Tuesday, 28 February 2012

A Peek behind deeply discounted 5 year rates

A peek behind deeply discounted 5-year rates.
When considering a deeply discounted 5-year rate, keep in mind that cheapest isn’t always best. Strangely, we know that’s true when we’re shopping for anything else - but we still tend to believe that lowest rate is the one and only factor in choosing a mortgage. But, that low-rate mortgage could actually cost you more in the long run.
An amazing cut-rate mortgage could have you locked in to a very rigid contract filled with financial “trip lines” that could work against you down the road. That’s why it’s important to check the fine print. For instance, is the mortgage fully closed? That means you’re not leaving the lender unless you sell your house, so your options are limited and you have no negotiating power if your needs change in the next 5 years. Low or no prepayments: means you have no or limited ability to chip away at your principal to reduce your overall cost. Maximum 25-year amortization can take away flexibility you may need later. Many prudent homeowners take a 30-year amortization but set their payments higher using a 25-year or lower amortization. This gives them the option to reduce their payments should an emergency arise or a special need like maternity leave. For first-time buyers too, a 25-year amortization means higher payments than a 30-year amortization and could limit their entry into the market.
Spot a deeply discounted 5-year rate? Talk to us first. We’ll always help you find the right combination of low rate with the options you need to achieve your goals for homeownership and the financial future you want.

Sincerely,
--
Kevin & Faye Kitzman
Sales Representatives
Remax Real Estate Centre
Direct : 519-577-0603
 
 
Faye Kitzman
Mortgage Agent
Mortgage Intelligence
519-588-0141
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Tuesday, 21 February 2012

A Home of Their Own- New Canadians Face Hurdles

New Canadians are making their numbers felt in the housing market, as they get settled and make the transition from renter to owner, purchasing their first homes in this country.

Over 280,000 new immigrants arrived in Canada in 2010, the highest amount in 50 years according to the Department of Citizenship and Immigration. Immigrants are expected to play a large role in the housing market in the coming decades. Between now and 2031, the foreign-born population of Canada could increase approximately four times faster than the rest of the population.

For these new Canadians, first-time home ownership may prove harder than anticipated, as they face some unforeseen obstacles, but there are definite opportunities.

Lack of Credit History
The biggest challenge for new immigrants is establishing credit because they do not have a financial history in Canada.

Without a credit history, it can be a struggle to get mortgage financing. It is important to start establishing credit soon after arrival in Canada. New immigrants are encouraged to bring credit and bank references (preferably in English) with them from their home country to help with developing a Canadian credit profile.

Large Down Payments
Another home ownership hurdle immigrants have faced is that many financial institutions traditionally have insisted that new immigrants provide a down payment of at least 25 to 35 per cent. A large down payment may be difficult for some because they are self-employed and working to establish their own business or unable to access funds from their home country. 

The good news is that things are changing. More and more lenders in Canada are offering mortgages tailored to the needs of new immigrants, including those with non-landed status.  In many cases, immigrants can get a mortgage with a down payment of as little as five per cent of the value of the property, as long as it comes from their own resources. 

To start preparing to apply for a mortgage, the following materials should be assembled:
  • Copies of your work permit/landed status papers or passport
  • Social insurance number
  • Employment letter(s)
  • Credit reference(s)
  • Documentation of the down payment money source
  • Bank statements showing 90 days of account activity

The great news is that mortgage brokers can streamline the mortgage process for new immigrants, from counseling on credit in Canada, to obtaining credit references from foreign banks, to confirming foreign income; We can work with new immigrant clients to present their financial history to the satisfaction of the lender.
 
If you know of anyone that might be new to our country and might benefit from the information above ; please pass on this email and our information and we would be happy to help them!

Sincerely;
--
Kevin & Faye Kitzman
Sales Representatives
Remax Real Estate Centre
Direct : 519-577-0603
 
 
Faye Kitzman
Mortgage Agent
Mortgage Intelligence
519-588-0141
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Wednesday, 15 February 2012

Comparison of Collateral versus Standard Charge Mortgages

Comparison of Collateral versus Standard Charge Mortgages
More lenders are moving to collateral charge mortgages so it’s becoming increasingly important to understand the differences between a collateral and standard charge mortgage.  Which is better for you?  They both have advantages and disadvantages so it all depends on your preferences and future needs. It’s important to understand those differences so you can make sure you get the mortgage that best fits your long-term goals. 

