Advice wanted: Mortgage renewal

Consumer mortgage application

Anyone have any tips for renewing a mortgage?

Most of the time, I feel like Matt and I have always lived here at the farm. However, we’re actually just coming up on five years–a fact that has been brought home to us ’cause our mortgage is almost at the end of its term, and it’s time to renew.

We’ve never gone through a mortgage renewal before (you may recall we were able to pay our first house off in 4 and a half years), so we’re a little uncertain about the process.

You also might remember that getting the mortgage the first time around was complicated because a farm is outside of the norm when it comes to financing.

I’m looking for any and all tips you have for getting the best deal during a mortgage renewal.

Interest rate is our most important consideration. We are working hard to pay off the farm quickly, so we want to pay as little interest as possible.

We’ve met with the credit union that currently holds our mortgage and with a bank. I have one more meeting lined up next week with a different bank. All of the rates we’ve been offered so far are lower than we’re currently paying, which is great, but I don’t feel like I’ve found the best deal yet.

Any advice to help us through our mortgage renewal?

 

 

Odds and sods

 

Preserves and homegrown apples

It’s been a busy week–really a busy month (or months)–so I’m taking it easy today with a quick list of the odds and sods that have been happening recently:

  • One of my very best friends left a whole package of homemade preserves, muffins and fresh apples on our driveway gate this week. We’ve been friends for more than 30 years and still live less than 10 minutes from each other. Life gets busy and we don’t see each other as often as we’d like, but we’re still connected. Little moments like this are what friendship is all about for me.
  • The 30th anniversary issue of House and Home was full of great rooms. A lot of the old favourites were some of my memorable spaces too. Kim Cattrall’s ocean front home (seriously, she stood in the ocean and then sat on driftwood for two pictures) is pretty special.
  • Our warm fall lulled me into a false sense of security. We’ve had windchills, negative temperatures and even snow over the past week. I need to get cracking on the annual seasonal shutdown. This weekend’s to-dos are remove the tractor mower deck and turn off the outside water.
  • Speaking of cold weather, I’ve started knitting again–and am teaching a whole bunch of people at my day job how to knit too. Yet another pair of my favourite slippers from French Press Knits are on my needles right now.

Is anyone else feeling like there aren’t enough hours in the day right now? Or the things I want to/need to do are too many for the time I have available? Obviously, my friend (who is also mom to two little boys) has found some deeper level of productivity than I have yet uncovered.

The cost of country living

You’ll have to excuse me today. I have a bit of a rant.

I said last week that I am most looking forward to getting to the payback stage of our solar panels. Friday night, we came home to an envelope from the hydro company. Inside was not a payment, but a bill.

The panels use a little bit of power to operate. Once our account is fully set up, this amount will be deducted from the total we generate. The payment side, though, isn’t set up yet. The billing side is. Funny how that works, eh?

Delays in getting our payments are not my complaint.

Country living is not simple, and it’s not cheap. One of my biggest surprises in moving to the farm was how much electricity costs.

Well, it’s not so much electricity. The rates are the rates. What changes depending on where you live is the delivery rate. In the country, where the population is less dense and there are fewer houses, delivery (the cost to get electricity from the generating station, through the lines and up to my house) is more than half my regular bill. Ouch.

I’m willing to suck it up and pay for the privilege of living where I do. However, this latest bill for our solar is completely out of whack. Look at the numbers.

Hydro bill

We used 1 kWh of electricity. One. Delivery was $5.40. Five freaking dollars and 40 freaking cents. Oh, and let’s throw 70 cents of tax on there just for fun. The total bill of $6.10 does not include a charge for using any actual electricity. It’s all just delivery and tax. Ridiculous.

Ask Matt and he’ll tell you that I’m a little bit bitter about the delivery charge. I’ve hated it for pretty much every hydro bill during the last two and a half years. I cannot wait until the hydro company finally starts paying us for the electricity we’re generating.

Going solar – Show me the money

It’s time for the final post in our solar panel saga. As we all know, going green costs green. Today, I’m going into the numbers (in a slightly artistic fashion).

Read on to find out how much our solar panels cost, how many kilowatts they produce and all of the other details for our solar system.

Solar panels cost and output

Obviously, our solar array and its associated dollars and cents are specific to the Ontario microFIT program. I expect some of our numbers will translate, though, for others who are setting up their own systems.

