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Federal government releases details on homebuyer incentive programs unveiled in Budget 2019

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Federal government releases details on homebuyer incentive programs unveiled in Budget 2019

 

Hombuyer incentives web

The federal government has released the details of the first-time homebuyer incentive programs promised in March in the 2019 budget.

Beginning Sept. 2, 2019, the First-Time Home Buyer Incentive will help middle class families take their first steps towards homeownership by reducing monthly mortgage payments required for first-time homebuyers, without increasing the amount they need to save for a down payment. This program complements other measures taken in Budget 2019 to support first time homebuyers with their down payment such as increased RRSP withdrawal limit from $25,000 to $30,000 The government has allocated $1.25 billion over three years for the program. The incentive will be available to first-time homebuyers with qualified annual household incomes up to $120,000.

Budget 2019 also previewed the Shared Equity Mortgage Provider Fund, a five-year, $100-million lending fund to assist providers of shared equity mortgages to help eligible Canadians achieve affordable homeownership. This will support an alternative homeownership model targeted at first-time homebuyers, help attract new providers of shared equity mortgages and encourage additional housing supply. The fund will launch on July 31, 2019, and will be administered by CMHC.

 

ALSO READ: Budget 2019 comes up short

ALSO READ: How the Liberals missed the boat on affordable housing

“Through the National Housing Strategy, more middle-class Canadians – and people working hard to join it – will find safe, accessible and affordable homes,” says Jean-Yves Duclos, Minister of Families, Children and Social Development and Minister Responsible for CMHC.“Our proposed measures will reduce the monthly mortgage for your first home by up to $286. This will mean more money in the pockets of Canadians and will help up to an estimated 100,000 families across Canada.”

First-Time Homebuyer Incentive facts

  • Canada’s First-Time Home Buyer Incentive will help qualified first-time homebuyers purchase their first home as the incentive reduces their monthly mortgage payment, without increasing the amount that they must save for a down payment. The program will launch on Sept. 2, 2019, with the first closing on Nov. 1, 2019.
  • The incentive will allow eligible first-time homebuyers who have the minimum down payment for an insured mortgage with CMHC, Genworth or Canada Guaranty, to apply to finance a portion of their home purchase through a form of shared equity mortgage with the Government of Canada.
  • For the purchase of an existing home, an incentive amount of five per cent may be available. For the purchase of a newly constructed home, an incentive amount of five or 10 per cent may be available.
  • Doubling the incentive for purchasers of new homes encourages new housing supply.
  • No on-going repayments are required, the incentive is not interest bearing and the borrower can repay the incentive at any time without a pre-payment penalty.
  • The buyer must repay the incentive after 25 years, or if the property is sold.

 

These details confirm that the First-Time Home Buyer Incentive program will be an ownership stake in the property of qualified homebuyers, whereby the government will participate in appreciation of the property and – in the case of the property devaluing – depreciation as well.

“The key issue remains qualifying, and this program diminishes the amount that a first-time homebuyer can qualify for by about 15 to 20 per cent,” says James Laird, co-founder of Ratehub Inc. and president of CanWise Financial. “This is because the program limits the mortgage amount to four times the households’ income, whereas those not participating in the program can actually qualify for a mortgage that is 4.5 to 4.7 times their income. Household income for qualified homebuyers is also capped at $120,000.”

Those who would be attracted to the program would be Canadians who are trying to purchase at their maximum qualification, Laird adds. “However, because the program diminishes how much they can qualify for, it doesn’t serve the needs of the group it is targeted at. Canadians can get a larger loan by not participating in the program.”

 

Maximum affordability calculations

A household with $100,000 of income, putting a minimum down payment of five per cent, can currently qualify for a home valued at $479,888 with a $2,265 monthly mortgage payment.

The maximum purchase price for the same household, if they participate in the First-Time Home Buyer Incentive program, drops to $404,858 with a five-per-cent minimum down payment. The total mortgage amount would then be $400,000 (or four times their household income).

Source: Ratehub.ca 

 

Mortgage payment calculations

If the household took a five-pre-cent incentive from the government (for resales), their mortgage amount goes to $378,947, and monthly payment is now $1,810.
If the household took a 10-per-cent incentive from the government (for new homes) their mortgage amount goes to $357,894 and  monthly payment is now $1,710.

