Tag Archives: female buyers

What does a mortgage broker do? Your step-by-step guide

What does a mortgage broker do? A mortgage broker is a licensed individual who helps you select the mortgage product that best suits your financing needs. They do this by comparing mortgage products offered by a variety of lenders. A mortgage broker acts as the quarterback for your financing, passing the ball between you, the borrower, and the lender.

To be clear, mortgage brokers do much more than help you get a simple mortgage on your home. They can help you access equity, refinance current properties, purchase investment properties, and a myriad of other tasks to support your financial well-being.

When you go to the bank, the bank can only offer you the products and services it has available. A bank isn’t likely to tell you to go down the street to its competitor who offers a mortgage product better suited to your needs. Unlike a bank, a mortgage broker often has relationships with dozens of lenders (oftentimes some lenders that don’t directly deal with the public), making his chances that much better of finding a lender with the best mortgage for you.

Now that you have a better understanding of what does a mortgage broker do, let’s look at how a typical mortgage application looks.

Step-by-step guide to a mortgage application

What does a mortgage broker do to win your business? Your relationship with a mortgage broker will usually start with an introduction from someone you trust like a family member or friend. Or, you may find your mortgage broker online. You’ll often set up an initial phone call to go over your mortgage financing needs.

Your mortgage broker will typically ask you some basic questions about how much you’re looking to spend on a property, how much you earn and how much you intend to put down on the property. If you’re looking to refinance, access equity, or obtain a second mortgage, they will require information about your current loans already in place.

Once your mortgage broker has a good idea about what you’re looking for, he can hone in on the best mortgage solutions.

In many cases, your mortgage broker may have almost everything he needs to proceed with a mortgage application at this point. If everything goes well, he’ll ask you to provide some documentation, such as a letter of employment, notices of assessment and pay stubs to submit your application to a lender.

If you’ve already made an offer on a property and it’s been accepted, your broker will submit your application as a live deal. Once the broker has a mortgage commitment back from the lender, he’ll go over any conditions that need to be met (an appraisal, proof of income, proof of down payment, etc.).

Once you’ve completed the mortgage commitment, your broker will usually submit the paperwork and any additional documentation to the lender to sign off on. Once all the lender conditions have been met, your broker should ensure legal instructions are sent to your lawyer. Your broker should continue to check in on you throughout the process to ensure everything goes smoothly.

This, in a nutshell, is how a mortgage application works.

Why use a mortgage broker

You may be wondering why you should use a mortgage broker. Isn’t it better to just go down to the local bank branch and get help with your financial needs there?

The main advantage of using a mortgage broker is that they deal with dozens of lenders and hundreds of products. Your broker should be well-versed in the mortgage products of all these lenders. This means you’re more likely to find the best mortgage product that suits your needs.

If you’re an individual with damaged credit or you’re buying a property that’s in less than stellar condition, this is where a broker can be worth their weight in gold. Since they have access to many lenders, they are more likely to find you a lender that can assist you, unlike the banks, which may turn down your mortgage application or offer your a higher interest rate.

Even if you’ve been offered a decent mortgage from your bank, using a mortgage broker means you’re doing your own due diligence. Your broker may be able to find you a better lending solution than your bank is offering. You won’t know unless you pick up on the phone and contact a mortgage broker.

Free service: When you work with a mortgage broker, in most cases you won’t have to pay them a dime. That’s because your broker is usually compensated directly by the lender. You can get unbiased mortgage advice at zero cost – it doesn’t get any better than that!

Just be aware that some lenders offer more compensation than others. You’ll want a broker who is honest and will put you with the best lender for you, despite another lender paying a higher finder’s fee.

Save time and money: By using a mortgage broker, not only can you save money, but you can save time. When you shop on your own for a mortgage, you’ll need to apply for a mortgage at each lender. A broker, on the other hand, should know the lenders like the back of their hand and should be able to hone in on the lender that’s best for you, saving you time and protecting your credit score from being lowered by applying at too many lenders.

Negotiate on your behalf: Your broker can negotiate on your behalf with various lenders to help find you the best mortgage solution. Be sure to ask your broker how many lenders he deals with, as some brokers have access to more lenders than others and may do a higher volume of business than others, which means you’ll likely get a better rate.

