Category Archives: single buyers

Bank of Canada slashes key rate as economy contracts, exports stall

The Bank of Canada is cutting its key interest rate for the second time this year, citing a larger-than-expected first half contraction and a “puzzling” stall in non-energy exports.

The central bank lowered its benchmark overnight rate by a quarter percentage-point Wednesday to 0.5 per cent, blaming faltering global growth, disinflation and low prices for oil and other commodities. The Canadian dollar fell more than a cent in the wake of the decision.

The bank stopped short of characterizing the economy’s first-half stall as a recession, even a mild one. But some economists say that is exactly what Canada is facing.

The latest rate cut marks a sudden about-face by Bank of Canada Governor Stephen Poloz, who has repeatedly insisted that the economic hit from the oil price collapse would be quickly offset by surging non-oil exports, such as car parts, lumber and machinery and equipment. He had characterized his earlier January rate cut as “insurance.”

But six months later the rebound remains elusive, in spite of a much cheaper Canadian dollar, now worth less than 80 cents (U.S.).

The bank acknowledged in its latest forecast, also released Wednesday, that the failure to get a lift from non-energy exports is “puzzling.”

Making matters worse a massive plunge in business investment – down 16 per cent in the first quarter – has become a dead-weight on the economy. The bank now says it expects investment in Canada’s oil patch to plummet close to 40 per cent this year, significantly worse than the 30 per cent it initially thought, as long-term investments in the oil sands are delayed or put on hold until the price of crude comes back.

A lower overnight rate typically prompts banks to cut rates on home mortgages and other loans – a situation that could exacerbate record household debt levels in Canada and add fuel to the hot housing market in cities such as Toronto and Vancouver.

But Mr. Poloz and his central bank colleagues say the risk of weak growth and disinflation outweighs the worry that Canadians may pile on more debt.

“While vulnerabilities associated with household imbalances remain elevated and could edge higher, Canada’s economy is undergoing a significant and complex adjustment,” the bank said in its statement. “Additional monetary stimulus is required at this time to help return the economy to full capacity and inflation sustainably to target.”

The bank’s new forecast calls for a contraction in the first half of this year, with the economy shrinking at an annual rate of 0.6 per cent in the first quarter and 0.5 per cent in the second quarter. The bank does not use the word “recession,” although a recession is typically marked by two consecutive quarters of shrinking GDP.

Nonetheless, the bank said it expects growth for the entire year to hit 1.1 per cent – a sharp downgrade from the 1.9 per cent growth it forecast just three months ago. It’s calling for growth of about 2.5 per cent in 2016 and 2017.

The central bank said the Canadian economy won’t return to full capacity until the first half of 2017, versus its previous target of late 2016.

Canada’s fundamental problem is that it now has a distinctly two-track economy – one faltering badly because it’s tied to oil and other commodities, and another growing due to “solid” household spending and the recovering U.S. economy.

“As the second track gains strength and Canadian producers benefit from the depreciation of the Canadian dollar, it should re-emerge as the dominant one,” the bank said in its statement.

The non-energy economy makes up more than 80 per cent of the Canada’s GDP, but that side of the economy has been swamped by the effects of the oil price shock.

For now, the weight of the economic decline in Canada’s resource-dependent provinces is dragging on the national economy. Since last November, unemployment is up 1.3 percentage-points in the energy-intensive regions of the country, while retail sales are down nearly 1 per cent, along with steep declines in car and home sales.

It’s a vastly different picture in the rest of the country, including Ontario and Quebec, which depend more heavily on manufacturing exports.

The central bank put the blame on the U.S. and China, where growth “faltered in early 2015.” This has depressed prices for oil and many other commodities that typically drive Canada’s export-led economy.

Also Wednesday, the central bank matched the cut in the overnight rate by lowering the bank rate to 0.75 per cent from 1 per cent and the discount rate from 0.5 per cent to 0.25 per cent.