     Collateral Charge                                           Standard Charge


·         Ideal if you want to be able to access your equity for debt consolidation, renovations or to invest in property or investments easily and cost effectively i.e. no legal fees (rate may be higher than original, need to qualify).
·         Only option available at ING, TD, and home equity lines of credit (HELOC).
·         Your mortgage is registered for the same or more than the property value; 100% at ING, 125% with TD Bank, which is why you can access your equity.
·         May affect your negotiating ability with your lender at renewal. It is harder to switch lenders without getting a new mortgage and paying legal fees, which range from $500 to $1,000. 
·         Could be difficult to get a second mortgage unless your home significantly appreciates in value.

·         Ideal if you won’t need to refinance your mortgage during your mortgage term.
·         Ideal if you want to have the ability to easily and cost effectively move from lender to lender at renewal.
·         Offered by majority of lenders. Some offer both – standard charge mortgages and HELOCs that are a collateral charge. You choose the option that best meets your needs.
·         If need to borrow more, you have the option of a second mortgage or line of credit.
·         You are not as tied to your lender for your full amortization period; it’s easier to switch lenders at renewal with little or no cost; keeps your options open.



Whether you’re buying your first or next home, getting ready for renewal, taking out some equity for debt consolidation, renovations, or investing, let us help you get the right mortgage type (collateral or standard charge) with the rate and features matched to your needs now and in the future. 
 
Kevin & Faye Kitzman
Sales Representatives
Remax Real Estate Centre
Direct : 519-577-0603
 
 
Faye Kitzman
Mortgage Agent
Mortgage Intelligence
519-588-0141
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Understanding Collateral versus Standard Charge Mortgages

Understanding Collateral versus Standard Charge Mortgages

More lenders are moving to collateral charge mortgages so it’s becoming increasingly important to understand the differences between a collateral and standard charge mortgage. TD Bank announced in October, 2010 that all new mortgages will be a collateral charge mortgage. ING made the same announcement at the end of 2011 and it is expected that other lenders may follow.  Collateral charge mortgages are now the only option with TD and ING.  Standard charge mortgages are offered by the majority of all other lenders, although some offer both – standard charge mortgages and HELOCs, which are a collateral charge. You choose the option that best meets your needs.  So what’s the difference, and which is better for you?

They both have advantages and disadvantages; the one that is right for you depends on your preferences, future needs, and long-term goals. The primary difference is that a collateral charge mortgage registers the mortgage for up to 125% (TD) or 100% (ING) of the value of the home at closing, instead of the amount you need to close your transaction.  The advantage behind this is that it makes it easier to tap into your equity for debt consolidation, renovations or to invest in property or investments easily and cost effectively, since you don’t need to visit a lawyer and pay legal fees. This flexibility is one of the primary advantages of collateral charge mortgages.

The downside comes at renewal. For consumers who want to keep their options open at maturity and have negotiating power with their lender, this isn’t the best product feature because collateral charge mortgages are difficult to transfer to another lender. That means if someone wants to change lenders for a better rate or product feature, they need to start from the beginning and pay new legal fees, which range from $500 to $1,000. Technically they can be assigned but lenders don’t accept the transfer. With regular standard charge mortgages, you can switch for free, although certain minor charges may apply. In addition, with a collateral charge, it could be difficult to get a second mortgage unless your home significantly appreciates in value.

The ability to take out equity is one of the primary features of Home Equity Lines of Credit, which are collateral charges for this reason. In these cases, clients want the ability to extract equity when they need it or as it becomes available. If you feel that there is a very good chance you will refinance to consolidate debt or to extract equity for a renovation or to invest, then a collateral charge mortgage may be a wise decision.

