Mortgage 101- Effective Rate Solutions | October 30th, 2023

In this edition of Mortgage 101, Clinton Wilkins and Todd Veinotte discuss the value of financial literacy and reviewing your rate options, especially in a time of financial hardship. Plus, learn what is in store for Financial Literacy Month in November.

Clinton Wilkins 00:04
There’s going to be a Nova Scotian artists playing at my conference, who I personally had suggested. So the entire country of mortgage brokers and you know lenders and industry partners are going to be there. It’s a Halifax band. Any guesses? No. Sloan.

Todd Veinotte 00:20
Oh, is that right?

Clinton Wilkins 00:21
Big time.

Todd Veinotte 00:22
Okay, I got another question for you. Do you like pumpkin spice latte?

Clinton Wilkins 00:25
I am not a coffee drinker. So I do not. I’m not a PSL type of person. But many people might think that I might be.

Todd Veinotte 00:31
I like pumpkin spice latte. I think it’s excellent. Pumpkin Spice Latte been turned on to it.

Clinton Wilkins 00:37
Really? So do you go to Starbucks now before you go up to the station, because it’s like literally –

Todd Veinotte 00:41
No no no, it’s a once a week thing.

Clinton Wilkins 00:43
Oh, it’s a little treat.

Todd Veinotte 00:44
Kelly and I will go for a drive and we’ll get a pumpkin spice latte.

Clinton Wilkins 00:46
That’s nice.

Todd Veinotte 00:47
Because it’s a little pricey.

Upcoming Mortgage 101 radio shows & Financial Literacy Month

Clinton Wilkins 00:48
You know what? It’s all good. And we’re gonna be rolling just to tee it up. Because I know like, we’ve had a lot of fun the show. But if anybody’s curious to know about November, it might be Movember. If people are gonna be fundraising.

Todd Veinotte 01:00
Are they still doing Movember?

Clinton Wilkins 01:02
Oh, totally.

Todd Veinotte 01:02
Okay.

Clinton Wilkins 01:03
But November is also known as financial literacy month. And you’re not gonna be able to get away from us in November. So we are doing our normal weekend show, which will be at the first of the first weekend in November. And then Todd and I were going to be doing two live shows where we’re going to accept callers live on the air. On November 16 and November 30.

Todd Veinotte 01:21
In my studio.

Clinton Wilkins 01:23
In your studio.

Todd Veinotte 01:25
Air traffic control.

Clinton Wilkins 01:26
That’s where that’s where the real action happens. So if you want to call in and ask us a question, tee it up November 16, and 30th, we’d love to take your call. I’m sure there’s going to be probably hundreds of calls, but your wonderful producer will field them all. And we will get some of you live on the air. So –

Todd Veinotte 01:44
I don’t know about hundreds of calls.

Clinton Wilkins 01:45
I think there’s going to be. We have a lot of listeners. And we have some fans.

Todd Veinotte 01:51
We have a lot of listeners, and we do have some fans. But 100 listeners or 100 callers is perhaps not obtainable?

Clinton Wilkins 01:58
Well, we will take caller number 99.

Todd Veinotte 02:00
There you go. All right. So mortgage lender, one your guide to homeownership, again, we talked about all kinds of stuff. So I guess, Clinton, what do you want to do? What do you want to touch on to wrap things up?

Options for challenging financial situations

Clinton Wilkins 02:09
Well, we’re going to talk about, you know, people that are in crisis. You know, in this rate environment, some people are really having a hard time. Not everyone’s having fun. You know, and I think that is very challenging. We always want to provide the best advice, and we want people to leave happy. But not everyone is happy right now. I think that’s just the reality. Just imagine, you know, if you’re coming out of a mortgage at well, you know, one and a half, two, two and a half, three percent and your new mortgage at 6%, you’re not going to be like running to the bank and be like, I’m so happy. You’re gonna be like, I’m surviving. You’re not thriving right now. By and large. And also, with this inflation environment, people are certainly having a hard time. And you know, one thing we talked about was, is the bank going to start to have losses? Are people going to start missing their payments, are there going to be foreclosures? In my opinion, the rates are going to be high for some time before we’re starting to see people like really in a loss position. So I think it’s a kind of a wait and see. But I really encourage people, if you’re kind of in a hard spot and you own a home, maybe a refinance is the right thing for you to do.

Todd Veinotte 03:21
Or maybe just sell.

