CMHC raises premiums

CMHC is increasing its mortgage insurance premiums for homeowners and 1-4 unit rental properties effective May 1, 2014.

The change will only apply to mortgages underwritten after May 1, 2014 and it will apply to all homeowner business from that day forward as a result of increasing capital targets. Premiums will rise about 15 per cent, according to CMHC, though it isn’t expected to have a major effect on the housing market.

“In 2013 the average CMHC insured loan at 95 per cent loan to value ratio was $248,000; using these figures a higher premium will result in an increase of approximately $5 to the monthly mortgage payment for the average Canadian homebuyer,” Peter De Barros, at CMHC ‘s executive director of communications said during the media conference call. “This is based on a five-year term using current mortgage rates and 25 year amortization. The premium increase is not expected to have a material impact on the housing market.”

CMHC also expressed its plans to make an announcement about its premiums – which are reviewed each year – in Q1 of every year going forward. The Crown Corporation has made a number of changes to its premiums; though this hike is the first increase since decreases between 2002/2003 and 2005/2006.

The increase was not a department of finance initiative, according to CMHC.

“Not in response to anything in particular although, certainly, the international and Canadian regulatory guidelines over the past years have trended to higher capital holding levels for mortgage insurers and obviously we are no exception to that,” Brian Nash, chief financial officer of CMHC told reporters.

It remains to be seen whether Canada’s two other insurers, Canada Guaranty and Genworth follow suit.

“I can’t comment on what they might do,” Steven Mennill, CMHC’s vice-president, insurance operations told reporters.

 

Source: Mortgage Broker News

 

How Can I Pay Off My Mortgage Faster?

looniesOne question I get a lot working with mortgages is, “How can I pay my mortgage off faster?” When you’re locked into a twenty five-year mortgage, the thought of paying it off early is certainly appealing.

But of course, it is in the lender’s best interest to keep you on the hook for as long as possible. Then again, most lenders understand that your imperative as a home owner is to pay for your home, and then maybe make some other large purchases, like a cabin or a place down south to escape from the winter. As such, there are some easy ways to go about paying off your mortgage faster without paying a penalty.

Many lenders will allow you to increase your monthly or biweekly mortgage payments on a short-term or, in some cases, a long-term basis. For example, if your monthly mortgage payments are $1,000, you can add anywhere from an extra $1 up to an extra $200 onto those monthly payments. This extra amount goes directly to the principle and allows you to chip away a couple years off your repayment period at least.

Here’s an example if you paid an extra $100 per month on a $200,000 mortgage:

untitled

 

Some other lenders we use allow you to make annual lump-sum payments up to 20% of your principal, which can speed up the rate at which your mortgage is paid off dramatically.  This is sometimes double what some major lenders allow.  Say you have a mortgage of $200,000. Under this plan, you can put a $40,000 lump sum payment onto your mortgage, on top of your monthly payments, once a year. This is certainly something to consider if you get a substantial raise at your job, or you come into some money. If you’re able to do this a couple years running, you’ll save thousands, and suddenly your mortgage is nearly paid off!

If you have any questions about how you can pay your mortgage off faster, give us a call. It’s our job to help you through the mortgage process, and that doesn’t just end once you’ve signed your mortgage papers. We’re happy to help make all your real estate dreams come true, while saving you as much money as possible.


IMG_2894 Chris Turcotte, Owner/Broker

 Office: (204) 727-2177

 Cell: (204) 720-4002

 Email: chris@christurcotte.ca

Preparing to Buy in the Busy Spring Market

House_And_Keys_1590931As we approach what is normally the “busy season” for the real estate market it is important to be prepared if you are going to be a potential buyer. As a rule a lot of homes are put up for sale during this time because the weather starts to get more favorable to go house shopping and it is just an all around better time to move. Here are some things you can do to be ready to go house shopping and make a purchase when the house of your dreams comes on the market:

1.)    Save: If a home purchase is in your near future make sure you are making every effort possible to save money. This is also the hardest part but once you find yourself in the home of your dreams those few extra dollars put into your savings account each cheque will all be worth it.  The more you save, the more you can put as a down payment which will also save you interest costs in the end. Saving will also give you enough money to cover costs that not everyone know about when purchasing a home. These are closing costs which consist of legal fees and land transfer tax.

