CONSTRUCTION MORTGAGES: Good planning and preparation make all the difference.

Text by Betty Shore

Building your new home is exciting yet can also be a bit daunting. There are so many decisions to make, choosing kitchen cabinets, flooring, light fixtures, bathroom fixtures and many more. You will need to dedicate yourself from the moment you decide to build to the moment you walk through your new front door.
In most cases, financing is also a significant consideration when planning to build a new home. One of the first things you will want to do is meet with a mortgage specialist to discuss the financing details. It is imperative that you understand how the mortgage process works when undertaking a project such as building your own home.
The mortgage specialist will need to know whether you are planning to hire a contractor, and have all the details of the house worked out in the contract, or if you plan to act as the general contractor responsible for arranging delivery of materials and hiring/coordinating the trades people throughout the project. He or she will also want to know the following:
WHO: Contract or Self-Build
WHAT: Contract or Construction plans with quotes/cost estimates
WHEN: Start date and completion date
WHERE: Purchase a lot or already own the lot

Contract Build
If you have decided to go with a contractor, you will want to eliminate all possibilities of confusion or oversight by reading your contract thoroughly and making sure that you understand it.
There are typically two types of contracts, turn-key agreements and construction agreements.
“Turn-key agreement” This construction is financed by the builder and paid by the purchaser either at the time of completion or possession date. A mortgage for this type of construction is very basic, in that your mortgage will be advanced at possession date and your payments will start thereafter as agreed upon.
“Construction agreement” This construction is financed by the purchaser and paid in installments. Also known as progress payments, the agreement is based on inspections verifying the percentage of completed work. Once your home is 100% complete and ready to move in the final payment is made. Most contracts will request four installments, after you have paid your deposit and down payment. At the completion of every stage the builder will ask for an installment at which time your mortgage specialist will send an appraiser to verify that the work is complete.
Extras or cost over-runs: As you are building a home, there are almost always some changes that are made along the way. You might decide to make a change to your kitchen cabinets, flooring, bathroom or lighting fixtures. Generally speaking, any upgrades you make from the original contract/plan should be discussed with you mortgage specialist, unless you intend to pay for them with cash.
Features that are not usually included in a construction contract are landscaping, decks, driveways, sidewalks, water and sewer, sunroom, light fixtures, window treatments or appliances. If you are purchasing built-in appliances you will need to consider installation/hook-up fees.

Mortgages for a “construction agreement” are a little more complex than a “turn-key agreement” in that your mortgage will be advanced in stages according to the percentage of construction completed. You will be required to pay interest on these advances up and until your possession date. Upon the final payment you will start with your full payments of principle and interest as agreed upon in your mortgage terms. Remember that when a builder commits to a 6-month possession date, there might be delays due to weather, late delivery of materials or difficulties in scheduling of trades.
Self-Build or acting as General Contractor
You need to gather all the information, house plans, written quotes for all material and labor for the construction of the house as well as for the lot requirements such as driveway, landscaping, well and sewer, hydro and gas services to the house. It is usually recommended to obtain at least two quotes and then decide which is best for you based on reputation, experience, price and/or availability. The mortgage advances are administered in the same way as the “construction agreement” discussed above.
As with most projects, good planning leads to the best success.

Marketing Your Small Business

 Text by Lori Broadfoot

Your business plan is done, the permits and paperwork are in place, the stock is in supply, and all that’s left to make your small business a success is for the customers to start calling. But who are these customers, and how do you reach them?

The first step is to create an image of your Best Customers. Be as descriptive as possible: who are they, where do they live, work and play? This will help you send the right message and ensure it hits the right target. You likely won’t be able to sell a lawn care service to an apartment dweller no matter how cleverly you package it.

Next you need to define what the benefits of your product or service are to that potential customer. How will you make someone’s life easier, more enjoyable or safer? Remember you can’t be all things to all people, so choose the ONE thing that will make you irresistible to that ONE customer.

Once you have these two elements in place, use these simple tips to put your business in the spotlight.

Website

Even if you have never had your fingers on a computer keyboard, no small business should be without a website in today’s marketplace. It can function as an electronic brochure, a product catalogue and a handshake to your customers before you even meet them.

If cost is a factor, enlist the services of a student, keen to show off their talents and build their portfolio. Just remember that a simple, clean design is more favourable than one that is complex and confusing. A poorly designed site will frustrate visitors and you’ll never know you lost them as potential customers.

A website is only as effective as the content you provide, both text and photos. You can provide details and specifications about your products and services, and answer questions that would otherwise tie up valuable personnel time.

Include your web address on your answering machine message, and your website can ‘take over’ whenever you’re not available, after hours or busy providing service to other customers.