This was an overview of working with a mortgage broker. By working with a broker, you’ll better your chances of negotiating a better deal on your mortgage with a lender of your choosing.

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Down Payment Assistance Programs Across Canada

Canadian down payment assistance programs help first-time home buyersSo many young people want to build home equity and get out from under their landlord’s thumb.

But they can’t. They don’t have the down payment to qualify for a mortgage.

For many modest-income Canadians, saving up the 5 percent minimum down payment (or 20 percent if you want to avoid CMHC insurance) can take years—many, many years.

While some are able to rely on gifts from parents/family (39% of first-time buyers according to a 2018 Mortgage Professionals Canada study) or loans from family (25%), or RRSP withdrawals (38%) to make their down payment, those options aren’t available to everyone.

That’s where government down payment programs come in. Scattered across Canada, these little-publicized municipal and provincial programs are helping first-time home buyers fund their down payments and make the transition from renter to owner.

Since most people don’t know about them, their uptake is typically low. When the B.C. government launched its program in 2017, for example, it thought 42,000 residents would participate in the first three years. After nine months, only 1,400 had done so.

To some onlookers, giving buyers government money to buy a house may seem a bit too socialist, but municipalities have an interest in transitioning financially stable renters from apartments to houses. Among other reasons, it frees up rental units and grows their property tax base.

To help homebuyers find such assistance, the Spy has rounded up some of the more popular programs. What follows are grant or loan programs that provide a portion of the down payment to qualified borrowers. Note that this list isn’t exhaustive and that the status of these programs change regularly. Moreover, once quotas are reached many such programs end, so contact the source for the latest info.

 

Alberta

Program: PEAK Housing Initiatives (formerly PEAK Program)
Provider: Joint initiative between Trico Residential, the Government of Alberta Municipal Affairs, CMHC and Habitat for Humanity
Details: PEAK housing units are priced at market value and recipients must be able to qualify for and hold a mortgage. Once approved for the program, PEAK provides a second mortgage for either a partial or full down payment up to a maximum of 5 percent of the purchase price. PEAK has so far helped 111 individuals and families purchase a home of their own.
How to apply: http://www.peakinitiative.ca/

Program: Attainable Homes (specific to Calgary only)
Provider: The City of Calgary
Details: This program has been in place since 2009 and is geared towards moderate-income Calgarians. Successful applicants must be able to contribute $2,000 towards the downpayment of their home, and the Attainable Homes program contributes the rest.  If and when the homeowner sells the home, the growth in the home’s value is split between the homeowner and the program, with that money reinvested to assist other homebuyers. The longer the homeowner remains in the house, the more their share of the appreciation increases.
How to apply: https://attainyourhome.com/

 

British Columbia

The province of B.C. ended its Home Owner Mortgage and Equity Partnership on March 31, 2018. It has no widely available down payment assistance programs at this time.

 

Manitoba

Program: Rural Homeownership Program
Provider: Manitoba Housing
Details: This program is limited to those renting a home owned by Manitoba Housing in selected rural communities or those who would like to purchase a vacant home owned by Manitoba Housing. Applicants must have a maximum household income of $53,441 if they don’t have children, and $71,255 if there are children or dependents. The program has two components, a loan worth 10 percent of the purchase price, which is forgivable on a pro-rata basis over five years. Another 15 percent loan is forgivable after 15 years of continuous ownership and occupancy of the property.
How to apply: http://www.gov.mb.ca/housing/progs/homeownership.html

 

Saskatchewan

Program: 3% Down Payment Assistance Program
Provider: National Affordable Housing Corporation
Details: Provides Saskatchewan homebuyers with a 3 percent non-repayable down payment assistance grant towards the purchase of a home from one of the NAHC’s partner housing providers. Saskatchewan households with incomes less than $90,000 per year are eligible for financial support under this program.
How to apply: http://nahcorp.ca/assistance/nahc-3-down-payment-assistance-program/

Program: Mortgage Flexibilities Support Program
Provider: City of Saskatoon, CMHC and the Saskatchewan Housing Corporation
Details: This program is for designated projects in the city of Saskatoon and provides qualifying homebuyers with a 5 percent down payment grant for the purchase of a home. The household income limit must be less than $69,975 for one person and $74,640 for two people. Their maximum net worth must also be less than $25,000.
How to apply: https://www.saskatoon.ca/services-residents/housing-property/incentives-homebuyers