Source: BARRIE MCKENNA OTTAWA — The Globe and Mail Published Wednesday, Jul. 15, 2015 10:01AM EDT

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Buying a House Together Before Marriage? Read This First

house keys in a ring box

Love may be blind, but don’t go into a real estate purchase with your eyes closed.

Serious young couples used to mark their commitment to each other with an engagement ring, but now they’re in the market for a bigger asset: a set of shiny new house keys.

One in four couples between the ages of 18 and 34 bought a house together before they were married, according to a study by Coldwell Banker Real Estate. MONEY found in our own poll of 500 millennials’ financial attitudes that 40% think it’s a good idea for a couple to buy a home together before marriage, while 37% think the purchase should take place prior to the wedding.

Low-rate mortgages, rising rental costs, and the ability to deduct mortgage interest from income taxes all make being a homeowner now rather than later seem like an attractive option. And while making that move first can work out well, as it did for Seattle couple Katy Klein and Charles Hagman, not every story has that same happy ending.

In fact, many financial planners advise against it. That’s because buying a home is often the biggest and most financially complicated move a couple makes, and unwinding it can be especially difficult for unmarried partners if the relationship ends. So if you’re buying a home with your beloved before getting hitched, spare yourself any potential financial heartbreak by following these tips.

Compare Credit Scores

You and your partner have probably already shared details about your income and savings when determining if you could afford to buy. But another piece of information you’ll need to share well in advance of closing is your credit report.

“If a couple is entering into a business deal, which is what a home purchase between two non-married people is, they should know the creditworthiness of their business partner. A person’s credit score will impact your ability to obtain a mortgage and the interest rate you will pay,” says Pewaukee, Wisc.-based financial adviser Kevin Reardon.

If you or your mate has a poor score, it could influence how you decide to title the property and who takes responsibility for the loan. Married couples are generally viewed by creditors as a single unit, but unmarried couples are assessed as individuals, even if applying for the loan together.

“This can work to your advantage if you have the person with stronger credit purchase the home,” says Sandra O’Connor, regional vice president with the National Association of Realtors. By eliminating the poorer score from consideration, you can secure better rates. On the flip side, with only one person applying for the loan, and thus one income on record, the amount you qualify for could be lower than what you could get with two incomes. And, of course, only one person’s name will be on the loan and deed, leaving the other partner vulnerable in the event of a breakup.

Open a Joint Account

Consider setting up a joint bank account, if you don’t already have one, that can be used to pay the mortgage, property taxes, insurance, and maintenance, Reardon suggests. Each of you can set up automatic monthly deposits into the account from individual bank accounts; this way neither party can forget. You can further simplify bill paying and budget tracking by having home expenses automatically deducted from the account each month.

Decide How to Manage Costs

When you cosign on a mortgage, you are 100% liable for the debt, which means if the relationship turns sour and your partner stops paying, you must assume the entire obligation. For this reason, financial planner Alan Moore, co-founder of the XY Planning Network, recommends choosing a home with a mortgage you can swing on one income. That can also be a huge help down the road in the event of unexpected illness or injury, since you’ll still be able to afford the monthly payments.

Before setting a housing budget, both partners need to have an honest conversation about the amount of debt they’re comfortable living with. Just because you can borrow the maximum amount doesn’t mean it’s a good idea. Stretch your combined budget too far, and any unexpected expense will likely have one of you coming up short when the monthly payments are due.

Put Your Agreement in Writing

Contact a real estate lawyer to prepare a written document, such as a property, partnership, or cohabitation agreement, that clearly outlines the full details of your arrangement, including what percentage of the home’s equity each partner is entitled to, especially if you contributed different sums to the down payment or mortgage balance, and what will happen to the property if you split up.

“The contract should specify whose name will be on the deed or lease, one or both, who will pay for what—I pay the utility bill, you pay the cable bill—etc.,” says Reardon. “It would be productive to note what happens if one party can’t pay. Will both parties move out? Will one party take over the payments for the other, if they are able to, then create a note receivable from the partner who can’t pay to the partner who can? Will this note be collateralized? It’s great to iron out these details in advance because it removes any doubt or emotions in the event things turn out badly.”