Source: Ratehub.ca 

 

 

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First-time homebuyers catch a break with slowing home price growth

First-time homebuyers catch a break with slowing home price growth

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First-time homebuyers catch a break with slowing home price growth

We have some good news and we have some bad news, prospective homebuyers in Canada.

First, the bad news: According to the latest Royal LePage House Price Survey, home price growth in many of Canada’s real estate markets is slowing. This means, if you’re looking to buy a home, its value may not grow as much as it has recently. The good news, however, is that this same slowing price growth presents a window of opportunity for first-time homebuyers to get while you can.

The price of a home in Canada increased just 2.7 per cent year-over-year to $621,575 in the first quarter of 2019, Royal LePage says, well below the long-term norm of approximately five per cent. When broken out by housing type, the median price of a two-storey home rose 2.6 per cent year-over-year to $729,553, while the median price of a bungalow rose 1.1 per cent to $513,497. Condominiums remained the fastest growing housing type, rising 5.4 per cent year-over-year to $447,260.

Looking ahead to the second quarter, Royal LePage expects national home prices to stay relatively flat throughout the 2019 spring market, with the national aggregate price of a home increasing just one per cent over the next three months. Meanwhile, the housing markets in several larger Canadian cities have shown noticeable signs of slowing, with nearly half of the regions in Royal LePage’s Quarterly Forecast anticipating quarter-over-quarter price declines.

But these are national numbers, and as we’ve written before, there really is no such thing as a Canadian housing market.

But more on this later.

Silver lining

Early in 2018, Canada experienced the most significant housing correction since the 2008 financial crisis. Markets showed signs of recovery late in the year, yet the figures for early 2019 suggest that the market has once again slowed.

We are expecting this to be a sluggish year overall in Canada’s residential real estate market, with the hangover from the 2018 market correction and weaker economic growth acting as a drag on home price appreciation, balanced by lower for longer interest rates,” says Phil Soper, president and CEO, Royal LePage. “There is a silver lining here. This slowdown gives buyers, and first-time buyers in particular, an opportunity to buy real estate in our country’s largest cities.”

In the federal budget tabled by Finance Minister Bill Morneau in March, the Canadian government announced three new or enhanced housing programs. The First-Time Home Buyer Incentive is a three-year, $1.25-billion shared equity mortgage program whereby  Canada Mortgage and Housing Corp. (CMHC) will co-invest up to five per cent of the purchase price of an existing home. Further, for the first time in a decade, there was an increase in the registered retirement savings plan withdrawal limits in the Home Buyers Plan. The increase, from $25,000 to $35,000, was the largest since the program’s inception in 1992. Finally, an additional $10 billion in financing over nine years was earmarked for the construction of purpose-built rental housing.

Real estate is local

Illustrating our point that real estate is local and not national, the GTA housing market is still showing healthy growth.

“The city of Toronto is still one of Canada’s fastest appreciating real estate markets,” says Soper. “Detached home prices are rising in line with inflation, but condominium prices are increasing at near double-digit levels as vertical living has become the primary new-build option in this growing, world-class city.”

Median home prices in Toronto rose 5.8 per cent year-over-year in the first quarter of 2019. Two-storey home prices and bungalow home prices rose 4.8 per cent and 2.5 per cent year-over-year, respectively, while condo prices rose 9.3 per cent year-over-year. The overall GTA’s aggregate home price rose 3.4 per cent over the same period.

Real estate values in Ontario’s Greater Golden Horseshoe region continued to appreciate at a brisk clip, as local economies grew and workers from the GTA looked to trade commuting time for lower house prices. Niagara-St. Catharines, Hamilton and Kitchener-Waterloo-Cambridge aggregate prices were up by 6.9 per cent, 6.3 per cent and 8.9 per cent, respectively.


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GTA waterfront homes

Budget 2019 comes up short

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Budget 2019 comes up short

GTA waterfront homes

The federal government released the much-anticipated Budget 2019 this week, with homebuyers, builders and others awaiting measures to address housing issues.

And in short, it comes up, well… a little short.

First-time homebuyer help

Much of the housing focus in Budget 2019 was on addressing the needs of first-timers, namely with a new First-Time Home Buyer Incentive.