2.)    Pre-Approval: It is always best to have an initial appointment with me as we can discuss what size of house you can purchase comfortably, and identify any areas that we need to take care of prior to making an offer for your new home. I will also identify how much you need for a down payment and discuss how much your payment would be for the size of mortgage needed.

3.)    Keep Status Quo: As mentioned, if a new home is in your plans this is not a good time to make any other large purchases such as vehicles. A purchase like this, with a large loan, may jeopardize the size of mortgage that would be required to purchase your home. If another credit product is a must at this point it is best to talk with me to make sure it still fits in your financial plan alongside your new house.

4.)    Real Estate Agent: Once pre-approved, now is the time to connect with a real estate agent. These agents are the professionals that can help you find the type of home you are looking for and negotiate a more favourable price. They also know what the house should be priced at, are able to spot any red flags and know what homes are available for your price range. When you are a buyer they also do this service for free so it is a win/win. I work with a group of great agents so it is nice to know from my stand point that my clients are well taken care of.

5.)    Preparation: The spring season will bring a lot of buyers out and sometimes homes can move quickly. At this point you should be ready to seriously look at a home if you are thinking about buying. I am not saying to make any rash decisions and buy a particular home before you truly love it, but just know there are normally lots of other buyers out there looking as well.

Buying a home will mostly likely be your biggest purchase of your life. As Mortgage Brokers, we will be right beside you every step of the way to make sure your mortgage experience is a comfortable and informative one. What we get most out of our jobs is seeing the pure joy of helping people get into their dream home. It is a great sense of pride becoming a home owner and we look forward to helping you get there.

 

Chris Turcotte, Mortgage Broker

 Office: (204) 727-2177

 Email: mortgagechoice@centum.ca

What Happens Post Bankruptcy – From a Lenders Perspective

It has recently been brought to my attention that the general public needs a little bit of guidance when it comes to what to do after a bankruptcy. I have encountered a number of people who have had to claim bankruptcy for one reason or another and when it comes time for them to buy a new home, they can’t and only because no one has explained what needs to happen in the finance world in order to survive after a bankruptcy.

First, I have come across clients who claimed bankruptcy because they were informed by a professional that “it’s your only option”. This one kind of drives me crazy because sometimes, it really isn’t the only option. I know this is not my line of work but I think my first words of advice are to make sure you are sure it’s your only option. If you do end up having to go through a bankruptcy, here is what lenders will be looking for from you before they will give you a mortgage.

If you are going to go to your regular bank to try to get a mortgage and a bankruptcy appears on your credit report, that’s the end of the line. I do not know of any of the major banks that will lend to someone who has a bankruptcy reporting (and I used to work for one of these banks). That means for 7 years, yes, that’s right, 7 years, you are not getting a mortgage through your bank. This is where I fly in and save the day, (picture me as bat girl or superwoman if you must). I can and have gotten people into their homes with a bankruptcy reporting on their credit report.

Not everyone that claim bankruptcy does it because they are bad with their money. Some people have had a family illness that cause them financial hardship, some claim to be “young and stupid” and tell me they know better now (maybe they do, maybe they don’t) and most common is a divorce/separation. Some lenders will look at the reason and be more understanding, some will not. What is most important to them is a look at how you handle your credit post-bankruptcy.

It does vary from lender to lender but here is a bit of an idea on how you can prepare yourself if you do want to purchase your home before that 7 years passes.

