FINANCING OUR DREAM RETIREMENT HOME

Contrary to popular opinion, Marguerite and Stan are not filthy, stinking rich. (We wish!) In fact, retirement is going to be a bit sparse with Stan probably working part time or temporary positions from time to time to make ends meet. We'd decided what we could spend on a motorhome, discounted it a bit to leave room for the repairs and alterations that are always necessary, and that's what we generally entered in our search criteria (taking exchange rates into account) when using Google on the Internet. It turns out that this motorhome was going to cost us a bundle more than we thought we could afford. Watch carefully, you might find Stan walking the roadsides, picking up beer cans! Honk and wave as you speed by.

One of the first options that we considered was financing the motorhome with a simple bank loan. A few calls to some of the local banks revealed that the current interest rates for motorhome loans centred around 6% or 6.5%. In this day and age, that seemed a bit high.

So, we sat down and did another reality check to estimate our projected net worth at the moment Stan retires. (This was only the umpteenth time we'd done so in the past several years.) This helped us identify what other of our meagre assets we could tap for this undertaking. Among those assets was our home, whose mortgage we'd paid off several years ago. The Schultz homestead was about to take a hit!

So, from all appearances our most accessible source of funds in the order of magnitude that was required was going to be a mortgage of our home. This was no easy decision. We'd prided ourselves on paying that mortgage off and viewed another mortgage with great trepidation. If we defaulted (for some unknown and completely unpredictable reason) we'd lose our home. Still, if we wanted any motorhome, that's about the only way we could get the money, so Stan began looking for lending institutions.

Stan cranked up the old computer, called our old friend Google, used the search string

• "mortgage rates" calgary -pdf -rtf -doc

After fiddling with their list a bit we learned how to sort it by clicking the column that we wanted it sorted by, "1 Year, Closed" specifically. That's when we noticed the spread in interest rates. Some were as high as 4.75%, others as low as 3.55%. That's almost 1½%. Now you might say "What the heck, it's only a percent and a half." But when we deal with amounts in the $100,000 to $200,000 range over a period of 20 years, it adds up. For us it amounts to almost $2,000 a year. That's a lot of greasy cheeseburgers!

So, who are these people who can give us such good rates? A few calls revealed that they were mortgage brokers.

Of the several that we called (those advertising the lowest rates), we got 100% voice mail responses. "If you know who you want to speak to, press..." We didn't so we just left "Call us back at your earliest convenience" messages. The first one to return our call was Sue Black-Garland of the INVIS Financial Group so Sue got our business.

While our method for picking a broker was a bit unscientific, it worked. We can recommend Sue very highly to anyone in southern Alberta.

But, what IS a "mortgage broker?" Basically these are just a person or a company who helps us get a mortgage. They canvas the various lenders for the best deal. The various lenders are also competing with each other for the broker's business, encouraging even better deals. The broker supplies us with a list of the documents and information required by the lending institutions. We merely collect and transmit these things to them. The broker fills out and submits the application forms for us.

The best news of all is that a good mortgage broker won't charge us one thin dime! They're paid a commission for their work by the lending institution.

Now here comes the bad news: We have to pay all the extra expenses associated with the mortgage. We'll get to those a little farther on.

All of our submissions were FAXed to Sue. She didn't need the originals and we didn't even have to go to her office. In fact, we don't even know what she looks like!

The documents we had to submit to Sue fell into two more or less distinct categories.

• Documents to establish that we qualified for a mortgage.
• Documents to establish that the property was mortgagable for the amount we required.

We had to submit a bevy of documents to prove that we were capable of sustaining a mortgage. These documents were collected by Sue before any applications were made. She compiled the information on them and, presumably, submitted the resulting application to several lenders to see which one would be willing to accept us. Here is a list of the documents she needed.

• Stan's last paystub. This is taken as proof that Stan really is gainfully employed and to what extent.
• A letter from Stan's supervisor stating what his position was, how long he'd been employed there, and what his prospects were of remaining employed for the foreseeable future.
• Notices of Assessment from Revenue Canada for the last three years. These were official replies from the Canadian tax people that recapped our tax contributions for the various years.
• A voided cheque.

We had to submit the following to demonstrate that the real estate was really mortgagable for the amount we wanted.

• Land Title Search. This indicates who owns the property and whether or not there were any outstanding liens on it. We'd acquired this as we payed off the original mortgage on our home just a few years ago, so it was no problem.
• A City of Calgary property tax bill for 2003. No problem here either. The City is very conscientious about sending us a new one every year!
• A Real Property Report. This required enlisting the services of a surveyor.
• A Compliance Certificate. This is merely a stamp by the City that indicates that the property, as evidenced by the Real Property Report, meets all City requirements and doesn't violate any bylaws or regulations.
• An Appraisal. Most lending institutions will not mortgage more than about 75% the appraised value of the real estate. Thus they incorporate a "buffer" into the system, just in case the bottom falls out of the real estate market or we default on the mortgage.

• The Appraisal.
• The Lawyer
• The Real Property Report.
• The Compliance Certificate.
• The Alberta Land Titles Office.
• Banking Fiasco!

and we discuss each in its turn.

• We thought we'd found our dream retirement home.
• We'd talked Stan's sister into fronting us for the US $1,000 deposit.
• We had the money sent to a disembodied voice on the phone.
• We hadn't seen the motorhome in person, we couldn't even vouch that it existed.
• We still had some reservations about a few of its construction details.
• We'd promised the seller that we'd make the loan payment for her if we couldn't buy the motorhome in time to avoid the October payment.
• But now we had the money and we could stop worrying.
• All that was left was to dance the choreography required to get the motorhome.
• We were pretty certain that we could import the motorhome into Canada because the big RV dealers do it all the time, but the exact process still eluded us.
• We'd worry about inspections and such after we got back to Canada. After all, the big RV dealers imported motorhomes all the time. Piece of cake!

At least this was maintaining our interest.

Jump to the top of this page.
Back to the Game Plan.
Jump to the Motorhome webpage.
Jump to the Spiders, Calgary webpage.
Jump to the Index and Table of Contents for this website.

Communicating with the authors is easy. Just select here.

Copyright © 2003, Stanley A. Schultz and Marguerite J. Schultz.
Select here for additional copyright information.

This page was initially created on 2003-November-09.
The last revision occurred on 2005-December-04.