Update information on your website on a regular basis, you may want to include a ‘What’s New’ page for more timely topics. A site with dynamic and up-to-date information will indicate you care about providing a service to your customers and have the same attention to detail that you have for all the other aspects of your business.

Email

In conjunction with your website, email is a flexible and cost-effective method of staying in touch with your customers, and piqueing the interest of new ones. Invite people to register for email notices, either at point of sale, on your website or whenever you hand out a business card. These are people who have now expressed an interest in what you have to sell, don’t let them get away. You can inform them of upcoming promotions, sales events, new products and any business news that will keep your name and products in their minds.

The actual email can be brief and invite people to click on links to your website. Include a link at the bottom of the email if someone should wish to be removed from your list, and also indicate that you will not share or sell their information. Don’t overuse this method; no one likes a ‘spammer’. Spam is the electronic version of junk mail and an unsolicited email may alienate some potential customers.

Business Cards

Never leave the house without a supply of business cards in your pocket; you never know when you may encounter a client-in-waiting — at the grocery store, the bank or a sporting event.

Not only will you appear professional but also you will be viewed as an enthusiastic ambassador for your business. Look at that seven and a half inch square piece of paper as an invitation for someone to contact you and learn more about you. And they can choose the time and method that is right for them: in person, by telephone or via a website and email.

Keep Your Customers Happy

It may seem like a simple concept, but you may overlook the potential of the customers you already have in the quest to find new ones. Enthusiastic quality service will help your business thrive, whereas even one disgruntled and vocal client can do your business irreparable harm. Keep in touch with your past clients, even if they are no longer in the market for your services. A little attention from you may solidify your place in their minds and initiate a referral at a later date.

As a small business owner, you may be overwhelmed at times with length of your To-Do list, but without ongoing marketing plans your customer lists will shrink in comparison. To market your business effectively your strategies need not be complex or expensive and don’t look at it as selling, you are merely informing people why your business is superior. At every opportunity.

Why A Final Inspection Is Necessary

 Text by Kathy Wiebe

In the sales contract, the sellers of your new home agreed to leave all the light fixtures, custom blinds, and refrigerator. When you walk in the home on moving day, to your surprise, all of those things are gone. In addition, the locks on the back door are broken; there is a huge stain on the living room carpet, and the garage opener doesn’t work.

Although this may be extreme, it could happen, which is why it is important to have a final inspection of the home you are purchasing before the closing. A pre-closing inspection gives you, one last opportunity to verify that you are getting all that was promised in the sales contract. Although buyers still have the legal recourse if they discover-even after closing-that the condition of the home is not as it should be. The best time to identify problems is before closing when the seller will be motivated to correct any deficiencies to close the transaction.

Typically, a buyer takes possession of a property one to three months after signing the sales agreement. But, a lot can happen before the actual move-in. Appliances and fixtures can break down, and walls, carpets and doors can be damaged during the seller’s move-out. Sometimes the seller will have simply forgotten what he or she has agreed upon and would like a chance of it being remedied.

If possible, schedule the inspection right before the closing, such as the day before. Ask your real estate professional to attend the inspection with you. What should you inspect? Using a copy of the sales contract as a checklist, first make sure that all items should be in place (appliances, built-in furniture, window coverings, fixtures, etc.) are there.

Test each appliance to make sure they work properly. Bring along an electrical clock or radio to test each electrical outlet. Test all electrical switches and the garage opener, if there is one. Run the garbage disposal and turn on every water faucet, checking under the sinks for leaks. Flush the toilets. Inspect the floors, carpets, walls and doors for recent damage.

If you discover that something is damaged or missing, make a note of it and inform your real estate professional immediately. In most cases, the seller is usually able to take care of small problems immediately, either by making a needed acknowledgment of the deficiencies and agreeing to correct it. Although pre-closing inspections take time and may be inconvenient, they are important and well worth the buyer’s time.

Do You Know What’s On Your Credit Report?

 Text by Lesley A. Baker

You apply for a mortgage and are denied. You apply for a car loan and it falls through. Perhaps you should request a copy of your credit report.

Credit reports are strategic for financial and lending institutions to measure a person’s credit responsibility and credit history. With good credit, the world can be at your hands. However, with a bad credit rating, you can be haunted by financial denials for up to seven years. Bad credit can hamper any hopes you may have of achieving financial success. Many people know very little about their credit report and ratings. We are all able to access a free copy of our credit report yearly. The first step though is to understand what your credit report is saying about you.

There are two major credit-reporting agencies in Canada: Equifax Canada Inc. and Trans Union of Canada. These agencies are linked to lending and financial institutions throughout Canada and are regularly updated. When you go to a financial or lending institution, one of the first things they do is access and assess your credit rating. The majority of lending institutions check credit reports through Equifax. To understand the language of your credit report, let’s take a look at some key terms. Account Status: Shows the current status of your account and may show delinquencies that were reported during the previous seven years. Balance Amount: Amount due to the creditor at the time account information was last reported. Credit File: A record of an individual’s credit payment history as reported at a credit reporting agency.