If you don’t believe that you’ll need to refinance or extract equity, then a regular standard charge mortgage will suit you fine, and it will give you the ability to move to another lender at renewal should you want to without incurring legal fees. In other words, it’s easier for you to keep your options open. If need to borrow more with a standard charge mortgage, you have the option of a second mortgage or line of credit.

Determining whether to get a standard or collateral charge mortgage adds another layer of complication for many homebuyers and owners. Speak to an experienced mortgage broker who is only focused on mortgages and knows what each of the over 50 lender partners have to offer I will analyze your situation and help you determine what’s right for you, and what’s not.

--
Kevin & Faye Kitzman
Sales Representatives
Remax Real Estate Centre
Direct : 519-577-0603
 
 
Faye Kitzman
Mortgage Agent
Mortgage Intelligence
519-588-0141
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Monday, 13 February 2012

Canadian Housing Market to Remain Steady

Canadian Housing Market to Remain Steady

OTTAWA, February 13, 2012 — Housing markets are expected to remain steady in 2012 and 2013, according to Canada Mortgage and Housing Corporation’s (CMHC) first quarter 2012 Housing Market Outlook, Canada Edition1.
“With the Canadian economy set to expand at a moderate pace and mortgage rates expected to remain low, activity levels in 2012 in both new home construction and sales of existing homes will stay close to levels seen in 2011,” said Mathieu Laberge, Deputy Chief Economist for CMHC.
Housing starts will be in the range of 164,000 to 212,700 units in 2012, with a point forecast of 190,000 units. In 2013, housing starts will be in the range of 168,900 to 219,300 units, with a point forecast of 193,800 units.
Existing home sales will be in the range of 406,000 to 504,500 units in 2012, with a point forecast of 457,300 units. In 2013, MLS®2 sales are expected to move up in the range of 417,600 to 517,400 units, with a point forecast of 468,200 units.
The average MLS® price is forecast to be between $330,000 and $410,000 in 2012 and between $335,000 and $430,000 in 2013. CMHC’s point forecast for the average MLS® price is $368,900 for 2012 and $379,000 for 2013. The moderate increases in the average MLS® price are consistent with the balanced market conditions that occurred in 2011, and that are expected to continue in 2012 and 2013.
As Canada's national housing agency, CMHC draws on more than 65 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable housing solutions. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.
CMHC Market Analysis standard reports are also available free for download at http://www.cmhc.ca/housingmarketinformation.
 
Kevin & Faye Kitzman
Sales Representatives
Remax Real Estate Centre
Direct : 519-577-0603
 
 
Faye Kitzman
Mortgage Agent
Mortgage Intelligence
519-588-0141
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RRSPs or TFSAs: Which is better to use when buying your first home?

RRSPs or TFSAs: Which is better to use when buying your first home?

Given the price of Canadian homes, some consumers almost have no choice but to take advantage of the federal government’s Home Buyers’ Plan.
Do you really want to raid your retirement fund to buy your first home?
Nobody sets out to do it, but given the price of Canadian homes, some consumers almost have no choice but to take advantage of the federal government’s Home Buyers’ Plan. You can withdraw up to $25,000 from your RRSP to buy your first home, as long as you pay it back over 15 years. Considering the average home in Canada sold for $363,346 last year, two people with $25,000 each could use that money to get closer to the goal of having a 20% down payment — an important demarcation point because it means you can avoid expensive mortgage-default insurance.
But tax-free savings accounts are now in their fourth year, meaning each individual could have up to $20,000 in that account. The TFSA is becoming a real alternative when it comes to saving for a home.
So which should you use to buy your house?