 

New Brunswick

Program: Home Ownership Program
Provider: Government of New Brunswick
Details: This program offers assistance in the form of a repayable loan worth up to 40 percent of the purchase price of an existing home, or a maximum of $75,000 for new builds. It’s available to those with household incomes below $40,000. Applicants must be first-time homebuyers or be living in a sub-standard housing unit; have been living in New Brunswick for at least one year prior to application; and have a good credit rating and meet all financial institution lending requirements for obtaining a first mortgage.
How to apply:http://www2.gnb.ca/content/gnb/en/services/services_renderer.8315.Home_Ownership_Program.html

 

Newfoundland & Labrador

Program: Home Purchase Program (HPP)
Provider: Government of Newfoundland and Labrador
Details: This program will remain open over 2018/19 until funding has been fully committed to up to 330 homebuyers. Grants of $3,000 are available to qualifying individuals and families to assist with the down payment of a new home valued up to $400,000 (including HST).
How to apply: http://www.nlhc.nf.ca/programs/programsHpp.html

 

Nova Scotia

Program: Down Payment Assistance Program
Provider:
 Housing Nova Scotia (Government of Nova Scotia)
Details: This is a pilot program to assist Nova Scotians with a household income of $75k or less. The program offers an interest-free loan of up to 5 percent, to a maximum purchase price of $280,000 in the Halifax Regional Municipality and $150,000 elsewhere in the province. The loans will range from $7,500-$14,000 and must be repaid in 10 years. More than 150 first-time buyers benefitted from the program in its first year, and it will remain open until March 31, 2019.
How to apply: https://housing.novascotia.ca/downpayment

 

Ontario

Housing programs in Ontario are administered by municipalities based on the premise that they know their community’s needs best. Below is a selection of just several first-time homeowner assistance programs from some key municipalities.

Barrie (Simcoe County)

Program: Homeownership Program
Details: This program offers 10 percent down payment assistance in the form of a forgivable loan.
There is presently a waiting list, but applicants are still encouraged to apply. A percentage of available funding is designated for applicants currently living in Social Housing or those who self-identify as Aboriginal households.
More details: http://www.simcoe.ca/dpt/sh/apply-for-the-homeownership-program

Hamilton

Program: Homeownership Down Payment Assistance Program
Details: This program provides support to low- and moderate-income residents who qualify for a mortgage with a maximum home price of $375,000. To qualify, applicants must have a maximum household income of $80,000,
More details: https://www.hamilton.ca/social-services/housing/homeownership-down-payment-assistance-program

Kitchener (Region of Waterloo)

Program: Affordable Home Ownership program
Details: This program provides individuals and families with a loan of up to five percent of the purchase price of a home (up to a value of $386,000). Applicants must currently renting in the Region of Waterloo, be able to qualify for a mortgage, and have a maximum household income of $90,500.
More details: https://www.regionofwaterloo.ca/en/living-here/funding-to-help-buy-a-home.aspx

 

Prince Edward Island

Program: Down Payment Assistance Program
Provider: Government of Prince Edward Island
Details: This program assists Prince Edward Islander’s with modest incomes by providing a repayable loan of up to five percent of the purchase price of a new or existing home to a maximum price of $11,250. The loan amount must go towards the down payment and not towards financing or other closing costs. The loan bears a fixed interest rate of 5% per annum. The purchase price of the home must be no more than $225,000.
How to apply: https://www.princeedwardisland.ca/en/information/finance-pei/down-payment-assistance-program

 

Quebec

Program: Accès Condos
Provider:
 Société d’habitation et de développement de Montréal (SHDM)
Details: Launched in 2005 by the SHDM, Accès Condos has provided more than 3,600 affordable units that promote home ownership throughout Montreal. Qualifying buyers must make a minimum $1,000 deposit and receive a 10% purchase credit, which is used for the down payment on the house in an approved development.
How to apply: https://accescondos.org/en/

