How to safeguard yourself in a home bidding war

Once your mortgage financing has been secured, finding a home you love is an exciting part of the process. It is easy to get swept up in the excitement of it all, and it is also commonplace for a listing agent to indicate there are other offers to stimulate a faster response from a client. A trend that has emerged and is gaining a lot of media attention, is bidding wars that emerge with only one bidder. Recently, a Toronto couple 'won' the bidding war on their desired property with a bid that was $90,000 over the asking price. They discovered after the fact that they had been the only bidders. In this article from Moneyville, we learn there are methods to protect ourselves against these situations.

The law does state that in the event of a bidding war, an agent must inform all bidders how many offers have been made. However, bidders names and offer amounts are never disclosed. A practice has been recently developed in Toronto for the buyer's agent to call the seller's agent to inform them a formal offer will be made later that day, although the potential buyer can always back out. This can result in a seller receiving several 'registered offers' throughout the day, with no guarantee any will actually become a legitimate bid. Still, a listing agent may tell potential buyers there are several offers, in hopes of encouraging them to make one as well.

So how can potential buyers protect themselves? Mark Weisleder, a Toronto real estate lawyer, has developed a bidding war clause that has proven very useful. The clause states that the buyer is making an offer based on the belief that other offers will be received that same day, and goes on to say that if there are no other offers received by a certain time that day, the buyer can rescind the offer or change the price. If the buyer's offer is accepted, the seller must provide the name, address and phone number of the real estate agent that presented the other offer. This clause gives potential buyers the security of knowing there is at least one rival bid. To learn more about the process, contact a qualified real estate agent or Canadian mortgage broker.

Click here for the full article from Moneyville.

Bank of Canada holds lending rate, cuts growth forecast

The Bank of Canada decided to keep its main interest rate unchanged yet again on Tuesday, a decision that was widely anticipated by economists. The rate remains at 1%, unchanged since September of 2010. This article from the Financial Post shares the highlights of Tuesday's announcement.

Taking into account the current global economic state, The Bank of Canada kept the wording of the announcement similar to that of the previous release in June, stating, "to the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate." This is surprising to some, as the economic outlook caused many to believe the Bank of Canada would possibly lower rates or give a longer time line for borrowing costs to rise.

The Bank of Canada also revised predictions for Canada's economic growth, stating results for 2012 to lower to 2.1% and 2013 at 2.3%, a departure from the previous forecast of 2.4% for both years. It was acknowledged that while the global economy is straining Canada's economic activity, "domestic factors are expected to support moderate growth." Bank of Canada Governor Mark Carney touched on a slowdown in the housing market, but did not mention new mortgage lending regulations. Carney will expand on the Bank of Canada's outlook for Canada's economy on Wednesday when the quarterly monetary policy report is released.

For more information on how these factors affect you, contact a Canadian mortgage broker.

Click here for the full article from the Financial Post.

Add value to your home with an addition

In an era of uncertainty surrounding home prices and the mortgage market, several home owners are looking to increase the value of their property by renovating. Kitchens, bathrooms and finished basements tend to be the most popular projects, but an addition can provide greater reward, if planned properly. A recent article from the Globe and Mail provides some helpful hints, and shows readers how adding to the home may be a better investment than simply relocating to a larger home.

As with any renovation, it is important to start with the proper research. The article suggests consulting a real estate professional in your area to find out what potential buyers are looking for. This information can be very beneficial when you decide on your expansion. The agent can also keep you informed on prices and recent sales, so you can stay within a reasonable price for your neighbourhood. It is also important to be honest about how much more time you plan to spend in the property. If you intend to sell shortly after completing the expansion, you will likely have a very different renovation plan than you would if you wish to spend 5 or 10 more years in your home.

If the idea of the research and costs of an expansion seems like too much, relocating may seem like an attractive option. This article includes a helpful chart to estimate the potential moving costs, making it easy to compare what will be the more feasible option for you.

To find out more about refinancing to renovate, contact a Canadian mortgage broker.

For the full article from the Globe and Mail, click here.

