New Trends in the Mortgage Biz

Ok, now I’m starting to get the private lending sector and to boot, the new rules implemented recently in regards to cutting back amortizations, LTV’s on refinances and soon to be HELOC’s, the trend will certainly be towards private lender’s & alternative lender’s.

Realizing as well that these alternative lenders can offer pretty good rate options and even if their rates are high when it comes to second mortgages, well not too bad if you are  paying interest only for 1 year or maybe 2 until you have the equity to go to a prime lender for a lower rate.

Let’s put it this way, there is always a way!!!!!

Read Full Post »

GET YOUR HELOC’S

Get your HELOC’s

If your considering obtaining a HELOC or a readvanceable mortgage anytime soon wether it be to make a purchase, or refinance your current mortgage, you better act fast as the new OSFI rule becomes effective by October 31^st.  Some Lenders make their changes prior to the date of compliance set.

Why the urgency you ask?  Good question…. As of October 31^st you will only be able to obtain a loan to value up to 65% from the current allowable advancement of up to 80%.  Some Lenders will allow you to amortize the 15% difference between 65% & 80% within a mortgage and let you keep 65% in a secured line of credit.

This new rule will indeed further reduce the first time home buyers being able to qualify for a product of their choice.  Only qualified borrowers will be able to have access to this product as they may have the down payment or equity available to purchase or refinance their current homes.

In  case you are wondering the advantages of a HELOC and what it can offer you, see list:

Investment borrowing (using strategies such as the Smith Manoeuvre

Borrowing for education

Rental property investment

Value-adding home improvements

One-time debt consolidation

An alternative to higher-rate loans

A down payment source for a second property

An emergency backup fund

Also can be used for personal consumption like Tv’s Vacations & Boats.

Read Full Post »

Canada Housing Market – Aug 2012

Canada Housing Market – Aug 2012

There have been two reports out recently, one stating that Condo prices in the GTA will drop by 2% to 7%  whereas another report came out stating the entire Canadian housing market  and not just GTA condo’s will have a 25% decrease in price.  This is not surprising due to the recent Government policy changes, along with consumer’s being reluctant to pay historically high prices in light of the current global economy.

First Time homebuyers will be affected the most by the new Government changes to insured mortgage products, yet they are 50% of the buyer’s out there looking to purchase homes.  Not to mention the speculation of interest rate hikes.

It is not surprising that we may reach a bubble if not already.  In my own residential neighborhood there are more for sale signs up then I’ve ever seen, yet none of them seem to be selling????  Personally I feel they are all overpriced, but hey if they sell, then my property goes up in value.    I know summer can be slower than Spring & Fall for the housing market, but this is the first summer I’ve noticed so many just in my own area.

I really hope things look brighter in the Fall.

Read Full Post »

Mortgage Market Update

In the past I usually provided educational blogs for consumer’s.  I am going to start blogging about the current market as there are new changes constantly and definitely Lenders are moving in a more conservative direction tightening up on their guidelines.  However the reason Lenders are doing this, is more to do with it coming from their regulator OSFI (Office of the superintendent Institution of Canada). This is going to make it a tougher market, especially for first time homebuyers and business for self individuals to obtain a mortgage.  As most recently, there is talk about Lenders pulling back on reducing the loan to value from 80% to 65% on their secured LOC products (HELOC’S).  I guess it wasn’t enough to reduce amortization, no to low income documents for Business for Self Individuals.  In saying this, on the up side, it is good that consumers are not able to get in over their heads in debt which they may never be able to pay off, or worse yet, have to declare bankruptcy and go through heartache and stress due to their debt load and possibly having to lose their homes.

This is definitely a time for consumer’s in the market looking to  purchase a home, or refinance their current home to obtain a professional mortgage broker who can help them save time and money.  Mortgage Brokers have access to many Lenders and their products and know which Lenders still have products which will suit your needs without you having to take your precious time to shop and receive rejections or higher rate prices in order to qualify under their new guidelines.

Read Full Post »

Market Update

As of March 20th,the Canadian real estate market is moving into its busy season and there’s a lot of chatter about the state of that market. In the past week we were told home ownership has become more affordable in Canada. A cooling in the Vancouver market takes most of the credit but increasing incomes and low interest rates also figure into the equation.
Low interest rates and the current mortgage wars continue to drive concerns that home buyers will over extend themselves. The federal government and the Bank of Canada continue to warn that the ratio of household debt to income remains too high. That ratio did come down slightly, but that too is credited to rising incomes, not declining borrowing.
At the same time the Canadian Real Estate Association predicts average home prices will fall 1.1% this year, to an average of $359,100, before rebounding 0.9% in 2013.
As of today, the Lenders are raising their rates as much as 20 bps up and almost all have stopped their rate special for the 4 yr at 2.99%.  The trend is for client’s to choose fixed rates over variable now due to the fear of rising interest rates.

Read Full Post »

Improved Mortgage Penalty Disclosures

Going forward, federally regulated financial institutions must disclose the following to borrowers:

1. The method (formula) for calculating the exact prepayment charge in language that is clear, simple and not misleading Where the penalty formula is complex (e.g., uses present value), a simple way to estimate penalties.  A description of all inputs used in the penalty formula (including things like posted rates at originations, future value, outstanding balance, all applicable interest rates, bond yields, etc.)
2. Information on how to obtain each of those formula inputs (or the actual values themselves)
3. An example and/or worksheet  to help consumers figure out their own prepayment penalty

Federally regulated lenders must be in full compliance with the above by November 5, 2012. The Financial Consumer Agency of Canada will monitor that compliance on an ongoing basis.

In addition to better penalty disclosure, lenders must also provide the following to customers annually:

• A description of the borrower’s available prepayment privileges
• The dollar amount of available prepayment options
• Explanation of factors that could cause penalties to change
• Specific information needed for the borrower to calculate his/her own penalty (e.g., the rates used to   calculate the penalty, balance, etc.)
• A list of all other fees for early repayment
• Contact information for lender staff knowledgeable about penalty calculations.

Upon request, the lender will have to furnish a written statement with the prepayment penalty (and other amounts) to be charged, with a full description of the formula used and the timeframe for which the penalty quote is valid.

Lender will also need to provide guidance on what triggers a penalty, how to avoid penalties, and how pay down principal quicker without incurring penalties.

And lastly, lenders must post calculators on their public websites to help determine “reasonable” estimates of penalties. No more guestimators that provide ballpark penalty quotes that are thousands of dollars off.

Read Full Post »

Why use a Mortgage Broker – Globe & Mail Article

Consumers are not educated enough still on what a Mortgage  Broker is and what they do.  Most importantly, they are not aware of what a mortgage broker can do for them to not only find the best rate and product matched to their individual needs, but also guiding and supporting the client throughout the process.  Brokers also provide a one stop shop, with only one application completed by client and the broker does the work there on having access to great discounted rates and products that a consumer would not have access to or even be aware of.

When you have a moment, please read the Globe & Mail article which will help to educate you further.

Referrals are always appreciated!

Globe & Mail Article – Why Use a Mortgage Broker

 

Read Full Post »