 

financial support

National Non-Loan Programs

First-Time Home Buyers’ (FTHB) Tax Credit

Provider: Government of Canada
Details: The FTHB Tax Credit offers a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009. For an eligible individual, the credit will provide up to $750 in federal tax relief.
Link: http://www.cra-arc.gc.ca/gncy/bdgt/2009/fqhbtc-eng.html

 

Home Buyers’ Plan (HBP)

Provider: Government of Canada
Details: The Home Buyers’ Plan (HBP) is a program that allows you to withdraw up to $25,000 in a calendar year from your registered retirement savings plans (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability.
Link: http://www.cra-arc.gc.ca/hbp/

 

GST/HST New Housing Rebate

Provider: Government of Canada
Details: You may qualify for a rebate of part of the GST or HST that you paid on the purchase price or cost of building your new house, on the cost of substantially renovating or building a major addition onto your existing house, or on converting a non-residential property into a house.
Link: http://www.cra-arc.gc.ca/E/pub/gp/rc4028/rc4028-e.html

Source: RateSpy.com – By  on November 26, 2018

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How Long Does It Take to Improve Your Credit Score Enough to Buy a Home?

How long does it take to improve your credit score? If you’re hoping to buy a home, having a good credit score is key, since it helps you qualify for a mortgage. So if your credit score is low, knowing how long it takes to raise it to home-buying range can help you plan.

While raising a credit score can’t happen overnight, it is possible to raise your credit score within one to two months. However, it could take longer, depending on what’s dragging down your score—and how you handle it. Here’s what you need to know.

How long does it take to raise a credit score?

First off, what’s considered a good score versus a poor one? Here are some general parameters:

  • Perfect credit score: 850
  • Excellent score: 760-849
  • Good credit score: 700 to 759
  • Fair score: 650 to 699
  • Low score: 650 and below

While it varies by area and type of loan, generally lenders will look for a score of 660 or higher to grant a mortgage (here’s more on the minimum credit score you need for a home loan).

If you’re looking to boost your credit score fast, here are some actions you can take.

Correct errors on your credit report

Correcting errors on your credit report is a relatively quick way to improve your credit score. If it’s a simple identity error—like a credit card that’s not yours showing up—you can get that corrected within one to two months.

If it’s an error on one of your accounts, though, it could take longer, because you need to involve your creditor as well as the credit bureau. The entire process typically takes 30 to 90 days. If there’s a lot of back-and-forth between you, the credit bureau, and your creditor, it could take longer.

The first step to correcting errors is to get a copy of your credit reports from TransUnion, Equifax, and Experian (the three major credit bureaus), which you can do at no cost once a year at annualcreditreport.com. Next, review them for errors. If it’s an error on one of your accounts, you must refute that error with the bureau by providing documentation arguing otherwise. For example, if you paid a credit card on time and the card issuer is reporting a late payment, find a bank statement showing that you paid on time.

Credit bureaus typically have 30 days to investigate the error. If they agree that it’s an error, they will remove the item. The credit bureau may also ask for additional information or ask you to discuss the information with the creditor involved. If that’s the case, stay on top of communications with your creditor so you can get things resolved as quickly as possible.

Deal with delinquent accounts

Bringing delinquent accounts current and settling accounts that are in collections can also boost your score fairly quickly. Once the creditor or collection agency reports your account update, you should see a positive bump in your score. Keep in mind, though, that your late payment history will remain on your credit report for seven years.

If you have bad accounts that have been on your report for six years or more, you may not want to worry about settling them or bringing them up to date. This can re-age the account, and if you fall behind again, it will stay on your credit report for another seven years.

“Make sure you don’t re-age these accounts, because they’re going to drop off soon,” says Nathan Danus, CDMP and Director of Housing and Community Development at DebtHelper in West Palm Beach, FL. Negative information typically “falls off” your credit report after seven years, so if you’re close, it’s best to just wait it out.

Lower your credit utilization

Credit utilization refers to how much you owe compared with the amount of credit you have available. For example, if you have a $10,000 credit limit across all your credit cards and you have balances totaling $9,000, you’ve utilized 90% of your credit. This drags down your credit score.

“What these consumers often need to do is pay down the balances on their existing credit accounts, which can be a challenge if they’ve allowed the balances to creep up over time,” says Martin H. Lynch, compliance manager and director of education at Cambridge Credit Counseling of Agawam, MA. “The ratio of what’s owed to the amount of credit available represents 30% of the consumer’s score, so rapid improvement is possible if there’s a large amount of money available to pay down balances.”

