Investing in Alberta is better than buying stocks

Homes provide shelter and refuge, but they are also most Albertan homeowners’ single largest investment. Housing represents 47% of total assets for the average Alberta family – much higher than stock market investments and pension plans combined (29%). Why is this important? Because homeownership benefits the economy as a whole, as well as individual homeowners. Let’s look at this in the context of the most recent stats on Alberta’s real estate, reported by the Canadian Real Estate Association.

Investing in housing in Alberta is better than buying stocks

Over the last 18 years, house price appreciation in Alberta has outpaced Toronto stock market returns. Between 1999 and 2016, with average annual residential sales of roughly 57,000, house price growth in Alberta (6.6%) outpaced yearly returns on stocks traded on the Toronto Stock Exchange (6.4%).

Average residential prices up 3.1% in Alberta in January

Total residential sales across the province were up 17.7% year-over-year, totalling 2,679 resale transactions in January 2016. Roughly 3.4 out of every 10 newly listed homes were sold, translating into a sales-to-new listings ratio (SNLR) of 34%. And the average residential sales price rose 3.1%, to $383,040.

Increased home equity = increased net worth

What’s so great about house prices being up? Rising house prices mean homeowners are building equity in their homes. Home equity represents the current market value of the house, minus any remaining mortgage payments. Equity is built over time as the homeowner pays off their mortgage and fluctuates with the market value.

Rising home equity benefits homeowners individually, and the Alberta economy as a whole. By how much? More than $40 billion in 2016.

 

Calculating Returns to Equity

Using Statistics Canada’s data on Alberta homeowners’ mortgage balances (Surveys of Financial Security), we calculated equity shares by age group. Equity shares multiplied by user costs (average two-bedroom apartment rents used as proxy) provided the income generated (returns to equity) per homeowner, by age class. The annual income generated by homeownership was then derived by multiplying the number of homeowners by age group in Alberta with returns to equity per homeowner.

For those under 35, the income generated by homeownership reached $11,000 a year per homeowner


Over the past five years (2012-2016), the annual income generated by homeownership averaged roughly $57,000 per homeowner (all ages) in Alberta. Returns on equity per homeowner ranged from annual income generation of $11,000 for homeowners under the age of 35 (generally considered as first-time buyers), to roughly $14,000 for those above 65 (annual average).

REALTOR® Tip: First-time buyers build equity in their home as they pay off their mortgage – roughly $11k a year!

Collectively, annual returns on equity (ROE) for all homeowners in Alberta reached roughly 38 billion dollars, or 12% of GDP

Thirty-eight billion dollars a year represents roughly 12% of Alberta’s nominal GDP and 85% of Government of Alberta’s annual revenues. When people build equity in their homes, they borrow against that equity through a home equity loan, or home equity line of credit. An increase in the value of their homes increases the amount of collateral available to households, leading to higher credit. Rising house prices, which imply higher housing equity, may encourage consumers to borrow more, causing a rise in consumer spending. Looking at the data, we know this to be true.

The increase in consumer spending following a rise in in house prices has been referred to as the marginal propensity to consume (MPC) from housing wealth. We found that, for every $1 increase in average residential prices, Albertans raise their personal spending by 6.7 cents, which collectively amounts to roughly $5 billion a year (2012-2016 average).For every $1 rise in housing prices, Albertan homeowners raise their personal spending by 6.7 cents – collectively $5 billion a year

Five billion dollars a year is 1.5% of provincial GDP, and 11% of government revenues. This is a significant boost to Alberta’s economy. A 3.1% price gain, like the one we just saw in Alberta this January, equals an average increase of $11,420. The associated rise in consumer spending that could come out of that is $868 per homeowner per month, or $10,415 per homeowner per year, or a collective increase of $616 million a year. 

-Regine Durand.  Economist

How to buy a home when you haven’t sold yours yet

You’ve found the perfect new home for your family, but your current house hasn’t sold yet. You can’t afford to carry two mortgages, or maybe you were counting on money from your sale to help with the down payment and closing costs.