  • The Incentive would allow eligible first-time homebuyers who have the minimum down payment for an insured mortgage to apply to finance a portion of their home purchase through a shared equity mortgage with Canada Mortgage and Housing Corp. (CMHC).
  • About 100,000 first-time buyers would benefit from the Incentive over the next three years.
  • Since no ongoing payments would be required with the Incentive, Canadian families would have lower monthly mortgage payments. For example, if a borrower purchases a new $400,000 home with a five-per-cent down payment and a 10-per-cent CMHC shared equity mortgage ($40,000), the borrower’s total mortgage size would be reduced from $380,000 to $340,000, reducing the borrower’s monthly mortgage costs by as much as $228 per month.
  • CMHC to offer qualified first-time homebuyers a 10-per-cent shared equity mortgage for a newly constructed home or a five-per-cent shared equity mortgage for an existing home. This larger shared equity mortgage for newly constructed homes could help encourage the home construction needed to address some of the housing supply shortages in Canada, particularly in the largest cities.
  • The First-Time Home Buyer Incentive would include eligibility criteria to ensure that the program helps those with legitimate needs, while ensuring that participants are able to afford the homes they purchase. The Incentive would be available to first-time buyers with household incomes of less than $120,000 per year.
  • Budget 2019 also proposes to increase the Home Buyers’ Plan withdrawal limit from $25,000 to $35,000, providing first-time buyers with greater access to their Registered Retirement Savings Plan savings to buy a home.

Noticeably absent from the housing measures was any adjustment to the stress test, which a number of experts say is necessary.

Industry reaction

“The Building Industry and Land Development Association (BILD) agrees with (Federal Finance Minister Bill Morneau’s) comments that there aren’t enough homes for people to buy or apartments for people to rent,” says Dave Wilkes, president and CEO.

“BILD feels the policies presented in (the) budget are a step in the right direction to help first-time homebuyers. We will continue to advocate for a review of the stress test so that first-time homebuyers can realize the dream of homeownership. Supply challenges still exist and are at the centre of the current unbalanced market, and we call for action on these by the provincial and municipal government.”

Supply challenges in the Greater Golden Horseshoe are serious, and Budget 19 fails to address them.

“This was a re-election budget that didn’t move the dial for new-home buyers in the GTA,” Richard Lyall, president of the Residential Construction Council of Ontario (RESCON) told HOMES Publishing. “While increasing RRSP borrowing for first-time homebuyers is helpful, creating The First-Time Homebuyer Incentive at a maximum of $500,000 doesn’t help many Torontonians or GTA residents.”

The Canadian Home Builders’ Association (CHBA) had been recommending a shared appreciation mortgage approach for some time, as a tool to help those who can’t get into homeownership but have the means to pay rent.

The modification to the RRSP Home Buyers’ Plan will help get Canadians into their first home, but will also act as a burden because the loan has to be repaid within 15 years, including a minimum of 1/15th per year.

“This means that, in the years following their home purchase, a homeowner has the additional financial responsibility of repaying their RRSP,” says James Laird, co-founder of Ratehub Inc. and president of CanWise Financial.

Important details of the First-Time Home Buyer Incentive program have yet to be released. For example, says Laird, it remains unclear whether the government would take an equity position in homes, or whether the assistance would act as an interest-free loan.

“This is an important distinction because if the government is taking an equity stake in a home, the amount the homeowner would have to pay back would grow as the value of the home increases,” he says.

The very launch of the program is surprising, Laird says, given that the BC Government implemented a similar measure a couple years ago, with unsuccessful results, and it was terminated in 2018. First-time home buyers found it difficult to understand and unappealing to have the government co-own their home.

Let’s do the math

Under existing qualifying criteria, including the stress test, homebuyers can qualify for a house that is 4.5 to 4.7 times their household income.

Under the new First-Time Home Buyer Incentive, however, the government has set a purchase limit of four times household income for the mortgage, plus the amount provided by the government, according to Ratehub.

By participating in this program, first-time homebuyers effectively reduce the amount they can qualify for by about 15 per cent, and their monthly mortgage payment naturally decreases in lockstep.

A household with $100,000 of income, putting a minimum down payment of five per cent, can currently qualify for a home valued at $479,888 with a $2,265.75 monthly mortgage payment.

