Frank Steinhausen, Broker
FSteinhausen@REMAX.net
RE/MAX Rouge River Realty Ltd., Brokerage
Phone 905-428-6533
Fax 905-668-1850
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Archive for April, 2009
7 Things To Do Before Refinancing
April 24th, 2009 Categories: Ajax, Mortgage, Pickering, Pickering Village, Real Estate News
As I am sure you have heard, the Bank of Canada has reduced their prime interest rate by 0.25%. I am hear all you with variable rates cheering in the background. For those of you with a fixed rate, what should you do?
Now is not necessarily the time to jump into re-financing. Here are 8 things that you need to do before you take that step:
- What is your current mortgage rate? Hearing that the interest rate is almost at a level that the banks will start paying you (interesting concept!) often causes people to jump at their mortgage applications. Compare your rate and penalties to the savings. Only sign up if it is saving you money.
- Find out how much equity you have in your home. On average in the GTA, prices have fallen about 4% since last year. Depending on your area, that price drop could be eating away at your equity. Knowing that will help you determine what kind of re-financing candidate you are.
- If you are underwater with your mortgage, find out how deep. House values, like any investment, fluctuate. Having a mortgage that is more dear than the house it is secured on, doesn’t mean that you don’t have options. Collect all the information you can, and talk to your bank or mortgage broker, they can be your best ally.
- Know your credit history and score. Contact Equifax
to find out what shape your credit is in. With lending decisions becoming more rigid, know your score. Banks can decide only to give the best rates to the players with the top scores. - Start identifying potential lenders. Shopping for your mortgage can be a lot like shopping for you house. Check out the features and benefits of banks, trust companies, credit unions, and mortgage brokers. Find someone you are comfortable with and trust.
- Look at the big picture. Interest rates are just one of the pieces of your mortgage puzzle. There is often a discharge penalty and, possibly, a fee to create the mortgage. If the mortgage is going to cost you $5000 in penalties and fees, and you are saving only $50 a month, it will take you 100 months to realize any benefit.
- Get your paperwork together. Completing the mortgage can require you to submit your income letters, notice of assessment, bank statements, etc. Collecting those a head of time can save a lot of back and forth.
We have collected a team that can help you with almost all of this.
Adapted from Ilyce Glink, Inman News, Thursday, April 23.
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Canada Mortgage Rates Not Likely to Fall, Soper Says
April 24th, 2009 Categories: Mortgage, Real Estate News
April 14 (Bloomberg) — Mortgage rates in Canada, which have plunged by almost 50 percent in the last year, aren’t likely to fall further, said Phil Soper, chief executive officer of Brookfield Real Estate Services Fund.
“Certainly with the Bank of Canada’s target rate set at virtually zero, there’s very little room,” Soper said today at a conference in Toronto on Canada’s real estate market. The rate is “the lowest it’s been in anyone in this room’s lifetime.”
Rates for home loans have been dropping during the biggest financial crisis since the Great Depression, with some lenders offering mortgages approaching 4 percent, Soper said. That compares with an average posted five-year rate of 7.5 percent a year ago, according to the Bank of Canada. He added that home prices in Canada aren’t likely to rise “sharply” over the next two years.
Bank of Montreal, which sponsored the conference, lowered its rate for a five-year fixed-rate mortgage this month to 4.15 percent.
“We are approaching almost zero interest rates,” at the Bank of Canada, said John Turner, the Toronto-based bank’s director of mortgages. “The question becomes, how much upward pressure will there be as we come out of this recession?”
The Bank of Canada last month cut its benchmark lending rate to 0.5 percent, its lowest ever, and said it’s preparing to use policies beyond interest rate moves to revive an economy hit by a recession and tight credit markets. The next rate announcement is April 21.
Canadian existing home sales rose in February for the first time since September as buyers took advantage of lower mortgage rates and prices, according to the Canadian Real Estate Association’s Multiple Listing Service. Sales of existing homes rose 8.6 percent from January to 28,669 units.
Bank of Montreal senior economist Sal Guatieri predicted that Canada’s housing market will decline further this year, without the “crash” experienced in the U.S.
