Buy A Home With Little Or No Money Down

Maybe you owned a home before and are presently renting; or you're a first time home buyer and need a way to break into the housing market but lack the required minimum down payment; or you you simply do not want to liquidate your financial assets to use as a down payment on a home. Well, regardless of your situation, if you want to get into or re-enter the housing market with a low amount, or even without a cash down payment at all, then this strategy may be just what you're looking for.

Now you can realize the dream of owning your own home with little or no down payment and closing costs.

That's right, zero cash down payment and closing costs. Here's what is required to qualify for the Zero Cash Down Payment Program.

1.  An excellent credit history. 
• No recent history of bad debts. no bankruptcies or consumer proposals.consistent and timely payment of liabilities
2. Limited liabilities.
• You will be required to disclose and will be evaluated on your current and future debt servicing ability. (ie. car loan/lease, credit cards, helocs,etc.)
3. Proof of two years of stable employment, ie. a letter of employment from your employer, CRA Notice of Assessments and three years financial statements for self-employed.
4. Properties under the program have to be average or above average properties. No less than average; fair condition or fixer-uppers
• Acceptable property types: detached or semi-detached home, freehold and condominium town homes
• Maximum 2 units
• Owner occupied only

It is important to note that not all properties qualify for the Zero Cash Down Payment Program. Ensure you get an accurate picture of what properties may or may not be included in this program, in your particular area, contact myself, Steven Porter, Mortgage Agent or your Realtor.

Benefits of the Zero Cash Down Payment Program

No Down Payment

Are you are renting? Why pay your landlord's mortgage? Why not reap the benefit of building your own equity? The general perception of many would-be home buyers and even some Realtors® is that a minimum down payment of 5% is required in order to purchase a home. This is not always true. Many home buyers feel they have to save for years to have enough money for a down payment so they can eventually enter the housing market. In the meantime, they are lining someone else's pockets paying rent went they could start building equity of their own.

Buy a Home Now!

With the Zero Cash Down Payment Program you don't have to wait to purchase a home. If the need for a cash down payment is keeping you from owning your own home, this program offers you an immediate way to get into the housing market.

Approved Lender Program

It is important to know that the Zero Cash Down Payment Program is an approved program through reputable lenders. Review this program with me or your Realtor®.

Note, certain terms and conditions may apply.

Steven Porter, Mortgage Agent - Mortgage Architects, www.StevenPorter.ca

Should you rely on a broker for a great mortgage?

If you visit different mortgage broker websites, you’re bound to come across wording like this: “We work with over 50 lenders to serve you better.”

The idea is that having more lenders to choose from when shopping for a mortgage improves your odds of getting the best deal. But is more really better and is it enough to rely on a broker to contact lenders on your behalf – or should you call around yourself?

Access to multiple lenders is a key benefit that brokers like to promote. However, the pool of banks that brokers have access to has shrunk since 2007, when Bank of Montreal, Canadian Imperial Bank of Commerce, ING and others began exiting the independent broker market. Those banks feel they can profit more by selling mortgages directly to customers.

Furthermore, most brokers don’t compare every available lender. Maritz Research found that 90 per cent of the typical broker’s volume goes to just three lenders. That’s partly because some brokers feel more comfortable in knowing a few lenders well, versus many lenders superficially. It’s also because brokers often get preferential rates and service – like better turnaround time – from their primary lenders.

Yet another reason, in certain cases, is self-interest. Lenders pay financial incentives to brokers who send them a certain amount of volume. Such incentives can be a conflict of interest if they lead a broker into recommending a less competitive mortgage.

When a broker deals with just three lenders, he or she might as well be a sales rep for those companies. There’s nothing necessarily wrong with that – if the lender has the best mortgage for the customer, but that’s not always the case.

One way to avoid brokers who don’t shop around sufficiently is to deal with an established and experienced high-volume broker, someone who isn`t as pressured to send a set amount of volume to a particular lender. These brokers are typically found high up in Google’s local search results, due to their longevity, referrals and professionally-run businesses.