Title It Right

You and your partner must decide how you will own the home or take title. You have three options: One person can hold the title as sole owner, both of you can hold title as “joint tenants,” or you can share title as “tenants in common.”

Typically, you would want both parties to hold title, as putting the property in only one partner’s name leaves the other partner without equity in his own investment. (You’ll certainly want that separate written contract mentioned above if you go this route.)

If both partners sign the title as tenants in common, then each owns a specified percentage of the property. One person may own a 60% interest, while the other owns 40%, for example. This split is specified in the deed. If one partner dies, ownership will not automatically transfer to the other homeowner unless that person is named in the will; instead the deceased owner’s heirs will inherit his or her share.

When you hold title as joint tenants with right of survivorship, you are considered equal owners, and if one of you were to die, the other would automatically inherit the other’s stake and own the entire property.

Bottom line: No matter how you hold title, it is important that you and your partner enter this agreement with a complete picture of each other’s finances and a written contract outlining your desires for the property’s division should the relationship end.

Source: Time.com  July 1, 2015

How banks/lenders weigh your mortgage application

Understanding the Gross Debt Service Ratio (GDS) and the Total Debt Service Ratio (TDS) and how it affects your mortgage application.

Before a lender approves your mortgage application, they will attempt to quantify how your debt affects your finances and predict your ability to make mortgage payments. They measure your affordability using two ratios: the Gross Debt Service Ratio (GDS) and the Total Debt Service Ratio (TDS).

Gross Debt Service Ratio (GDS)

The GDS looks at the percentage of your income that is needed to cover your required monthly housing costs; this includes your monthly mortgage payments, property taxes,heating costs, and 50% of your condo maintenance fees (if applicable).Generally, this percentage must not exceed 32% of your gross monthly income, to qualify for a mortgage. For example, if your gross monthly income is $3,500,you should be spending less than $1,120 on monthly housing expenses.

Your GDS ratio max limit: $3,500 x 32.0% = $1,120

Total Debt Service Ratio (TDS)

The TDS ratio takes the GDS ratio one step further, by including ALL debt obligations into the calculation, such as car payments, credit card debt, lines of credit, and alimony (if applicable). The percentage of your income that is needed to coverall monthly obligations must not be greater than 40%. For example, if your gross monthly income is $3,500, you should not be spending more than $1,400 per month.

Your TDS ratio max limit: $3,500 x 40.0%= $1,400

Both the GDS and TDS are tools used to measure your credibility and risk. The guideline limits are enforced by the Office of the Superintendent of Financial Institutions (OSFI),which is the primary regulator of banks and other financial institutions in Canada.

Falling outside the limits

Can you still get approved if the bank determines your GDS and TDS ratios are just outside the upper limits?

“The limits to the GDS and TDS ratios aren’t set in stone; however, banks do treat them as a hard guideline,” said SteveLevine, a mortgage broker with True North Mortgage. “Every lender is a little different, in terms what they are willing to accept beyond the max limits. Some banks will accept TDS ratios of 41% or 42%, depending on the situation, so there is a bit of wiggle-room. However, no bank will accept a TDS ratio that is 5% above the limit.”

When asked on what mortgage applicants need in order to get an exception with high GDS/TDS scores, Mr. Levine says that consumers need “clean files” with strong credit scores.

“Mortgage brokers have unique relationships with lenders, so if I have a client that is slightly above the limit, I might call a mortgage underwriter with a particular bank and explain my clients’ case, so long as I believe the client has a quality file – one that the lender will find appealing.”

If you find yourself outside the GDS and TDS limits, you may also implement four strategies to lower your GDS and TDS percentages, before submitting your mortgage application:

1) Increase your down payment amount

2) Reduce your overall debt

3) Increase your gross household income (i.e. add on a spouse’s income)

4) Choose a less expensive property

Understanding your Gross Debt Service Ratio and Total Debt Service Ratio is important before you plan to buy a home, because these ratios are used to determine your credit worthiness to lenders.

