The ins and outs of mortgage rates

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It seems like not a week goes by that a major news story doesn't rock the Canadian real estate market regarding mortgage rates. While it's true that mortgage rates are an important factor when it comes to homebuying, it's even more essential for Canadians to understand exactly how mortgage rates work, and how they can affect home loans.

What are mortgage rates?
A mortgage rate is a term used to describe the interest on a home loan. For most individuals, obtaining a mortgage is a necessary part of buying a home. Mortgage rates are figured on the principal balance of a home loan, meaning how much money is still owed before the loan has been fully repaid. Since a higher balance means more interest, mortgage rates are typically more expensive at the beginning of a loan. As the balance is paid off, less interest is able to build up. This is also why homebuyers spend so much time searching for low rates, as lower interest means less money owed. Continue reading

Mortgage brokers offer different options than banks

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When considering financing options for home buying, borrowers have two options: a bank or a mortgage broker.

According to the Eastern Morning Herald, Canadians are looking for the best possible mortgage rates. The statistics show that as Canada's housing market continues to recover from the global recession in 2008, mortgage brokers are favored for helping people with financing needs for their homes.

In one year, the National Bank Composite House Price Index was up 2 percent in April 2013. That's the smallest increase in 15 years. With the slow growth, tighter requirements and low interest rates, the mortgage market in Canada is becoming competitive. Continue reading

Avoiding homebuying mistakes

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Everyone makes mistakes, but when it comes to buying a home, those mistakes can be costly. According to data from the Royal Bank of Canada's 20th Annual Homeownership Poll, most Canadians admit to make some kind of mistake during the homebuying process. While 40 percent said everything went smoothly, 60 percent said there was some type of error on their part.

The following are the most common homebuying mistakes according to the RBC poll, as well as ways to avoid them. Continue reading

Mortgage brokers express concerns over industry

Data from a Canadian Mortgage Professional poll provides a special insight into what issues facing the current real estate market most concern mortgage brokers.

"No, the sky isn't falling, say the majority of brokers responding to CMP's fifth-annual Sentiment Poll, but their answers – recorded over a six-month period ending early March – suggest headroom is getting tight," reads the report. "Even with interest rates falling instead of rising, broker worries have grown right along with economic uncertainty and the creeping slowdown in home sales more stringent mortgage rules have ushered in."

Figures from the poll show that 66 percent of brokers are concerned with the stricter underwriting guidelines put in place by Finance Minister Jim Flaherty, an increase from 56 percent during 2012. Meanwhile, 42.33 percent of respondents said home sales were their chief worry, with another 32 percent pointing to falling home prices. Continue reading

Canadian homeowners comment on the mortgage process

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The results of a new survey among Canadian homeowners reveals that finding a mortgage can be a time-consuming process for some. However, resources exist to make the process easier and more affordable in the long run.

The survey, commissioned by ING DIRECT, revealed that 67 percent of Canadian respondents who currently carry a mortgage said the process is complicated (31 percent), difficult to figure out (16 percent) or confusing (20 percent).

"Whether you're a first-time home buyer or shopping around for a new mortgage, applying for a mortgage doesn't have to be a confusing or complicated experience," said Peter Aceto, president and CEO at ING DIRECT. "Choosing a bank that provides a great rate up front and offers flexible terms means saving both time and money over the long run. We're committed to making the process of getting into your home easier and giving clients the option to pay off their mortgage faster." Continue reading