Linda L. Jacob, a financial counselor at Consumer Credit of Des Moines, IA, recommends paying down balances to below one-third of your credit line. Any payments you make will be reflected on your credit report as soon as your creditors report your payment to the credit bureaus. Credit scores are updated on an ongoing basis, and creditors typically report once per month, so if you make a payment that lowers your credit utilization, that should be reflected on your credit score within two months.

If you’re regularly using your credit card but you want to keep your utilization low so you can apply for a mortgage, you may want to pay down your credit-card balance on a weekly or biweekly basis. This ensures that your balance is as low as possible whenever your creditor reports your payment history to the credit bureaus.

You can also decrease your card utilization by getting more credit, but this approach can backfire. Consumers sometimes assume that by getting more credit, their credit score will improve. If you have a $3,000 balance on a card with a $4,000 credit limit and you’re approved for a new credit card with a $1,000 limit, you now have $5,000 in total credit lines. Instead of using 75% of your available credit, you’re now using 60%. That’s better, right?

Not necessarily. “Just applying for credit lowers your credit score, and that effect lasts for months,” warns Mike Sullivan, personal finance consultant at Take Charge America in Phoenix, AZ. “For the first few months after you apply for credit, your credit score may actually go down.”

You can try getting around this by asking a credit limit increase on a card you already have. Be sure to ask whether they do a “soft” credit pull rather than a “hard” credit pull, though, since hard credit inquiries are the ones that impact your credit. A creditor may be willing to give you a credit line increase with a “soft” pull, which will not hurt your credit score.

Soft inquiries are for background purposes only. For example, a credit card company may do a soft pull to see if you’re eligible for certain credit card offers, or an employer may do a soft pull before offering you a job. Soft pulls can be done without your permission and do not impact your credit score. Hard pulls require your permission, and are done when lenders or credit card companies are assessing whether to grant you a loan or line of credit.

How to raise your credit score for the long haul

Once you’ve corrected errors, settled your delinquent accounts, and brought your credit utilization under control, the only other things that will improve your score are time and developing good payment habits. For example, if you tend to forget to make payments, you can set up automatic payments so you don’t forget.

And here’s some good news for people with bad credit: Generally, people with the lowest scores will see the biggest gains the fastest.

“It’s a lot like dieting,” says Sullivan.

For instance, if your score is 550, “you could probably get it up 30 points in a matter of a couple months, if you’re really dedicated and really careful,” he explains.

On the other hand: “If your credit score is already a 750 and you’re trying to get it to 780, that can take double or more the time.”

Still, it’s worth doing whatever you can to get the best interest rate possible.

For more smart financial news and advice, head over to MarketWatch.

Source: Realtor.com –   | Nov 28, 2018 Melinda Sineriz is a writer living in Bakersfield, CA. She writes about personal finance and real estate for several websites and businesses.
The realtor.com® editorial team highlights a curated selection of product recommendations for your consideration; clicking a link to the retailer that sells the product may earn us a commission.
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Mortgage stress test vs. high interest rates: which has impacted the Canadian housing market more?

Photo: James Bombales

When the Bank of Canada decides to hike interest rates, the impact of the move tends to peak six quarters after the fact. But, according to one economist, the effect of the current rising-rates environment is already making itself felt, at least when it comes to the Canadian housing market.

“Even though the first rate hike of this cycle, let alone the subsequent moves, was administered less than six quarters ago, there’s already pain being felt,” writes CIBC economist Royce Mendes, in his latest note.

The BoC hiked the overnight rate to 1.75 percent in October, and is widely expected to do so again in the new year. And while there’s been some debate among industry experts about whether higher interest rates or the stricter mortgage rules introduced in January are to blame for a slowdown in Canadian housing activity, Mendes says it’s the former that is dealing the biggest blow.

“It’s difficult to identify how much of the recent slowdown in housing activity has been due to tighter mortgage rules versus higher interest rates,” he writes. “But, based on prior estimates of the effects of the rule changes alone, the slowdown in lending has been more precipitous.”