“There is a huge premium if you sit down and do the numbers for taking it out from the point of view of missed opportunity in terms of growth,” Al Nagy, an Edmonton-based certified financial planner with Investors Group Financial Services, says of removing the cash. “Once you’ve taken it out, unlike a TFSA, that contribution room is not put back. You lose that contribution unless you create new contribution room in terms of new income.”
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The loss in terms of sheltered income growth can be harsh, says Mr. Nagy, who cites a 30-year-old individual with RRSP valued at $30,000, earning 8% per annum on average. If there were no HBP withdrawal, the RRSP would grow to $139,829 by age 50 and $301,880 by age 60.
But take $20,000 out and repay it over 15 years and the RRSP would be worth $92,215 at age 50 and $199,805 at 60. Pay the $20,000 back over 10 years and the RRSP would be worth $100,237 at 50 and $216,404 at 60.
“The loss of RRSP growth by using the HBP would be mitigated by the savings in the mortgage interest expenses by reducing the size of the mortgage through the use of the HBP withdrawal,” he notes, adding people need to remember HBP repayment is a non-deductible expense.
“I don’t think we should forget the reason for the RRSP is to save for retirement.”
Don Lawby, chief executive of Century 21 Canada, still sees a strong need for the HBP and says it has yet to be replaced by the TFSA. “I think it still has some value. There is still a lot of confusion out there about the TFSA,” says Mr. Lawby, adding RRSPs remain more attractive to consumers. “People have a tough time saving for a down payment and it assists them to do that because those dollars are before tax.”
He adds there is a third alternative for those interested in buying a house. There is nothing to say you couldn’t use both accounts for a down payment. That could mean $90,000 for a couple and based on today’s home prices you might need that much cash to get to a 20% downpayment.

Kevin & Faye Kitzman
Sales Representatives
Remax Real Estate Centre
Direct : 519-577-0603
 
 
Faye Kitzman
Mortgage Agent
Mortgage Intelligence
519-588-0141
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Friday, 10 February 2012

Canadian home prices rising again

Canada’s realtors have a new way to test the housing sector and, based on the first set of results, the market is showing signs of heating up again after posting its first price increase in two months.
The MLS home price index was up 5.2% in January from a year ago, and 0.27% from a month earlier, based on the five markets surveyed. For now, only Calgary, the Fraser Valley in British Columbia, Vancouver, Montreal and Toronto are surveyed, but that covers about 44% of the entire Canadian real estate market.
“The introduction of the [index] will provide clients and realtors a more timely and accurate gauge of home values in a number of major markets across the country,” said Gary Morse, president of Canadian Real Estate Association, which represents 100 boards across the country.
CREA says the new index uses a “sophisticated statistical model” that takes into account such quantitative measures as the number of rooms in a home and such qualitative measures as whether or not it has a finished basement.
The model also considers location, measuring proximity to schools and hospitals, even golf courses, when comparing prices.
The index will divide the information into different categories that include single-family homes — split into one-storey and two-storey homes, — townhouse or row units, and apartments.
The Ottawa-based group will continue to release its traditional monthly average price data, calculated by taking total value of housing sold divided by number of sales.
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Gregory Klump, CREA’s chief economist, said the index more accurately measures the housing market. “Changes in average price and median home prices are open to misinterpretation, since they can swing dramatically based on changes in the mix of home sales,” he said.
The five boards involved with CREA started working on the project in 2009, partnering with real estate research firm Altus Group to come up with the index.
It faces competition from the Teranet-National Bank price index but is expected to issue results on a more timely basis. Teranet’s most recent statistics are for November while CREA’s cover January.
However, Teranet’s index represents 11 cities. CREA says it hopes to expand to 16 boards by 2013, which would represent almost 70% of the Canadian housing market.
The first set of results from the MLS index shows the housing market did rebound after a poor finish to 2011. Prices declined 0.20% in December from a month earlier and slid 0.7% in November from October.
Overall, the MLS index shows prices were up from a year ago in all five of the markets surveyed, led by Toronto, where they rose 7.6%. Prices in all housing categories rose, but the strongest showing was for two-storey homes, up 6.7% from a year ago.
“While home prices remain up compared to one year ago, price growth from one month to the next has been slowing, causing year-over-year gains to shrink, and prices are generally expected to continue to stabilize this year,” said Mr. Morse.
Kevin & Faye Kitzman
Sales Representatives
Remax Real Estate Centre
Direct : 519-577-0603
 
 
Faye Kitzman
Mortgage Agent
Mortgage Intelligence
519-588-0141
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Tuesday, 7 February 2012

Don't renew your mortgage with your eyes closed

Don’t renew your mortgage with your eyes closed

When your mortgage comes up for renewal, your lender will send you a letter suggesting you renew at their current offer. If you do, you’ll be renewing your mortgage with your eyes closed! This is your moment of opportunity to negotiate the best possible deal, either with your current lender or with a new one. Do you know if the same lender remains your best choice? If you don’t, you aren’t alone.