To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net.
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3,681 Transactions In First Half Of April
April 20th, 2009 Categories: Ajax, Durham Region, Pickering, Pickering Village, Real Estate News
TORONTO, April 17, 2009 - Greater Toronto REALTORS® reported 3,681 transactions in the first half of April, down seven per cent compared to 3,955 during the same period last year.
“In lock-step with the favorable March results, resale housing market conditions in the first half of April were markedly improved compared to the winter time,” said TREB President Maureen O’Neill.
“Households that were on the sidelines at the beginning of the year are now taking advantage of lower interest rates and lower home prices.”
The average price for MLS® sales was $383,161, down four per cent from $399,117 last year.
“The average home price in the GTA stabilized as resale market conditions tightened over the past two months,” according to Jason Mercer, TREB’s Senior Manager of Market Analysis.
“Existing home sales increased relative to new listings.”
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Cash Strapped? Talk About It–Help For Homeowners
April 15th, 2009 Categories: Area interest, Real Estate News
I read a statistic recently that said that 0.33 percent of Canadians are currently in mortgage arrears. Although that is a small number, we are in danger of having that number get much bigger.
If you are in that situation, or in danger of that happening, the first step to getting help is asking for it.
CMHC (Canada Mortgage and Housing Corp.) wants to help Canadians who may be facing a mortgage crunch. Genworth Financial, a private mortgage insurer, is also stepping up their Homeowner Assistance Program.
“CMHC has a long tradition of offering mortgage tools to lenders to help them assist homeowners whose financial circumstances have changed,” says CMHC vice-president of insurance underwriting Mark McInnis. “We want to remind people that the best course of action is to speak to their lenders a the first sign of financial difficulty. With early intervention, co-operation and a well-executed plan, you can work together with your lender to find a solution.”
Genworth offers the opportunity to capitalize the arrears, increase the amortization period, arrange a partial or shared payment plan, or even deferred payments. They have a Homeowner Assistance Evaluator online to help you assess your situation and look at the possible solutions.
Another online resource that can help is Industry Canada’s Take Charge of Your Debt. There are plenty of resources to help you discover the best solution for you.
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March Resale Housing Results Bring Positive News
April 7th, 2009 Categories: Ajax, Buying real estate, Pickering, Pickering Village, Real Estate News, Selling real estate
TORONTO - April 6, 2009 — In March 2009, Greater Toronto REALTORS® reported 6,171 sales – down seven per cent from March 2008, representing the smallest year-over-year decline in the last five months. The average price for March transactions was $362,052 – down less than five per cent from the same month last year.
“The Greater Toronto housing market has stood up very well given the challenging economic times the world has experienced in recent months,” commented TREB President Maureen O’Neill.
“In fact, over the past two months, the situation in the housing market has improved.”
The seasonally-adjusted annual rate of sales increased to 65,600 in March – up 36 per cent from the ten-year low reached in January.1
“Sales in March increased at a rate over and above what would be expected from the normal spring-time bump,” said Jason Mercer TREB’s Senior Manager of Market Analysis. “A greater number of households have taken advantage of increased affordability in the housing marketplace.”
1Seasonally adjusting TREB MLS® data removes recurring seasonal trends observed each year. For example, MLS® sales are highest in late spring each year and lowest in the winter months. Removing the recurring seasonality, allows for the analysis of a meaningful trend reflecting actual changes in market conditions. By multiplying the monthly seasonally-adjusted figure by 12, creating an annual rate, we can compare how the current month relates to historical annual figures.
Median Price
The median price in March was $317,500 from the $326,000 recorded in March of 2008.
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Sales Tax Harmonization Will Hurt Resale Home Market
April 3rd, 2009 Categories: Buying real estate, Real Estate News, Selling real estate
Not that I want to be the bearer of bad news that could affect my livelihood, I think that everyone should know that the closing costs for selling or buying your home have just increased.
It is a good thing that the federal government is giving the buyers a bit of a break with their closing costs. The provincial government has just increased them.