In a perfect world, it would be easy to find a broker who shops all lenders objectively, even lenders that don’t pay brokers. Unfortunately, most brokers don’t have the time or technology to closely track the rates, terms and guidelines of 50-plus lenders. And brokers, like bankers, like to get paid and seldom recommend outside lenders.

So if you truly want to shop all major lenders, you’ll need to do your own legwork. If you’re getting a new mortgage, you must:

Contact these non-broker lenders yourself: RBC, BMO, CIBC, HSBC, ING, Manulife Bank, PC Financial

Go direct or use a broker to get quotes from these lenders: Scotiabank, TD Canada Trust, National Bank, Industrial Alliance, Desjardins and the major credit unions

Use a broker to get quotes from wholesale lenders like First National, MCAP, Street Capital, Home Trust, Merix Financial, ICICI Bank, CMLS, MonCana Bank, Radius Financial, RMG Mortgages, AGF Trust, B2B Bank, Xceed and others.

In short, you’ll never truly know all the deals out there unless you take matters in your own hands and contact dozens of lenders. However, you need to be sure it’s worth your time. You might save another 0.05 or 0.10 percentage points off a great bank or broker rate by shopping yourself (that’s about $49 savings per $100,000 of mortgage per year).

But the legwork could literally take hours of asking the right questions and negotiating with all the key lenders. And if you inadvertently pick a lender with onerous fine print, the cost of that lender’s restrictions could easily outweigh any upfront rate savings.

Using rate comparison sites for leverage is another strategy. The problem there is that rate sites typically don’t reveal all the limitations of a mortgage (e.g., penalty calculations, porting rules and mortgage increase policies, to name a few). So you still need advice or lender feedback to find the ideal mortgage at the absolute lowest possible rate.

Even if you plan to get your mortgage directly through a bank – like 57 per cent of Canadians do – contacting a broker might work in your favour. At worst, you’ll get market and rate intelligence that you can use to your advantage at the bank. At best, the broker may find you a flexible product that costs less, and/or suggest a strategy that saves you interest.

And, brokers have dozens more options than any single lender, which gives them access to cut-rate pricing, easier approvals for people with special situations (eg. self-employed or with bad credit history), lower penalties for breaking a mortgage early, and more choice of features, like pre-payment privileges, linked credit lines and the ability to extend your term before the mortgage comes due, penalty-free. (Banks too have unique features not available through brokers. Examples: BMO’s Cash Account, TD’s HELOC and Manulife’s One account.)

Comparing dozens of lenders on your own can be educational, but it takes considerable effort and some know-how. If you know what questions to ask, that extra effort can lead to a slightly lower upfront rate. I’ll list the essential questions in a future column.

Just remember this. The cheapest rate doesn’t necessarily equal the least money out of pocket. Things like costly payout restrictions, lender refinance policies and accelerated payoff privileges can add or subtract thousands from your total borrowing costs.

In practice, most Canadians lead busy lives and are content to let a banker or broker find them a mortgage that’s “good enough.”

But if you have the spare time and truly want the best deal, you can engage a broker to shop for you, and call the non-broker lenders yourself and cross reference your quotes with a rate comparison site. And while you’re at it, don’t be afraid to get a second broker opinion.

by: Robert McLister editor of CanadianMortgageTrends.com

10 tips to help you get the best mortgage

So you’re looking for the best mortgage terms known to humankind. Well, chances are, you won’t find them. Or, even if you do, trust that the search won’t be easy. You will need to do a lot of looking to find rates that are even halfway decent. Often, what happens is this: you end up paying more for the interest than for the full amount of the principal or the loan itself.

Don’t dig yourself into that trap. Here are some of the best mortgage tips to cut down on your expenses.

1. Supposing all the terms are equal, choose the bank that provides you the lowest spread in interest formula. This results in smaller interest expenses.

2. Pick a fixed rate for the rest of your loan’s life. Do this only after you have found a rate you’re comfortable with. With a fixed rate, you won’t have to worry about ugly surprises or shocking increases down the line.