The last outstanding part of our solar project is to receive our first payment from the hydro company. I have to say I’m looking forward to moving on to the payback stage of this project.

Where to buy inexpensive cloth napkins

Last year for our Christmas party, I really wanted green napkins. I went to all of the usual stores, and even though it was just a month before Christmas, I had absolutely no luck. Then in July at Value Village, I found a dozen dark green napkins.

Dark green table napkin

Christmas was honestly not the first thing on my mind in July, but I knew I’d use the napkins and the price was much more reasonable than at any of the usual stores, so I bought them.

We use cloth napkins all the time at our house, and I’ve had the most success finding napkins at a decidedly unusual source: the dry cleaner.

You know the rack of abandoned clothing? One day at the cleaners, hanging from the rod alongside the shirts and trousers and outdated suits were dozens of napkins clothespinned to wire hangers.

I picked out a set of gold and a set of chocolate.

Where to buy inexpensive cloth napkins

They must have been from a nursing home or restaurant because there were so many of them. It’s been a few years since I bought them, but I’m sure I paid less than a dollar each. They’re all large and nice thick fabric.

The one issue with formerly institutional napkins is that some of them are stamped on the back side.

Stamp on a cloth napkin

For me, that’s a small price to pay to get 12 napkins for less than $10.

Do you use cloth napkins or paper? Where do you usually buy your napkins? Have you ever bought anything at the dry cleaner?

Not so fab freebie

See my full review of the Ikea Strandmon.

 

People, I am uncomfortable.

It’s affecting me physically, financially and emotionally.

It all began at the start of the summer.

A colleague at work was downsizing. She had furniture–extremely well-made furniture–and she wanted it gone.

I said, “What I’m really looking for is a wing chair.”

She said, “I have a wing chair.”

I said, “I’ll pick it up on Thursday.”

Of course what I really meant was I’d convince Matt to go with me to pick it up on Thursday, as there was no way a wing chair would fit in my car. If you’ve read any of Victoria’s hilarious blog, Matt’s reaction is a lot like Paul’s (although the wing chair is not in any way the same as the kingdom mirror).

So with only slight jeopardy to my marriage, Matt was on board. After he carried the chair out of the house, loaded it, drove it home, carried it into our house and down the stairs to the basement, he stood there, looked at it, and said, “Do you like that fabric?”

I said, “Of course not. I’m going to recover it!” And then I sat down.

And he said, “What’s wrong?”

And very quietly I said, “It’s not the most comfortable.”

Matt was silent.

Since then, the chair has sat in the reading nook in the basement. Occasionally, I sit in it, hoping it’s gotten more comfortable. It hasn’t. I had a friend come over and test it for me. She agreed. It’s just not a comfortable chair.

Flowered wing chair

The seat is too shallow. The back is too straight and too short. The wings are too narrow. This is a sit up straight and balance your teacup on your knee type of chair (which I should have guessed from the fabric). This is not a slouch down, lay back, snuggle in and relax type of chair.

However, I found a chair that is exactly what I’m looking for.

Ikea Strandmon wing chair

Most of you are probably familiar with Strandmon from Ikea. This chair is extremely comfortable. The first time we met (before the uptight flowered one came into our lives), both Matt and I agreed that it is a great chair. You can sit sideways with your legs thrown over the arm and your head is still wonderfully supported by the wings–yes, I absolutely sat like this in the store. The back is the perfect angle to slouch a little bit but still be supported.

I want this chair.

But it’s Ikea. The chair that I have is probably full of hand-tied springs, high density foam and solid wood. There’s no way that Strandmon can match that. Plus, the chair that I have was just $25. Strandmon is $300. Twelve times more expensive!

Sure I’ve spent money on furniture before (hello most comfortable couch ever), but it’s always been a carefully researched decision into an “investment” or “adult” piece of furniture that will last us for years. You may say that $300 isn’t a lot to spend, but the rest of my furniture either came from garage sales or was made by me, so my threshold for sticker shock is pretty low.

The only way I can think of to make this work is to put Strandmon on my birthday list. September happens to be my birthday month. My family doesn’t typically do big extravagant expensive gifts for each other (and yes, in my world $300 is a lot to spend), but I think if all of my family members and Matt went in together, I would feel okay with them buying me Strandmon.

