Chris Grimes

Renting vs. buying has long been discussed. There are many financial advisors that would argue both sides of this coin. The positions range from larger tax incentives for renters, to pride of ownership for home buyers, but what is right for you? When considering homeownership, you should first consider how important owning a home is for you? Taking pride in caring for your home, having a place for you and your family to call home can be a really motivating and uplifting feeling. Not to mention as you pay down your mortgage your equity will grow and over time your housing costs will diminish. If owning a home is important to you, then you should consider how often you expect to move? The commissions associated with buying and selling a house can exceed 5% and the closing costs vary around 1.5%. With these costs you should expect to live in your house a minimum of 3 years or you could expect a loss. Once the decision has been taken to buy a home and live there for the foreseeable future, you need to know whether you can afford it. Considering the stability of your income and the growth potential will go a long way to determine what you can afford to buy. Keep in mind mortgage lenders will look at your credit history, total income, employment stability, your total debt and the property, before issuing a commitment. Finally you should consider that the cost of owning your home, property taxes, utilities, maintenance/repair costs, etc. can all add up. You should be in a solid financial position to cover these costs if your personal or financial situation should change. Feel free to drop us a line if you would like a full step by step guide on how to purchase your first home.

Double Presidential FirstLine Mortgages a subsidiary of CIBC Inc has a product that they have linked to the US presidential elections. Every election year this mortgage product will renew. With the current US election just around the corner you can lock in your rate for 4 more years, until November 12th, 2012. The advantage to you the consumer is that interest rates tend to come down during a presidential election year. This will give you a great opportunity to take advantage of potential dip in the mortgage rates and save the most money possible on your mortgage.

Back in July, 2008 the Department of Finance announced a major change to the structure of the mortgage market. As of October 15th, 2008 they no longer allowed 100% financing and 40 year amortizations. They now require 5% down payment and a new maximum of 35 year amortizations. Can I still get 100% financing? YES, it just costs you a little more - in fact 2% more. With the industry changing there has been a recent switch back to the ‘Cash Back’ Mortgage. Lenders only require that you prove that you have 5% down payment. The lender will actually return the 5% back to you upon closing. The benefit to you is the extra cash to use as you choose and the benefit to the Lender is that you have to buy a higher interest rate. However, you only have to pay back 95%. Purchase Price $200,000 Down Payment $10,000 Loan Amount $190,000 Cash Back $10,000 (Amount is for example purposes only and does not reflect CMHC fees) The catch is that you still have to prove your down payment. But there are several ways to do that including borrowed funds, gifts, 100% sweat equity and Lender cash back incentives, as well as traditional sources. This allows you to borrow up to 95% Loan-to-Value (LTV) which satisfies the government’s regulation for insured mortgages. The bonus is that you retain the 5% down payment, and have the extra cash required for moving expenses, legal fees, furniture, closing costs etc.