#mortgagesmadesimple

Invest in real estate and in your kids

“I had originally shared this article back in spring of 2010, but I think it certainly deserves a reshare.” – The Ray C. McMillan Mortgage Team

Here’s one way to tackle the red-hot Canadian housing market: Get someone to buy you a home.

That someone would be your parents. According to a new survey from TD Canada Trust, 10% of Canadians are considering buying a condominium for their adult children. A year ago, only 5% of parents thought about buying the kids a condo.

“It could be something that the parents are looking at as a long-term source of income, letting their children live it in for now,” says Chris Wisniewski, associate vice-president of real estate and secured lending with TD.

It could also be that parents know condominium prices, like detached homes, have climbed to unprecedented levels, making it difficult for adult children to come up with a minimum 5% down payment, let alone the 20% needed to avoid costly mortgage default insurance.

Toronto condo research firm Urbanation Inc. says the average existing condominium in the city sold for $331,000 in the first quarter of 2010. Based on an average $369-per-square-foot price, that’s a 900-square-foot unit.

For a new one, prices averaged $443 per square foot in the first quarter, so about $400,000 for that same-sized condo.

Ms. Wisniewski says low interest rates are convincing parents to step up and buy their children homes. The condominium represents an attractive alternative to those parents because the costs are stable.

“They know what the maintenance costs will be,” she says. “[Parents] are thinking, ‘I’m not worried my children are too young to accept the responsibilities of home ownership if I set them up in an apartment. They don’t have to recognize the responsibilities of maintenance in an apartment.’ ”

Parents might also see a condominium as a way to get their kids to start a family. The survey found 36% of Canadians are willing to raise families in a condo.

“One of the reasons for that is affordability,” says Ms. Wisniewski. “Where are the new condominiums being built? They are being integrated in really nice existing neighbourhoods with all the infrastructure and all the schools and amenities.”

Brian Johnston, president of developer Monarch Corp.’s Canadian division, says he doubts families will ever be integrated into the condominium stock, but does agrees with the premise that parents are helping to buy housing for their children. He says parents often want to keep children close to them so they’ll chip in for a condominium in a nearby neighbourhood.

“How do we know they’re helping out? They tell us when they are writing the cheques for the deposit,” Mr. Johnston says.

Mr. Johnston said when it comes to recent immigrants to Canada, there is “lots of help” from family members to get that first home. “Condominiums are not inexpensive and they’re going to need that help, particularly if the younger ones have not had time to build up their finances.”

The builder has his own children and, based on today’s prices, he figures he’s going to have to lend a helping hand. “I don’t expect them to be able to buy a condo … before they are 30. That is just part of the deal [for parents],” says Mr. Johnston.

It’s not like Baby Boomers don’t have the cash. There have been endless studies that suggest the Boomers are set to inherit billions of dollars in the coming years from their parents.

Craig Alexander, deputy chief economist with TD Bank Financial Group, says there is no hard data to suggest how much parents are helping children, but they certainly have the financial capacity to lend a hand.

Canadians have $1.5-trillion invested in stocks and mutual funds with $500-billion of that figure in capital gains.

“The generation before the Baby Boomers were big savers and, as a consequence, there is a very large income transfer going to take place over time,” says Mr. Alexander, adding it makes sense that some of that money is going to end up in housing and real estate.

For first-time buyers facing rising rates and increasing prices, the helping hand couldn’t come at a better time — just ahead of tighter mortgage financing rules. Most of them probably hope their folks go from “considering” buying a condo to actually doing it.

Source: Garry Marr, Financial Post Friday, May 7, 2010

Should You Sell Your House or Renovate It? Either way, it’s an expensive, time-consuming proposition.

A home for sale and a man working on a home renovation project.

Your house may not have changed much over the years, but you probably have. Maybe you were single when you signed your mortgage papers, and now you’re married with children (or divorced and sometimes with your kids). Perhaps you’ve added some pets and wish there were amenities like cat doors. Or maybe that cute, little starter home is simply little and no longer cute to you.