3. If you feel it’s better to get a loan with an adjustable rate, be sure to reprice quarterly. However, be sure to do this only if you believe the rates will drop lower in the short term and if your bank is offering a rate cap.

4. Increase either your down payment or your equity so you borrow very little. However, if you can invest more at a higher rate, go ahead and put down the smallest equity possible.

5. Lower your interest expenses by shortening your loan term.

6. Go with a declining-balance amortization schedule. The best mortgage experts in the business say this will help you pay lesser interest in the long haul.

7. Pay every two weeks. This may seem tedious to you but there’s a reason for it: it lets you pay off the loan quicker and lets you save on interest in the long run. Or, you can make pre-payments on the principal; this lowers your total interest expense.

8. Consider refinancing the loan if the rates drop. There is a right time and a wrong time to refinance. However, given that rates are lower now than they ever were, it makes a lot of sense to refinance while you can, when you can.

9. Negotiate for some fees to be waived. You may think it’s possible to get some of the settlement fees to be waived but it’s not. Just ask; you will be surprised what a few questions here and there can do.

10. Shop around. You will never find the best mortgage if you do not shop around. Different groups offer different terms. Here’s an insider’s tip to getting your bank to offer you lower interest rates: get the bank to consider the business relationship you have. If you have significant deposits, for example, they just might reduce the interest you need to pay.

There are mortgages, and there are mortgages. Why settle for anything less than the best? Use these 

10 tips to help you get the best mortgage. You won’t be sorry once your wallet starts feeling the difference.

By  Eric  Smith

Should you boost your income or build your assets?

When it comes to money decisions, it can be hard to figure out the right thing to do. Money is about power, emotion, morality and security, among other things. So in this space, we gather a few experts to weigh in on a financial quandary.

The question: Should you focus more on boosting your income or building your assets?

Robert Kiyosaki, author of Rich Dad Poor Dad and Second Chance: “When you work for income via a paycheque — even high and/or steady income — that income stops when you stop working. It’s you working hard for money for a lifetime. When your income — or a part of your income — comes from assets, it’s like having your money work for you 24/7 instead of you working for money and typically paying higher and higher taxes as your paycheques increase in size.

“While there isn’t anything wrong with working for a paycheque, it probably isn’t the best road to creating the wealth and peace of mind that so many overworked, super-stressed and stretched-to-the-max [people] sorely need. Investing in assets, even in small ways, can build wealth and deliver a lifetime of income even if or when you stop working.”

Sheila Walkington, co-founder of Money Coaches Canada: “Your ability to earn an income is your biggest asset, so focusing on boosting your income or at least maintaining your ability to earn a good income and keeping yourself employable is very important. Increasing your income will open up more opportunities to save, pay down debt and to build the life you want.

“But earning more money is not always the answer. Often the more people make, the more they spend, and this can get people in trouble. So the key is to live within your means while also building a financial foundation for a comfortable future/retirement.”

Preet Banerjee, author of Stop Over-Thinking Your Money!: “If financial success was all about increasing income, then celebrities, athletes, doctors, and other high earners wouldn’t have any money problems. Of course you should try to boost your earnings, but the truth is we don’t have as much control over that as we do on what we do with what money we earn.

“Focus on the fundamentals. Whatever you earn, spend less than that. Building assets like investment portfolios and home ownership gives you a base to work from in case any risky pursuit of a higher-income-at-all-costs strategy doesn’t pan out. Once you’ve laid the foundation, then you can focus on expanding your income through less traditional methods. Getting rich slowly tends to work better than always swinging for the fences, with the possibility of striking out.”

by MW Leong Financial Post

Rate shopping sites…tested again.. and failed again.

A few years ago, I published a study on Rate shopping sites.   These sites were gaining popularity with consumers as a  place to go if you wanted to get the best rates.  And they attracted a lot of attention.

