New CMHC Policies That Could Effect You
By Leah Coss
Well, today, April 9th 2010, starts a new era of mortgage insurance policies from CMHC (Canadian Mortgage Housing Corporation). Upon the government’s review of our economic situation they decided to make some new government mandated changes that will be officially starting as of April 19th, 2010.
CMHC, however, has created additional new internal policies (not government mandated) that will effect who can and cannot get approved for their mortgage insurance. If you put down less than 20% down payment then you will have to also be approved by a mortgage insurer in addition to your mortgage lender. If you can’t get approved by the insurers, then you can’t get approved.
Keep in mind, CMHC is only 1 of 3 mortgage insurers out there. These changes ONLY apply to CMHC’s policies
The changes will apply to people who are:
1. Self employed or 100% commissioned
2. Own rental or investment properties
So what are these new changes that we will have to work around in addition to the already restricting Government changes?
Let’s start with the changes to people who are self employed or 100% commission. There was a program where you could just state your income and not have to declare it or “prove” it on paper. This was really only applicable to self employed or commissioned sales people because it is often difficult for them to document their income according to traditional bank guidelines. This is due to tax write offs with self employed borrowers. With the stated income program you could also just put 5% down for a down payment.
Those days are now gone with CMHC. You can now ONLY state your income if your business is LESS than 3 years old. If your business is older than that then you will have to document your dollars and prove your income just like all other borrowers.
The second change is that for those of you who do fall within the stated income guidelines of less than 3 years in the business, you will now have to put 10% down and not just 5%.
With respect to the changes to people looking to buy an investment property, or who already own investment properties, or have basement suites, these next changes may hurt you a little as the changes are drastic.
One part of the government mandated changes starting April 19th is that to purchase an investment or rental property you will now have to put 20% down, not just 5%. This is law.
What CMHC has done is take it a little further to ensure that no one gets in over their head when they purchase a home where they are depending on that rental income every month. For many, if your rental suite is empty for more than a couple months you may find yourself unable to make your large mortgage payments and eventually lose your home.
Without getting overly complicated for you, basically what they have done is change the math so that you will qualify for a smaller dollar amount. When we as a Mortgage Broker pre approve you for a dollar amount to buy a rental home, we take into consideration the fact that you will probably use the rental income to pay for your mortgage. The problem is they need to account for the months that will occur when your suite goes unrented as well as other expenses that come from having renters.
Previously we could take 80% of your rental income and use it to off set your other costs which was very beneficial for you. Now, we can only take 50% of the income and then only 44% of that to add to your income.
In simpler terms you are going from an 80% offset to a 22% offset. A Significant Difference! For the actual calculations on how this is done you can read about it here.
Lastly, with the old rules, a declaration from an appraiser of the amount of rent you can potentially collect for your suite you could simply submit that to your lender and nothing else needed to be done. As of now, if it is a new purchase than this is still the case.
When refinancing, however, with the new CMHC changes you will now have to show tax returns proving you have paid taxes and declared the rental income as income to the government. It will be the profit and loss that is shown on your tax return that will be used to qualify you.
This will also be the case if you are perhaps buying a new home for yourself and have a rental property in your portfolio already. You will only be able to use the income declared on your tax forms to help qualify you for a new home.
If you want more information on the CMHC changes and how they will effect you, call Leah at 604.313.9996 or email her at coss.l@mortgagecentre.com
What Do Single Women Want – In a Home?
By Christopher Shaw
There is a new trend in today’s real estate market and that trend is Single Woman buyers. In recent years single woman have become a “force to reckon with”. According to recent national studies by National Association of Realtors, Fannie Mae, single women account for the fastest growing segment of home buyers. The reasons for this new trend varies. Today’s women are earning better wages, many are divorced or have simply chosen to postpone marriage and build lives independently. Quite simply many are wise enough to take advantage of the current market which is excellent for buyers. The question is what are these single women looking for in a home?
Studies show that women have a very distinct criteria when it comes to buying a home. They know exactly what they want!
1. Security was high on the list . Women are seeking homes in neighborhoods that they feel safe and secure in.
2. As they say in the real estate industry; location, location, location. If you did not get it the first time location is also very important. Woman typically desired homes in well planned communities in good school districts, close to family and work if possible, shopping and other conveniences.
3. Women, whether they savor the joy of cooking or the art of making reservations. Most tend to desire homes with spacious well equipped updated kitchens. Kitchens that provide lots of cabinets for storage, granite counter tops with five to six feet of workable space complete with appliances.
4. Bathrooms are also important. Women want bathrooms that offer a spa like experience.
5. Lots of closet space was also important along with ample storage space as well. We are a society of consumers, we have a lot of things. We need somewhere to put those things.