Before you let that dream home slip away, consider these strategies to help bridge the transition:

MAKE AN OFFER THAT’S CONTINGENT ON THE SALE OF YOUR HOUSE

A seller may be persuaded to accept your offer with the caveat that you’ll have to sell your house before closing on theirs. You’ll strengthen your chances of getting a seller to take a chance on you if you can show that your home is priced properly and has a solid marketing strategy, says real estate broker Dayolin Pratt with Re/Max Advantage Plus in Minnetonka, Minnesota. Successful contingency offers depend on good communication between the real estate agents representing both sides, Pratt adds. It’s up to you and your agent to reassure the seller that the closing won’t be delayed.

Obviously, in hotter housing markets with potentially multiple bids, it can be harder to get sellers to accept such an offer.

OFFER THE SELLER A RENT-BACK OPTION

One way to buy yourself extra time to complete your sale is to offer to buy the new house, then rent it back to the seller after closing, Pratt says. A rent-back agreement is typically for just a month or two. But this arrangement can give sellers extra time to move — or to find a new house of their own — while putting a little money in your pocket and keeping you from having to pay two mortgages at once.

TAP THE EQUITY IN YOUR CURRENT HOME

If you have a high credit score and considerable equity in your house, you could free up some of the latter with a home equity line of credit. A HELOC lets you use up to 85 per cent of your home’s value, less the balance remaining on your mortgage, and is fine-tuned based on your credit profile and income. Most HELOCs have a variable interest rate, so it’s in your best interest to pay off the loan as soon as your current home sells.

This strategy may let you buy a house before you sell, but it’s not a last-minute option. A HELOC requires an appraisal, income verification and a thorough credit check, so it takes time — generally 30 days or more — to qualify, says Tim Beyers, mortgage analyst with American Financing in Aurora, Colorado. If you’re thinking of going this route, make sure you run the numbers with an expert upfront, Beyers says.

To qualify for the new loan, a lender will evaluate your current mortgage payment, plus the HELOC payment and your new monthly mortgage payment, to calculate your debt-to-income ratio for the new mortgage approval, Beyers says. If your income is high enough to have a debt-to-income ratio below 40 per cent with all those payments and other monthly expenses taken into account, only then should you consider a HELOC, he adds.

“Once you start dipping into your home’s equity, that changes the equation when you apply for a new mortgage,” he explains. “Taking too much out can hurt your qualification chances on a new mortgage. Don’t make an offer, then try to scramble to do the math.”

ADD A HELOC TO YOUR NEW MORTGAGE

With this strategy, you break up the financing on your new home with a first mortgage for the amount you need, plus a HELOC to make up the difference in your shortfall for a down payment, says Elise D. Leve, senior mortgage banker at Citizens Bank in New York.

Once you sell your current home, you can pay the HELOC portion off in full and end up with the single mortgage you wanted in the first place, Leve says.

 

-NerdWallet: Deborah Kearns

Things to Consider When Buying an Old House.

It’s like a love affair; some older homes make your heart skip a beat. It is hard not to fall in love with an older home’s historic unique architecture, gabled roofs, hardwood floors, crown moldings and antique light fixtures—older homes definitely have their charm.

The plastered walls, leaded glass windows, original chandeliers, and oak paneling make an old home as attractive as it can possibly be. If you found your love you should be aware of the following money pitfalls of old houses. You do not want to discover that beneath the surface of your dream home lays a dilapidated wreck.

This article provides you with some valuable tips to help you identify potential problems and some renovation rules, should you decide that this love affair is going to be your Gold Mine.

Foundation
The foundation is the most important aspect of any home especially for older ones. One problem that is common for older homes is called the “sulphate attack”. This can occur as a result of a chemical reaction between the soil and the concrete, which causes the foundation to crack and crumble and that can be very problematic. Another major concern with older homes is that the centre beam of the home can begin to sink. This can result in a sagging roof, bowed walls, and sloping floors. If the old house has a bad foundation then renovating it can be very expensive where the cost can range from several thousand dollars to approximately $50,000 depending on the size of the home. Also, in some cases, one might need to jack up the house to replace the foundation and shore up the centre beam.

Electrical Wiring
When buying an older house, it is very important to find out if there are any problems with the state of the electrical and lighting system. Do the lights flicker? Is the current steady or do the lights fluctuate between bright and dull? Is there adequate lighting in the home? It’s important to have the wiring carefully inspected. Also, many older houses use aluminum wiring, which is cheaper than copper wiring but it is a serious fire hazard. Ensure that you factor the cost of rewiring into your offer price. Also, you should consider whether there are enough outlets in the home to suit the needs of a modern household. Install more outlets in order for you to run a number of devices at once like a television, computer, stove, etc.

