When financing a home, your lender will offer to add "mortgage insurance" to the contract, but you should think twice before agreeing to do so.  What is "mortgage insurance"?  To be blunt, it's nothing more than a low-grade, high-cost version of good old fashioned life or disability insurance.  It's not that "mortgage insurance" is without merit, it's just that it always makes more sense to consider individually-owned coverage.  It's far superior, cannot be taken away from you and is often less costly.
 
In the case of traditional lender-owned versus personally-owned insurance, there are several important features to consider: 

 
o       Who will own the policy
o       When underwriting takes place
o       Rates and rate certainty
 
Ownership:  Typically, "mortgage insurance" is owned by the lender.  If something happens to you, any claim is paid directly to them, and it leaves nothing for final expenses or other needs such as income replacement.  Who is this really protecting?  If you own it personally, YOU decide how to allocate the funds.  (I.E. pay off part of the mortgage, and use the rest to take a trip, take time off with the kids, etc.)  In addition to this, lender-owned coverage is attached to the mortgage.  So every time you refinance, you also must re-qualify for new coverage.
 
Time of Underwriting: Signing up for lender-owned "mortgage insurance" is often just a signature and a few simple health questions- so easy!  - but ask yourself why.  The reason for this simple application process is that the underwriting is done at the time of claim.  In essence what you're signing is a tentative agreement that if, at the time of claim you were found to have been insurable back when you applied, only then will your claim will be paid.  Ouch. You may find out too late, that you are NOT insured even though you've been paying your insurance fees every month.
 
Rates: With "mortgage insurance," rates are not guaranteed, and in many cases are higher than they need to be.  The price can go up without warning, and there is no option to lock in a level rate.  IF you own your own insurance policy, it's YOURS, and your rates cannot be increased, regardless of how your circumstances change.
 
The best way to insure yourself is to take an hour to sit down with a licensed, qualified agent who will help you determine the best types of coverage to suit your needs and your budget.  Once you are comfortable that the proposal from your agent meets your needs you can accept the coverage, knowing that you've done your due diligence for the sake of your financial security.  Remember, you don't need to protect your lender; you need to protect yourself and your ability to provide for your family. 
 
Adam Stephanson deals with families and business owners, and ensures their financial needs are adequately provided for.  He makes sure your money is worth the most when it's needed most, through insurance, investment and retirement planning.

phone: 604-685-6521 ext. 343
cell: 604-818-5615
Adam.stephanson@f55f.com
www.adam-stephanson.com
 

 

June 20th was the first day of summer and the Vancouver Real Estate market is still moving along at a good pace. In the past week there were approximately 200 sold listings in the City of Vancouver.  Definitely not a slow real estate market!

 

In comparison to the market we have been accustomed to in the past few years, there is a definite increase in the number of price reductions. Within the City of Vancouver 328 price reductions were reported in the past week. I don't necessarily believe it is because the property values are falling. I think the reductions are due to overly optimistic sellers and Realtors. Some Realators are looking at the price of  properties sold in early 2008, and then adding 5% to the price. They are assuming the market has continued to move upward, and pricing accordingly. 

A number of weeks ago I toured and inspected a property listed on the West Side. This is a nice home listed in the 1.6M ballpark. I was pretty surprised when I saw the home, thinking it was substantially over priced . Three weeks later the house is still on the market and has now been reduced by $200,000. It should now sell quickly. This is an example where the media would print the headline, "Prices being reduced by hundreds of thousands in Vancouver." In reality this home was very poorly priced; there were no comparable sales remotely close to the original asking price.

For the past five years, the media has been saying that prices will be falling and the market is cooling. I suppose if they continue to tell people this, eventually they will get it right. I believe that we still have a healthy market. I have recently been on both the Buyers and Sellers end of deals that are comparable to times when sellers were receiving 3,4 or 5 offers. It is the same idea as one gas station selling a litre of gas for $2.00 when every other station is selling for $1.40.  If the station at $2 brings down their price to $1.40 it doesn't mean that gas prices just dropped 60cents. It is just another example of ... "you can ask whatever you want ... the proof is in the sale price."

Overall I think we are in a more balanced market.  Sellers can still get a good price for their property and Buyers can find good value when they do their due diligence. I also believe the days of the bidding wars are over. I had a sale a few summers ago where I priced a home at the low end of market value to facilitate a quick sale. After the first open house we had 15 subject free offers. The house sold so much over asking price the sellers could have bought a 1 bedroom apartment in Kits with the extra money!

 

As a Seller in today's balanced market, the most important aspects for a successful sale are current comparable sales, and taking the emotion out of the sale of your home. An experienced Realtor will help you set realistic expectations so that your home can be marketed properly, resulting in a very successful transaction.

If you would like to know how my marketing plan differs from a Realtor who will just "stick a sign in the ground" I would love to hear from you.


 
Simon Clayton
www.simonclayton.ca
604-764-0711 (Direct)
 
This communications is not meant to cause or induce breach of an existing agency agreement.