You know the sites… they have catchy ads like ‘shopping for the Best Mortgage rates in Canada’ or ‘comparing Canada’s mortgage brokers for the best rates’.
Hey, who doesn’t want the best rate?  These ads work. Canadians were clicking these links to get more info. 

Sounds great, right? Yet, it’s not.

LOWEST RATE OR PAY THE LEAST AMOUNT OF MONEY TO OWN YOUR HOME?

The original study found that consumers wouldn’t ask too many questions. They were too rate focused and didn’t focus on the terms of the mortgage.  Most consumers don’t bother asking any further questions or spend the time required to read the 30 or 40 pages of legal jargon in their mortgage.  And this where it can become a costly experience.

The original study showed that if you asked a borrower whether they wanted the ‘lowest rate’ or ‘to pay the least of money on their mortgage’ , the average person would choose the latter.   And make no mistake, these are two very different things.

My original study revealed that these sites didn’t shop all mortgage brokers or lenders.   The sites listed only a small handful of brokers.  Only brokers that got in early, would be compared….and only brokers that were willing to pay a fee per lead, can participate.   The ‘low rates’ were NO FRILLS products, in most cases…products that carried restrictions, limitations and inflated prepayment penalties.   Hardly a true comparison of ‘All mortgages and All mortgage brokers’.  And hardly unbiased.

Today, not much has changed..  well, that’s not true.   They’ve become worse.  Here’s an update:

• One of these large sites was purchased by another online rate site.  A quick review of their current rate offerings revealed they no longer had competitive rates.  It’s advertising rates well above the best in today’s market.  They seem to just be promoting Banks rates… which are higher than broker rates.
• Another popular site has a BIG conflict of interest, in my opinion.  They decided to start their own mortgage brokerage but are still running and operating their Rate shopping site.  Seriously, it’s true!  This raises the obvious question, ‘how can they remain unbiased and neutral when they own one of the brokerages they are comparing?’  It’s like asking TD Waterhouse or Investor’s Group who has the best Investment Advisors?   Or like asking Burger King or McDonald’s, ‘who makes the best burgers?’.   If I ask Rogers who has the best cell service, I wonder if they will say ?  
• And yet, you’ve see these sites advertised and promoted in our country’s largest newspapers, as unbiased and independent!!   Anyone else see a problem with this.

HOW TO PAY THE LEAST OF AMOUNT OF MONEY TO OWN OUR HOMES

Hey, if you want to compare rates, it’s easier today. Just contact an experienced mortgage specialist.   Ask a friend, your real estate lawyer, your real estate agent or financial advisor for a referral.  

by Steve Garganis

Canadian real estate market outlook 2015

Sooner or later mortgage rates will rise and house prices will start to moderate. Why this is the year the market will finally start to turn. Buy a house. Don’t buy a house. Soft landing. Crash landing. As we start the new year, the question on everyone’s mind is: What can we expect from Canada’s housing market?

Once again, experts agree that housing affordability is stretched, historically low interest rates will rise, and housing prices will drop. Rewind 365 days and you could be reading a forecast for 2014. But this time the experts agree: prices really will fall and it’s got everything to do with the recovery of the global economy.

Now, if the global economy were a ballgame we wouldn’t be in the World Series. Oil prices are depressed and Europe is still struggling with its credit crunch. But things are slowly improving in the U.S. and within Canada, and the important teams are still in the game: our employment rate is stable, oil prices are not (yet) low enough to cause real concern, and exports have picked up as the value of our dollar has dropped. All this leads most economists to believe we’ll see slightly higher bond and mortgage rates and a nation-wide cooling of the housing market over the next couple of years.

Robert Hogue, senior economist with RBC Bank, says he believes the coming year will be “a moderating phase for the market with a soft landing in 2016.” Hogue predicts national home prices will actually rise 1% or maybe 1.5% in 2015, as buyers race to get in the market before mortgage rates increase, after which prices will fall later in the year. “It’s one of the reasons why 2014 was such a strong year.”