–          Most have a minimum 2 – 3 years from time of discharge of the bankruptcy

–          Most require 1 – 2 years of re-established credit, CLEAN credit! They have VERY LITTLE leniency for even one missed payment after a bankruptcy, no excuses

–          Most require at least 2 trade lines reporting for that 1 – 2 years. A trade line is a type of credit, like a credit card, loan or line of credit (again, can’t stress enough, NOT 1 missed payment)

–          Most require a minimum beacon score (your credit score from your credit report) of 600 – 620 depending on the lender

–          Most will ask for more than the minimum 5% down payment, some ask 10%, some ask 15% or more

–          Few lenders will allow any of that down payment to be gifted, they want to see that you have re-established a savings and are more responsible with your money

These are the things that are going to help you qualify for a mortgage. This does not mean if you have met all the requirements, that there is a guarantee but if you want to give yourself a fighting chance, you need to meet these criteria. Everyone makes mistakes and recovery is the important part, so if you have had to go through a bankruptcy, please be sure to take extra care of your credit so you can put the past behind you. Lenders don’t deny people based on one missed payment but post-bankruptcy, they go through your credit report with a fine tooth comb.

If you are struggling to get things back on track after your bankruptcy and want to buy a house, give me a call and I can help get you on the right track.

 

Naomi 1

 Naomi Hamm, Mortgage Broker & Partner

 Office: (204) 727-2177

 Cell: (204) 724-7290

 Email: naomi_hamm@centum.ca

Why More Home Sellers are Listing in January

A slow real estate market and savvy buyers are helping to drive January housing sales

Traditionally, January is a slow month for real estate as most sellers choose to wait until the middle of February in the hopes of capitalizing on the early spring market. However, more and more sellers are opting to put their house on the market in January.

This presents an opportunity for buyers. Most people are reluctant to uproot their families during the school year, so that means less competition — and fewer bidding wars. Lenders will not be as busy, so buyers can expect a more efficient process to get approved for a mortgage to ensure they have financing in place before making an offer. But there are things you simply won’t be able to inspect during the winter.

Here are some tips for protecting yourself when making a deal during the winter months:

Sellers

Spruce up the outside: Use urns with light wood branches to brighten up the exterior of your home, to compensate for any overcast day or snow on the ground. Get rid of the Christmas lights: homes that look dated on the outside give the impression that they are probably dated on the inside.

Make sure your fireplace is working during any showing, that the temperature is comfortable in the home and that any interior lighting compensates for what is usually grey lighting from outside.

Have pictures of your landscaping available from the summer and autumn, showing how beautiful your home looks year round.

Have available any inspections that you may have done on your air-conditioning unit or swimming pool before they were closed for the winter, as buyers will likely not be able to conduct inspections on these items and will have questions.

Consider inviting a company to do an environmental audit on your home in advance, confirming that there is no moisture behind the walls that could lead to mould and that you have sufficient insulation behind the walls.

Buyers

If there is anything that cannot be inspected because of the winter, such as the air-conditioning system or any swimming pool, then negotiate an extended warranty in the agreement, to give you until at least May 1, to inspect and have the seller be responsible for any damages. In addition, also negotiate a holdback of, say, $2,000 so that if a problem arises, the money comes out of that fund to fix it and you don’t have to chase the seller in court later.

Be careful about snow accumulating around the base of the home. It will be difficult for a home inspector to figure out whether the grading is likely to cause water problems in the basement later. Consider doing your own environmental audit to check for moisture behind any walls.

If the snow on the roof looks like it is evaporating faster than the snow around the house, it is likely a sign that there is not enough insulation in the home.

Check with your insurance company early as to whether you will have any difficulty obtaining insurance on the home; for example, by finding out whether there have been claims made in the neighbourhood about water damages or sewage backups.

Check whether snow accumulation makes it more difficult for street parking, as this may be the only parking available on certain streets. Also see how bad weather may affect your morning commute.

Check the last electric/gas bills, to determine how energy efficient the home is in winter. People tend to hibernate and stay at home in the winter, so take the opportunity to get to know the neighbours before you finalize your purchase.

By being properly prepared in advance, buyers and sellers can negotiate a safe and successful winter home sale

 

Source: Genworth

Will Bi-Weekly Mortgage Payments Save You Money?

The short answer, yes. Making bi-weekly payments on your mortgage will absolutely cut your interest costs and shorten the length of time it takes to pay off your mortgage. But accelerated bi-weekly payments can significantly reduce costs even more.

How does it all work? There are 12 months per year and 26 two week periods per year. This means with bi-weekly payments, you are essentially making 13 monthly payments per year. Bi-weekly is not to be confused with semi-monthly, which at two payments per months, works out to 24 payments per year.