However your mind gets there, many homeowners find themselves pondering the big question: Should I sell my home or stick it out and renovate?

There’s really no wrong or right answer. So much depends on the homeowner’s point of view and the house itself. But here are some factors that may tip the scales.

The math may sway you. Sell or renovate? If you’re leaning toward selling, but are toying with making upgrades to increase the sticker price, know this: A major renovation won’t always spell a big payoff.

“My wife and I just went through this debate,” says Bennie Waller, a professor of finance and real estate at Longwood University in Farmville, Virginia. They did their due diligence and collected estimates, but realized renovating would be very expensive. “We didn’t think we would ever be able to recoup the cost of the investment when it came time to sell,” he says.

So they decided to buy a new house – and keep the old one so they could rent it out for another income stream.

“I examined the decision purely from an investment perspective,” he says.

Or the math may not matter much. For some people, a house is their home for keeps. If you feel like staying put as long as you can, so that someday your adult kids can decide if they’d like to move in or sell their childhood home, recouping renovation costs may not matter to you. Especially if you’re young and plan to spend decades there.

Indeed, sentimentality can be a strong motivator to stay. Take it from Tracie Hovey, a Greencastle, Pennsylvania, resident and the president of a public relations and advertising firm. Though she has only lived in her house for a few years, she has no desire to pack up and go anywhere. She and her three children moved into the house when she remarried. Her husband had two of his own kids, and so they now live under a roof with five kids, ages 15 to 21. There are good memories here, and Hovey says they like their neighborhood and neighbors.

Still, it can get crowded. “We are short one bedroom when all the kids are home,” Hovey says. But it’s outside the house where the trouble really begins, especially during the summers and holidays, when the kids are on break.

Image result for images of renovate or sell

“When they are all home, it makes getting in and out of the driveway impossible, and I often find that I’m moving two cars just to get out of my garage,” Hovey says. Some of their kids end up parking on the street, which, she says, “can be irritating for our neighbors. It looks like we’re constantly having a party.”

So Hovey and her husband, a business executive, are currently shopping around for home contractors, hoping to build a three-car garage alongside the house and turn the existing garage into a master bedroom. She admits they’re a little nervous the home improvements might put the house above and beyond the value of neighboring homes, which could increase the pain come selling time.

It’s just one of those unwritten rules of real estate; it’s always easier to sell a house when it’s around the same price as the neighboring homes.

“But we aren’t the most expensive house in the neighborhood, even with the addition, so I think we would be all right,” she says. Plus, other houses in the area have three- and even four-car garages, so their home won’t be dramatically different than the others in the neighborhood.

You could buy and then renovate. That’s what Cosmo Macero Jr., a public relations consultant in Belmont, Massachusetts, did. His house seemed really large when it was just him and his wife. After two kids, it seemed a little smaller. When they decided to bring in Macero’s 89-year-old mother three years ago, they realized they had to make a change. They weren’t just housing another adult, but one with health care aides dropping by regularly.

But the cost of renovating was punishing. So Macero toyed with the idea of renovating his mother’s home and having them all move in there. That, too, was wildly expensive, and it didn’t feel like it would be a good investment. Macero’s main concern was spending a lot of money on improvements that wouldn’t be seen as improvements by anyone else.

“They might have become money pits for the sake of creating a living space that might feel very customized [and unappealing] to a buyer years down the road,” Macero says.

So he ended up leasing his home, since the market wasn’t great for selling, and purchased a new house with a vacant dentist’s office attached.

A dentist’s office? It sounds like the last thing a homeowner would want, but not in this case. “That office became the object of a major renovation that turned it into a wonderful in-law suite for my mother,” says Macero. His mother, now 92, loves her suite, which has its own entrance, thanks to its former purpose, and Macero believes the suite will be a selling point in the future.

Natalie Gregory, a real estate agent in Decatur, Georgia, took a similar path. She considered renovating her house but instead bought another one – and then renovated that.