That’s because, while the market has largely adjusted to the effects of stricter mortgage rules over the course of the year, it’s only now starting to contend with the impact that higher interest rates will have on would-be homebuyers.
“It’s hardly a stretch then to say that the housing market is already feeling some pressure from rate hikes, particularly since many mortgages are now rolling over at higher rates for the first time in a quarter-century,” writes Mendes.

That could mean that, heading into 2019, housing activity will cool even further, as the effects of the rising interest rate environment make themselves known.

“Given the lags in monetary policy, even as the effects of the mortgage rule changes wane on a year-over-year basis in the months to come, the impacts of rate hikes will actually become more apparent.”

Source: Livabl.com- 

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Homeowners’ typical mortgage payments are rising much faster than home prices

Homeowners’ typical mortgage payment is rising much faster than home prices, according to new data from CoreLogic.

The US median sale price has risen by just under 6% over the past year, according to CoreLogic. However, the principal-and-interest mortgage payment on a median-priced home has spiked by nearly 15 percent. And the trend looks set to continue – CoreLogic’s Home Price Index Forecast predicts that home prices will rise 4.7% year over year in August 2019. Mortgage payments, meanwhile, are forecast to have risen more than 11% in the same time period.

One way to measure the impact of inflation, mortgage rates and home prices on affordability is to use the so-called “typical mortgage rate,” CoreLogic said. That’s a mortgage-rate-adjusted monthly payment based on each month’s median US home sale price, calculated using Freddie Mac’s average rate on a 30-year mortgage with a 20% down payment.

“The typical mortgage payment is a good proxy for affordability because it shows the monthly amount that a borrower would have to qualify for to get a mortgage to buy the median-priced US home,” said CoreLogic analyst Andrew LePage.

While the US median sale price in August was up about 5.7% year over year, the typical mortgage payment was up 14.5% because of a neatly 0.7-percentage-point hike in mortgage rates over the time period, LePage said.

Source: Mortgage Professionals America – by Ryan Smith18 Nov 2018

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The fast track to your first home

Thinking about buying your first home? Saving for a down payment sooner rather than later is easier than you think. Here are nine strategies to boost your financial fitness and fast-track your way to homeownership.

  1. GAUGE YOUR FINANCIAL FITNESS

You need an honest assessment to know which areas of your financial house are on track and which areas need improvement. Get your Financial Fitness Score by taking the Genworth Canada/Canadian Association of Credit Counselling Services Financial Fitness survey at caccs.ca.

  1. CHECK YOUR CREDIT

Order a copy of your credit report from TransUnion or Equifax so you can check your credit score and history, as well as ensure there are no errors. Contact the credit report-ing agency if you identify any mistakes.

  1. BUMP UP YOUR CREDIT SCORE

The higher your credit score, the better the lending terms you’ll receive, whether for a mortgage, car or consumer credit loan. The most effective ways of improving your credit score are paying your bills on time, dramatically paying down – or, better yet, clearing – your credit card balance each month and repaying any loans.

  1. CREATE A MONTHLY BUDGET – AND TRIM THE FAT

Find a template online or download a household budgeting app to your smartphone. How much do you spend each month on rent, utilities, transportation, groceries, child-care, insurance, gym memberships and clothing? You need accurate info about your income and expenditure to evaluate how much house you can afford. At the end of the month, you’ll be able to spot patterns and identify the most effective places to save money, whether your spending vice is a two-lattes-per-day habit or too many taxi rides each month.

 

  1. DETERMINE HOW MUCH HOUSE YOU CAN AFFORD

Use your budget to evaluate how much of a mortgage you can afford. A bank may approve you for monthly mortgage payments of up to 32 per cent of your gross monthly household income, but can you afford it? Work out what your future expenses will look like each month (mortgage + insurance + utilities + taxes + other expenses). Do you make enough to cover this – with enough left over to save? If not, maintain breathing room by opting for a more affordable first home.

  1. START “PAYING” YOUR MORTGAGE

If your future mortgage payments will cost approximately $1,800 per month and you currently pay $1,300 in rent, now’s the time to start setting aside an extra $500 per month, so you can get into the habit of budgeting $1,800 per month for shelter. That will grow your savings faster.