Lead Paint
In older homes, lead paint is very common as lead was used as a white pigment in paint until the mid-1950s. If you are planning to repaint the home, call in a professional renovation firm as they know the safety precautions needed to be taken when repainting the house. Children and pregnant women should not be in the home during renovations.

Asbestos
Asbestos is a mineral that makes a very effective fire and heat-resistant material that was discovered to cause lung disease. When the tiny particles of this mineral are inhaled, over a period of years they begin to damage the tissue of the lungs. In old homes, asbestos was used in carpet underlay, textured paints, roofing felt, electrical wiring insulation, acoustic ceiling material and insulation. Getting the house checked for asbestos is critical.

Galvanized Pipe
Galvanized pipes are known to rust very quickly. Most insurance companies now refuse to cover water damage caused by leaks in a home with galvanized pipes.

Condition of the Older Home
Just like people, years will eventually take a toll on homes as well. An older home may begin to sag and slope, which is why it’s very important to know about the conditions of the house you’re planning on purchasing.

Older homes may be beautiful, but they aren’t designed for modern living without a total update or upgrade. Make sure the house structure can be modified easily to suit a current living style.

For older homes, renovations are a challenge. To determine the price you are willing to pay, add up the estimated costs to renovate the property based on a thorough assessment of the house. Then, subtract that from the home’s market value after renovation. Allow for an additional 5% for cost overruns and unforeseen problems plus inflation.

Preserve the Charm of Your Old House
If you have already fallen in love with this old house, then make sure you follow the golden rules in repairing your dream home and preserve its historic features and value.

  1. The golden rule of remodeling is, “do no harm”. As you update your older home, make sure to preserve its historic details. Reuse existing materials. Keep historic moldings and hardware. Wire gas lamps for electricity. Keep distinctive examples of craftsmanship. Restore marbling, stenciling, and carvings.
  2. Don’t try to undo long-ago renovations. Most buildings change over time, and alterations to your house may have historic significance in their own right.
  3. Whenever possible, repair rather than replace. Don’t throw away that old claw foot bathtub—have it re-glazed. Fix damaged doors, refinish old cabinets and patch cracking plaster.
  4. If historic features cannot be repaired, look for a similar item at an architectural salvage centre, or buy a new item that matches the old in design, colour, texture, and other visual qualities.
  5. And best of all make sure you hire a contractor that shares your passion and understands your love affair with your old house.

Good luck, you may have found your Gold Mine.

 

-News4realty.com

Choosing the correct window – Many wonder which is best but there is no easy answer

There’s no simple answer to how to choose the correct windows, but here are some things you should watch for.

Windows serve three purposes: They provide light, airflow and ventilation. But they should also help keep the heat out in the summer and in during the winter. That has to do with R-value — in other words, insulation — and the air-tightness around the window itself.

Every window leaks heat. You can have the best windows on the market — triple-paned, double low-E coatings — but they will not have the same insulation value as an insulated wood or concrete wall; no matter how thermally efficient they are.

The trend today is to increase the size of your windows, not to mention the number of windows in a home. People love natural light. But at the same time we need to make sure the windows are improving the house — not working against it.

Heat loss and gain through windows accounts for about half of our heating and cooling needs. A poorly installed and/or insulated window is like having a giant hole in your home’s exterior — and you will see the proof in your energy bills.

When it comes to window choice, there are several options, which can be overwhelming for some homeowners.

It used to be that all you could get were single-paned windows — those are windows that have just one sheet of glass. Now you can get windows that are double- or triple-paned, windows with argon or krypton gas, low-E coatings in between the panes — and different combinations of each, like low-E double-paned windows or low-E triple-paned windows with argon gas.

What’s the difference? For starters, a double-paned window has two layers of glass; triple-paned has three. Multiple layers of glass allow for insulation to go in between the panes, and that boosts the R-value.

The most common types of insulation are argon or krypton gas. Both help stop heat transfer. Krypton insulates better than argon but it’s also more expensive. If you have the budget, it’s a good investment. However, argon-gas-filled windows are still very good; if a home has these windows, I wouldn’t be disappointed.

If you’re not the original owner of your home, you might not know if your windows are gas filled. When you bought the house the previous owners would have probably told you, since they do make for better windows and cost more.