“I work from home and wanted to have a basement where I could have a dedicated office, as well as a play room and media room for the kids. So we specifically looked for a home with a basement and a lot that would allow for expansion,” Gregory says.

She didn’t renovate her old house because it was built in the 1920s, and major changes would have adversely altered its character. The added amenities of a dedicated office, play room and media room, she says, would have added more to the home’s value and would have likely made it more difficult to sell in the future.

“You want to make sure you still have the value in your home,” Gregory says of considering a major renovation. “Some homes are what they are. It is right the way it is. For instance, if a home is a great two-bedroom, one-bath, maybe it needs to stay that way and you pass it on to the next people who need just that.”

So should you renovate or sell? Really, you could say it comes down to your frame of mind – and the frame of your house.

SOURCE: USNEWS.com  March 6, 2015 | 10:50 a.m. EST

Questions about Home in Peel?

The Home in Peel Affordable Ownership Program is designed to provide low-to-moderate income residents who are currently renting a unit in the Region of Peel (Brampton, Caledon or Mississauga) the opportunity to qualify for down payment loan assistance, up to $20,000.00 to buy a home in Peel Region.
This program will assist eligible applicants who have a total gross (pre-tax) household income of $87,800 or less to purchase a resale home in the Region of Peel that does not exceed a purchase price of $330,000.00.

To find out more on how to qualify, contact The Ray C. Mcmillan Mortgage Team – Mortgages Made Simple, or visit http://www.RayMcMillan.com to schedule your consultation.

Applicants are considered on a first-come-first-served-basis subject to ‪#‎qualification‬

Home in Peel Affordable Ownership Program

Region of Peel, Human Services
7120 Hurontario St.,
PO Box 634 RPO Streetsville
Mississauga, On L5M 2C2

How to Boost Your Credit Score at Any Age

Image result for images of boost my credit score

Improving your credit score can be more arduous at certain points in life — and inspires different approaches. CBS News — with the help of Credit Karma — has broken down average credit score by age, and the options for improving a credit score. We’ve added our advice and directed you to the parts of our Solution Center that can help you with your credit.

In Your 20s

  • Average credit score: 635.
  • What to do about it: Get a credit card without annual fees as soon as you can, which our Solutions Center’s Finding the Perfect Plastic page can help you do. “Ask Stacy: How Can I Get Credit Without Credit?” can also help. Then, pay off the bills on time every month and get another card after a few months of responsibly managing the first one. Having multiple cards builds up your “payment history” score category, which constitutes 35 percent of your FICO score.

In Your 30s

  • Average credit score: 645 to 646.
  • What to do about it: Continue paying off credit card bills on time every month and monitor your credit score carefully. In truth, this advice applies to your credit score at any age. Don’t apply for any other credit for at least six months before applying for any big loans like a mortgage, Greg Lull — Credit Karma head of consumer insight — told CBS.

In Your 40s

  • Average score: 648 to 657.
  • What to do about it: If you’ve built up a couple of decades of credit history responsibly, consider refinancing higher-interest loans to secure a better rate. Our Solutions Center can help you find the best rate on loans like mortgages, car loans and personal loans.

In Your 50s

  • Average score: 671 to 685.
  • What to do about it: If you have multiple credit card accounts, focus on the one or two that offer the best cash back or rewards. AS CBS reported: “There’s no downside to leaving no-fee cards outstanding, but you have enough credit history that it’s not going to hurt you if you cancel a credit card or two that charges an annual fee.”

In and beyond your 60s

  • Average score: 699 to 712 for consumers in their 60s, 728 for consumers in their late 70s.
  • What to do about it: Resist the temptation to use your high credit score to take on more debt than you can afford. Chances are, you are in a situation where you are living off a decreasing income or limited retirement savings. According to CBS: “Once you’re living on a fixed income from pensions, savings and Social Security, it’s a good idea to be paying down those debts.”

How does your credit score measure up to the average score for your age bracket? 

Source: MyDailyFinance.com By Karla Bowsher