Posts Tagged ‘Homebuyers’
New To Canada Mortgages – What you need to know
Are you or someone you know looking to immigrate to Canada? Are you curious about what it takes for a new Canadian to get a mortgage? Well, it is probably easier than you thought. Genworth and CMHC both have programs in place for new Canadians to purchase homes with minimal downpayments. Those with more than 20% to put down on a property do not fall under most of the guidelines below. Four things New Immigrants need to know to get a mortgage in Canada: CREDIT - You don't necessarily need Canadian credit. The insurers will consider alternative sources to prove credit worthiness. The most obvious would be a credit report from your home country, but they will also consider things such as proof of rent being paid on time as well as utilities. RESIDENCY STATUS - Both permanent and non-permanent residents have access to mortgages. However, those with non-permanent status are only eligible for purchases and can ...
Using a Buyer’s Agent
Are you using your own Toronto Realtor to purchase your property? Many Toronto First Time Homebuyers can be tempted to use the seller's real estate agent when purchasing their first home. They think they are going to save money because the Realtor will usually reduce the total commission when they are representing both parties in the deal.....but do they really end up saving? Does the seller's agent really have the buyer's best interests in mind? They have been hired by the seller to get the most money as possible for their home. In turn the buyer expects the Realtor to get them the home for the least amount of money. Do you see the conflict? Most Realtors are very honest and do their best to make sure both parties win in the deal, but at the same time, there is still the conflict between selling the property for the most money and buying it for the least. I recommend to all my clients that they should always use their own buyer's representative. This way you can be ...
Increase In The Cost of Home Ownership
According to a study completed by RBC, the cost of owning a single family, detached home in Canada has increased to about 43% of a family's before tax income. Although this is up by about 1.2% over the previous quarter it is still not as high as the 52% we saw in the spring of 2008. The record high was 57% which was reached in the second quarter of 1990. RBC goes on to say the increase is due to a slight rise in mortgage rates combined with an increase in the price of houses. The Canadian Real Estate Association also released some stats on home prices across Canada. They found house prices are up over 20% compared to October of last year resulting in the largest year over year increase in 20 years. Part of what is driving this increase is a shortage of supply in the housing market and record low interest rates. The increased demand created by the interest rates is not being met due to a decrease in housing supplies which results in bidding wars and increased prices. This is great if you are a seller, but extremely discouraging if you are a buyer. Phil Soper from Royal ...
Canada’s Housing Bubble
I was reading the Financial Post the other day and came across an interesting article on Canada's housing bubble and how CMHC has contributed to our situation. Diane Francis brought up quite a few valid points. As a mortgage broker I see the benefits every day of CMHC insurance and how it allows homebuyers to purchase their home with as little as 5% down. However, the by-product of making housing more available to more people is it drives up home prices. If you ever took economics 101 in school you will know that increasing the demand for an item while keeping supply constant will result in increased prices. When you add our historically low interest rates to the mix.......well it could be a recipe for disaster. After all what contributed to the economic melt down in the US? You guessed it.....the availability of financing to people that probably should not have had it. In fairness CMHC does impose criteria far more strict than the US, but the basic principal is the same. Diane also brings up a good point concerning interest rates which I have actually wondered about myself. Why do banks charge a homebuyer with only 5% down the same interest ...
Homebuyer Tip – Bully offers
A Realtor that I work with has a video blog that is quite informative and I recommend checking it out if you are a home buyer. He recently did a post on what a "Bully Offer" is and how you can use it to your advantage when buying a home. Check out the video below. Let me know if you have any questions.