But he cautions home owners: “Canada’s real estate market really is a multi-headed beast. It’s essentially very strong in Toronto, Vancouver and Calgary, but it’s balanced or soft in the majority of other markets.” As such, he predicts we’ll see a cooling of the three biggest markets by the end of the year in response to small mortgage rate hikes starting mid-year.

Now, if the prime rate were to climb from its current 3% level to 5% or 6% over the next year or two, many Canadians could find themselves in deep trouble, says Hogue. But he isn’t sure we’ll see rates shooting up that fast any time soon. Until recently, analysts and policy makers considered 5% to be the neutral or natural interest rate. It was the rate that allowed full employment, a stable inflation rate, and a sustainable growing economy. But Hogue, along with economists from Morgan Stanley and analysts from the C.D. Howe Institute, believe that the “new neutral rate” has actually dropped.

The primary reason is the impact baby boomers continue to have on the national economy. As boomers continue to age and leave the workforce, Canada can expect a slowing of the labour market, which will depress productivity growth, limit the economy, and suppress potential inflation, explains Hogue. “If the new normal is markedly below what we’re used to, then we won’t see as much downward pressure on housing prices,” he says.

The impact of demographics doesn’t stop there. According to a new report by Benjamin Tal, deputy chief economist with CIBC, analysts have been seriously underestimating the number of new immigrants in Canada. New immigrants account for 70% of the country’s population growth and about half are between the ages of 25 and 44—the key demographic that leads to household formations. According to Tal the under-estimated increase in the number of home-buying immigrants in Canada will help to offset a slowing economy, created by the boomer generation. “Immigration, itself, won’t be able to change this trajectory, but it will help to offset it,” explains Tal.

But David Madani from Capital Economics isn’t convinced. “Every good economist knows that immigration always fluctuates and it’s never prevented a housing cycle in the past.” He’s also not convinced that builders are out of the weeds when it comes to supply and demand. While he agrees that absorption rates are close to historical long-term averages, he’s confident that the market will suffer. “There are too many one-bedroom condo units being built when demand shows a need for family accommodation.”

So what’s a regular home buyer to do? The best advice is prepare for the worst, but if you’re ready to jump in and you can afford it, waiting for prices to fall might not be the best idea. Ted Rechtshaffen, president and CEO at TriDelta Financial, advises against trying to time the market in general. “It’s not about prices or the mortgage rate, it’s whether you can truly afford to own the home.” This means calculating whether or not you could still afford your monthly payments even if mortgage rates increased to 4% or 5% a few years from now. It also means deciding whether or not you can stomach a housing price drop. While many economists are predicting a 10% drop, the correction could be as great as 30% in some Canadian markets.

Of course, your home is more then equity and capital. It’s the place you spend time with friends and family, and the place you build memories. “Life and lifestyle is just as important,” says Rechtshaffen, so as long as you can afford your payments, “don’t be too concerned about the correction.” - by Romana King

How much you need to earn to buy a house in every major Canadian city

Many say property is the best investment you can make. Bursting housing bubbles and mortgage scandals aside, they’re usually right.

The price of making that investment varies widely in Canada, depending on where you live. We looked at how much you need to earn to buy a house in every major Canadian city.

To get these numbers, we consulted Adrian Williams. He explained that to calculate the income required you need to know the purchase price, down payment, rate, utilities – mortgage qualifying must include a minimum of $100 a month for heating costs – and taxes.

We got the average purchase price per city from the Canadian Real Estate Association, and Williams provided the property tax rates. At his suggestion we used a 2.99% interest rate, which is the average qualifying rate for a 5-year fixed term. We used a down payment of 10% of the purchase price and calculated $100 a month for utilities.

According to Williams, “Other factors that will be included with mortgage qualification are the total monthly payment obligations from credit card, LOC’s, personal and car loans, car lease and other types of credit that require a monthly payment.”

Here is what you need to earn to buy a house in every major Canadian market. (Numbers are rounded to the nearest dollar.)

