fraud — a person fraudulently transfers your property without your knowledge or consent.
  • Forgery — someone forges your signature on a registered document, which allows them to sell or mortgage your property.
  • Encroachments — if a structure built by a previous owner sits outside the property’s boundaries or if a neighbour builds a structure that is partially on your property after you purchase your policy.
  • Lack of building permits — if a previous owner completed work to your property without the required building permits, you could be forced by your municipality to remove or fix the structure.
  • Duty to defend — if you have to protect and restore your title as a result of a covered title risk, FCT will pay for the legal fees and costs associated with it.

How much does a policy cost?

  • For a low one-time premium, you can ensure that you have the protection you need for as long as you own your home. Your lawyer can provide you with a quote within minutes.

Don’t put yourself at risk. For a free quote, visit fct.ca today!

This is provided as general information only. For further details regarding coverage, please review your policy.

 

Jun 9 | 2017

What Can Buyers do to Avoid Surprises and Delays in Closing?

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Tips for closing successfullyWith rising prices and stricter controls on mortgages, housing affordability is getting more challenging. And once you finally obtain funding (after squeezing out every last drop of your savings for a down payment), it’s still not a done deal till the closing date. A number of unexpected issues can come up that may kill or delay a deal.

Here’s a checklist that will help you get to the finish line successfully:

  • Don’t start spending big – Now that you’ve secured funding for your house, you might think that it’s time to start buying furniture for your new home. Try not to spend large sums of money, whether cash or credit, as it will affect your standing with the lender. Your financial status will be checked a few days prior to closing and any major changes from your initial evaluation will need to be reassessed to ensure you still have the ability to pay off your mortgage.
  • Be wary of changing jobs – While it might seem like a great idea to take a higher paying job before your closing date, it may affect your lender’s decision to close as scheduled. They may want a few months of pay stubs from your new position to prove that you have stable income. While it may not be a deal breaker for your lender, it may delay the closing date.
  • Provide documents on time – Your closing date can be anywhere from 30-90 days after signing the agreement of purchase and sale. You do have some time to provide your mortgage broker and lawyer with the documents that they require, but don’t delay! The sooner you provide all the paperwork necessary, the sooner your team will be able to handle any unexpected findings or issues that may arise.
  • Try not to skip the home inspection – With the hot market and multiple offer scenarios nowadays, a lot of homes are being sold without conditions. While presenting a clean offer may win you the home of your dreams, it can also end up costing you more than you expected. When you’re mortgaged to the max, you can’t afford costly surprises like leaks or repairs that you come across when you finally move in.
  • Keep extra funds on hand – Buyers often put as much money as they can into their down payment. However, you should always keep extra money on hand to prepare for closing costs like land transfer fees, legal fees and any bills the sellers may have prepaid, such as property taxes or utilities. You may also need to put down a larger down payment if the lender appraisal values your house at a significantly lower price than you paid for it.
  • Don’t forget the title insurance – Make sure you’re protected by asking your lawyer to purchase title insurance for you. It not only allows you to close fast even in the absence of a survey and provides gap coverage, but it also protects you from paying any liens or debts the previous owners left behind.

Have you encountered unexpected issues before closing? Share your stories in the comment section below!

May 31 | 2017

Does Your Client Really Need Title Insurance?

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Does your client need title insuranceThe topic of title insurance may come up when clients are purchasing a new property, and a common question is, “do I really need it?”

Well, title insurance in Canada has come a long way from when we first introduced it to the market over 25 years ago. It offers the best defense against title fraud, as well as survey and title issues/defects. It can also protect your clients from unexpected costs that may threaten their financial status.

For instance, Jason and June* finally found their dream home after years of saving and searching for the right property. Once financing was approved, they happily moved into their newly purchased home. Shortly after moving in, they received a notice from the city about outstanding tax and water utility charges amounting to over two thousand dollars. This was a very unwelcome surprise given their tight budget as first-time homebuyers. Luckily their lawyer had recommended they purchase a title insurance policy, which covered outstanding tax and utility bills. Because of their title insurance coverage, they were spared the extra expense when the claim was paid out by FCT.

Commercial property owners also benefit from protecting their multi-million dollar investments with title insurance as it covers issues like encroachments, zoning violations, unpaid taxes and utilities, etc. For example, a developer Jack*, purchased a golf course with plans to develop it into a larger golf course and resort. The municipality provided confirmation that the land could be developed for these purposes. Unfortunately, after closing, he was notified by the municipality that there was an error and the land was zoned as “open space/residential” and applying for re-zoning was not an option. As a result, the land could continue to be used as is but development plans could not proceed. Because FCT had insured the value of the land along with the approximate value with the improvements, Jack received a claim settlement for the loss in property value because of the zoning error. With the claim settled, he had the choice to use the property in keeping with current zoning, or sell the property without incurring a financial loss.

So does your client really need title insurance? You decide.

*Names have been changed to protect the privacy of our clients. This information is provided as general information only. For further details please review the subject policy.

May 24 | 2017

8 Tips for Selling your Home

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8 tips for selling your homeCompetition can be fierce in the real estate business, especially in these uncertain times. One day it’s a seller’s market and the next it’s not. So how do you make sure your home stands out in the marketplace?

While there are a lot of factors beyond a homeowner’s control—such as market conditions and regulatory environment— there are certain things a homeowner can do to maximize opportunity and profit.