But if you want to make sure you can check the window tag. It’s usually on the bottom inside track of the window.

You can also try looking for two small holes on the spacer — one hole is where the gas would have been injected, and the other hole is for air to exit.

Another feature to look for is low-E glass, or low-emissivity glass. This is a microscopic metallic-oxide coating on the glass that lets in light but also helps stop heat — and ultraviolet rays — from transferring through the window.

Sometimes heat transfer is a good thing. In the winter, we want the sun to help heat our homes. But I’ve heard some homeowners complain about turning up their furnace more often after installing triple-paned windows. That’s because some windows do an excellent job at stopping heat transfer.

However, just like they help stop heat from escaping your home, they also don’t let the natural heat from the sun come in.

One option is to have triple-paned windows on the north side of the house only, and then double-paned on the rest. This provides the extra insulation needed to help block north winds, but still allows some heat to get in on all the other sides. It’s a tricky balance, which is why you should talk to a pro.

Once you’ve decided on the type of glass you want, you have to choose the framing. The most common are wood, metal — and vinyl, which tends to last longer and is easier to clean.

Metal can get scratched and dented. Wood is nice but requires a lot of maintenance; you will need to repaint your window framing at least every five years, and that’s if it’s done really well. The natural expansion and contraction of the wood frame can crack the paint. The basic rule of thumb is that if you can see the wood, the frame needs to be re-caulked and re-painted.

What type of window is the best? Most people want an easy answer. But like most things, there is no easy answer. It depends on the house and the application.

The key to making the right choice is finding a professional who will know what type of windows will work best for your home, and who will make sure they are properly installed.

 

Original source article: Choosing the correct window

The lowdown on low down payments – Mortgage insurance a must for those with high-ratio loans

Hot markets and cold feet might keep some people out of the housing market, but a lack of upfront cash doesn’t have to be an obstacle. While it’s long been the convention in the industry to start with a 20% down payment, the availability of mortgage default insurance means ownership is still possible with as little as 5% down, as long as the buyer meets industry standards of income and creditworthiness.

“What mortgage insurance allows people to do is to get into the market with today’s prices, with today’s low interest rates, once they have determined that home ownership is right for them,” says Mary Stergiadis, principal for Ontario business development at Canada Mortgage and Housing Corp. The insurance repays lenders if a homeowner defaults on payment.

People with insured mortgages can take advantage of the same interest rates as those taking out conventional mortgages, she says. And the insurance doesn’t cost as much as some people think.

Here’s how it works: With 5% down, the insurance premium is 2.75% of the mortgage. On a $400,000 property with $20,000 down, the mortgage insurance premium would be $10,450. That would bring the total being borrowed to $390,450. Assuming a fiveyear closed at 3.75% amortized over 25 years, the monthly payment would be about $2,000, including less than $55 a month for the insurance. The same property with 20% down would have a monthly payment of $1,640.

“What consumers have to ask themselves is what $60,000 means to them in terms of savings,” Ms. Stergiadis says, referring to the amount needed to reach a 20% down payment for this property. “How long would it take to save that additional down payment? Where will home prices be within that time? Where will interest rates be?”

(But note that the tax on the premium – 8% in Ontario – cannot be amortized and is due on closing.) The insurance rate goes down as the down payment goes up. For buyers with 10% down, for instance, the premium is 2%; with 15% down, it’s 1.75%.

A popular misconception is that this insurance applies only to the primary residence of the borrower. But it is also available for a second property, such as a home or condo in the city to cut a commute or to house an aging parent or a student. CMHC does not, however, insure recreational properties.

Private mortgage insurers, such as Genworth Canada and Canada Guaranty, also insure high-ratio mortgages. The rates offered match those of CMHC; consumers usually aren’t aware of differences, as lenders apply directly to the insurers once an offer has been made and accepted on a property.

Genworth estimates about 30% of Canadian mortgages are insured, down from historical levels of as high as 40%. That percentage tends to be lower in the GTA, says Jason Neziol, Genworth’s regional vice-president of sales for Ontario and the GTA. That’s because higher prices mean more people make larger down payments in order to quality for mortgage loans.

Mr. Neziol says private insurers play an important role in the market by providing more choice for lenders and helping to educate the public about options. “It gives options to consumers,” he says. “It’s good for lenders to have a choice in terms of what insurance providers would do.”