Toronto

Average price: $587,505

Monthly mortgage payment: $2,560

Property tax: $354

Income required: $113,009

Vancouver

Average price: $819,336

Monthly mortgage payment: $3,570

Property tax: $251

Income required: $147,023

Calgary

Average price: $465,047

Mortgage mortgage payment: $2,026

Property taxes: $236

Income required: $88,578

Edmonton

Average price: $365,520

Mortgage payment: $1,592

Property tax: $244

Salary required: $72,617

Regina

Average price: $331,161

Monthly mortgage payment: $1,443

Property tax: $378

Income required: $72,028

Saskatoon

Average price: $349,322

Monthly mortgage payment: $1,522

Property tax: $366

Income required: $74,546

Winnipeg

Average price: $270,605

Monthly mortgage payment: $1,179

Property tax: $274

Income required: $58,235

Ottawa

Average price: $357,887

Monthly mortgage payment: $1,559

Property tax: $336

Income required: $74,820.28

Montreal

Average price: $344,273

Monthly mortgage payment: $1,500

Property tax: $237

Income required: $68,884

Halifax

Average price: $264,447

Monthly mortgage payment: $1,152

Property tax: $266

Income required: $56,929

by  Elizabeth Bromstein

The Myth of the Property Ladder (A Warning to Young Canadians)

Parents are great, they spend thousands of dollars and countless hours on their children and get almost nothing in return. Joking aside, my point is that parents usually mean well. There is one area however where I believe Canadian parents are leading their precious children astray, real estate.

The property ladder refers to when buyers attempt to get their first house, where they can than save up and subsequently trade up to a better house. The whole idea, is just to get on the first rung and according to baby boomers you'll be on your way. But just as getting good grades and a good University degree was once a sure fire way to success in the past, what worked for one generation might not work for the next.

Real Estate for most young Canadians is a leveraged investment. Well not just leveraged, but very leveraged. My generation is quick to scoff at the executives from the financial crisis who ran investment banks at sky high debt to equity ratio's of 20:1+. Yet, they think nothing of putting 5% down on a house (which of course is the exact same amount of leverage). A measly 5% drop in house prices and you are wiped out. That's if you can even put 5% down in the first place. Many can't. This is where the parents step in. 

Beyond the emotional push to buy a first house with the common (yet ridiculous argument) of "why pay somebody else's rent?"  I have seen many of my friends' parents routinely gift the 5-20% of the down payment of their first house. No, they are not just giving them free money but rather giving them the money on the condition of a house purchase (and saddling them with massive mortgage debt). It's kind of a like a drug dealer offering free cocaine but only once you get addicted. It's a terrible system so why do parents do it?

The biggest reason is because it worked very well for them.  There is a very stark difference however that will dramatically effect these housing returns going forward: interest rates.   Baby boomers have ridden a three decade wave of falling interest rates. This low cost of financing has lead to the record high price to income ratio. With the end of quantitative easing in the US these low rates are very possibly coming to an end. (Remember Canadians' don't have 30 year fixed mortgages, they reset after 5 years for most people.)

This house price to income ratio chart on the right is from a September 2014 Bank of Canada presentation. Note that although it once cost just a little over 2x your annual income to buy a house, now it is 5x. 

What is actually most disturbing about this chart  though is not the record high number but the linear trend line that CMHC was so kind to add. The price to income ratio over time will revert to its mean. If it didn't, you would have house prices continue to outpace incomes and consume well over take home pay. That's what makes this dotted black line so deceptive. To the casual observer (say the CMHC board which has a deep conflict of interest with its ties to the construction and finance industry) it makes it seem like 'everything is on track' when in reality the dotted line should stay relatively flat over time. Charlie Munger would probably call it 'bullshit graphing' or something along those lines. Anyways, if this graph were to revert to any where near its historical level there would be big problems for Canada and its record high debt binge.

Moral of the story to Canadian millennials: Don't let ma and pa get you unknowingly hooked on the debt cycle, a mortgage will ultimately be your debt, not theirs. Borrow accordingly or better yet, rent until prices make sense. - by hardcore value