The difference between bi-weekly and accelerated bi-weekly are as follows. Bi-weekly is a monthly payment times 12 months then divided by 26. Accelerated bi-weekly is a monthly payment divided in half times 26 payments.

Here is an example based on $220,000 mortgage with an interest rate of 3.6%

Monthly            Bi-Weekly        Accelerated Bi-Weekly

 

Payment                                   $1,110.04          $511.92                         $555.02

Yearly Payment                        $13,320.48        $13,309.92                 $14,430.52

Actual Ammortization              25 Years          24.8 Years                   22.1 Years

Period

Total Interest Paid                    $113,001.00      $112,743.00                  $97,887.00

Interest Savings Over                N/A                 $268.16                         $15,124.23

Life of Mortgage

 

As you can see, with only a small adjustment to you bi-weekly payment, your overall savings are drastic in the long run. You save money by paying less interest on your mortgage, reduce the amortization period and decrease the principle balance that much faster.

If you have any questions on how one of these items may affect you, please call us. It is important to get it right!

Choosing Between Renovations

choosing_renovationsWhich renovations should you pursue before winter comes?

As colder months approach, your family will be spending more time indoors. As a result, you may be planning on upgrading your home to suit your family’s changing needs. But with tight budgets, it’s not always easy to decide between installing heated floors or new counter tops.

When weighing your renovation options, you must evaluate the value you place on each project to ensure you’re maximizing your resources.

There are many different types of value, all unique to the desires of the individual. A residential remodel intends to change the way the current home either functions or looks to suit the needs and wishes of its occupants. The challenge is first to determine what your priorities are. While this can seem like a simple wish list, you may often find that you initial desires are not necessarily what is best for you, or our home, and the journey can shift our focus to a new set of “values.”

Here are four value categories to help you assess which renovations are most important to you:

Resale value:

This is the most common issue raised and is always top of mind. The factor driving the weight of this is how long you plan to stay in your home. If it’s five years or less, it requires heavy weighting. If over 10 years, it becomes fairly lightweight as housing trends quickly change. Renovations can date themselves, too, so anything over 10 years will likely call for an update of at least some finishes from a new owner.

Enjoyment value:

How badly are the changes you are planning needed or desired? Do you have a fourth child on the way and living in a two-bedroom house? That addition is pretty critical. Likewise, while the third-floor urban greenhouse may not add millions to the future selling price, if it is part of your retirement dream and will bring years of enjoyment to you, so that value should not be discounted.

Health & comfort value:

With so many new products on the market today, it is worth it to research the health impacts of different products you may consider installing in your home. Whenever possible, stick to natural materials, which are always better in the long run. Every house works as a system, and any changes to the building envelope and the HVAC system will affect the comfort of the home and the long-term health of its occupants. Topics such as radon gas, moisture and air management, R-value and off-gassing need to be discussions, if not research topics for every good renovation.

Social value:

How does the home consume energy, if at all? How does the renovation take environmental impacts into consideration when it comes to waste creation, salvage and new resource management? How does it fit within the surrounding area? These are all important questions to ask.

You may want to consider calling a professional to start to ensure your project is off on the right foot.


 

Source: Genworth

Easy Ways to Prepare Your Kids for a Big Move

When it comes to moving into a new home, children may feel more uncertain than excited.

For children, the excitement of moving into a new home is often clouded by uncertainty. Parents can ease the transition — starting at the dinner table. The ritual of sitting down to a family meal can help kids start to feel at home, says Nancy Darling, a psychology professor at Oberlin College in Oberlin, Ohio. “When kids feel like everything is changing, they need that stability,” she says. “They need attention and stability.” That may mean anything from choosing familiar paint colours in the new house to letting kids be part of decorating decisions.

Barbara Miller, an interior designer in Portland, Ore. who has moved with her children three times, painted their new rooms the same colour as their old ones.
“I try to keep things as much the same (as possible) — especially if they’re nervous,” says Miller. Moving can be more disruptive for kids than parents realize, says Doug Tynan, a child psychologist with the Nemours Foundation in Newark, Del. Be prepared to handle tears or unusual behaviour as children adjust to their new setting, he warns. “Don’t take it personally if they walk into a wonderful new house and burst into tears,” says Tynan, who estimates it takes five to six weeks for children to adjust to a move.