Clinton Wilkins 03:23
Some people need to sell. And due to the amount of inventory on the market and we just heard from James Dwyer, realtor here in Halifax, with Engel and Volkers, I said it because you know, you don’t like saying that name. There’s not enough inventory on the market. So I think that if you’re in a challenging position, listing your home is okay. Sell your home, maybe then you can buy another home with a smaller downpayment. Sometimes people cannot refinance for whatever reason. And with a refinance, you can only refinance up to 80% of the market value. But if you sell it, you’ll probably still retain about 95% of that sale price, because you still have to pay your realtor. And then maybe you can do like a 5% down on a new home. So maybe you can access more cash per se, by selling and buying, that’s an option. And maybe when you buy, you can buy a you know, a less expensive home. They really do exist. We talk about maybe buying in a war rural area further out a town that could be an option for some people.

Todd Veinotte 04:17
Do you find that people often come to you and you guys do an outreach, obviously through email, and this is part of why –

Clinton Wilkins 04:25
And we do a lot of calls too.

Todd Veinotte 04:26
That’s right, that’s right. So this is why you want to talk to your clients on a yearly basis, on an annual basis. But I find, I’m sure that you reach out to people at times and they sound pretty desperate when you first started talking to them. You get them in, you do a review and you go through some options and they go wow, I didn’t realize that I had some options here.

Ways to adjust your rate product

Clinton Wilkins 04:47
Totally. And I think sometimes that, you know, is a refinance, and sometimes it’s a midterm transfer. So just I want to talk about even a meeting that I had today. Obviously I’m not going to breach anyone’s privacy but I had a couple in that bought a house a couple years ago. And we believe, you know, their property value went up $100,000 from last year until now, they had a very good healthy downpayment. You know, they didn’t just put down 5%, they put down 20% or more, and they are in a variable rate, and they’re like, what should we do, we have a very, very good variable rate. And what I consider a good variable rate is anyone at like prime minus 90, 95, 100, 105. So a very good variable rate. And, you know, they’re concerned, they’re considering either converting into a fixed rate with their existing lender, or potentially doing a transfer out of their existing lender into a new lender, and generating the penalty. When we do a transfer like that, we can capitalize up to $3,000 of the penalty, and then they were going to pay out the rest of the penalty. So I think the penalty was like six grand, so we’re gonna capitalize three, they’re gonna pay out three out of their account. And what we were trying to determine is, the rates that they were given in terms of doing a conversion, is that better than doing a transfer, or is doing a transfer out at a lower rate and paying the penalty make the most sense? And we really talked about, you know, three options. You know, one is obviously converting with the existing, one is doing a transfer out to a new institution and becoming a new customer again, and we know sometimes new customers get better rates than existing. And then the third option is basically doing nothing, right. And doing nothing might be considered ostriching.

Todd Veinotte 06:27
Yep that’s the new term we coined.

Clinton Wilkins 06:29
We love saying ostrich, but sometimes that’s okay. And especially at prime minus 100, let’s say, somewhere in that range, it is okay to stay the course. I’m in a variable, you’re in a variable. And variable rate mortgages are way more popular, even the last month as they have been in the last six months. The reason being is because the variable rates and the fixed rates are almost the same again. You know, there was a lot of disparity where variable was much more expensive than fixed, but it’s not now. Many more borrowers are taking a variable, because it has the flexibility to either break the mortgage and pay only three months interest to get out. But you can always convert with that existing lender down the road, especially if the rates do go down. So I can tell you variable way, way, way more popular today than they were even two months ago, three months ago. So that’s why it’s really important to talk about the type of rate product that you have, the type of report that you want to go to, what’s happening in your life, and everybody’s situation really is different. Everybody’s income is different. Everybody’s credit is different. Everyone’s assets are different. And I think really planning out what’s going on is really just so so important.

The value of financial literacy

Todd Veinotte 07:45
And the bottom line, like you said, Don’t ostrich, open your mail, have the conversation, talk to a professional talk to a professional, seek somebody out. Doing nothing is never the answer ever.

Clinton Wilkins 07:55
No. And I think sometimes people want to avoid their situation. You know what I mean? Nobody’s situation is the best right now. No one’s having the best ever time, I don’t think. And that’s why it’s really important to talk, talk to your spouse, talk to the professional, and really make the best plan going forward. And I think just teeing up our financial literacy month, November is a great time to really look at your finances. And I’m going to tee this up that going into the end of the year, holidays can be very, very challenging for people Todd, just around even like what the costs are, and you know overspending, all these things, and we’re going to talk about all of that in November.

Todd Veinotte 08:33
All right. So what is the best way for people to get a hold of you?

Clinton Wilkins 08:36
I think checking us out online is the best way. Check us out at teamclinton.ca/radio. Great place to start. We have hundreds and hundreds of blog posts, you can contact us and you have all the links to our social media. So you can see Todd and I online and you could also listen to our show anywhere where you listen to your podcasts.

Todd Veinotte 08:57
Mortgage 101 your guide to homeownership. Thanks so much for listening, everybody. We will talk again next time.