Don’t put off getting your line of credit set up

In June 2012, the Minister of Finance announced that mortgage amortizations would be shortened once again. This time the maximum amortization would be down to 25 years from 30 years.  This would not affect existing mortgage but only affect those making new purchases. However, in the same week the OSFI , the Office of the Superintendent of Financial Institutions Canada, a division of the government of Canada also announced changes that could affect Canadians even more.

    The OSFI announced that effective October 31^st , the maximum amount that you could finance your home using a Home Equity Line of Credit (HELOC) would drop from 80% of the house value to 65%.

 How will this affect your average Canadian? If you were thinking about opening a line of credit to give you funds for finishing the basement, re-doing the roof , paying for a wedding or even buying a car, you will be limited in how much cash you can pull out of your home’s equity as of October 31^st.  If you have ever made a large purchase you know that paying cash gets you a better price. HELOC’s give you the option to pay cash and then pay the amount down over time when you have extra cash, while having an interest rate at or near bank prime rate. This is one of the cheapest forms of credit and it will be limited  soon.

   My advice is to establish a line of credit now even if you are not planning on using it right away. The reason being, that all lines of credit up to 80% will be grandfathered and you will have the freedom down the road of having re-advance able credit using 15% more of your house equity.

    Here’s another fact you should be aware of, Eco-rebates from CMHC and Genworth. When you purchased your home you paid a premium to CMHC or Genworth to insure your home. This may have been over $10,000 . Did you know that if you make your home more energy efficient you can get 10% of your premiums returned to you?  Did you know that there’s no DEADLINE on how long after your home purchase you can claim this rebate? $1000 could pay almost half of the cost of new furnace, or for a new window. You can find out more about this program by visiting CMHC’s website here http://www.cmhc.ca/en/co/moloin/moloin_008.cfm If your home was insured with Genworth, they have a similar program http://www.genworth.ca/homeownership/pdfs/Product_Overview_EEHP.pdf

    Why do you have to act now if there’s an October 31^st deadline? Experience has taught me that when these restrictions are announced the banks tend to react quickly and they won’t wait until October to implement the changes. I would think that by Labour Day we will see all the banks using the new guidelines. Now is the time to act. Call or email me at http://davidcooke.ca and we can discuss whether this is a good option for you.

Mortgage Wars 2012

July 9th , Canada's finance minister changed the rules for getting and renewing mortgages for the 4th time in 4 years. We are now back to where we were before he changed the rules in 2006. What has happened each time he changed the rules was he cut out more potential home buyers and this resulted in a dip in mortgage applications. Moving from a 30 year amortization to a 25 year amortization made the monthly payments for a $300,000 home go up by $157. per month. It's not a huge amount but it took some buyers out of the market and meant that other buyers could not afford as much house as they could have bought in June.

   As Europe looks like its going to be suffering for some time to come, and China's economy is slowing down as well, the world economy looks like it will take some time to recover. Canada's mortgage lenders are responding to the economic slowdown and the mortgage rule changes by lowering mortgage rates again.. Will this mean another mortgage rate war?

 As of this week, the 5 year fixed rate mortgage has dropped with some lenders from 3.09% to 2.99%. This means that a mortgage for $300,000 with a 25 year amortization would have monthly payments of $1418. instead of $1433. What is even more interesting is the variable rate mortgage.
For the past year, rates have been at prime or slightly above it. Many lenders are at Prime + .20% or 3.20% . As of yesterday one lender has dropped their 5 year variable rate mortgage to Prime - .35% !
 This translates into a 2.65% rate which is amazing.
 

These are not big changes but they may result in lenders competing for market share . The one to benefit from mortgage wars will be you, the borrower. If you want to discuss how these  changes affect you, contact me through my website or call me at 403-836-1201.

   

The 5 Dumbest Things you can do if you have too much debt

If you’re struggling with too much debt you’re not alone. It seems as if the whole nation has a borrowing hangover. For years, credit was easy and many people became overextended. But we now live in an era of austerity and it’s time to get our affairs in order.