The ABC’s of Mortgage Insurance
One of the biggest roadblocks for first time homebuyers is saving the downpayment. With the burdens of paying rent, student loans and other expenses it is not realistic to expect you can save 20% of a home's purchase price for your downpayment. What is Mortgage Loan Insurance? Mortgage Loan Insurance is just that — insurance from a trusted third party, which protects lenders against default on a mortgage loan by a homeowner. In Canada, Mortgage Loan Insurance is generally required whenever a homebuyer has less than 20% of the purchase price available as a down payment. Because the lender is protected, they are able to offer mortgage financing even if you have a smaller down payment, at a rate of interest that is comparable to the lower rates typicallyreserved for homebuyers with a larger down payment. To obtain Mortgage Loan Insurance, an insurance premium must be paid based on the total amount of the loan (the purchase price minus the down payment). This premium can be paid in a lump sum, or added to your mortgage and included in your monthly payments. The latter is normally the case. How Much Does it Cost? In general, the larger your down payment, the lower your premiums will ...
Mortgage Pre-approval
After my last post on lenders not offering competitive rates for their mortgage preapprovals, I finally have a lender willing to step up and offer a great interest rate with 120 day rate hold. If you look at the 5 interest year rate most lenders are offering these days they tend to hover around 4.09% and they may or may not offer preapprovals at that rate. I am happy to announce I am now able to offer my clients 3.99% for a preapproval and the rate will be held for 120 days. This is not a "No Frills" mortgage and has all the bells and whistles you would expect. If you are looking to by a house in the next 3 months it would make sense to get your rate locked in today. Keep in mind if rates go down between now and the time your house closes, you will get the lowest rate at that time. Also keep in mind this rate is based on approved credit and income.
Mortgage Rates
For those of you who have been shopping around for the lowest mortgage rate, your mortgage broker may have offered you a mortgage with a non-standard term. Usually fixed mortgages come in 1, 3, 4, 5, 7, 10 year terms....atleast those are the most common. However, recently a few lenders have been offering mortgages with unusual terms such as 42 months or some other odd number that probably does not make much sense to the average consumer, and possibly not even the average mortgage broker. The one thing most people will notice is the interest rate on these unique term mortgages is quite attractive. The question remains, why are lenders offering lower mortgage rates on these particular products and why are they venturing outside the normal mortgage terms? I am going to try to explain how these products came about. First, you need to realize that most mortgages in Canada are securitized. This means after you get your mortgage the lender packages your mortgage with hundreds of others and sells them into the Canadian Mortgage Backed Securities market (CMBS). Units of these mortgage backed securities are then sold off to investors who receive a monthly cashflow from their investment. Your lender still ...
When Will Mortgage Rates Fall?
As we’ve seen the spreads on the bond yields increase, the question of “when are rates coming down?” has been asked a lot! Earlier in the year when volumes were low, volumes for the banks were also low. During Spring Market the race for obtaining 2009 market share was on! Profitability was taking a back seat to market share and we saw very competitive rates from the banks. They were treating a mortgage as a loss leader to get that client in the door. Some also had extra deposit money from RRSP season to lend out. Now into the third quarter of 2009, profitability is again top of mind. Remember year end for the banks is Oct 31. They only have 4 months left to hit their revenue targets. Therefore, we are now seeing banks hanging onto this higher spread for as long as they can….there may be some movement soon, but banks are ensuring bond prices stay consistent before they make a move.
Mortgage Pre-approvals may not be around much longer
As a mortgage broker one of my primary roles is to get a mortgage pre-approval for my clients before they start their house hunt. This accomplishes two things for homebuyers. First, it let's them know exactly how much they can afford so they don't waste their time or their Realtor's time looking at houses out of their price range. Second, it locks in their interest rate for 120 days and protects them from increases in mortgage rates. Both of these functions are very important in the home purchase process. Unfortunately, although this is a great service for home buyers it is not so great for the banks lending the money and many of them are taking steps to change the process. Why are the banks against pre-approvals? Well, it costs the banks a significant amount of money to hold your rate for 120 days. Canadian Mortgage Trends reports that it costs the banks between $900-$1200 to hold (hedge) a $100,000 mortgage for 120 days. Obviously the higher the pre-approval the more it costs. So before you even sign the mortgage papers, the bank has already spent about $1,000 on you. This wouldn't be so bad if you actually used that bank ...