What do you think, family? Happy birthday to me?

Update: Check out if my birthday wish came true… and some more thoughts on the Standmon… in this post.

Update #2: See the finished reading nook here.

My pot problem

Hello. My name is Julia. And I have a pot problem.

It’s not what you think. In fact, it’s more like a problem with a pot.

You see, there’s this great window in the basement. It’s large, lets in lots of sunlight and has a great wide windowsill. I wanted to do a little display there. A vignette if you will. One of the features I wanted to include was a potted plant.

All of this was a rather vague idea until at a meeting at work everyone was given a plant. I selected a bright green ivy thinking to myself, “This would be perfect in a bright yellow pot on the windowsill in the basement.”

Never mind that I’m not good with plants, particularly houseplants, and my ability to keep this ivy alive was very much in doubt. I had a vision in my mind. I had to see it come to reality.

Unfortunately, my perfect pot was hard to find. Well, not really. I found it last fall. It was in the garden clearance section at Rona. And it was $12.99. Now I don’t know about you, but that seemed like a high price to pay for a ceramic pot, especially in the clearance section at the end of the season.

I walked away.

I came back every so often to check on it and see if the price had been reduced. I looked at other stores. I examined numerous yellow pots. I considered spray paint. Nothing matched up to the picture in my head.

Finally, this spring, I snapped. I pulled into Rona on my way home from work one evening, strode into the store, picked up my pot and bought it. With tax, it was close to $15. For a ceramic pot. Granted, it was a ceramic pot in the perfect style, of the perfect size, of the perfect shade of yellow.

I stuck my ivy in it and plopped the whole thing onto the windowsill. And it’s perfect. It matches my mental image.

Yellow pot with ivy in it on a windowsill

I still begrudge paying $15 for a pot, but I do admit that seeing the ivy–which somehow is still surviving–makes me happy.

I’ve never consciously “decorated” a house before, so I’m finding it tough to spend money on decorative elements, which seem somewhat frivolous to me. I have no hesitation about pulling out my wallet when it comes to big ticket items like construction supplies or, ahem, pets.

Is it weird that I spent nearly 6 months thinking about a ceramic pot? Do I have a problem? What’s your usual spending threshold for decorative items? How do you justify buying pretty things for your house?

All about farm property taxes

The first installment for our 2013 property taxes are due this week. I realize this topic will not apply to some readers, but I decided to write this post anyways, as our experience may be helpful to some of you.

Property taxes on a rural property can be a bit complicated. However, it’s worth it to seek out rebate programs, as the savings can be significant.

For us, the farm is divided into three parcels: residential, agricultural and conservation.

Large hayfields

The residential section is exactly the same as most people’s property taxes. It includes the house and one acre of land immediately around it. These are taxed at the regular residential rate.

The agricultural section of the property is the fields. These are classified under the farm property class and are taxed at 25% of the residential rate.

The conservation section of the property is the woods and marshland. For us, this adds up to 42 acres that is classified as “provincially significant wetland.” Under the Conservation Land Tax Incentive Program, these acres are tax exempt as incentive to maintain them as natural areas.

None of these tax rebate programs are automatic, as we discovered last year. Previous owners had let the rebates lapse, and between 2010 and 2011, the property taxes nearly doubled. The whole 129 acres was being taxed at the residential rate–ouch.

The residential classification was still in place when we took possession of the farm last March. We went to work right away to apply for the rebates that were available to us. What we learned is there is no single point of contact for farm property taxes.

Farm property tax paperwork

The Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) handles applications for the Farm Property Class Tax Rate. Operations such as tree farms, animal farms, greenhouse operations or crop farms like ours count under this class of property. The farm must simply generate at least $7,000 of income a year. The most important part of the application is the Farm Business Registration Number. Since we do not farm the property ourselves, the farmer who rents our fields has to complete this portion of our application and supply his registration number.

The Ministry of Natural Resources (MNR) manages the Conservation Land Tax Incentive Program. Most of our property is restricted under the local conservation authority. However, this does not automatically qualify us for the CLTIP. The Ministry has to deem a property—or a section of it—as provincially significant. Fortunately, our property was already in the MNR’s system, so we just had to apply for the rebate.