You don’t have to be a first-time buyer in order to qualify. Plus, even conventional mortgages, those with 20% or more down, can be insured. This can happen if a loan is slightly outside of a lender’s usual parameters.

And there can be a rental component. A buyer can purchase a duplex with 5% down, for instance, but must live in one unit. A 10% down payment is the norm for three-and four-unit properties, where one unit is owneroccupied and the others are rented out. The point, Mr. Neziol says, is to be aware of the many options available.

© Copyright (c) National Post

Mortgage 101: Where to start – The numbers behind the home

You’re 29 years old. You’ve been in a solid job for a couple of years and your partner has a good job, too, giving you a gross household income of $125,000 a year.

The housing market has recovered after the dip caused by tougher lending rules and prices continue to rise, so it might be time to act and leave renting behind. Interest rates are holding steady at still-low rates. And your parents are ready to gift you a healthy down payment.

Now it’s time to determine how much you can afford. Online mortgage calculators, of which there are many, will provide a rough idea. And this is where many people start. You could click on RBC Royal Bank’s calculator and punch in the numbers, which include your income and debt information. Other sites may ask for slightly different numbers, but the process is generally the same.

Your magic number for buying is $505,000. With a down payment of $75,000, a 25-year amortization and a five-year locked-in rate of 4%, your monthly mortgage payment will be $2,310.

While this may seem doable, mortgage professionals highly recommend more work be done before heading out to find that dream home. And they caution against jumping right to the maximum mortgage potential.

“We don’t want to put someone into a house just because it’s their maximum,” says Jennifer Bissonnette, a mortgage specialist at RBC. “You want to leave some wiggle room. You don’t want to live just to pay your mortgage.”

Online calculators are good tools, but they aren’t always realistic, agrees Laura Parsons, a financial expert at BMO Bank of Montreal. “It’s good to go there and have an idea. But there are many other components to consider.”

A chat with a mortgage professional will help put things in perspective. You might be asked about your plans to start a family, how much you are contributing to your RRSP, what your career goals are, how old your cars are.

This conversation will get you thinking about whether you really want to borrow $439,000, which includes the mortgage principal and mortgage default insurance. You should also consider the ramifications of rates rising in the future.

“Maxing out your borrowing is not always where you want to be,” Ms. Parsons says. “You can’t see into the future, but you have to have some idea of what to prepare for.”

There will be property taxes, homeowner’s insurance, utilities and regular maintenance. There may be emergencies, such as a leaking roof, a broken furnace or a flooded basement. There could be landscaping, snow removal costs or condo fees. All this needs to be rolled into the budgeting process. “You may have to buy a lawnmower,” Ms. Parsons says with a laugh. “A lot of people don’t think about these things.”

Mary Stergiadis, principal for Ontario business development at Canada Mortgage and Housing Corp., explains some guidelines for determining a target home price.

There’s total shelter costs, which include month-ly payments for principal and interest, taxes, heating and half of a condo fee, if there is one. (According to industry standards, half of the fee is seen to represent true shelter costs, while the other half includes things like condo maintenance.) This total is divided by monthly gross household income. As a general rule, the total monthly housing costs should be no more than 35% of gross household monthly income.

Then there is the total debt-servicing-ratio calculation, which adds other monthly debt payments to shelter costs. This total is divided by gross monthly income. Again, as a general rule, servicing these costs should be no more than 42% of gross household income.

CMHC has a suite of online calculators to help homebuyers crunch the numbers. “If they are over the ratios that are allowable within the industry, they would have to look at lowering the mortgage,” Ms. Stergiadis says.

At this point, you might think a less expensive property might be more reasonable. But it sometimes happens, though less often, that people find they qualify to borrow more than they expected. Once a target price has been established, it’s time to apply for a pre-approved mortgage.

A pre-approval will help you refine the process and know exactly what you have to work with when you find the right place and are ready to make an offer. A pre-approval entails a credit check and information such as the rate being offered (usually locked in for 120 days), as well prepayment options. Ask for details about such closing costs as land transfer taxes and legal fees.

A word of caution: A preapproval is not a final approval, so make sure you know what the condi-tions of getting final approval are and that you can meet them. If you go out and lease a new Mercedes before closing, you could end up with a nasty surprise about your ability to qualify. And don’t forget to save a little for that new lawn mower.