  1. BULK UP YOUR INCOME

Another way to hold on to your money is to make more of it! Consider a second job, extra hours or selling those collectibles on eBay. (Bonus: Fewer boxes on moving day!)

  1. PAY YOURSELF FIRST

Get serious about paying yourself first by setting up bi-weekly automatic transfers from your chequing account to your savings account. Beyond the down payment and closing costs associated with a new home, homeownership might come with surprise expenses like a leaky roof and a broken washing machine. A healthy savings account will make you less stressed about those possibilities.

  1. CONSIDER PROFESSIONAL ADVICE

Once you’re on track, see a financial advisor to work out short- and long-term strategies for your ongoing financial goals, from homeownership to retirement savings. You’ll get more from the meeting if you have already determined your goals and actions.

Source: HomeOwnership.ca

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MultI-generational home purchases

Buying a house with Mom and Dad? In competitive housing markets, this seemingly unconventional choice can be a smart strategy for attaining homeownership sooner. That said, any financial partnership requires planning. Avoid conflict by clarifying roles and formalizing financial agreements. Here are two common shared homeownership scenarios, along with tips for making a financial arrangement that works for everyone.

FAMILY HOMEOWNERSHIP SCENARIO NO. 1:
Housing your child during university

Why: Renting can be expensive. Some parents may prefer to buy a home for their child while they attend university or college. This option allows families to build their own equity, rather than pay a landlord rent for three to five years or more.

Important considerations:
  • Size & lifestyle: Choose a home that is appropriate for a single young adult, such as a turnkey condo or small bungalow.
  • Future plans: What will happen once your child graduates? Will the property be sold? Will your child take over the mortgage payments? Discuss future plans openly to avoid unpleasant surprises.
  • Written agreement: Use a written agreement to solidify co-ownership responsibilities and expectations, including who is financially responsible for specific homeownership expenses (i.e., mortgage, utilities, taxes and so on), what happens if payments are missed, and what happens if either party wishes to exit the financial partnership.

Ask your mortgage professional about… Genworth Canada’s Family Plan program. This program enables qualified buyers with excellent credit to assist an immediate family member with their home purchase. To qualify, your dependent must have good credit, even if they lack sufficient income to meet typical mortgage qualification standards. The home must meet certain quality criteria, and qualified buyers can make their purchase with as little as five per cent down.

FAMILY HOMEOWNERSHIP SCENARIO NO. 2:
Parents and adult children living together

Why: Forget fleeing the nest. Increasing numbers of adult children are buying a bigger nest with Mom and Dad (maybe even Nan and Gramps too!). According to the 2016 census, a whopping 403,810 households across Canada are multi-generational households with at least three generations of the same family under one roof. Whether you’re inspired by tradition, cost savings or convenience, shared homeownership can be a prudent and fulfilling decision.

Important considerations:
  • Size & lifestyle: Upfront, family members should be on the same page about living arrangements. Will this be a one-household home with shared living quarters? Or will the property be divided into suites, with each household residing in a self-contained unit?
  • Future plans: Involve the whole family in discussions around shared homeownership and include adult siblings who are not buying in with you. Be frank about family assets and the future care needs of older relatives. Is there an expectation that you shoulder this responsibility due to proximity?
  • Written agreement: As with any shared homeownership situation, clarify co-ownership responsibilities and expectations in a written agreement.

Ask your mortgage professional about… Genworth Canada’s Progress Advance program, which helps qualified homebuyers finance a custom-built home with as little as five per cent down. Dual master suites? A bachelor-size nanny suite? An approved home builder or contractor can create a house perfect for your multi-generational family’s needs.

Or, if you’d prefer to renovate a resale home, ask about Genworth Canada’s Purchase Plus Improvements (PPI) program, which can finance home improvements and combine them with your mortgage in one easy mortgage, also with as little as five per cent down. Check out our PPI calculator and guide at homeownership.ca/ppi.

Finally, if your family has immigrated to Canada within the last five years, consider Genworth Canada’s New to Canada program. Don’t let a lack of Canadian credit history derail your family’s homeownership dreams. The New to Canada program can help qualified borrowers who have full-time employment and a strong history of rent and utility payments in Canada buy their family home with as little as five per cent down.

Source: HomeOwnership.ca 

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