Marsh in the winter

We also went through our local municipality for a few other adjustments specific to the house itself: their records showed a mobile home on the property and a working indoor pool, both of which did not exist and which impacted the value of our house. After the “demolition” of the mobile home and the pool, our taxes decreased by a whopping $257.56–hey, I’ll take whatever I can get.

The Municipal Property Assessment Corporation (MPAC) is the overarching organization in Ontario that manages everyone’s property taxes. Approvals from the city, OMAFRA and MNR flowed through to MPAC, which pulled all of the information together, determined our tax rate and notified the city of what we should be billed.

The flow of applications, approvals and adjustments is very, very slow. Our applications went to the various organizations last spring. I followed up monthly by phone to make sure all of our applications were wending their way through the system and no information was missing.

Some of the approvals came through in the summer. However, none of the adjustments were applied at the city level until the fall. We paid three installments at the full residential rate—ouch again. However, by the end of the year when the reclassifications finally came through, we had a huge surplus on our account—so much so that we didn’t have to pay our last installment and the city still sent us a cheque at the end of the year.

Now heading into the 2013 tax year, all of the rebates are in place, and the quarterly tax bills are very manageable. In fact, the amount of property tax that we’re going to pay this year is equivalent to what we paid when we were living in our little house in the city.

Our $9 TV

It sounds like an episode of extreme couponing. Customer goes into a store. Cash register rings up a charge of $819.24. Customer opens wallet and pays $9.24.

Well, we’re not extreme couponers, but this is exactly what happened when Matt went to buy the new TV for our basement.

50 inch LG LED TV with DIY network on the screen

You know I had to put DIY Network on the screen for this photo

So how did he do it? It’s all about the points.

For years, Matt has had a Sears Mastercard. He liked it because he could redeem his points for gas or restaurant gift cards. But then everything changed. A couple of years ago, Sears decided that points could only be spent at Sears. We don’t shop at Sears a lot (at all), so Matt’s been building up his point balance for a long time.

Knowing that we wanted a second TV for the basement, Matt decided that this purchase was the chance to finally use his points. He did his research to figure out what TV he wanted. He cashed in his points for a couple of gift cards. He watched for sales. And then it happened.

A 50-inch LED LG TV came on sale. The total price after tax (including Ontario’s special e-tax) came to $819.24. He plunked down $810 in gift cards and charged the rest to his Sears Mastercard.

Bill for a new TV

Depending on how you look at it, the TV cost either $9 or $81,000–the amount of money Matt had to spend to earn all of his points. Buying on points is definitely not a quick process.

I should also say that while Matt and I use our credit cards often, we pay off the balance in full every month, so there are no interest charges and we didn’t go into debt to buy our $9 TV.

Have you ever bought anything on points? Are there any extreme couponers out there? What’s your favourite rewards program for collecting points? What’s the best deal you’ve ever found?

Financing the farm

It’s been a year since we bought the farm, and this month I’m revisiting some of our experiences from the purchase.

When we last left our heroes, they were standing in the snow next to a sold sign smiling giddily because they had just bought a farm.

In reality, they had a conditional sales agreement on a farm. In order to actually close the deal, they had to pay for the farm, which meant a mortgage.

Consumer mortgage application

Finding a lender for the farm was a bit like finding the perfect property–frustrating, trying, drawn out, complicated… although [spoiler alert] ultimately successful.

Matt and I had gone to our bank and been pre-approved before we ever started looking at farms. However, now that we had found our farm, we had to convert our pre-approval into an actual approval. And according to our conditional offer, we had eight days to firm up financing.

What we discovered was that in the case of a rural property a pre-approval is mostly hypothetical. Turning it into reality is another matter entirely.

Banks, and really most lenders, like cookie cutter. They have forms and check boxes and mathematical formulas. A 129-acre farm with a modest house, a massive barn, a semi-rickety driveshed, a bunch of hay fields and a few acres of forest doesn’t fit their molds.

Posted interest rates don’t apply. Nor do minimum down payments. Hoops and hurdles are placed in your path. Acrobatics–and lots and lots of paperwork–are required.

Signed offer in hand, we headed to our bank. To cover all of our bases, we also visited a credit union where Matt’s Dad is a member and connected with a mortgage broker recommended by our real estate agent.

