Higher Capital Targets For CMHC

by Darrin DeRoches March 20 - 26, 2014

Mortgage rates have stayed low for the past three years, and they will stay low into the near future, so things seem bright for buyers. The lower the rate, the higher you will be approved for and the bigger the property you can buy. Sounds good but the Canadian Mortgage and Housing Corporation has decided to raise their fees to insure your home. Most people buying a property are not even aware of this insurance and do not even consider it when buying a home. So how does it work?     Quite simply, every home must be insured by CMHC if you put down less than 20 per cent on a property. This relates to the majority of home buyers. There are a couple of other insurance companies but CMHC are the standard. If they do not approve of the deal, you do not get a mortgage. It is that simple. They can kill a deal for many reasons and if they deem the deal to be “shaky” – no insurance and no home. So what is the big deal about the increase?     As of May 1st 2014, the premium will go up from 2.75 per cent to 3.15 per cent on the average 5 per cent down deal. Their website then goes on to say it will only cost $5 more per month on the average mortgage – so who really cares? All of this is really misleading. The average homebuyer is only putting down 5 per cent when buying, and since the average home will hit $400,000 this year, what is this slight increase going to cost you? Around $1,600 on the deal which really increases the monthly mortgage about $8 per month. Currently you would pay about $11,000 of insurance on this deal and your premium will now be around $13,600 for insurance on an average sale of $400,000 property. Does this not seem to be a lot of money for insurance you will never use and the CMHC never really pays out?     We went through a housing crisis a couple of years ago so you would think that the insurance company must have paid out millions of dollars on this disaster. If there is a huge flood or catastrophe, insurance companies have to pay out millions if not billions. The CMHC explains the increase this way: “The higher premiums reflect CMHC’s higher capital targets” said Steven Mennill, CMHC’s Vice–President, Insurance Operations. This statement should be written in simpler language like this “We want more money, so we are raising our rates”. But don’t worry, we will just roll these costs into your mortgage so it is only like five bucks more a month. The reality of it is that this extra $1,600, which is about $13,000 on the average mortgage, is going to cost you about $20,000 over the course of your mortgage. But just look at it as an extra five bucks per month to the CHMC since they want “higher capital targets”. Your only option is to put down 20 per cent — so come up with another $60,000 on an average deal to save the insurance premium of $20,000 over 25 years. V     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at sold@uniquerealty.ca.

Ten Steps To Making More

by Darrin DeRoches March 13 - 19, 2014

This winter has been brutal for weather but the real estate market is still hopping. Next week it is officially spring and the weather may not be co–operating but the market is. The phones have been ringing all week and once March break is over the market will be in full spring fling. So what should you be doing?     Get your property ready for the spring market by doing these ten steps. Begin by donating something. Take a look around your home and make a pile of clothes, furniture — whatever — and donate it away. You will feel good about it and your home will begin the positive purge.     Next, trash all of the stuff that is not worth donating and get it out of your life. The third step is to sell something. It may too valuable to just donate so list it online or have a garage sale. The money you will raise from this will give you a “piggy bank” to invest in the supplies you need to do the next steps. Fourth thing to do is paint something. Take the money you made and freshen up a room or the whole house. This fresh step will give you pride in your property and it will show once you put the property up for sale. Once that is done, clean something. It may just be all the windows that are dirty from the harsh winter, the yard from the ice storms or the winter grime from all those grey days. Get serious and scrub the property clean and once you’re done — do it again. A clean property sells faster than a “staged property”. That said, now it is time to do the sixth step and organize — it can be your kitchen cupboards or your basement storage. Make things neat and tidy so that your property looks ready to move into.     Next, renew something that is tired. It can be a simple project but a little update goes a long way. Now try to update something in the home. By adding a new trend or even colour, a simple change can bring todays style into your home and give potential buyers the push to see how the home can be updated. The ninth step is to plant something. Bring in a little colour and freshness to your property. It can be a simple pot or a whole new yard of grass. Take a look around and update your landscape.     Lastly, take a look around your now clean, freshly painted, de–cluttered property and spend the last dollars you made by selling off your unwanted items and buy a new “upgrade”. Reward yourself for the hard work and buy something that may upgrade the property or better yet something that you can take to the new property as yours will be selling for top dollar since you did all ten steps. Come on sunshine! V     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at sold@uniquerealty.ca.