 The 5 strategies you may want to avoid:
 The first advice of experts in the field is to be sure you don't make your situation worse by making common mistakes. In particular try to avoid: · Paying only the minimum payment on your debt as this will results in the amount you owe actually growing and your problems will only become worse. ·
 Relying on friends and family as this can damage relationships with the most important people in your life. ·
 Unscrupulous credit counselors that demand cash upfront or high fees for help they promise, but don't deliver. ·
 Using new high-interest loan to pay off lower interest rate loans – while it may be easier to just have one payment but it will actually increase the amount you have to pay back. ·
Declaring bankruptcy – this can have permanent and severe consequences on your financial future, avoid if you can, especially when debt settlement may work for you... Debt Settlement For many people, working with a Debt Settlement company can actually be a great solution. You’ve probably heard a lot of advertising for these services recently, but what exactly do they do. Debt settlement is the process of negotiating with creditors to get them to forgive a big portion of your debt. Why would a credit card company do this? Well, it’s not out of the generosity of their heart. They have made the financial calculations and determined they are better off knowing for certain that they’ll get paid something rather than not knowing at all if they will get paid anything. Settlement companies work with individual consumers to determine a reasonable monthly amount that they can afford to pay against their debt load. The individual makes the affordable payment every month into a special-purpose account, and as these funds accumulate, the settlement company reaches out to creditors to negotiate a full and final actual settlement amount that they will take. Typically, these companies have excellent relationships with creditors and are negotiating on behalf of thousands of people every day. The amount of savings they can obtain for consumers can be significant. While each situation is different, it’s not uncommon for debt settlement companies to negotiate reductions of as much as 50% of the outstanding amount and help get their customer debt free in just a few years. There are a many debt-settlement agencies, so the next question is how to find a legitimate and trustworthy company to work with?
One great way to start is by visiting your local mortgage broker .. They offer a free, no-obligation consultation to evaluate your options. Then, if you chose to proceed, they will develop a plan that meets your specific needs and negotiate it on your behalf with your credit card companies . To learn how much of your debt can be reduced, and how quickly you can be debt free Contact David Cooke, your Calgary Mortgage broker at http://davidcooke.ca

Good News ! - Alberta Mortgage Arrears decreasing

Mortgage arrears data came out today. A very reassuring trend is developing. Mortgage arrears are decreasing. Arrears is when you are behind on your mortgage payments by 3 or more months. This is usually a sign of financial distress. Illness, loss of a job , or lossing your overtime hours can all create stresses in a family's finances. The graph here shows that while Alberta enjoyed low mortgage arrears in 2008 of .30% or 1/2 of 1% , this number "rocketed" up to .84% during the past couple of years. Down arrears are trending downward and now sit around .60%. This is a good sign of a recovering economy. People are back to paying their bills and mortgages on time. One thing that is helping is that people are renewing their mortgages are much lower rates today. If you would like to explore the option of renewing your mortgage early contact me to discuss the different ways I can help you. Alberta Mortgage Arrears

Mortgage Fraud:How to protect yourself when purchasing or refinancing a home.

CMHC recently published a number of article meant to educate the public. I want to share this information with my readers. Here is the CMHC article in its entirety.

What is Mortgage Fraud?

Mortgage fraud occurs when someone deliberately misrepresents information on a loan application, to obtain mortgage financing that likely would not have been approved if the truth had been known. There are several different forms of mortgage fraud. One of the most common is when a con artist convinces someone with good credit to act as a “straw buyer.” A straw buyer is someone who agrees to put his or her name on a mortgage application for a home that someone else will be buying.

Mortgage applications for straw buyers also often misrepresent other important information as well, such as their income, occupation and the real source of a down payment. In return for their participation, straw buyers may be offered cash or promised high returns when the property is sold. While the promise of an easy payday may be tempting, consumers should be aware that in most cases, the fraudsters are the ones who walk away with all the profits, while the straw buyer is left “holding the bag” when the mortgage defaults. Consumers who knowingly take part in these frauds will also be responsible for any shortfall when the property is resold, and could even be held criminally responsible for their misrepresentation.


What Can You Do to Protect Yourself?

To protect yourself and your family from becoming victims of, or accomplices to, mortgage fraud, be an informed consumer. This means: Never accept money, guarantee a loan or add your name to a mortgage unless you fully intend to purchase the property. If you allow your personal information to be used for a mortgage, even for a brief period, you could be held responsible for the entire debt even after the property is sold. Always know who you are doing business with. If you are buying or selling a home, use only licensed Real Estate Agents and other industry professionals. And never sign anything until you know exactly what you are signing.
 Determine the sales history of any property you are thinking about buying, and consider having it inspected and appraised.
Ask for a copy of the land title search.
Find out if anyone other than the seller has a financial interest in the home
. If a deposit is required, make sure the funds are held “in trust” by the Vendor’s Realty company or lawyer / notary.
Get independent legal advice from your own lawyer / notary.
 Talk to your lawyer / notary about title insurance and other alternative methods of protection.
Be wary of anyone who approaches you with an offer to make “easy money” in real estate.