Here’s what our options were:

  • The bank: Throughout our dealings with our bank, we felt like they were trying to make things as difficult as possible so that Matt and I would just go away. Even though we weren’t planning on working the farm, they wouldn’t give us a residential mortgage. Everything had to go through their small business line of products. And the interest rate was a full percent higher than what other residential customers were getting.
  • The credit union: Service was great, and we really felt like our staff person was working with us to make the mortgage happen. They would do a residential mortgage, but the interest rate wasn’t any better than at the bank.
  • The mortgage broker: For the most part the broker struck out. Even though Matt and I were a good credit risk and the farm had no big issues, lenders didn’t want to step outside of their little boxes. He did manage to find one major bank willing to give us a residential mortgage. The snag was that the bank saw the “needs TLC” description in the real estate listing and wanted to hold back a portion of our loan conditional on us installing a new heating system and new roof within 120 days of taking possession.

So there was no clear front runner among our three options.

The biggest hurdle in securing financing was that every single lender wanted an appraisal. A real live person had to visit the farm, walk around and say how much it was worth. Except he’d only look at the house plus 5 acres. Maybe 10 if we were lucky.

A big part of the appraisal was looking online for comparable properties, which meant that since the appraiser was only evaluating 5-10 acres, he was looking for anything in the 1 and 15 acre range. Now maybe I place more value on land than other people do, but somehow in my mind 5 acres doesn’t compare to 129 acres.

It was important to us that the whole property be valued properly. All of the lenders would only give us a mortgage for up to 80% of the appraised amount, so if the appraisal came back too low, we could be in the situation where we might not be able to afford the farm.

Aside: The 80% loan speaks to my earlier comment about minimum down payments not applying to farm purchases. While in Canada people are able to purchase houses with as little as 5% down, if you buy a farm, your lender is going to want 20% minimum.

Anyways, the other huge frustration with the whole appraisal process is that the lender ordered it, required us to do it, kept the report and wouldn’t show us a copy, but required us to pay for it. I managed to speak with the appraiser our bank wanted to send out to the property and when I asked him how much the appraisal was going to cost he refused to tell me!

The appraisal ended up being the tipping point for us.

I managed to get the credit union to agree to appraise the full 129 acres–at a cost to us of $762.75. Given the urgent deadline of firming up our financing within a week, we gave their appraiser the green light to head out to the property.

The day our conditions expired, the appraiser’s report showed up at the credit union. Even though we hadn’t signed the final paperwork, we went ahead and waived the conditions on our offer. And by the way, the appraisal came out more than $60,000 higher than we had paid for the farm. Phew!

The day after we waived the conditions, a bank contacted by our mortgage broker came forward with a firm commitment for a residential mortgage at a half percent less than the credit union was offering.
Mortgage Loan Offer paperwork

Though he had no obligation to do so, our broker gave us the paperwork from the bank, so that we were able to take it to the credit union and use it to negotiate a better interest rate. The great service from our broker and our mortgage specialist at the credit union made what was an extremely frustrating process slightly less painful.

Some lessons learned for securing a mortgage for a rural property:

  1. Give yourself as much time as you can to finalize your financing. We had had lots of conversations with the bank throughout our property search, well before we ever placed our offer on the farm. We had some idea of what would be required to secure the mortgage. However, the financing was much more complicated than we could have ever dreamed. We squeaked in just under the deadline to waive our conditions.
  2. Have all of your financial information documented in detail and carry it with you at all times–extra hard copies as well as electronic files you can email. All of the lenders required three years of tax statements for both of us. In addition, we each supplied pay stubs and personal statements detailing our assets and income. Having all of our numbers on hand ensured we didn’t add any extra delays to the process.
  3. Consider working with a mortgage broker. Our broker’s contacts and experience were invaluable. He was a fabulous advocate for us and it was very helpful to have someone who was willing to explain the intricacies of mortgage conditions and vet any documents we received.
  4. Shop around. Don’t settle for the first offer you receive and consider alternatives to traditional banks. Even when you receive an offer, go back to the lender and ask for exactly what you want. You might not get everything, but you may be able to do a little better. Ask lots of questions and make sure you understand exactly what you’re getting.
  5. Be prepared for some extra expenses just because you want a rural property: you’ll likely face a bigger down payment, higher interest rate and appraisal fees.

For Matt and me, the extra expenses were worth it because we got the farm of our dreams. I can’t say the frustration was necessary, but we made it through.