Mortgage insurance rule changes…how will they affect you?

New mortgage insurance rules.

In October and November this year the Government of Canada made changes to mortgage insurance requirements. Mortgage insurance is provided by three companies in Canada. The biggest provider of mortgage insurance is CMHC a crown corporation. This insurance is paid for by the borrower and protects the lender in case of default. It reduces the lenders risk therefore enabling consumers to purchase homes with as little as 5% down.
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Happy Home Hunting Tips for Canadians

Home hunting tips

Finding the right home for you and your loved ones really comes down to three chief factors:

  1. Affordability: Does the home fit into your budget? Have you determined the financing you can qualify for through a mortgage pre-approval? Have you factored in mortgage insurance, utilities and heating expenses, association fees and taxes?
  2. Lifestyle: Is the home located in an area within the proximity of the amenities you and your family require? Is the lot large enough for your pet(s)? Will owning this home impede you from doing the things you love doing? Are you close enough to work, family and friends?
  3. Future Needs: Are kids a possibility in the future? Is the home large enough for a family? Is the basement developed? Are there schools nearby? Or, if you are close to retirement, is the home too large? Are there too many stairs and floors in the home to negotiate?

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Department of Finance rules lead to fewer first-time home loans

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Rules issued by the Department of Finance last year that tightened mortgage standards appear to be having their intended effect, slightly suppressing demand by first-time buyers, especially in British Columbia. While approximately 20 percent of people across Canada who were looking to secure first-time home loans delayed such a move due to the new rules, that number was higher in B.C., where one-third of respondents said they would wait (compared to a low of 11 percent in Ontario), according to a study commissioned by BMO.

Prices remain high
Despite the decline in demand among first-time buyers, overall housing prices have remained high, continuing to set records in most places across the country. With mortgage rates still below 3 percent, demand has remained steady and inventory relatively low, since few people are allowing talk of a possible housing bubble to scare them into selling. Continue reading

Creeping mortgage rates are part of housing market’s soft landing

The reports of the demise of Canada's housing sector appear to have been greatly exaggerated. According to the Royal LePage House Price Survey, housing prices across the country continue to post relatively modest gains, and home loans have been kept in check, leading to market stability. And, defying those who had predicted an imminent collapse, it doesn't appear there will be any extreme price movement either way through at least the end of 2013 and probably into 2014.

Avoiding the housing bubble
Four different sets of rules have been issued by the Department of Finance since the worldwide housing bubble collapse in 2008, all of which increased lending restrictions. Those efforts, along with the creeping rise in mortgage rates over the past few months, appear to have helped the Canadian housing sector into a soft landing, avoiding any possible catastrophe. Continue reading

Home loans soon to be under stricter regulation

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The Canadian Mortgage and Housing Corporation (CMHC) recently issued new guidelines for the use of debt ratios and confirmation of income documents in their mortgage calculators. Set to take effect on December 31, 2013, many lenders are already adhering to the stipulations, while others, like Genworth Canada, are in the process of reviewing them, and may not completely implement the guidelines by the end of the year.

What the new debt ratio rules mean for borrowers
Last year, the Department of Finance issued its fourth round of rules tightening mortgage insurance practices. Those rules, intended to shield the Canadian economy from the brunt of the worldwide debt crisis, set restrictions on mortgage applications for new borrowers with less than 20 percent equity. The long-term repercussions of last year's moves, along with this newest set of rules from the CMHC, should serve to further cement mortgage standards and close existing loopholes. Continue reading

Buying an older home

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It may seem like everything in modern life is about the latest and greatest, but sometimes you can't beat the charm and craftsmanship of something from the past. When it comes to purchasing a property, newer isn't always better, and at the end of the day, mortgage rates and home loans take a back seat when a buyer falls in love with a house. However, deciding on an older home means taking the property's unique characteristics into account. Older properties can present certain challenges not found in newly constructed homes, meaning home buyers need to fully understand what they're getting into.

Foundation
A solid foundation is vital to any property, and older homes may be more vulnerable to foundation issues. While the architecture or location of an older home may be what draws you to it, determining the condition of its foundation should be the No. 1 priority. Foundation problems are very costly to fix, so checking for signs of cracking or shifting is essential. Hiring a professional home inspector should be a part of any home buying process, but it's especially important for older homes, as they have the expertise necessary to find any problems with a property's foundation. If an older property does have foundation issues, it's probably in your best interest to move on. Continue reading

Buying a condominium

When it comes to taking out home loans, there is no shortage of options on what types of properties to purchase. Some buyers may be hoping for a detached house with a yard, while others might prefer the simplicity and convenience of a condominium. If you find yourself in the latter camp, it's important to understand the ins and outs associated with purchasing a condo.

What is a condo?
A condo acts like a combination of a private home and an apartment complex. An owner's residence is owned privately, but common areas are owned collectively by all of a complex's residents.

Condos also feature associations that manage common areas and certain aspects of all properties.

Benefits of a condo
In areas with high property values, a condo can offer the comforts of home ownership at a more affordable price. Additionally, for buyers who may not need an excessive amount of space, condos offer tax incentives available to homeowners without worrying about constant upkeep and maintenance of a large property.

Condos are also often located in convenient, central areas that are close to offices, shopping centers, restaurants and entertainment venues. Continue reading

Buying an energy efficient home

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Purchasing a property is a major life decision, so it only make sense that home buyers would want to ensure that their financial investment makes sense in the long run. One way to do so is by ensuring that they're purchasing an energy efficient home. Energy efficient homes are designed to reduce energy consumption, as well as other environmentally-unfriendly things like greenhouse gas emissions and nonrenewable resources. Properties can either be built from the ground up with energy efficiency in mind, or existing homes can be renovated to make them more energy efficient.

Determining energy efficiency
One of the simplest ways to determine a property's energy efficiency is to find out its EnerGuide rating. EnerGuide compares properties and rates energy performance on a scale of zero to 100. The higher the score, the better a home's energy efficiency.   Continue reading

Dealing with debt

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There’s been a lot of talk in recent months regarding household debt in Canada, much of it related to home loans. However, a new article in The Globe and Mail makes the case that debt incurred through purchasing a home isn’t necessarily a bad thing. Debt is a fact of life; the key is differentiating between debt that can help you and debt that can hurt you.

The article makes the case that debt is a necessary and useful tool when it comes to investment. After all, there’s a big difference between maxing out a credit card in order to buy a shiny new toy and taking out a mortgage in order to purchase property that will grow in value over time. Continue reading

Understanding title insurance

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Between dealing with mortgage rates and home loans, it’s easy for other parts of the home buying process to fall through the cracks. After all, who has time to worry about things like title insurance when you’re trying to find the best deal on a home purchase? However, with more lenders now requiring title insurance as part of a mortgage loan, it’s vital that potential home buyers fully understand what title insurance is, how it can protect them and ways to save money in the process.

What is title insurance?
Title insurance is a form of coverage that protects against losses arising from ownership in a property. When you purchase a home, chances are that it’s gone through a number of changes in ownership. This also includes the land the home itself sits on. Since human error or unforeseen problems regarding the transfer of ownership may lead to legal troubles regarding a home’s title, this insurance means that public records have been thoroughly searchedto ensure a property’s title is in order. It also means that if any problems do arise, the owner or lender will be covered. Continue reading