Canada’s housing market at ‘tipping point’: Royal LePage

Although it is believed that new mortgage legislation will keep a number of buyers out of the housing market, a recent study from Royal LePage forecasts that the year will end ahead of its expected growth percentage. This article from the Financial Post shares the highlights of the recent report.

Phil Soper, chief executive of LePage Real Estate says that although growth in home prices has been steady for almost three years, they cannot be expected to continue to increase faster than salaries and the economy. Recent historically low mortgage rates have caused several regions to reach what is believed to be an upper level of price resistance. Historically, following a period in which home prices increase significantly, statistics show that Canadian home prices have tended to stay flat, rather than decline. The report also states that the last marked national price drop was in 2008, after a 16 year period with no decline. The drop lasted 11 months.

The new tighter mortgage regulations were announced June 21st and came into effect July 9th. It is believed the changes, most notably decreasing the maximum amortization period of insured mortgages to 25 years, will have a significant impact on many first time home buyers. However, a recent survey estimates that approximately 50% of Canadians are still unaware of the changes. To find out more, contact a Canadian mortgage broker.

For the full article from the Financial Post, click here.

In Vancouver, the seller's market recedes

June is traditionally one of the busiest months in real estate, yet one of the country's priciest cities saw a significant decline in activity. Vancouver's June sales fell by 17% compared to the previous month, and 27.6% below June 2011. Economists are seeing this drop as a sign of market correction, and predict that home prices will start to decrease as well. This article from the Globe and Mail explores industry statistics and possible causes.

The average price for a detached home in Vancouver has reached a high of $961,600, an increase of 35% from the average three years ago, and 50% higher than the Toronto average. A price decrease would move Vancouver closer to a buyer's market, a welcome change for those seeking their first mortgage.

Financial analysts are unsure of the exact cause of the slowdown, but it is believed that new lending regulations are partly responsible. Industry professionals in the city have seen buyers back out of potential sales, citing new income requirements as the reason. Over the month of June, only 2,362 properties were sold, the lowest Vancouver has seen since the year 2000. Following the Vancouver slowdown, some analysts believe the Toronto market will follow.

To read the full article from the Globe and Mail, click here.

Tips for first-time landlords

In a time when single family homes are more and more expensive, acquiring a renter may be an attractive option for many homeowners. The extra income from a tenant is a terrific way to pay off a mortgage faster, or simply free up space in a tighter budget. This article from the Globe and Mail gives a list of helpful hints for those thinking of renting out the basement.

When making a change as significant as this, it is important to do the proper research. Every province has different regulations for landlords, so ensure you are complying with the proper guidelines. There are several helpful hints on the CMHC website. It is also prudent to research the tax implications of becoming a landlord. Any rental income acquired must be claimed as income on your yearly tax return. Finally, ensure you alert your home insurance company. Failing to report a rental suite to your insurance company can void the policy if anything were to occur in the suite itself.

Another important consideration when thinking of renting out your personal space is privacy. If your suite isn't equipped with a separate entrance, be prepared to see a virtual stranger in your house and around your property. If this is an uncomfortable feeling for you, it may be wise to consider renovating to allow for a private tenant-entrance.

For more information on taking on a tenant in your own home, contact a Canadian Mortgage Broker.

To read the full article from the Globe and Mail, click here.

Mortgage Brokers City announces the launch of Advanced Private Lending

Mortgage Brokers City is pleased to announce the launch of its sister company, Advanced Private Lending. As Mortgage Brokers City expands, an increased need for private mortgage financing has emerged. An ever-changing economy, coupled with stricter lending regulations, has made it difficult for many hard-working Canadians to qualify for a mortgage.

Advanced Private Lending is a licensed Mortgage Administration Company located in Ontario, but has a network of Accredited Mortgage Professionals across Canada to assist clients in any province. In many cases, the company also assists other Mortgage Agents and Brokers in funding their own deals.

