Mortgage Terms Explained
Mortgage terms explained Open mortgages, closed mortgages, variable mortgages, oh my! All of the mortgage terms out there are enough to make your head spin. That’s why we wanted to give you an overview of some mortgage terminology, to help you make sense of this sometimes confusing language. Here are some mortgage terms you need to know: Insured mortgage: if you’re making a down payment of less than 20% of the price of the home, then you'll have to have mortgage default insurance, ( click here CMHC , Canadian Mortgage and Housing Corporation or click here Sagen , for another mortgage insurance program) This protects the mortgage provider who’s providing a loan without the security of a substantial down payment. When you speak to your trusted mortgage broker (message me for a list of trusted mortgage brokers that we use) they will explain clearly how all of this works and share with you your options. Conventional (Uninsured) mortgage: if you’re making a down payment of more than 20% of the price of the home, then your mortgage doesn’t require mortgage default insurance. Variable mortgage: the interest rate fluctuates with the Bank of Canada’s prime lending rate. Fixed rate mortgage: fixed-rate mortgages guarantee a fixed interest rate for the length of your term. Closed mortgage: a closed mortgage can’t be repaid without prepayment penalties during its term, except if there are exceptions in the mortgage agreement. Open mortgage: an open mortgage allows repayment of your mortgage at any time, without penalty, but typically has higher rates. Amortization period: the length of time over which you expect you pay off your mortgage. It typically ranges from 15-25 years (although I think in the near future we will begin to see some people taking on a 30 amortization). Mortgage term: your term is the amount of time that you’re committed to your mortgage provider, interest rate and payment options. At the end of your term, you can choose to either renew your mortgage under the same conditions but at a new interest rate based on the current market, renegotiate your mortgage with the same provider or move your mortgage to a different provider. PS. I am continually adding new blogs and information to my new website. If you are not finding the information that you need or if you are looking for something specific, please send me a text 403.400.5182 , and email art@artrae.ca or give me a call 403-400-5182 and I will help you with your need. I look forward to hearing from you!
Top 10 Myths that Trip Up home buyers
Top 10 Myths That Trip Up First-Time Home Buyers If you’re thinking about buying a home, you’ve probably received your share of advice from family and friends. Add to that the constant stream of TV shows, news segments, and social media posts that over-simplify the home buying process for easy entertainment. With so much information to sift through, it can be tough to distinguish fact from fiction. That’s why we’re revealing the truth behind some of the most common home buyer myths and misconceptions. Buying a home is a big decision, but it doesn’t have to be a scary one. If you arm yourself with knowledge and a qualified team of support professionals, you’ll be well equipped to make the right choices for your family and financial future. DON’T FALL FOR THESE COMMON HOME BUYER MYTHS Myth #1: You need a 20% down payment. Plenty of buyers are purchasing homes with down payments that are much less than 20% of the total cost of the property. Today, you can buy a home with as little as 5% down. There are multiple programs out there that allow you to have a lower down payment, and a lender or mortgage broker can talk you through which option is the best for you. Since you’re putting less money down, you’re a riskier borrower to your lender than people who put down a full 20%. Because of this, you will need to pay mortgage insurance (CMHC) as part of your monthly payment. Your trusted mortgage broker will explain how all this works. Let me know if you would like a few names of my trusted mortgage brokers. Myth #2: Real estate agents are expensive. Your agent is with you every step of the way throughout your home buying journey, and he or she spends countless hours working on your behalf. It sounds like having an agent is expensive, right? Well, not for you. Buyers usually don’t pay a real estate agent’s commission. Your agent’s fee is paid for at closing by the seller of the home you’re buying, of by the new home builder that you are buying from. The seller and the new home builder knows to factor this cost into the property’s total purchase price. Myth #3: Don’t call a real estate agent until you're ready to buy. The earlier you bring in an agent to help with the purchasing process, the better. Even if you’re in the very early stages of casually browsing Realtor.ca, a real estate professional can be a huge help. They can create a search for you in the Multiple Listing Service (MLS), so you get notifications for every house that meets your criteria as soon as it hits the market. Our Realtor MLS is more up-to-date than popular home search sites like Realtor.ca, as it will let you know which homes already have ‘conditional accepted offers’ on them Setting up a search a few months before you’re considering buying gives you a good idea of what’s out there in your town that’s in your budget. Reviewing these listings and speaking with an agent as soon as possible can help you set realistic expectations for when you actually start the house hunting process. Myth #4: Fixer-uppers are more budget friendly. We’ve all watched the shows on HGTV that encourage people to go after fixer-uppers because they’re more affordable and allow buyers to eventually renovate the home to include everything on their wishlist. But, this isn’t always the case. Sometimes, homes that need a lot of work also require a lot of money. Big renovations, like add-ons, a total kitchen remodel, or installing a pool, take a lot longer than it looks on TV. If you’re really interested in a fixer-upper, ask