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 the 'Mortgage' Category
Are You Ready For Rising Interest Rates?
May 12th, 2010 Categories: Mortgage
The Bank of Canada has stopped promising to keep interest reates rock bottom. In fact, most financial institutions have already started to jack them up. The posted rate for banks is about 6.25%* which is up from March when it was 5.25%.
Are your ready for it?
The CMHC studied current home owners and found that, yes, the majority are comfortable with their mortgage debt load and are confident that things are going to stay that way. According to an Investor’s Group report, forty-one percent of Canadians said that their financial security could withstand a three percent increase in mortgage interest rates.
“A three percent increase in mortgage rates…implies mortgage payments for these borrowers could increase an average of $444 per month for an mortgage of $254,514.
Can your budget handle it?
* You should not that you can negotiate a better interest rate at most institutions, depending on a number of factors.
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New Mortgage Rules Apply Today
April 19th, 2010 Categories: Mortgage, Real Estate News
If you are involved in the real estate market, whether buying or selling, you might be aware that the Canadian government implemented its new qualification rules today for refinancing or buying a home. If you are considering purchasing a home, or refinancing, before the introduction of HST on July 1, you will need to consider the changes that might affect the amount of home that you can buy.
Here are the main changes to the mortgage rules:
- Qualifying
Borrowers must qualify for the five-year fixed term mortgage rate, no matter what product they are purchasing. It was previously based on the three year term. What it means to you is that you will need an extra $9,200 in annual income to qualify for the mortgage on a $337,000 home. - Refinancing
Homeowners can now only withdraw up to ninety percent of their equity. This is up from ninety-five percent. It might mean that some homeowners will have to put off other big purchases. On the plus side, the government is limiting the risk of negative equity homes–a fact of life in a declining value market (see the United States). - Speculation
Investors will be required to put twenty percent down on the purchase of a home that they are not going to live in. The purpose of this change is to reduce the number of speculators in the market.
Call me if you want to know how, or if, the mortgage changes affect you.
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One Good Reason To Buy That Home Now
March 24th, 2010 Categories: Buying real estate, Mortgage
There are any number of reasons that a realtor will give you to buy a home now. And looking back over the past year, if you had listened, your home could be worth up to 10% more than you paid for it last spring.
This spring things aren’t much different, except mortgage interest rates have never been so low.
There are now whispers about the possibility of interest rates going up. And quite honestly, there is no where else for them to go. When that happens affordability comes into question.
The following table shows you how a 1% increase in interest rates will dramatically change your monthly costs, or decrease the value of the house you can buy.
Interest rates will be going up. Will you be ready?
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The Financial Post states that Mortgage changes target ‘reckless’ buyers: Flaherty
February 26th, 2010 Categories: Buying real estate, Mortgage
Here is an explanation of the new mortgage rules:
OTTAWA — Jim Flaherty, the Finance Minister, says he is targeting “reckless” speculators who buy up multiple condominium units in the country’s biggest cities with new rules introduced yesterday that will make it tougher for Canadians to get a mortgage….
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“The measures will not affect the ability of a Canadian family to buy a house. It will affect those who are speculating,” the Finance Minister said. “What we’re getting at is the speculation in multiple condominium units in particular which we see in Vancouver, Montreal, Toronto and in some other places in Canada.”
Home builders were taken aback by the measures introduced, saying they could result in “severe implications” for the condo and housing markets.
The changes, scheduled to come into effect on April 19, will make it harder for first-time buyers to qualify for government-backed mortgage insurance — from either Crown agency Canada Mortgage and Housing Corp. or private-sector providers — which is required if down payments are less than 20% of the property’s value.
Borrowers now have to meet standards for a five-year fixed-rate mortgage, even if the buyer wants a shorter-term, variable rate product.
Some analysts, however, indicate the shift is not as big as it appears. Eric Lascelles, chief economist at TD Securities, said the revamped rule likely means the minimum household income cutoff for Canadian mortgage applicants would be about $5,000 to $8,000 higher.
Further, Ottawa has raised the minimum down payment on rental income properties — where the buyer does not plan to live — to 20% from 5%.
Mr. Flaherty said one goal is to protect Canadians from overextending themselves financially as interest rates are likely to climb from present historic lows. The other, he added, is to root out speculation in real estate, which he suggested was happening with greater frequency based on prebudget consultations….
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SUMMARY OF CHANGES
*Borrowers must qualify for a five-year fixed rate mortgage instead of a three-year loan when calculating gross debt service and total debt service ratios.
*Refinancing will be capped at 90% for government-backed high-ratio mortgages versus 90% previously.
*A down payment of 20%, instead of 5%, will be required for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation.
WHAT CHANGES MEAN FOR A $337,000 HOUSE
*The difference between a three-year mortgage rate and a five-year mortgage rate is currently in the range of about 50-100 basis points. The average house in Canada costs $337,000, which means that this change will require that mortgage applicants have the capacity to absorb an extra $2,500 per year in mortgage costs than in the past, according to calculations by Eric Lascelles at TD Securities. Effectively, the minimum household income cut-off for Canadian mortgage applicants is now about $5,000-8,000 higher than it was previously, to fulfill the new rule.