He recommends that parents talk openly with children about the move as soon as they decide it’s going to happen. “The more information the better,” he says. “Be as upfront as possible.”

Tynan, Darling and Miller offer these additional tips to help children adjust to a new home:

  • If possible, take them to the new house before the move. If they don’t have a chance to see the interior, take photos or show them the online listing. Talk about how the family will use the new spaces.
  • Let them help arrange their new space. Give kids a floor plan of their new room and let them decide where to place the furniture.
  • If their new school has a website, spend time online getting to know the building and its teachers. Arrange to visit the school in person as soon as possible.
  • Pack the kids’ rooms last so they face as little disruption as possible. Unpack their rooms first at the new house.
  • Give children a box to pack. Tell them to put their most valuable possessions in it. If possible, let them keep the box with them when travelling to the new house.
  • When you arrive, take kids on a tour. Point out the location of light switches, bathrooms and other useful details. Make sure children know how to get to their parents’ room during the night. Consider using nightlights or placing glow-in-the-dark stickers on light switches to help kids feel more comfortable.
  • Visit a playground or other neighbourhood attractions they might like. Point out positives, such as proximity to a pool, ball field or ice cream shop.
  • Sign kids up for sports teams, classes and other extracurricular activities as soon as possible. If the move occurs during the summer, try to register for a camp or class that will include local kids.


 

Source: Genworth

The Smart Way To Maximize Your Down Payment

If you are looking to buy your first home, qualifying isn’t always the toughest part. For a lot of clients I have met over the past year, coming up with the 5% down payment (which is the minimum since the zero down payment was taken away last year) appears even more difficult. Many people are trying to get out of renting because a mortgage on a home would be cheaper and then your money is going toward equity in your home.

When paying that high rent each month, it does make it really hard to have any extra money to put away. Setting up a budget and cutting out unnecessary “extras” is the obvious way to set money aside for a down payment but what’s the best way to make this money work for you? Here is an idea on how to benefit the most from what money you are able to put away for you down payment.

The government of Canada has a program designed for First Time Home Buyers, simply called the First Time Home Buyers Plan (ingenious title isn’t it?) How this plan works is it allows first time buyers to withdraw money from their RRSP’s, tax free and interest free, to put toward their down payment on their first house. You do have to eventually put that money back as it’s great to get into your first home but if you drain your retirement savings in the meantime, you are no further ahead. That problem is solved by giving you a 2 year grace period in which you do not need to make any payments and then you are given 15 years to pay back the full amount and not be taxed.  The maximum amount to be withdrawn is $25,000/person. This is a one-time deal. The only exception is if you happen to sell your home and rent for 5 years, then you will requalify for this program.

Sounds simple right? Well, chances are, if you have no savings, you probably have no RRSP’s to withdraw from so I still can’t solve the problem of not having the extra cash flow but what I can do is give you advise to make the most of what you can put away.

The best thing for you to do is to put your “extra” money (when you are able to find some) into a TFSA (tax free savings account). A TFSA is an account that gives you the benefit of investment income and capital gains, like an RRSP, but allow you to withdraw money at any time, tax free.

Now that we have some money saved up and you’ve started looking for your dream home. You need to consider a couple things. Contributing to your RRSP’s has tax implications. If you contribute everything from your TFSA into an RRSP, you will generally receive a tax rebate when you file your income tax. Bonus, extra money! The catch is, to use your RRSP money through the FTHB plan, it MUST be in the RRSP for 90 days so you do have to preplan to use this strategy.