Affordability calculations

The maximum purchase price for the same household, if they participate in the first-time homebuyer incentive, drops to $404,858.29 with a five-per-cent minimum down payment. The total mortgage amount would then be $400,000 (or four times their household income).

Mortgage payment calculations

If the household took a five-per-cent incentive from the government (for resales), their mortgage amount goes to $378,947.37, and monthly payment is now $1,810.90.

If the household took a 10-per-cent incentive, (for new homes) their mortgage amount goes to $357,894.73, and  monthly payment is now $1,710.29.

Stress test modifications

The CHBA is among the industry groups that is pushing for modifications to the existing mortgage stress test, which has served to lock out too many well-qualified Canadians due to the market and interest rate changes of the past year.

“The First-Time Home Buyer Incentive, if coupled with immediate adjustments to the stress test, has the potential for getting the housing continuum functioning again,” says CHBA CEO Kevin Lee. “It is essential that these changes come quickly, though. Current restrictions on mortgage access mean that many millennials and new Canadians are seeing homeownership slipping away, and in many markets the economic impacts are substantial.”

Looking ahead to the 2019 federal election, CHBA will be encouraging all federal parties to address housing affordability in very meaningful ways in their respective platform documents.

Budget 2019 housing measures

Budget 2019

 

 

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The housing outlook for 2019

GTA among the most promising new home outlooks for 2019, Altus Group says

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GTA among the most promising new home outlooks for 2019, Altus Group says

The new home sector in Canada had a challenging year in 2018, but markets in the Greater Golden Horseshoe, including the GTA, have among the most promising outlooks for 2019, according to Altus Group.

Increased regulations, higher interest rates, new taxes and higher Development Charges are testing the industry,  Altus Group says in its New Home Outlook for 2019.

Altus Group is a leading provider of software, data solutions and independent advisory services to the global commercial real estate industry, and tracks new home development and sales activity across the country.

At the start of 2018, the supply of available new homes in both the Vancouver and Toronto markets was constrained, particularly in the condominium apartment sector. The lack of available product contributed to the rapid rise in pricing in 2017 and impacted sales volumes at the start of 2018.

In Alberta, the new home sector, along with the rest of the housing market, continued to be impacted by low energy prices and weaker economic activity. The opposite was the case in Montreal, where a sharp increase in demand for new homes led to peak sales levels.

The outlook at the end of 2017 was that the market would continue to see reasonably strong demand in 2018, but sales would be impacted by the new mortgage regulations and other new policies, taxes, and regulations – the degree to which was unknown.

Looking at 2018’s market performance year-to-date, Altus can see that demand was impacted in the major markets, most significantly in the single-family and higher-end townhouse segments. New condominium apartment sales have also moderated in Vancouver and Toronto where the incredibly strong demand seen in 2017 has softened in the current year. Some of the moderation is normalization from the frenzied market pace noted in recent years.

KEY FINDINGS

Greater Toronto Area

The GTA market came off a record new condominium apartment sales year in 2017. However, the impacts of mortgage rule changes and new development charges contributed to a decline in project launches and lower sales to start the year. Sales and project launch activity have increased in the back half of the year, but year-to-date sales remain down by almost 50 per cent compared to 2017.

While sales have been lower, pricing for new condominium apartment product in the downtown area has remained fairly stable with overall average prices trending towards $800,000.

New single-family sales continued to decline in 2018. Although availability of product to purchase has increased, it remains beyond the reach of most buyers.

Hamilton and Kitchener-Waterloo

Markets outside of the GTA have continued to benefit from their relative affordability compared to Toronto, particularly in Kitchener-Waterloo, where the new supply of condominium apartment product experienced strong demand in 2018. Both markets benefit from markedly better pricing compared to the GTA, where lower average prices for both new condominium apartment and single-family housing makes it a much more buyer-friendly market.

Promised improvements to transit, which will take several years to implement, will enhance commuting options throughout the Greater Golden Horseshoe, thus providing greater opportunities to live in markets outside of the GTA.

Montreal

Montreal saw a strong increase in new home sales over the past three years and continues to experience robust demand for new condominium apartment homes. Given the growth in sales, many of the challenges seen in the other large markets have started to impact Montreal – rising costs, elevated inventories of under construction product and increased investment activity. Despite the challenges, year-to-date sales activity remains strong and is trending slightly higher than last year.