 

© Copyright (c) National Post

How much home can you afford? – Saving a down payment is often the biggest hurdle

The first step in determining the price you can afford to pay for a home is to get a clear picture of your current financial situation.

Be aware of your monthly payments on any loans or credit cards, and of your total gross (before taxes) monthly household income.

Lending institutions follow two simple affordability rules to determine how much you can pay.

The first affordability rule is that your monthly housing costs shouldn’t be more than 32 per cent of your gross household monthly income.

In this case, housing costs are considered to include monthly mortgage payments, property taxes and heating expenses — known as P.I.T.H. for short.

For a condominium, P.I.T.H. also includes half of the monthly condominium fees.

Lenders add up these housing costs to determine what percentage they are of your gross monthly income.

This figure is known as your gross debt service (GDS) ratio. Remember, it must be 32 per cent or less of your gross household monthly income.

The second affordability rule is that your entire monthly debt load shouldn’t be more than 40 per cent of your gross monthly income. This includes housing costs and other debts, such as car loans and credit card payments. Lenders add up these debts to determine what percentage they are of your gross household monthly income. This figure is your Total Debt Service (TDS) ratio.

This will tell you what your maximum monthly payments should be. But the home price you can afford depends on several other factors, too.

Specifically, these are the amount of your down payment and the current interest rate.

For most people, the hardest part of buying a home — especially your first one — is saving a down payment.

Many people will not have 20 per cent of the purchase price to put down. With mortgage loan insurance, though, you can purchase a home with less.

Mortgage loan insurance protects the lender. By law, most Canadian lending institutions require it.

The way it works is if the borrower defaults on the mortgage (fails to pay), the lender is paid back by the insurer. The cost for this type of insurance can be paid in a single lump sum, or it can be added to your mortgage and included in your payments.

Most mortgage loan insurance products require homebuyers to provide the down payment from their own resources, such as savings and RRSPs. Gift down payments from immediate relatives are also acceptable.

For down payments of less than 10 per cent, CMHC enables lenders to offer homebuyers the flexibility to use additional sources of down payment, such as borrowed funds or lender incentives.

Once you’ve made the necessary calculations, rounded up a down payment and feel you are ready to obtain a mortgage, it’s a good idea to get pre-approval.

This means that a lender will look at your finances to establish the amount of mortgage you can afford. At that time, the lender will give you a written confirmation or certificate quoting a fixed interest rate, good for a specific period of time.

Having a pre-approved mortgage amount makes the search for your new home much easier and less time-consuming, because you have a price in mind.

Some of the things you will need to have with you the first time you meet with a lender are:

Your personal information, including picture identification;

Details about your job, including confirmation of salary in the form of a letter from your employer;

Your sources of income;

Information and details about bank accounts, loans and debts;

Proof of financial assets;

Source and amount of down payment and deposit;

Proof of source of funds for closing costs (these are usually between 1.5 per cent and four per cent of the purchase price) .

Trouble qualifying?

Your calculations may show that you will have trouble meeting the monthly debt payment on the home you want, and that you will likely have trouble getting approved for a mortgage.

Here are some things you can do:

Pay off some loans first;

Save for a larger down payment;

Revise your target house price;

Meet with a credit counsellor who can help you minimize your debts;

Buy your home through a rent-to-own program provided by the builder, a non-profit sponsor or a government sponsor.

Your credit rating

Before approving you for a mortgage, lenders will want to see how well you have paid your debts and bills in the past.

To do this, they get a copy of your credit report. This provides them with information on your financial past and use of credit.

Before your lender sees your credit history, get a copy for yourself to make sure the information is accurate. Contact one of the two main credit-reporting agencies, Equifax Canada Inc. or TransUnion of Canada, to get your credit report. (There may be a fee for this.)

If you have no credit history, it is important to build one. One way is to apply for a standard credit card, make small purchases and pay for them as soon as the bill comes in.

If you have bad credit, lenders might not want to give you a mortgage until you can re-establish a good credit history by making debt payments regularly and on time.

Most unfavourable credit information, including bankruptcy, is dropped from your credit file after seven years. If you have bad credit, you may want to consider credit counselling.

Despite a poor credit history, you might still be able to get a mortgage loan if you have a family member willing to be a guarantor or co-signer on the loan.

This person must meet the lender’s borrowing criteria, including good credit history, and is legally obligated to make the mortgage payments if you do not.