Financial Post
pvieira@nationalpost.com
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Ottawa Changes Mortgage Borrowing Rules
February 17th, 2010 Categories: Mortgage, Real Estate News
Watch as Finance Minister, Jim Flaherty, changes the affordability of homes in Canada:
http://watch.ctv.ca/news/latest/tougher-rules/
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Is It Time To Refinance?
October 2nd, 2009 Categories: Buying real estate, Mortgage
David Bach, of The Automatic Millionaire fame, gives some great advice if you are considering refinancing your home to take advantage of today’s low interest rate:
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Canadian Home Buyers Savvy and Optimistic
July 21st, 2009 Categories: Buying real estate, Mortgage, Real Estate News
Canada Mortgage and Housing Corporation (CMHC) released the results of a survey that they conducted on consumer mortgages. They indicate that 90 percent of the people who bought homes recently believe that home ownership is a good long-term investment and that almost 70 percent of them think that now is a good time to buy.
CMHC says:
Given the current economy, this study indicates that Canadians continue to be optimistic about home ownership and are astute mortgage consumers,” said Francois Blouin, Director, Insurance Products and Strategic Direction, CMHC. “Our results reaffirm what we have seen in previous surveys—when it comes to their mortgages, Canadians are informed and manage their debt prudently.”
For the complete press release, check this out.
The area home buyers seem to agree. With sales continuing briskly in July, the housing market continues to defy the economic odds.
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6 Creative Ways to Afford a Home
June 9th, 2009 Categories: Buying real estate, Mortgage, Real Estate, Real estate investment
If your income and savings are making homebuying a challenge, consider 
these options.
1. Investigate downpayment options. Your mortgage lender has several choices that can reduce your downpayment.
2. Get the seller to provide financing. In some cases, sellers may be willing to finance all or part of the purchase price of the home and let you repay them gradually, just as you do a mortgage.
3. Consider a shared-appreciation, or shared equity, arrangement. Under this arrangement, your family, friends, or even a third-party may buy a portion of the home and thus share in any appreciation when the home is sold. The owner/occupant usually pays the mortgage, property taxes, and all maintenance costs, but all investors’ names are usually on the mortgage. There are companies that can help you find such an investor if your family can’t participate.
4. Get help from your family. Perhaps a family member will loan you money for the downpayment and/or act as a cosigner for the mortgage. Lenders often like to have a cosigner if you have little credit history
5. Lease with the option to buy. Renting the home for a year or more will give you the chance to save more toward your downpayment. And in many cases, owners will apply some of the rental amount toward the purchase price. You usually have to pay a small, nonrefundable option fee to the owner.
6. See if you can qualify for a short-term second mortgage to give you the money to make a higher downpayment. This may be possible if you have a good income and little other debt.
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Banks Are Lending To Qualified Buyers
June 5th, 2009 Categories: Buying real estate, Mortgage, Real Estate News, Real estate investment
As a follow up to my last post, I see that David Bach, author of The Automatic Millionaire (among others).
Although this video references US loans and forms, the information is equally true here in the Greater Toronto Area. CHMC can insure mortgages if you have less than 20% down payment and you do need proof of income for mortgage pre-approval.
If you have any questions, call me to get information about a mortgage that you can qualify for.
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What Is Your Home Affordability Range?
June 4th, 2009 Categories: Buying real estate, Mortgage, Pickering Village, Real Estate
When a client comes into the office looking to buy a new home, we send them off to the mortgage broker to see how much home they can afford. The broker will crunch some numbers and help them to define an “affordable house payment.”
But what is an affordable house payment?
According to CMHC (Canada Mortgage and Housing Corporation), your monthly housing costs should not exceed 32% of your gross monthly income. Your housing costs include monthly mortgage payments, taxes and heating expenses (and half of the condo fee, if necessary). Along with that , your entire monthly debt load should not be more than 40% of your gross monthly income. This includes all your housing costs, and other debts like car payments, personal loans, and credit card payments.
The trouble with these guidelines is that they fail to take into consideration other factors. For example, a couple with 4 children is probably going to be able to afford less house than a young couple with no children.
Let’s look at a specific example.
Suppose a family of four is pulling in about $6,000 per month. That’s 
$72,000 annually. We will assume that they are otherwise debt-free, just to make things easier. According to the DTI (debt-to-income) ratio of 32%, the couple should be able to afford a monthly house payment of $1920. That leaves $4080 per month to cover everything else.
Before I encourage them to purchase a $250,000 plus house, let’s take a look at their current monthly budget. Here is where the rest of the money might go:
Income taxes (30% very conservatively) $1800
Kid’s activities (hockey, soccer, dance) $400
Groceries $700
Car insurance $180
Gas (for the cars) $200
Car maintenance and repairs $200
Movies, TV, internet $120
Cell phone, telephones $200
Clothing, shoes $50
Dining out $150
Gifts $100
Personal care (hair cuts, sundries) $70
Pet care $50
Total $4220.00
Now, you wouldn’t exactly say that this family was living high on the hog, yet if the house payment was $1920 per month, they would be seriously struggling every month to make ends meet.
What can you learn from this?
That guidelines are just that. You need to talk to a professional about how much house you can afford based on your budget and projections and develop a realistic affordable payment plan. Every situation is unique.
I can tailor your house payment to fit your budget, not the other way around.
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