At the end of 2011, Manulife Bank of Canada released the results of their latest consumer debt survey.  They found that two-thirds of homeowners (65 per cent) did not compare products from several different lenders to make sure they were getting the best deal the last time their mortgage came up for renewal. Twenty per cent stayed with their current lender and did not negotiate, while 45 per cent stayed and negotiated but did not shop the market.  Interestingly, the youngest age group surveyed (30-39) were the most likely to shop around (41 per cent) but also the most likely to stay with their current lender and not negotiate (24 per cent). This age group is in the most hectic period of balancing work and children, which often causes things to be left to the last minute and it’s easier to follow the path of least resistance.

You could save a considerable amount of money if you renew at a lower rate.  A half percent difference on a $225,000 mortgage with a 20 year amortization can mean over $5,200 in interest savings over five years.  Wouldn’t it be better to put that amount towards reducing your mortgage principal?

You also need to consider that your mortgage needs may have changed.  This may be a good time to roll your high-interest credit cards and other debt into your mortgage to get one lower payment, boost your cash flow and save on interest costs. Or you may want to take some equity out for renovations, a second property or for investing. 

Keep in mind that there are some administrative details and costs when switching your mortgage to another lender, but don't let this discourage you from finding out more. It doesn’t cost you anything to investigate your options or get a second opinion. When you switch your mortgage to a new lender, you will go through an approval process similar to when you took out the original mortgage. You can either assign your existing mortgage or you can apply for a new one should you want to borrow a larger amount to consolidate your high interest debt or complete some renovations.

Your lender may charge a discharge fee, and you may need to pay legal and appraisal fees if you are getting a completely new mortgage instead of switching your existing one. At that point, you should assess if the money you will save by switching to a better interest rate offsets those costs. The cost for you mortgage life insurance may also change. You won’t have to pay for your mortgage broker’s service (oac) because the lender selected pays compensation for the services and mortgage solution provided to you.

If a renewal is in your financial future, bring us your renewal notice four months prior to your renewal date. There are some great options out there; we’ll help you look around.

Kevin & Faye Kitzman
Sales Representatives
Remax Real Estate Centre
Direct : 519-577-0603
 
 
Faye Kitzman
Mortgage Agent
Mortgage Intelligence
519-588-0141
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Monday, 6 February 2012

Will Canadian lending guidelines be tightened in the coming months?


Will Canadian lending guidelines be tightened in the coming months?

OSFI (Office of the Superintendent of Financial Institutions) is apparently worried that Canadian banks and mortgage lenders may be making some of the same errors that led to the U.S. real estate and mortgage crisis. According to Bloomberg News, OSFI is specifically worried about stated income lending and home equity lines of credit and the potential for certain borrowers to get into debts they cannot repay. 

However, Bloomberg also notes that the Canadian Banking system has been rated the soundest in the world for four straight years with no Canadian lenders needing a government bailout during the recent recession and credit crisis, unlike the U.S. and European banking systems, which remain precarious.

According to Canadian banking industry figures, the percentage of mortgages in arrears in Canada currently sits at .39 of one percent, hardly a red flag for loan quality in Canada. Even still, there may be some additional tightening of Canadian lending guidelines this year as cautious regulators see how badly the credit crisis has damaged the U.S. housing market and their overall economy, and strive to avoid anything like that in Canada. 

Stay tuned.  In the meantime, if you ever have any questions, please get in touch. We are always aware of the current environment and the resulting implications, so we can help you find a mortgage that gives you an edge and meets your current needs and future goals.
 
Kevin & Faye Kitzman
Sales Representatives
Remax Real Estate Centre
Direct : 519-577-0603
kevin@kitzman.ca
faye@kitzman.ca

http://www.kitzmanteam.com/

Faye Kitzman
Mortgage Agent
Mortgage Intelligence
519-588-0141
http://www.mortgagesbyfaye.com/
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