Credit Report – A compilation of credit information presented in an easy to read format. Credit Reporting Agency -Also known as a Credit Bureau. An organization that compiles information from financial institutions, lending companies, and courts to create an individual’s file.

Credit Score – A score based on variables in your credit file that ranks your credit worthiness compared to the rest of the population.

Creditor: – A person or business from whom you borrow or owe money.

Date on File – Date your credit file was started.

Date Open – Date account was opened.

Date Paid – Date account was satisfied.

Date Reported – The last date in which the file was updated by the credit reporting agency with credit information.

Filing Date – Date item was filed with the courts.

High/Limit – The highest balance since the account was opened or the limit on the account.

Inquiry Date – Date your credit file was requested.

Last Activity Date – Date of last activity on the account.

Monthly Payments – Average monthly payment reported to the credit reporting agency.

Original Creditor – Shows the original creditor that turned the account over to the collections agency.

Ownership – Designation by a lender of an individual responsible for payment of account.

Past Due Amount: – Amount currently past due.

Payment Pattern Grid – Shows the amount of time the account was reported past due: 30, 60 or 90 days.

Type of Account: Revolving – an account where a balance is carried over from month to month.

Instalment – An account with a fixed payment for the term of the loan.

Mortgage – A fixed payment account involving ownership or property.

Open – An account where the balance must be paid in full at the end on 30 days.

Once you have ordered and received your free credit report from Equifax, Trans Union or both, then it is time to review your score. Make sure your names, address, Social Insurance Number, and date of birth are all correct and up to date. Secondly, ensure all accounts listed are yours. Ensure the balances, limits and accounts are correctly listed.

 

What is your credit score?

Your credit score can range from 399 (lowest) to 862 (highest). If your score is between 399 and 550, it is weak and you may not be approved for financial loans or mortgages. The mid point would be 750 and the best credit score would be closer to 862. The higher the score, the better your chances will be for financial approvals. To challenge anything that seems out of sorts on your credit report, contact the reporting credit agency immediately.

To find out how you can improve your credit rating, you can speak to a qualified credit education specialist, your bank loans officer or you can apply for a credit information booklet from one of the credit reporting agencies. The most important objectives are to know what’s in your credit report, report any inaccuracies, check your score quarterly and do your very best to improve your score. Make all your payments on time, be faithful to gratify your loans and don’t apply for credit you know you cannot financially pay back. Ignorance may be bliss but in this case, education is the key to your financial success.

Home Business

 Text by Pat Gerbrandt

 The idea of working at home may appeal in terms of flexible hours, being able to avoid commuting, and ready access to one’s own coffee machine, but the entrepreneur who plans to set up a home business needs to consider many other factors.

What is the market for the proposed service or sales venture? Opening a bed and breakfast establishment may be your fondest dream, but if you live in a low traffic area and there are already five other such facilities nearby, practicality may lead you to reconsider.

Check out the growth rate and other demographics of your community. What types of goods or services are needed? Will your business meet the demands already evident or can you confidently project there will be a need for your services?

Do you already have suitable space or will you need to do some renovations? A separate business entrance may be a good idea. Give consideration to warehouse/storage space, easy access to a bathroom, reception area, and parking. Will proximity to the family’s living area necessitate any changes? You may be comfortable with the happy sounds of children at play and the aromas of your simmering supper, and the presence of pets may be of no concern to you, but customers may have different opinions. And, if you will be responsible for young children as you work, do you have a backup plan if illness and business deadlines appear at the same time? A separate business phone line prevents calls missed due to family member’s using the phone and helps to avoid frustration for all concerned. A home-based business venture must take into account the family’s needs, and family support is crucial for the entrepreneur.

Do you have easy access to postal and delivery services? Will you need to arrange for shipping? Be sure to check out zoning regulations, necessary insurance, permits, licenses and tax considerations. Advertising costs and the price of business stationery also need to be considered. Doing your own correspondence may work well at first, but as the business grows, you may need to hire help. The services of an accountant are recommended. Be realistic in terms of your expectations. It may take three to five years before a new business venture shows a profit.

Check with your local chamber of commerce or with the Manitoba Small Business Association to see if you qualify for the discount rate on processing charge card purchases. An attractive, well managed and easy-to-navigate website is a good investment.

The Canada-Manitoba Business Centre has a wealth of information and resources for small businesses and personnel there can offer valuable assistance for business start up or expansion. Think creatively, do your research, be realistic in terms of your abilities and your commitment, and when you’ve counted the cost and decided it is time to follow your dream, summon your courage and take the first step. You will never know success unless you aim for it.