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Buying a home is cheaper than renting. Don’t be intimidated!

Buy Or Rent?

Could 2018 be the year where the pessimists finally get their way? I hate to admit it, but this could be the year where buying a home may not be a good idea.

OK, just kidding!!!

But after years of seeing countless articles and posts about rising interest rates, housing affordability issues, mortgage stress tests disqualifying some people from being able to buy, higher personal debt levels, NAFTA economic fears and Donald Trump (ok, Trump has nothing to do with this, but you can’t write an article these days without blaming him, right?!), does it still make sense to buy a home?

Yes! There is positive news. You can still buy a home. And you can still qualify for a mortgage.

Continue reading “Buying a home is cheaper than renting. Don’t be intimidated!”

Six Months was What it Took to Absorb Latest Mortgage Changes!

Blog Image, Adjust to Change, August 2018

Ever since the US 2008 sub-prime mortgage crisis, we’ve seen a never-ending string of change. Mortgage lending rules have become tougher and tighter. Underwriting is stricter and more thorough. (As usual, the government has not missed an opportunity to stick their nose into your business by making lenders ask for more income documentation.)

The rule of change is that it takes around six months for consumers to adjust.
Continue reading “Six Months was What it Took to Absorb Latest Mortgage Changes!”

Reverse Mortgages growing in popularity… Product of the year 2018?

Reverse mortgage

Mortgage stress test is the buzz phrase in mortgage lending for 2018. Every borrower, regardless of how much down payment you’re making, must pass a stress test to qualify for a mortgage. The math is simple, yet intimidating. Lenders must now use your mortgage contract rate PLUS 2.00% to qualify you.

Yes, that’s correct. You need to qualify at a rate that’s 2.00% higher than your actual rate. And it doesn’t matter if you have 35%, 40%, 50%, 60% or even 70% down payment. That will not have any impact on your approval. It’s all about how much income you can prove you earn and the strength of your credit worthiness.

For many, this new rule will prevent them from qualifying for a mortgage. And for seniors or people approaching retirement who still require a small mortgage to get through the next 10 or 20 years, these new mortgage rules are a killer. The stress test is surely causing stress among many Canadians!

I’M RETIRING AND WANT TO STAY IN MY HOME…

A reverse mortgage is a terrific option for homeowners who are at least 55 years old. It empowers them to be able to stay in their home and access tax-free equity without having to make regular payments.

Continue reading “Reverse Mortgages growing in popularity… Product of the year 2018?”

Mortgage Brief.. Mortgages rules explained… and why didn’t the govt consult experts?

Bill Morneautrudeau

They say we don’t read emails or articles anymore.. we just skim through them.   But some things can’t be understood with a quick glance.  The new mortgage rules will impact EVERYONE!

If you want to understand how they impact you, continue reading… If you don’t care or want to be oblivious, take the blue pill and move on.

I’ve put together a list of the mortgage rules so that you can understand what they mean and how they will impact you.   Hey, let’s give The Federal govt some credit… they’ve been transparent about a few things, right?:

  • They want house prices to drop.
  • They don’t want anyone to have a mortgage if their home is worth more than $1,000,000.
  • They don’t want you to ever refinance your mortgage.  You should only require a mortgage when you buy a house.
  • They don’t want you to buy a house and rent it out.  You should only buy a rental property if it has 2 or more units.
  • Mortgages should not be amortized for longer than 25 years.
  • They want rates to go way up.

Here’s the official update from our Department of Finance.

Here we go.. Forget the data and stats being reported today.  Those stats don’t matter!  We want to see the stats after March 30th, 2017.

Remember the mortgage rule changes of October 17th?  How about the ones on November 30th?  Get ready, we won’t see the full effect of these changes until after March 30th 2017.

That’s when the last of the mortgage approvals will have closed, that were done under the old rules. And all the new mortgage closings beyond this date, will have had to been qualified with the new rules.  This is when we’ll begin to see the impact of these rules… And we’ll begin to see just how many Canadians will be have been impacted.

If you think I’m wrong, read the rule changes below and tell me what other conclusions you can come up with. Continue reading “Mortgage Brief.. Mortgages rules explained… and why didn’t the govt consult experts?”

Mortgage tricks… and treats!

halloween-moneyHappy Halloween! And before the kids knock on your door.. just thought I’d send a quick mortgage trick and trick..

TRICK..  ‘Stress Test’ for mortgage qualifying.  The Finance Minister, Bill Morneau, blindsided Canadian Banks, Financial Experts and consumers when the govt introduced mortgage rules making qualifying even tougher.  The new rules mean consumers must qualify at the posted bank 5 year fixed rate.

TREAT... The reality of the new mortgage rules is that it’s not going to affect that many.  One of Canada’s biggest mortgage lenders told me, confidentially, that over 95% of their portfolio would easily pass the new stress test.  The REAL devil here is the Canadian Press.  Unfortunately, they are making this latest change sound like a death-blow for the real estate market.  Gauging my own clients profiles, I would say that even fewer than 5% would be affected.

If you’ve followed my site, you’ll know I’m a huge Variable rate advocate.  More than 90% of my clients have been in a Variable rate product.  And guess what?  They’ve always been able to qualify using the posted 5 yr fixed rate.

The govt wants to slow the housing market and property value increases.  I agree, we don’t want to see house prices continue unsustainable increases.   Not sure this latest change is the correct move.  Perhaps, this rule could have apply for higher priced homes only..?   Exclude homes less than $600k or $700k? Just a thought..   I’m also unsure the lack consultation or input from industry experts, was a wise move.  More open discussion is needed.  Just my opinion..

Happy Halloween.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

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