6. Financing assistance. Recognizing this trend, lenders are targeting and offering programs specifically designed to assist single women in purchasing homes. There are programs that offer assistance to divorced women, single mothers as well as down payment assistance just to name a few.
8. Although women are no longer afraid of maintenance many women are looking for condos and townhouses which offer lower maintenance like lawn care and landscaping along with amenities such as pools, recreational rooms, and gyms. Due to time constraints and busy lifestyles these living situations simply make things more convenient. I must add that women are also buying single family homes however the purchase of townhouses and condos is increasing with this trend.
9. Studies also state the women are buying homes in the median price range of $139,000 – $162,000. ????????
(note: the price range depends upon the income level of the single women used for the study.)
10. An investment in financial well-being. Single women are planning their financial futures and see owning a home as a part of building wealth. They are looking for homes that they can sell or rent at a later date as they climb the economic ladder.
As single women continue to buy into and change the face of the real estate market, it has become increasingly important that housing professionals continue to expand their marketing efforts toward this growing and powerful demographic.
Making Sure You Get What You Need
By Carmen O’Doherty Smith
When you’re shopping for a new home, it’s a good idea to create a checklist of what you want and what you need. It keeps you on track to ultimately find the property that best fits your requirements. However, a lot of us get caught up in the excitement of looking at properties and confuse the two terms. So let’s clarify them right now.
A ‘need’ refers to a feature that is an absolute must in a new home. A ‘want’, by contrast, is a ‘nice-to-have’. Some home buyers make the mistake of choosing a ‘want’ at the expense of a ‘need’.
For example, say you ‘need’ four bedrooms in your new home but ‘want’ a golf course located nearby. It can be tempting to fall in love with a property that has a beautiful golf green just a couple of blocks away, even if it has only three bedrooms. You may find yourself signing the offer while dreaming of Saturday morning tee-offs, only to awake to the realization months later that the lack of an extra bedroom has become a serious inconvenience to you and your family.
Of course it is possible to get most, if not all, of what you need and want in a new home. But if it comes down to a choice, it’s usually a good idea not to sacrifice something you really need in order to get something you want. Working with an experienced Realtor will help you stay focused on the must haves. We have all made impulse purchases in our lives, but you don’t want your home to be one of them.
So when you’re making your house hunting checklist, be clear about what is a need-to-have and what is a nice-to-have. Don’t forget that some features you want – like a wraparound backyard deck, for example – can potentially be added to your new home later.
Carmen O’Doherty Smith, Sales Representative
Prudential Sterling Realty
778-773-2283
www.carmenodohertysmith.com
“Working with you and for you too reach all your real estate goals”
Benefits of Townhome Living
By Roby V. Pagong
Times have changed and it has reflected on the real estate market as well. Gone were the days when people dream of owning a single-family home with a vast lawn seen as they step out the door. Today, the needs and wants of the buyers have changed. To answer these, there is a variety of options provided in the real estate industry. Among them is the townhome.
Although the term townhome has become a common name, there are still a lot of people who do not understand what separates it from other properties. A townhome is another term of a townhouse. This type of property merges the conveniences of a single-family home and a condominium. It is characterized by a structure having several units for different occupants. Normally, they are multiple-story structure but they do not have a neighbor below and above the units.
Many are investing in townhomes today. This is because of the many benefits it offers. This is what people living in a fast paced community need. Among the benefits of townhome living is indicated below:
1. It is cheaper compared with the single-family home. Since they are similar, you can still enjoy the benefits of a single-family home at a much cheaper value.
2. You do not have to worry about privacy. Although there are multiple units in on structure, you will not have a neighbor below or above your unit. Homes are placed side by side.
3. There is no need for a tedious maintenance outside your property. This is because the space outside of the property is limited. It will still require some cleaning and monitoring, however, it is not as difficult as mowing the grass, watering the field and checking the landscape. This means that you will save more time, effort and energy.
4. It will also be difficult for burglars to enter your property. This is because the properties are next to each other. Neighbors can easily check suspicious behavior or noise next door.
5. Socialization in a townhome is also easier. You will get to know your neighbors with ease because your homes are next to each other. If you want to organize a party, it will be easier as well. You can just go next door and hand the invitation. There is no need to mail them or drive to different houses.
6. You can also enjoy several amenities. Most townhomes have swimming pools, fitness centers and tennis courts. You will definitely have the venue to relax and rejuvenate after a tiresome week at the office.
7. You can save time as well. Aside from the time you will spend maintaining the yard, you can use that time to rest or be with friends. There are also townhomes in areas near workplaces. If you can find one, you will surely save on travel time as well as the transportation expenses.
Although a townhome offers a lot of benefits, it is still not for everyone. However, if you feel that this is what you are looking for, find a townhome most suitable for you.
Consider the Carefree Condos for Sale and Townhomes in Cave Creek in your next purchase.
Article Source:EzineArticles
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