One thing to consider is, if you do decide to go the route of contributing to your RRSP’s from your TFSA, is that you do have to repay that RRSP or you will be taxed on the funds, defeating the purpose of all this planning. If repaying 1/15th of the money you withdrew does look like it’ll fit into your budget, then don’t put it into your RRSP’s, just use your TFSA for you down payment. If you think you’ll be able to make those payments 2 years down the road when you are required to, then get that money in those RRSP’s and prepare to collect the refund when tax time comes around. That free money from the government could be used to help pay back a portion of your RRSP’s when the time comes, it could be added to increase your down payment or to purchase things you’ll need for your new house. The possibilities are endless! I’m sure we can all easily find something to do with our tax rebate!

This may sound a little bit complicated but it’s really not. It just requires the right advice and planning. If you have any questions about any planning methods, give me a call, I’ll help simplify it. Wouldn’t it make you feel better to know that you got the maximum benefit from that money you worked so hard to save up?!

Naomi 1

 Naomi Hamm, Mortgage Broker & Partner

 Office: (204) 727-2177

 Cell: (204) 724-7290

 Email: naomi_hamm@centum.ca

8 Must Do’s After a Mortgage Preapproval

Although it may seem like the obvious thing to keep paying bills and show your responsibility after you are preapproved for a mortgage, surprisingly there are some people who get so excited about shopping for a home that they neglect some other important things. Mortgage preapprovals are normally good for 60 – 120 days depending on the lender so after that specific time period, if you have not taken possession of a home, the lender will do another credit check so it’s important to stay on top of your good behavior that got you the preapproval in the first place. Here are some tips on how to be sure you will remain approved.

1) Don’t apply for new credit

Some mortgage brokers are required to do another credit check before the final approval. If you have new credit inquires, they may have to verify you haven’t taken on any new debt and this can take time. Also, your credit score can change with new debt so don’t take any chances.

2) Don’t make any major purchases

If your mortgage broker does has to pull another credit report, and we find a new loan or change in credit card balance (say your bought new furniture or appliances on your credit card, we will have to use those credit card balances which will increase the debt-servicing (the guidelines used for qualifying) and it could bring down your maximum loan amount and make you miss out on the house you have made an offer on.

3) Don’t pay off all your debt

Everything you do can have an impact on your approval so consult your mortgage broker before doing anything. Paying off your credit card debt may seem like a good idea but if it diminishes your cash flow and your ability to provide a down payment, you will end up having to wait to purchase in order to save up again.

4) Don’t co-sign any loans

A lot of people don’t realize that co-signing a loan does affect your credit even if you have nothing to do with that loan from the time you sign. Any loans that show up on your credit report have to be used in our calculations so even though you never make a payment on that new car you consigned for your brother, according to the lenders, you have that monthly obligation because if he doesn’t make the payments, you are responsible for them.

5) Don’t change jobs

Even if it seems like a good move, don’t make the switch while you are still in the process of buying a house. Most of the time when a person starts a new job, they are on probation, meaning you could be let go at any time. That does not give lenders security. Not to say there are not exceptions but to give yourself more security, hold off on switching jobs until you buy your home.

6) Don’t ignore lender requests

If your mortgage broker recommends something, you should really take their advice. We know what we’re talking about. If we tell you not to buy a new car before you get your house, it’s not because we want you to continue to drive that old beat up pickup truck around, it’s because a big car payment is one of the biggest reasons people don’t get approved for a mortgage. Also, when we request certain documents, I promise it’s not to make your life miserable or to see how good you are at filing your paperwork. These documents are required by our lenders to verify the information we have provided. Without verification, they will not fund your mortgage and you will not get into your home.

7) Stay current on your existing accounts

Continue to pay your bills on time and don’t be in your overdraft on any of your accounts. The credit report we pull is a snap shot in time and if you want to keep your chances of being approved again in the future, you want to try to keep your finances consistent.

8) Keep a paper trail of your deposits

Depositing money isn’t a problem, but it’s a good idea to keep track of any large deposits (other than regular paychecks). There is a lot more mortgage fraud and money laundering now than there used to be so lenders are much more restrictive and they want to know where those large deposits come from.

Please contact me if you have any questions about this, or any other financing issues. It’s important to get things right!

Naomi 1

 Naomi Hamm, Mortgage Broker & Partner

 Office: (204) 727-2177

 Cell: (204) 724-7290

 Email: naomi_hamm@centum.ca

 

Source: MSN real estate