Excerpted from Canada Mortgage and Housing Corp.’s Homebuying Step by Step
© Copyright (c) The Calgary Herald

Upgrades help boost resale

Sure, it’s exciting building your first home — all of the choices, the finishes, the new house smell, not to mention the fact that you can put your personal stamp on everything from flooring to countertops.

But if you are a first-time home builder on a limited budget with plans to move up to a larger home in the next few years, it is important to think about what upgrades will contribute to resale value.

“You have to temper the visceral experience with logic,” says Todd Talbot, co-host of Love It or List It Vancouver. “It’s all about thinking about opportunities to add value.”

But a recent study by Remodeling Magazine, the Farnsworth Group and the National Association of Realtors found that not all upgrades offer equal return on investment when it comes to resale value.

Although the study looked at major U.S. centres and the information was dictated by the U.S. housing market, the basic premise (what features are most attractive to a homebuyer) can be applied to the Calgary housing market with some modifications due to climate and consumer sophistication.

The study found that the top high-value upgrades include fibre-cement siding, anything kitchen, a garage addition, a basement remodel and outdoor decks.

Ross Pavl, a Calgary-based real estate agent with Re/Max would concur with these conclusions, but adds a few twists given the Calgary climate and market.

Here are his top five upgrades to consider with resale in mind when building from scratch:

THINK KITCHEN

It’s the single most important room in the house. It’s where people congregate, where the kids do their homework and where we nurture ourselves and our friends and family.

“This is the place to put your dollars and upgrade, upgrade, upgrade,” says Pavl, adding that the formal dining room is taking on less importance.

Whether it’s stainless steel appliances, granite countertops, a central island or upgraded full-height cabinets, every little bit helps when it comes to attracting a buyer.

“The kitchen is huge — I just sold a house in Aspen that had a massive kitchen; the rest of the house was OK — the buyer came in and saw the kitchen and she didn’t care about anything else.”

The cost varies depending on the upgrade. Caesarstone countertops start at $4,500.

PLANK IT WITH HARDWOOD

“Everyone wants hardwood,” says Pavl. But when building a home from scratch, it’s really important to research the options.

Some builders offer hardwood flooring as a standard feature and others offer it as an upgrade. Pavl suggests choosing a wider plank (4 ¾ inches) rather than a more narrow board.

“It just seems to be the trend right now.”

The cost is $6,000 and up, depending on type and square footage.

COSY FIREPLACE

A fireplace adds an element of warmth to a home, making it more attractive and appealing to a homebuyer, especially in Calgary’s climate. It also adds an architectural element of interest to the home’s interior. Once again, it is important to research the options and the various home builders and home designs.

With some, a fireplace is standard and included in the cost and with others it is an upgrade.

The cost is about $3,000 and up.

GARAGES

When the crisp, cold days of winter hit and the thermometer drops below zero, a garage becomes a necessity in Calgary.

“It’s very important,” says Pavl. “People don’t want to leave their cars outside in Calgary’s winters.”

He says that a garage can be a game-changer when it comes to price. “Depending on the area, a three-car versus a two-car garage can add $100,000 to the price of a home.”

Although with a front-attached design, the price of the garage is built into the price of the home, not so with most laned products, which offer the unattached garage as an upgrade.

If you are going with the garage option, think about adding an upscale garage door.

The remodelling study found that single upgrade recouped almost 103 per cent on the initial average investment of $3,014, not to mention the added curb appeal that it provides.

The cost is $30,000 and up.

DEVELOPING THE BASEMENT

The lower level is the perfect place to create more living space and as most new home designs include an unfinished lower level, the area is ripe with promise.

“If you go on the market without a finished basement, it is harder to sell,” says Pavl, adding that 80 per cent of homeowners have finished their basements within five to 10 years of building a new home.

The cost is $30,000 and up.

© Copyright (c) canada.com

Leave stress behind when planning a move

For Adam Stuart and Courtney Tunnicliffe, moving into a new home also means uprooting their nine-monthold son, Jeffrey. Arranging baby sitting and packing up belongings without disturbing Jeffrey’s routine will be important to the success of the family’s move.

Kristel Pellow, owner of Hassle Free Move, is a professional organizer who specializes in pre-and post-move organization and says moving with children requires careful preparation.

But whatever your situation, she offers several tips to reduce the stress of moving.

PACK, PURGE EARLY

Pre-packing can begin even before listing your home.