Edmonton

The Edmonton market has been facing challenges from elevated inventory levels, a large stock of completed and unsold new homes and the impact that weak energy prices is having on housing demand. Consumers’ mortgage qualification has become a more significant challenge for new home projects, resulting in a year-over-year decline in sales levels by almost 50 per cent for both townhouse and condominium apartment product. The slow pace of sales has also meant that several projects have shifted to purpose-built rental.

While the market has been slow, there are some bright spots with development in the Ice District experiencing reasonably strong demand, along with well-priced townhouse developments in the suburban markets.

Calgary

The Calgary market is performing stronger in 2018, with increased sales of both new condominium apartment and townhouse product on a year-over-year basis. This growth has been exclusively in the suburban markets where new condominium apartment and townhouse sales have exceeded 2017 numbers.

While sales in the suburbs are tracking higher, the inner city and downtown markets are seeing weaker demand and lower sales volumes with higher office vacancy and lower downtown employment impacting housing demand near the core. Conversely, the strongest new home sales in the suburbs have been occurring in regions near employment centres.

Vancouver

Leading into 2018, the Vancouver market was the tightest of the markets examined, in terms of available new homes with only 1.8 months of inventory. This year, new project launches, particularly along transit lines and in the Fraser Valley, have added much needed inventory and boosted the supply to 3.3 months of inventory – although this remains the lowest in the country.

The frenzied pace in the market has softened with the sales rate at launch moderating, while price growth has stopped and even pulled back in certain segments of the market. A key challenge that has become more apparent as of late has been the price sensitivity of consumers, with higher-priced projects, or those priced above the competition, experiencing below average sales rates.

2019 Outlook

The outlook for housing demand in 2019 remains positive across the country with elevated immigration levels, continued demand from first-time homebuyers and tight rental vacancies and elevated rents encouraging homeownership. The key pressures that Altus Group sees continuing to impact the new home market in 2019 are higher interest rates and housing affordability constraints, rising construction costs and development charges impacting developers, and weaker economic growth potential in certain regions constraining demand.

Across the major markets in Canada, Altus Group believes the markets in the Greater Golden Horseshoe, including the GTA, have the most upside potential for an increase in sales activity in 2019 given the depth of the decline in 2018 and building off of the sales recovery noted in the back half of 2018.

Calgary and Edmonton will continue to be impacted by the weaker economy, but are not forecast to experience a material decline in overall sales volumes given the current levels of activity in each market.

The two markets that may see a decline in sales activity in 2019 are Montreal and Vancouver – but for very different reasons. Montreal had a strong sales year in 2018 and 2019 volumes are expected to decline as the market returns to more normal conditions. The Vancouver market, which is currently exhibiting the most potential for downside risk, is expected to see a modest decline in sales volumes as consumers react to higher borrowing costs and developers react to escalating construction costs in the face of lower revenue opportunities. With that said, the sales volumes in 2019 are still anticipated to be at or close to the 10-year sales average for the market.

altusgroup.com


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First quarter for 2018 is shedding positive light on home ownership and first time buyers.

First quarter for 2018 is shedding positive light on home ownership and first time buyers.

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First quarter for 2018 is shedding positive light on home ownership and first time buyers.

by Arie Buzilo

The real estate market in 2018 is off to a good start! Our paradigm has shifted due to the stress test and interest rate increases, but there will always be advantages.

Sellers have had a pretty good run in the last few years. Prices have sky rocketed, sending almost every property into a bidding war. Prior to the stress test and rate increase, it would be much easier to get approved for a mortgage and a much higher amount. It was also helpful that the interest rates were at an all time low. So you’re probably sitting there and thinking, how is this good for first time buyers? Well, since the government changed the rules and applied the stress test, property value has dropped significantly.

Another factor that is now playing a role on the cool down effect is that the Bank of Canada has increased interest rates.So, although it is true that the bank is not lending as much as they did before the stress test, it is also important to note that since property values dropped, buyers are able to purchase properties for significantly lower than when they had a higher approval without getting into a bidding war. What we have now is a more balanced market.

Getting your foot in the homeownership market in the city is very obtainable. Condos come in various square footages, which make it possible to afford to live in the city.