Seller List For Spring

Sellers List For Spring

by Darrin DeRoches March 6 - 12, 2014

I wrote about what the buyers are doing to get ready for the spring market and now we can focus on what the sellers need to do. First thing you need to do is declutter.  This winter has been brutal and we are stuck in the house so you might as well use the time to start throwing out the accumulation of stuff. Get everything packed up and ready to either be stored or, better yet, thrown out once the weather clears.  The second thing to do is fix up all the little bumps and scrapes that your house has weathered over the winter.  The little fix ups will make it really easy once the market starts to heat up and you will be ready the minute it stops snowing.  Once the snow finally melts, clean up from the ice storm and make your outside as tidy as the inside.  Then call you broker and get ready to list early.     Homes are still selling fast in this cold, miserable market and once the weather clears up, the market is going to be fast and furious.  Think of it as cabin fever and once the buyers get ready to buy, it will be early spring. Talk to your agent about the best way to market your property and how they will be able to control the sale in a fast paced market.  If you make a mistake it may cost you dearly.  You only come on the market once and you really want to hit it the right way.  A great broker knows how to control the sale and get top dollar without getting greedy and pissing off the buyers.  I once sold a cottage in competition for top dollar after sitting on the market for the whole winter with no calls. Timing and marketing to the right market made a huge difference to the bottom line and profit.     You should be contacting your broker soon so that they can help you prepare your property for the spring market.  The weeks following March Break are when everyone has settled down from their holidays and are looking to make a move.  If your house has a pool, you should be booking the earliest opening so the property will stand out amongst the others.  No one has to swim in it but it will sell your home over others with a pool covered up. If your roof has been leaking in the fall, book a roofer now so that you can have a new roof to sell the property.  All these trades people have been waiting all winter to make money and you should book them now or you will be waiting to set up your property for the spring market and may in fact miss the best opportunity be waiting to the last minute.  Take the time now to get things ready and booked so that your property will shine amongst all of the others that are going to hit the market when spring comes. V     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at sold@uniquerealty.ca.

Debt And Real Estate

by Darrin DeRoches February 27 - March 5, 2014

I have written about personal debt and real estate a few times in the last year but a new wrinkle has surfaced and it may help more people out of tough times so I think I should write about it.  Debt is a part of life and when it becomes overwhelming, people look at their home as a piggy bank. The problem is that more and more people have “sucked out” all of the equity from their homes and they are left with no assets. The phones are ringing and collectors are knocking on your doors but you still think everything will be alright.     Banks will lend you up to 90 per cent of the value on your home and in some cases they over extend that amount. If you default on your mortgage for three consectutive months, they will take the house back.  In most cases the bank does not want to take your house but most people just try to avoid the issue until it is too late to take care of the problem.  This is when they will call an agent and try to sell their house fast.  Then they try to reduce the commission since there is no money left in the house and everyone is in a panic.  People will also call the signs on poles that say they will buy your house for cash today but of course they will not pay what the home is worth and this also is a mistake.  Some people call lawyers but they also want to get paid and this is usually a waste of time.  So what should someone do when they are in such a situation?     Negotiate. The bank wants to get paid. The credit card companies want to get paid.  The government wants to get paid.  So negotiate with them and find a solution for everyone.  Unfortunately, most of these debtors will not want to negotiate with you and they will give you terrible advice to borrow from family or sell your home.     Your first call should be to a Debt Councillor.  I work with a great one and recently observed a situation where a client was looking to sell their home and get out of debt.  Once we looked at the numbers we realized the best situation was to negotiate – keep their home, reduce their debt from over $70,000 dollars to about $30,000 dollars and before it was all wrapped up they were able to trade in their five year old car for a 2014 model within the same monthly payment.  Everyone gets paid and through a Consumer Proposal they will pay the debt down in five years while their home increases in value.  If you look at the numbers they wrote off over $40,000 dollars in debt, kept their home which will most likely value up over the $30,000 grand they will pay off in five years and they are driving around in a new car.  Every situation is different and in some cases selling the home is the only option. Either way a Debt Councillor can help you work out the best solution. V     Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at sold@uniquerealty.ca.