“Seasonal items are the easiest to pre-pack,” Pellow says. “If it’s summertime, you know you don’t need your snowsuits and Christmas decorations.” Once you purchase your new home, purging items you know you won’t need should come next. Of the items you will be moving, Pellow recommends holding off on packing until a couple of weeks before moving day.

A ROOM AT A TIME

Packing up a home full of years of stuff can seem daunting. To make the task more manageable, take it one room at a time, Pellow says, sorting each room’s contents into three piles: keep out, pack and donate/sell.

KID’S MOVING BOX

Packing away belongings into boxes can be upsetting for a child, especially if they aren’t excited about the prospect of moving.

To give them some sense of normality during the transition, give them an open moving box (labelled with their name), where they can store their favourite toys up until the day of the move.

HIRING MOVERS

Plan ahead to avoid unexpected charges, advises Chelsea Ball of Two Small Men with Big Hearts Moving Company. “Some companies may charge extra for fuel or materials such as blankets to pad furniture.”

Ask for an all-inclusive rate and be sure you know what’s included in your moving quote before booking your move, to avoid surprises.

LABEL CLEARLY

Labelling boxes can save time and energy at the other end of the move.

“People say, ‘I’ll remember what’s in this box,’ but, realistically, when you get into the new house and there are 300 boxes, you won’t remember,” says Pellow. Label boxes with the room name and its contents, for example: Green Bedroom, Desk Items. Pellow even recommends labelling furniture. “You may think it was perfectly clear that the couch should have been in the living room, but you find it in the basement. If you label (your furniture) with the room location, they have no reason not to put it there,” says Pellow.

© Copyright (c) Postmedia News

Common sense can keep your home safe

When it comes to home safety and security, this advice may sound like a no brainer, but is worth repeating: always lock your doors. It’s surprising how often burglars enter through unlocked doors.

Don’t get into the habit of closing a window without locking it. All too often, homeowners close a window and forget to lock it, creating an easy entry for the “bad guys.”

Window coverings not only conceal you; they also mask your expensive electronics, so make sure you always close your drapes or blinds.

Install lighting around your home. If a prowler is sneaking around the outside of your home, the shock of a motion light will often send him packing.

Make sure you manage your social media presence carefully. Think about what you’ve been Tweeting. Don’t give too much information on planned holidays or extended weekends out of town.

Make sure you shred all your personal documents before putting them in your recycle bins.

Take a note of neighbourhood traffic patterns. Often knowing where a person lives or what they drive can take away any unnecessary suspicion or fear.

What better “peace of mind” than installing a home security system? One can rest a lot easier knowing there’s backup in the event of an attempted break-in.

Don’t give your keys to anybody. At times, it may seem convenient to give your house keys to cleaning people or gardeners, but don’t do it! The only people who should have keys to your home are your trusted emergency contacts.

Change up your living routine. Burglars like to target people with the same routine. Folks they can set their watch to as to when they come and go are preferred.

Most tradesmen and labourers are honest, trustworthy individuals, but there are some lacking in honesty and integrity. I’m talking about thieving tradesmen who focus more on their gains than your losses.

A good way to send away an unwanted visitor lurking at your front door is to purchase a video door intercom. With these units now at affordable prices, they create a great filter for unwanted visitors without having to open the door.

Whenever you let a stranger in your home – whether the washer repair man, plumber or furnace man – make sure you ask for identification.

Keep in mind that every time you allow a stranger in your home, you could be increasing your chances of experiencing a home break-in.

A repairman with bad intentions could scope out your home’s layout, contents and whether you have a security system in one swoop. Never get personal with the repairman. Don’t ever divulge your plans to these folks; and never lose sight of the fact they are strangers.

Sadly, women who live alone are advised to take heightened precautions.

When scheduling home service visits or deliveries, women should always have another person present. Burglars posing as door-to-door salesmen can be more aggressive and persistent with women, especially if they suspect they live alone.

Go with your intuition. Distrust can be a good thing, so don’t compromise your personal security because you feel you have to let strangers into your home.

If you don’t own a dog, consider purchasing one. Dogs make great companions and offer a great sense of security whether large or small.

And if you’re the dating type, never host a first date at your home, and don’t allow your date to pick you up or escort you back to your home. Arrange a public location for dates until you get to know the person better.

© Copyright (c) The Vancouver Sun