Homebuyers should invest now

Despite mortgage rates remaining near all-time lows, many Canadians are not planning on taking the plunge into homeownership any time soon.

According to a poll from Ipsos Reid, only 15 percent of Canadians surveyed said they plan to buy a house during the next two years. This marks a decrease of 27 percent from the previous year, as well as the largest decline in buying intentions in the history of the yearly poll, which the Royal Bank of Canada has been conducting for 20 years.

The poll, which included 3,000 Canadians surveyed between January 31 and February 8, shows that 75 percent of respondents attributed declines in buyer intentions to mortgage restrictions put in place by Finance Minister Jim Flaherty. Continue reading

Low rates still available despite challenges

Following mortgage restrictions he put in place last summer, Finance Minister Jim Flaherty continues to keep a close eye on the mortgage market, intervening when he sees fit.

In recent weeks, he has singled out financial institutions known for lending home loans at low mortgage rates and criticized them, leading to the banks canceling their low advertised rates. Many industry observers, including those in Flaherty's own party, are not happy with this.

"Me, personally, I would not dictate to businesses what prices to decide," said Conservative cabinet Minister Maxime Benier. "It's the market. It's supply and demand that decides the prices. It is the case for interest rates, it is the case for other products, too."

Other analysts take issue with the seeming randomness of the financial institutions being criticized. Continue reading

Effects of mortgage restrictions continue to be felt

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While mortgage rates continue to hover near historic lows, there's no doubt that Finance Minister Jim Flaherty's mortgage tightening rules have cooled the Canadian housing market. Now, according to Will Dunning, chief economist at the Canadian Association of Accredited Mortgage Professionals, Flaherty's financing restrictions will also cool down another area of the Canadian economy: employment.

As reported by Canadian Mortgage Trends, a recent report from CAAMP forecasts that 190,000 jobs will be lost between the years 2013 and 2015 due to the mortgage tightening rules. This includes 70,000 jobs from the new construction market, along with 120,000 jobs in the resale market.

"To put this in perspective, the entire Canadian economy generates roughly 20,000 jobs a month…," writes Rob McLister for Canadian Mortgage Trends. "If his projections are correct, the new amortization rules eliminate almost 80% of a full year's worth of job production.

CAAMP shared these findings with policymakers in late February. We suspect the data won't result in any imminent rule loosening as the government wants to monitor the impact of July's changes further." Continue reading

Tips for selling a home

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Spring isn't just a busy season for homebuyers. When the weather begins to warm up, homeowners also have a better chance of selling their properties. While homebuyers are figuring out mortgage rates and home loans, home sellers should be focused on making their properties ready for the market. The following are some strategies home sellers can use to help speed up the process.

Finding the right price
More than any other factor, an inflated price can drive away homebuyers. While many homeowners may be attached to their properties, it's important to realize that a home's price should be based on the current market, not emotional investment.

Hiring a professional appraiser is one way to figure out how much your home is really worth. Not only will these professionals take into account the property itself, as well as any additions homeowners may have made, but the market as a whole. Location and demand both affect what buyers are willing to pay, so it's important for home sellers to adjust their expectations accordingly. Continue reading

Buying a home in spring

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Spring is typically the busiest homebuying season of the year. Once the weather begins to warm up, homebuyers are more willing to brave the outdoors in search of a new property. Additionally, the passing of the holiday season means more home sellers are in a position to begin the moving process. This leads to more homes on the market, as well as more buyers to compete with. For homebuyers looking to close a deal this spring, there are strategies that can help speed up the process and offer a leg up over the competition.

Get preapproved
Before you can buy a home, you need to make sure you can afford it. Besides taking mortgage rates into account, homebuyers should find out exactly how much money they can borrow. This allows them to narrow their search for properties and focus on homes in their price range. A mortgage preapproval allows a lender to evaluate a potential borrower's finances and determine the maximum amount they will be able to take out. While not the same as a signed mortgage agreement between a lender and borrower, mortgage preapproval is the next best thing. Continue reading

Research a home before purchasing

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Buying a home is a large investment. Between home loans, mortgage rates and closing costs, it's important to make sure that the property you're investing in is worth your time and money. However, some Canadians allow their emotions to get in the way of sound financial decisions.