Advanced Private Lending specializes in turning challenging credit situations into great opportunities. If a traditional lender is unable or unwilling to lend money, private lending sources are a good opportunity. Whether you are experiencing a difficult separation, consolidating debt, borrowing for education or have bad credit, an Advanced Private Lending professional can find the solution.

Follow the link for the full press release from PR Web.

Mortgage rules could cool hot market

Jim Flaherty's recent announcement that the government has chosen to tighten mortgage lending regulations has led to much discussion surrounding potential effects to the housing market, specifically higher priced areas such as Vancouver and Toronto. This piece from the Vancouver Sun explores the possible outcome these new rules will produce.

Under the new regulations, including a lower maximum amortization period and increased gross and total debt service ratios, it is speculated that the average first-time buyer would have to earn an extra $500 and pay $209 more to their mortgage each month. First-time buyers, notably those in Vancouver and Toronto, are typically singles or young couples who are looking to enter the condo market. Price ranges of $350,000 - $400,000, combined with shorter amortization periods will mean many buyers will no longer qualify for a mortgage. Many analysts believe the new regulations were an unnecessary attempt to slow the heated housing market, which has already been slowing steadily. Over the last six months, home prices in Vancouver have lowered 12% and sales volumes have slowed as well, signs that the market is correcting.

For those who are unsure about how the new regulations will effect their ability to qualify for a mortgage, it is prudent to seek the advice of a professional Canadian Mortgage Broker. A Mortgage Broker will assess an individual financial situation and budget to find the mortgage solution that is best suited.

To read the full article from the Vancouver Sun, click here.

Mortgage controls hurt young buyers: expert

After the government's recent announcement surrounding tightening lending guidelines, many young Canadians are left wondering if there's still a chance for them to enter the housing market. In this article from the Ottawa citizen, Mortgage Broker and Managing Partner Frank Napolitano of Mortgage Brokers City voices his concerns about how these changes will affect home buyers, specifically those just entering the market.

First-time buyers have been a driving force in the housing market for the last five years, and the move to decrease the maximum amortization period from 30 to 25 years is believed to make first-timers think twice. In this interview, Napolitano said, "There are a lot of young Canadians who are renting right now and have aspirations to own a home and this is setting them back two or three years." A recent report from the Canadian Association of Accredited Mortgage Professionals stated that between January of 2011 and May of 2012, 47% of all home purchases were made by first-time buyers.

The changes set forth in the June 21st announcement are an attempt to slow the accumulation of consumer debt, however, Napolitano believes the wrong area is being targeted. Although a mortgage is considered a debt, it also builds equity and increases in value as the borrower pays the mortgage down. "The message we're giving to young Canadians is, it's OK to have bad debt like credit cards. The government is doing nothing about that stuff. But, they are going to clamp down on good debt which is a mortgage," Napolitano stated.

Any home buyer with questions or concerns about the recent guidelines and how they will be affected are strongly urged to seek the advice of a professional Mortgage Broker.

To read the full article from the Ottawa Citizen, click here.

New Canadian mortgage lending guidelines announced

Full Mortgage Brokers City response to changes to Canadian mortgage lending rules

The much anticipated announcement of the new guidelines for Canadian mortgage lending occurred on June 21st, sparking a media frenzy. Jim Flaherty announced the government is setting forth four major changes, which will come into effect on July 9th, 2012. These changes include:

• Reducing the maximum amortization period on mortgages with default insurance from 30 years to 25.
• Lowering the maximum amount Canadians can borrow when refinancing from 85% to 80% of the value of the home.
• Fixing the maximum gross debt service ratio at 39% and the maximum total debt service ratio at 44%.
• Limiting the availability of government-backed insured mortgages to homes with purchase prices under $1 million.

In this video, Mortgage Broker Frank Napolitano addresses the above changes, how they will affect the average Canadian borrower and how the advice of a qualified Mortgage Broker can help. Frank also discusses the changes put forth by the Office of the Superintendent of Financial Institutions regarding Home Equity Lines of Credit, which were announced the same day.

Those with further questions or concerns should feel free to consult a professional Mortgage Broker in Canada.