your agent to show you a mix of newer homes and older homes. If you fall in love with an older home that needs a lot of work, get some quotes from contractors before you buy so you know the real cost of the renovations and see if you can work them into your budget. Myth #5: Your only upfront cost is your down payment. Your down payment is big, but it isn’t the only money you’ll spend during the home buying process. At closing, you’ll pay your down payment, but you’ll also bring closing costs to the table. Closing costs are typically anywhere from 2-4% of the total purchase price of the home.2 This amount includes the cost for items like homeowners insurance, lawyers, and more. You’ll also need to pay for an inspection before closing, which usually costs around five hundred dollars. This price will be higher or lower based on the size of your new property. Your lender may also require an appraisal. An appraiser will come in and inspect the home to determine how much it’s worth. Depending on your lender, you may have to pay this when the appraisal is conducted or it might be rolled into your closing costs. Myth #6: You need a high credit score to buy a house. You don’t need perfect credit to buy the perfect home. There are loans out there that buyers with lower credit scores can qualify for. These are good options for people who have had credit issues in the past, but some of them come with additional fees you will need to pay. Speak to a mortgage brokers to talk through which options might be best for you. Myth #7: You can't qualify for a mortgage if you're still paying off student loans. While some buyers may feel more comfortable paying off their existing debts before taking the leap into homeownership, it’s not a requirement. When you’re applying for a mortgage, the lender takes a close look at your debt-to-income ratio.3 If you want to calculate this on your own, add up all of your monthly debt payments and divide those by your monthly income. When you’re lender does this, they’re trying to make sure that you will be able to afford your monthly mortgage payments along with your other existing payments. If your income is high enough to allow you to make all of these payments each month, having a student loan will most likely not stop you from getting a mortgage. We have a few good trusted mortgage brokers that we work with. Let me know if you would like us to pass on their names to you. It would be our pleasure. Myth #8: You should base your budget on what your lender approves. How much house you qualify for and how much you can afford are two totally different numbers. When you prequalify for a mortgage, your lender will look at your income, debt, assets, credit score, and financial history to determine how much money you might qualify for.4 For some people, this number might be much higher than you thought because lenders tend to approve for the highest amount they think you can afford. But that doesn’t mean that’s how much you should borrow. Instead, figure out how much house you can actually afford. An online mortgage calculator can be a good first step in determining this number. We recommend thinking about what you want your monthly payment to be as a starting point. And remember to include your principal, interest, taxes, and, insurance. You should also think about ownership expenses that aren’t part of your monthly payment, like HOA dues and maintenance. Myth #9: It's all about location. You’ve heard the phrase. Location, location, location is basically the real estate industry’s motto, but we’ll let you in on a little known secret: It’s not always true. Yes, location is great to consider when it comes to school districts and commute times, but you also need to think about how the home will function for you and/or your family’s lifestyle. If a family of five is choosing between a one bedroom condo in the bustling city center and a 4-bedroom home out in the suburbs, the latter is probably the best, most functional choice for them. Also, by buying in a less sought after neighborhood, your property taxes will most likely be much lower! Obviously, you might still want to choose an area with great resale potential, and this is something that your agent can speak to you about. They’re an expert in your city and are constantly monitoring buying and selling trends. Myth #10: If you look hard enough, you'll find a home that checks every box on your wishlist. You’ve seen that famous house hunting show. And while we have our suspicions about how real it is, the one thing they get right is that almost every buyer needs to compromise on something. Yes, the perfect house that meets every item on your wishlist is probably out there, but it’s also probably double or triple your budget. A long wishlist can be a great starting point for figuring out what you want and don’t want, but we recommend narrowing that wishlist down to the top five things that are important to you in order of priority. We also recommend noting on your wishlist what your absolute deal breakers are, like “must have a yard for our dog,” and noting what you can live without, like “heated bathroom floors.” This is a great list to discuss when you first start talking to an agent. A good real estate agent will be able to look at your list and find properties that might work for you. By coming to that first meeting with realistic expectations and knowledge about home buying rather than a bunch of myths heard here and there, you’ll be able to start the process off on the right foot and be in your new house in no time. WE’RE HERE TO HELP Whether you’re a first-time buyer or a seasoned homeowner, there’s no reason to go through the home buying process without an advocate on your side. We’re here to answer your questions and do the hard work for you, so you can spend your time dreaming about your new home. Call me today to schedule a free, no-obligation consultation.
2023 Quarterly Update/Forecast Calgary and Area
https://www.creb.com/-/media/Public/CREBcom/Housing_Statistics/Quarterly_Reports/Q12023ForecastReport.pdf