Remember: if a deal sounds too good to be true, it probably is.

 There are also several simple steps you can take to protect yourself from another common form of fraud: identity theft.
These include:
 Never give out your personal information until you know who you are dealing with and how your information will be used.
This includes requests for information in person, by mail, or over the phone or Internet.
Never reply to e-mails or phone calls that ask for your banking information, credit card details, passwords or other personal or sensitive information, particularly if you did not initiate the exchange.

Review your mail, bank statements and other financial statements on a regular basis to look for any inconsistencies.
If you don’t receive a bill on time, follow up with your creditors or service

David Cooke
 DLC Westcor Calgary, Alberta
Tel: 403-836-1201

 The information is provided by CMHC for general illustrative purposes only, and does not take into account the specific objectives, circumstances and individual needs of the reader. It does not provide advice, and should not be relied upon in that regard. The information is believed to be reliable, but its accuracy, completeness and currency cannot be guaranteed.

Neither CMHC and its employees nor any other party identified in this Fact Sheet (Lender, Broker, etc.) assumes any liability of any kind in connection with the information provided. CMHC stake holders are permitted to distribute the materials at their expense.

 The above mentioned stake holder organization is responsible for the distribution of this document. providers.
Shred or destroy all personal and financial documents before you throw them away.
 Inspect your credit report on a regular basis by contacting Canada’s two credit-reporting agencies: Equifax Canada at www.equifax.ca and TransUnion Canada at www.transunion.ca.
Find Out More If you suspect that you or someone you know has been the victim of mortgage fraud, contact your local police department immediately.
To find out more about mortgage fraud,
 visit the fraud prevention section of the Canadian Association of Accredited Mortgage Professionals (CAAMP) website at http://mortgageconsumer.org/lookup.php?q=protect-yourself-from-real-estate-fraud&lang=en. For more tips, visit CMHC’s Homebuying Step by Step Guide at www.cmhc.ca. CMHC is Canada's largest provider of mortgage loan insurance, helping Canadians buy a home with a minimum of five per cent down
. Ask your mortgage pro
To contact me on how to protect yourself or any other mortgage questions contact me via my website.

Market Commentary

Earlier today, First National Financial, one of Canada's largest mortgage companies issued a market summary. This is what their economists predict will be happening for the rest of 2012. It's a guess, but it's an educated guess. Here's what they had to say. "The latest interest rate announcement and policy statement from the Bank of Canada make it pretty clear there’s unlikely to be any increase this year. While the economy appeared to be making all the right moves early in the first quarter, in the end, the results didn’t meet expectations. The resurgence of the Greek problem, the growing troubles in Spain (the euro zone finance ministers agreed to lend Spain up to $125-billion (U.S.) to shore up its struggling banks),slowing in the rest of Europe, China and the U.S., and weaker than expect growth at home have the central bank backing away from hints about a hike. Nonetheless the Bank remains concerned about the risk of a housing bubble and a high level of household debt." With rates this low, is it time for you to renew your mortgage early or consider getting a preapproval? Contact me to discuss your options. If you would like to get a weekly email with current mortgage rates click here and fill out your email address under Subscribe to News and Rates. David Cooke - your Calgary mortgage broker

More Canadians locking into low interest rates

An article in the Vancouver Province newspaper highlighted some changes going on in the Canadian mortgage market. People are slowly moving away from variable rate mortgages. At this time 29% of homeowners have variable rate mortgages but over time, they switch to fixed rates. Why? Interest rates are at all time lows, where will they be going? Up , of course. Another interesting trend is how people are taking advantage of pre-payment privileges. 23% of mortgage holders are increasing their monthly payments, and 19% of making lump sum payments. Is there an incentive behind this? Yes, every dollar that you pay down saves you $3. In interest over the term of the mortgage. Put down an extra $1000 from your Christmas bonus and save $3000. Canadians have also been bombarded by news reports about how average household debt is increasing. This is how many people are reacting. Personally I think that you should start with your high interest debts. Pay off your credit cards at 19% , follow that up with your car payments at 6-8% and then tackle your mortgage. You may wonder where you can come up with the money. Well, it's the time of year when we all get our tax refunds. Instead of spending it on sometime we don't need why not spend it on paying down debt and saving huge amounts of interest. That can be very rewarding and gratifying. Try it now and see how much more money you will have next year at this time. For more information on mortgages and credit visit visit your favourite Calgary mortgage broker at my website.