My advice to anyone who is considering getting into homeownership is to think of real estate as a long term investment. When you think about real estate, remember that there will always be cycles. Real estate is very dimensional. Some facts to consider — new and old communities developed and undeveloped, distance from the city, highrise and lowrise properties, location of commercial businesses or the potential of development, and so on. The bottom line is there are pros and cons to every scenario so for all the first time buyers that are on the fence I say, this is a great time to get in to the homeownership market.

Arie Buzilo is a real estate Broker and an investor specializing in buying and selling properties all over the GTA.

He works out of Century 21 Leading Edge Realty.


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First-time homebuyers face new challenges in 2018

First-time homebuyers face new challenges in 2018

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First-time homebuyers face new challenges in 2018

There are still plenty of opportunities for first-time homebuyers to enter the real estate market.

by Matthew Ablakan

Last year, we experienced many significant changes with regards to qualifying for a mortgage. In addition, the Bank of Canada increased their overnight rate twice for the first time since 2008. What does this mean for first-time homebuyers? A more difficult process to qualify for a mortgage, less purchasing power and more compromise.

As of January 1, 2018 buyers that have a down payment of less than 20 per cent will have to qualify using the Bank of Canada’s Benchmark Rate, which is currently at 4.99 per cent, or 2 per cent more than the interest rate they are being offered by their lending institution (whichever is higher). And the Bank of Canada has already signaled that Canadians should prepare for a series of interest rate hikes in 2018.

Matthew Ablakan, founder of Millennial’s Choice
Matthew Ablakan, founder of Millennial’s Choice

So, it seems, that this year will be filled with optimism as well as uncertainty. But there are still plenty of opportunities for first-time homebuyers to enter the market. With financial support such as the Land Transfer Tax rebate, HST rebate, Home Buyers’ Tax Credit and the ability to use your RRSPs for your down payment, there is still a lot of hope.

I recommend using a licensed broker who has great relationships with builders as well as banks and alternative lending institutions. This will give first-time buyers more flexibility, as well as options when it comes to making a purchase.

Some lending institutions — not the big banks — have more flexible guidelines that allow them to make certain exceptions when it comes to qualifying for a mortgage. And some builders offer incentives especially for first-time homebuyers.

Purchasing pre-construction real estate, whether a condo or a new home, offers flexibility as well as different options for first-time homebuyers. You have the opportunity to enter into the marketplace without having to dish out money for a mortgage and other expenses right away. All you need to worry about is the deposit the builder requires, as well as a mortgage pre-approval. This gives you lots of time to prepare for your final closing.

With that being said, if you purchase a condo that is going to be ready in three to four years, you might be able to afford something a little more expensive than if you were to purchase it right now. In the intervening years, you may be more established in your career, have a spouse who can contribute and you may be starting a family. All of these factors play a role in purchasing a home. Purchasing a new home or condo gives you flexibility in the event these things change.

But it is important not to overextend yourself when making a purchase. There are more costs to owning a home then just your mortgage payment. You must be prepared for things like property taxes, utilities, maintenance and upkeep, as well as things like cable, Internet and phone bills.

Another helpful tip is to move away from your parent’s way thinking. What your parents were able to purchase just doesn’t exist anymore. That is a fact. That is the reality that first-time buyers are faced with today. There is nothing wrong with purchasing a one-bedroom condo to get your foot in the door. This will allow you to build wealth and help you get one step closer to that dream home.

When it comes to purchasing real estate, there are many different factors involved. I strongly recommend you do your own research as well as consult with different professionals. There are some professionals who offer things like buyer seminars. It is also important to know what you qualify for before you start your search. This will save you lots of time. Also, ask your broker if he/she can recommend a lawyer as well as a mortgage broker. This will save you the hassle of finding someone that is trustworthy and reliable. Always remember that a real estate salesperson or broker cannot provide you with legal advice. The onus is on you to show your contract to a lawyer, who can then provide you with that peace of mind.

Purchasing a home is supposed to be fun. It represents the start of a new chapter and adventure. Compromise does not mean settlement. When you are in your home, it should feel like home.

Matthew Ablakan is the founder of Millennial’s Choice, a team of experienced real estate and mortgage brokers dedicated to serving the millennial generation.