Here is a quick list to help you make the most of your selling experience before you even put your home up for sale.

  1. Ask yourself the important questions – Is now the best time to sell from both a personal and a marketability perspective? How much do I want/need to get in terms of a selling price?
  2. Prepare yourself to have people in your home. Potential buyers will scrutinize your living space and you should be ready for the feedback.
  3. Put yourself in the buyer’s shoes and do a thorough walkthrough, critiquing your home from their perspective. Making a few small touch-ups and repairs can make a big impression.
  4. Clean, de-clutter and de-personalize your home so that prospective buyers can envision living in the space. For a complete listing of areas to consider when making your home look its best, click here.
  5. Gather paperwork such as utility and tax bills, warranties, property surveys and permits that will answer any questions for a prospective buyer.
  6. Maximize curb appeal to create a powerful first impression. Here are some good ideas to make your home more inviting, as suggested by MoneyTalksNews.com.
  7. Interview several realtors before selecting one to represent you. It is important to choose one that specializes in your area and type of home; one that has a solid reputation and valid credentials.
  8. Consider using the Certified Resale Home service – a pre-listing home inspection backed by an 18-month transferrable warranty to help your home stand out. By understanding what repairs your home needs, you can get in front of potential conditions that can delay or kill a deal. Visit thecertifiedresalehome.ca for more information on how to put FCT’s innovative service offering to work for you.

Do you have any other tips to share?  Please comment below!

 

May 10 | 2017

How to Respond to the Transitioning Real Estate Industry

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How to respond to the real estate industryDeath and taxes, according to Benjamin Franklin, were the only certainties in this world. For all his wit and wisdom, he missed one obvious thing – change.

As pioneers of the title insurance industry in Canada, FCT constantly responds to change with its own innovation. This ability to adapt is even more important in the current real estate market. New regulations are in effect that are throwing the market into chaos. That’s what this blog post will address – how to respond to change and chaos.

For the past year, we have interacted with some of the most compelling personalities in Canadian financial services. We went deep with ‎Fisgard Capital’s Hali Strundlund-Noble, our former president, Pat Chetcuti, Dominion Lending Centres’ Jay Seabrook and Paradigm’s Kathy Gregory—original minds all— and we like to think we got gold. Most of all, we discovered some remarkable commonalities.

Reflecting upon the shared intuitions from our trailblazers, this is what we learned:

1) It is important to stay resilient and responsive to ensure we can deal with business threats.

2) Intuition plays a key role in decision making – where intuition relies on and emotions and expertise-based analysis of data.

3) The benefits of adopting a startup strategy – rapid response, great team chemistry and staff retention.

That’s not all. Researchers have confirmed “that the more unstable an organization’s environment is, executives reported the reliance on their intuition, and their organizations’ performance was better than the industry average when they did so.”

Takeaway? Chaos is good. Instability inspires creativity and entrepreneurial behaviour. And, recognizing a good decision right now is better than a perfect decision next week. This is good because odds are we’re going to see more chaos this year—not necessarily more than usual but almost certainly in new forms.

So: the Canadian mortgage industry has cracks all over it—our trailblazers shared this truth time and time again.

Why? There are deficits in client education, in process innovation, and in responding to regulatory change. There are gaps when reading the fog that lies ahead. Or when there’s technological disruption that drives big banks into agile best practices. In addition, there is more potential disruption with upcoming regulatory changes, FinTech, blockchain, peer-to-peer lending among a myriad of allegiances for financial service businesses to navigate.

What’s going on in the industry?

  • Increased CMHC mortgage loan insurance premiums
  • More rigorous stress tests for property buyers
  • Capital gains reporting changes
  • Portfolio insurance changes
  • Tax on foreign buyers
  • Expanding rent control, and more

 

How will this play out? 

From broker to lender, people begin to worry. But as it turns out, worrying is actually good for us.

This year, the mortgage marketplace will reward not just those capable of seeing beyond the numbers to the stories beneath and then pivoting, but also to those who can use the anxiety.  And we all experience anxiety when change hits us right between the eyes.

Here’s the paradox.

It’s not the worrying that freezes us. It’s our inability to get past the moment the worry does freeze us. This is the moment when powerlessness wins and we’re no longer open. What freezes us is not surrendering to the anxiety—the paradox is that worry is actually doing something.

In fact, research shows that worry motivates us and makes us better planners. A crew of enterprising researchers looked at rumination and discovered that people who sat with their anxiety tended to have far higher verbal intelligence than those who don’t.

The ability to apply that intelligence is quite likely the recipe for success. And here’s how you can do that:

  • Use worry as a mindfulness tool: Worry is often based on expecting something to happen in the future. The cues of feeling the physical tension of worry or noticing that you’re spiraling into despair can bring you into the present. When worry surfaces, allow yourself a set time to stew in it, and then start a distracting activity.
  • Plan ahead: Essentially, worry helps to prepare us. Once we decide on the different actions we can take in various scenarios, the need to worry is eliminated. When you worry about a particular situation, balancing the negative with a positive action plan will help you set your fears aside.
  • Create a support system: Fear and worry can leave you feeling isolated. However, when we feel a sense of connection and support, our fears can be calmed. Based on the plan you create, build a support team to help you action your plan or just to share the worrisome moment with you and hold you accountable.

 

How are you responding to the changing real estate industry? Share it with us in the comments!