A recent article from The Ottawa Citizen details ways in which homebuyers may leave logic at the door and let their excitement run away with them.

"[A] study published in the Journal of Advertising Research in 2002 said emotions can be twice as important as knowledge in consumer buying decisions," writes Patrick Langston for the news source. "Subsequent research has determined that the role of emotion in buying situations varies by individual and circumstance, but there's no doubt that, overall, it's a critical factor in consumer behaviour."

Many buyers may like to think that important details like price and location would be their prime concerns, but according to June Cotte, who teaches marketing at Western University's Ivey Business School, this is not always the case. Continue reading

The benefits of mortgage brokers

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Whether you're a first-time home buyer or a current homeowner looking to trade up, the process of purchasing a property can feel overwhelming. Searching for the right home, shopping around for the best mortgage rates, qualifying for a home loan – it can all add up to be a stressful ordeal. Fortunately, there are professionals available who deal with the ins and outs of the real estate market on a daily business. Not only can these professionals help alleviate the stress of purchasing a home, they can help buyers find a better deal. This is why any individual in the market for a home loan should consider reaping the benefits of a mortgage broker.

What is a mortgage broker?
A mortgage broker is an individual who represents borrowers in their attempt to obtain a home loan. Since they are not limited to working with specific lenders, they have a network of mortgage lenders offering different products.

What services does a mortgage broker offer?
A mortgage broker counsels borrowers on their loan options, takes applications and generally helps in the borrowing process, including credit reports, appraisals, verification of employment and assets, and other qualification procedures. Continue reading

Tips for moving

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Once mortgage rates have been found and home loans have been secured, it's time to put down the paperwork and get down to the nitty gritty of purchasing a property, namely, actually moving into it. Moving can be a stressful time, but by employing some simple strategies, home buyers can ensure a pain free process.

Before a move
The first thing people should do upon planning a move is so obvious that they often forget it entirely: collecting boxes. You have possessions to transport, so it only makes sense you'll need containers to put them in.

While you can purchase boxes from a retailer, it's just as easy to get them for free. Ask friends and family who have moved recently if you can borrow their boxes. Many retailers, such as grocery stores, also go through plenty of cardboard boxes on a regular basis. Another idea is to hop online and see if anyone is willing to give away boxes instead of throwing them out. Not only is this good for your wallet, but it's also good for the environment. Continue reading

Protecting your home from carbon monoxide

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While most homeowners are aware of the dangers posed by fire and flooding, and have taken the necessary steps to protect themselves from both, the threat of carbon monoxide may not receive the same attention. While fire and flood are usually preceded by warnings or unmistakable indicators, carbon monoxide can enter a home without notice, making it a danger every homeowner would do well to take seriously. While it's easy to get wrapped up in mortgage rates and home loans, a homeowner's well-being, and that of their family, should come first.

What is carbon monoxide?
Carbon monoxide, or CO, is a colorless and odorless gas that cannot be seen, tasted or smelled. However, since CO is toxic, even low levels of exposure to it can lead to serious health problems.

While CO is the result of fossil fuel burning that is common in homes through appliances such as stoves and chimneys, proper ventilation does away with the risk of CO poisoning. However, if an appliance is not working properly, it leaves homes vulnerable to a dangerous buildup of CO. Continue reading

The importance of inspecting a new home

Most home buyers understand the importance of having a home inspected prior to purchasing. Not every potential homeowner is a master builder, and having the expertise of a trained home inspector can be invaluable when it comes to spotting problems. After all, what’s the point of taking advantage of affordable mortgage rates if a home will require costly repairs down the line?

However, home buyers purchasing a brand new property may feel that a home inspection isn’t necessary. A home that hasn’t been lived in may seem pristine, but it can still feature a number of problems that only a home inspector might be able to find. This is why having a home inspected is just as essential for new properties as it is for resales. Continue reading