Just want to update everyone who reads this blog.

I have offically changed postions from one mortgage broker to another.

I was warned that if this ever happend that it would be costly in more ways than one. I’ll try and let you know in what ways as time goes on.

First off let me say I was stunned at the number of contacts that I have. I thought I had a fair number when I started. It seems I’ve doubled that number and more in the 2 years. I’m sure there’s a paper out there somewhere that talks about social networks and how they increase over time. I’d love to read about what studies on this topic have shown.

It was interesting, when I started. I was told to compile a complete list of everyone I had contact information for. Some I had to look up addresses for, some I only had email addresses for. In total, I remember sending out 150 letters and about 250+ emails. I remember the emails as I found there is a limit to BCC at the time. Yahoo/Rogers would only allow 250 max at the time.

I recalled a statistic at that time too. Most people “know” approximately 350 people in their lifetime. I figured this was about right.

So, what happened? In the space of 2 years my contact sphere increased to well over 700 people! Much of this is attributable to the industry contacts that I had to pick up, but I’d still only peg that at maybe 100 people. I certainly didn’t add all their names to my list either, as I figured I don’t regulary email/talk with them anyway. The fact that I’m moving should be mostly irrelevant to them.

I tallied all the clients I have done mortgages for, plus all the would-be clients whom I’ve at least started an application. Again, not all of the clients (mostly because they don’t all have email addresses) and some we have mutually agreed not to contact again. Maybe 75 came out of this batch.

That leaves my main networking group, OREIO (www.oreio.org). They have added close to 150 members or so in the last 2 years. Impressive on its own. I can’t say I’ve connected with more than 20% of those new people, but I sure do find a lot of people who approach me now and say “I’m so-and-so. I saw you at OREIO…”

These days at OREIO, I find myself purposely networking to get to know the people as there are just so many new faces in the crowd.

We started with 400 contacts. Some I’ve lost touch with for whatever reason. We’ve added say 75 from my industry, maybe another 75 “clients” and say 30 or so from OREIO. That’s still a fair number from the 700+ I tried to contact.

To be fair, there were also 120 bounced emails, which brings us pretty close to the correct number, however these emails still had people attached to them. They like me have simply changed addresses (I’ve had 1 consistent email in the last 8 years, plus easily 20 other addresses that pointed back to this or another ISP address).

Note to the readers. If you use any web base mail system (yahoo, gmail, hotmail, etc.), be aware that they have limits on how many emails can be sent in a day (to prevent spam agents). Gmail was the biggest with 500 max recipients, however they suspended my account for 24 hours after that.  I wont be doing that again anytime soon. Plaxo, facebook & linkedin will just have to do.

Great way to reconnect with old friends.

You moved? I didn’t even know you were there!

Recently I wrote about the demise of both the 100% financing & 40 year AM.

Well it seems the banks really liked the idea of 100% financing and don’t want to give it up anytime soon. That is unless federal legislation comes in and changes things again.

Banks have been offering cashback mortgages for at least a decade now. The idea is that you get a mortgage, but you are short on savings to buy those little items to keep your house moving, like a lawn mower to cut the grass. So, the banks being the nice people they are, realized this and offered a cash back on your mortgage to help you with the purchase of needed items for your home. The net effect years ago was to give you a mortgage for 95% of the value, fully CMHC insured and then also provide you with an ‘extra’ 5% cash back at the time of close.

You still had to show you had the cash, however you didn’t need to bring it to your lawyers office in order to close the deal.

So with the demise of 100% financing offered by the banks, they’ve all gone back to their old cashback product lines. Dusted them off and said, we can’t call it 100% but in the long run the client is better off anway. Their rationale is that the CMHC fee is lower (2.75% vs 3.1%), thus “saving” the client funds and reducing their overall interest paid.

What they tend to overlook is the increase cost of that 5%. It’s still cap’d into your mortgage and if you decided to refinance (or move) you have to pay back a portion of that 5% WITH interest.

If you make it to the end of the term and either renew or switch, then yes you are likely slightly ahead of the game.

I’ve always warned people when they ask about 100% financing. I tell them that they had better plan on living in that house for at least 7 years, otherwise their equity will be eaten up by real estate commissions, lawyers fees & taxes.

Most people look at me and say “we plan on living there forever”. Some will, however today the average length of time people stay in a given home is 3 years. Marriage, divorce, job change, critical illness, “life” events… all add up.