The Ontario Real Estate Association tells us:
(Toronto, March 26, 2009) Ontario’s REALTORS® say the McGuinty governments plan to harmonize the GST and PST will add over $2,000 to the cost of a real estate transaction, hurting the resale home market and prolonging the housing industry’s recovery from the current economic downturn.
“Now is not the time to be erecting barriers to homeownership,” said Pauline Aunger, President of the Ontario Real Estate Association. “We need consumers to invest in housing to help get our economy going again.”
According to the Canadian Real Estate Association, home sales in the province of Ontario were down 29 per cent in February, compared to 2008.
Under a harmonized sales tax (HST), home buyers and sellers will have to pay extra tax on a range of services associated with real estate transactions such as legal fees, moving costs, real estate commissions and home inspection fees. Currently, consumers only pay the 5% Goods and Services Tax (GST) on these services.
“These additional taxes could price some homebuyers, especially first-time homebuyers, right out of the market,” explained Mrs. Aunger. “Harmonizing will not help homebuyers in any way.”
For a resale house priced at $360,000, a HST could add over two thousand dollars in new taxes to closing costs. In total, a HST will add $313 million annually in new taxes to resale home transactions.
“In the last decade, Ontario’s homeowners have faced a barrage of new costs,” said Aunger. “From municipal land transfer taxes to sky rocketing property taxes, homeowners are being pushed to the brink to accommodate increasing demands from government. A harmonized sales tax is yet another cash grab on Ontario’s already overtaxed homeowners.”
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QUICK FACTS Table 1: HST and Resale Homes |
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Taxable Service |
Current Tax Payable |
New Taxes |
HST Tax Payable |
|
|
Mortgage Insurance Premiums 1 |
$752.40 |
$470.25 2 |
$1222.65 |
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|
Legal Costs |
$50.00 |
$80.00 |
$130.00 |
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|
Real Estate Fee/Commission |
$720.00-$1,080.00 |
$1,152.00-$1,728.00 |
$1,872.00 - $2,808.00 3 |
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|
Home Inspection |
$20.00 |
$32.00 |
$52.00 |
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|
Title Insurance |
$24.00 |
$15.00 |
$39.00 |
|
|
Total New Tax: |
$1,749.25-$2,325.25 |
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Ontario’s Plan for Mandatory Energy Audits
April 1st, 2009 Categories: Green Building, Real Estate News, Selling real estate
It is kind the case of one hand giving and the other hand taking away. The federal budget this year gave a tax break to home buyers by giving them a tax credit for some of the closing costs when buying a home. And the provincial government is considering implementing a mandatory home energy audit for sellers before they can complete the sale of their home.
The Ontario Real Estate Association says this:
“This mandatory government regulation will impose a significant cost on home sellers. As with most Canadians, we don’t believe in green at any cost,” said Gerry Weir, President of the Ontario Real Estate Association. “It’s not the initial cost of these audits that concerns us,” he said. “Rather, the results of these audits will be used by home buyers as bargaining chips to significantly reduce the final selling price.
“Today’s economic downturn is a terrible time to introduce this measure. Home sellers are already worried about lost equity in their homes. A move like this, which will reduce their value even further, will not help them in any way,” Mr. Weir said.
REALTORS® favour government encouragement of energy efficiency in homes through expanded tax breaks and other measures.
In addition, REALTORS® point out that there is no one standard for energy audits. Different firms arrive at different assessments of the same house. “EnerGuide ratings of an existing home can and do vary between energy auditors, depending on the assumptions they make and the extent of data they collect on the building’s actual construction,” Mr. Weir said.
Not everyone is opposed to this government intrusion into the marketplace. Elden Freeman, founder of the National Association of Green Agents and Brokers says, “considered over the long term of owning a house, the opportunities for improvements that audits can reveal ultimately pay for themselves several times over. Take into account that both the audits can reveal ultimately pay for themselves several times over. Take into account that both the audits and the improvements are both government-subsidized and it becomes clear that home audits are an opportunity for savings and asset enhancement.”
The jury is still out on this new initiative. Not sure it is a good idea, let your MPP know. It is undergoing public consultations now before it is put to a final vote.
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