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Tips for First-Time Homeowners

Tips for First-Time Homeowners

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Tips for First-Time Homeowners

How have your dream of home ownership come true

Buying a home is one of the biggest decisions and commitments in your life. But personal finance experts warn that home buyers, especially first-time buyers, need to research, plan and save for their new home in order to realize their dreams of home ownership.

“Buying a home is very exciting but you have to do your homework first. Don’t just look at how much your mortgage payment will be. Make sure you factor in future expenses such as repairs, maintenance, property taxes, utilities and possible commuting costs when making the decision to buy a new home,” says Wade Stayzer, Vice President of Retail at Meridian, Ontario’s largest credit union. “You might be able to afford $1,200 a month for rent, but with the additional costs of owning a home you might not be able to afford a $1,200 mortgage, due to the additional costs associated with home ownership.”

Meridian offers tips and advice that will help you become a successful home owner.

Save up for a down payment: Saving up a significant down payment is extremely important, as it will help to cut down mortgage payments going forward. You should save up at least five per cent of the price of the home for a down payment.

Calculate your initial costs:  Besides your down payment, you have to factor in closing costs, moving costs, lawyer fees and taxes. So you aren’t surprised later, the general rule of thumb is to add 1.5-2% of the total purchase price to cover closing costs.

Meridian - Tips for First-Time Homeowners

Get pre-approved: Work with a trusted mortgage specialist to make your first home-buying experience easy and well planned. When getting pre-approved, make sure that you are accounting for all your monthly expenses, such as childcare, commuting costs and contributing to a savings account. Life has a way of changing at just the wrong time – it is good to have some financial wiggle room for unexpected events.

Know your options:  It’s important to know that a first-time home buyer includes anyone who has not owned a home in the past seven years. The Canadian government is currently offering a First-Time Home Buyer Tax Credit, up to $750, which you can later put towards a mortgage payment. It also allows first-time home buyers to borrow up to $25,000 from their Registered Retirement Savings Plans tax-free to fund their purchase.

Shop around: Different financial institutions offer different solutions so find the mortgage that is right for you. Make sure that your mortgage is flexible and you understand what you are getting.  As the saying goes, if it sounds too good to be true, it probably is. If someone is offering you a very low mortgage rate it may be because the service charges on it are enormous or that the mortgage is completely closed and you will be locked in until it matures.

Tips for First-Time Homeowners

For more information visit meridiancu.ca



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Mortgage Advice from First Time Homebuyers

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Mortgage Advice from First Time Homebuyers

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BMO chases first-time home buyers with cash-back mortgage promo

BMO chases first-time home buyers with cash-back mortgage promo

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BMO chases first-time home buyers with cash-back mortgage promo

The Globe and Mail

Bank of Montreal is courting potential first-time home buyers with an unconventional offer of up to $1,000 cash back on some new mortgages.

The promotion launches at a moment when the bank, which is Canada’s fourth largest by assets, is keen to boost its share of the mortgage market. But it also appears tailored to help acquire new clients by promising some relief on the costs of a first mortgage, while requiring that the payments be deducted from a BMO chequing account.

Competition for new residential loans is poised to intensify as Canada’s mortgage market shows signs of slowing growth. The pressure comes from several sources: Interest rates have risen from rock-bottom lows, consumers are heavily indebted, and the federal government has introduced stricter rules on new mortgages in an effort to cool overheating prices in Toronto and Vancouver.

http://www.theglobeandmail.com/report-on-business/bmo-chases-first-time-home-buyers-with-cash-back-mortgage-promo/article33810371/


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How Donald Trump just raised many mortgage bills

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How Donald Trump just raised many mortgage bills

Fortune

In one of his very first substantive moves as president, Donald Trump signed an executive order Friday that will result in a hike to many first-time homeowners’ mortgage bills.

Trump, who claimed a populist mantle in his first speech as a president, signed the executive order reversing an Obama-era policy less than an hour after leaving the inaugural stage.

The order will have the immediate effect of increasing the amount that most non-wealthy homeowners must contribute to the Federal Housing Authority’s insurance program. Beginning Jan. 27, most borrowers will now have to pony up six-tenths of a percent of their mortgage each month, up a quarter of a percentage point from last year. Americans with $200,000 mortgages will pay roughly $500 more in 2017 than they did in 2016, according to the FHA.

http://fortune.com/2017/01/21/donald-trump-mortgage-bills/

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