Steve Bucher

Purchasing a home is a major decision for most people; it represents the single largest purchase they will ever make. So when it comes to qualifying for home financing, what should you know? What is important to the bank? Here are five questions to ask yourself:

Capital - How much do you have to put down for the purchase of your new home? The larger the down payment, the less risk you present to the lender. A minimum 5% down payment is normally required to purchase a home in Canada. However, if you have good credit, there are some lenders who will consider lending you the down payment as well. Having no down payment is not always a limitation.

Capacity - Is your income sufficient to support the repayment of the requested loan amount? Most lenders will allow 40% of your income to go towards housing costs and debt. The calculation looks like this: monthly debt payments plus housing costs plus heat plus ½ condo fees if applicable.

•· Monthly debt payments includes: car loan, credit card, lease payments, etc.

•· housing costs include mortgage and taxes for all your properties

•· heat is usually estimated between $85 to $100 per month

If you have good credit, you can be allowed to use up to 44% of your income for debt and housing payments.

Credit - Is the financial institution confident that you will pay them back? Credit is the evaluation of the borrower's habits in meeting credit obligations. If you have never taken out a loan or secured a credit card...you may be surprised to find out you have no credit rating. A credit check will report your credit history and provide a numerical score (0 to 900, 900 is the best score).

Collateral - Will the real estate purchase offer suitable collateral to the lender? Collateral is the security offered up to lender should the borrower for some reason be unable to provide repayment. In the event of a default, the lender could sell this collateral to recoup their costs plus expenses. Now it only makes sense that the lender will want to ensure that your purchase will not put them in a money losing position.

Lenders watch out for terms like "fixer upper" or "handyman special" when examining your purchase, and will want assurances the property is in good condition without problems which may make it hard to resell. In some cases, lenders will require an appraisal. The appraisal serves to quiet any fears the lender may have about the value or condition of the home.

Banks will also pay attention to your assets i.e. vehicle, bank account, RRSPs, etc. The greater amount of assets you have, the lower risk you present. These assets could be conceivably be sold and used to make mortgage payments in times of crisis.

Character - What kind of impression do you make? Character is your reputation and reliability - the general impression you make on the potential lender. The lender may look at:

•· educational background

•· business experience

•· length of time at your current employment and residence. People with a transient job history or address history are seen as less reliable than someone who has been in a home or job for 20 years.

For more information about qualifying for a mortgage or if you have questions about your specific situation, please call 250 682 6077 or e-mail stevebucher@invis.ca or check out my website at www.mortgagebuilder.ca

copyright Steve Bucher 2009 reprint only with permission

In todays economy. many families are suffering from reduced work hours, lay offs and reduced income opportunity in general (ie. stocks, GICs etc). To make matters worse, consumer debt was on the rise prior to the recession and lower savings trends have not helped. For families in these situations, they often have the choice between managing multiple monthly debt payments or refinancing and paying a penalty.

Having met many families trying to decide just that, I can say that the decision is never easy. Paying a penalty for breaking the first mortgage contract, only to get a second bigger mortgage is daunting to say the least. However, the pile up of bills sometimes speaks louder than the cost. As a mortgage broker, I do the best I can to secure best mortgage rate and mortgage terms in general. I am proud to say that my customers were able to get the larger mortgage they needed to pay out their debts, but their new payment was still lower than the mortgage we got rid of.

If you know someone struggling with monthly payments, but still has equity to spare in their property, encourage them to speak to their local mortgage broker. In Kamloops and the interior, please give me a call at 250 682 6077 or email at stevebucher@invis.ca

www.mortgagebuilder.ca

What a market! Dispite prevailing opinion that interest rates did not have much further to drop, we see lenders again and again drop rates on 5 year product to entice customers. This is gratifying for me as a mortgage broker because I get to be the bearer of good news! But how long can this be sustained?

China is on a buying spree securing real estate, resource companies and supply contracts. The timing is suspicious as it indicates the Chinese do not think the market will drop further.

Housing inventory is moving, albeit at lower prices. Certainly no sales records, but inventory is clearing in many markets across Canada.

Interest rates are making rent unaffordable!!! Why pay thousands for rent, when you can purchase a home for around the same dollar and less.

Job losses are multiplying. Unfortunately, recessions wash from the market, companies that are inefficient, non-competitive and weak. Once the weak are purged from the system, the strong will have room to expand and hire. Just watch the head hunting successful companies are doing right now.

Savings are up. Stats show that personal savings are increasing due to market uncertainty...but be assured, money in the pocket eventually burns a hole! This savings cash will turn the stock market into a bull.

The danger of stimulus money, increasing availability of loans and bull market attitudes is inflation. Too many dollars chasing the same item...leads to high prices. Funny I would mention inflation as a concern in this deflating, eroding price environment...but it all relates back to inventory. When the savings return to the market, the ball will bounce and we will see a second run on price.

So my advice is as follows:

1) protect your investments by locking in with a low interest rate. Obtain low interest credit products for use later on.

2) if you buy, be prepared to sell early next year to take advantage of the bounce

3) beware the next drop. Savings will be the force behind the next inflationary wave...when they deplete, there will be nothing left to drive the market...watch for signs the market is slowing and be prepared to jump.

The fun thing about a crystal ball is that it is just guesses and mental exercises. My opinions are my own and I front them for discussin purposes only. What do you think is going to happen?

Steve Bucher, Mortgage Consultant

INVIS KAMLOOPS www.mortgagebuilder.ca

I know, I have said the B word. Most realtors run when they hear those words and for good reason. It means that in the past, someone was not responsible with money. If you run, you will miss out on a fantastic opportunity. Here is what I mean. The client's which will praise you the loudest are the ones who see you going above and beyond. So some good PR at the risk of wasting a few hours of your time.

Step 1) re-establish credit. Any person who goes bankrupt will have a terrible credit score and will have no credit cards or really any avenue to build credit. So step 1 is obtaining a secured credit card. The client will have to prepay an amount and then will recieve a card with a predetermined limit. As long as the client makes the payments on time and uses the card (every month, even a $10 purchase, ie. just gas), the client will start to build a better credit rating.

Step 2) down payment. Now down payment is an issue for people with bad credit, as most lenders will only lend 75% loan to value on a weak beacon score. Encourage your clients to start saving.

Step 3) time. Some lenders will consider a mortgage immediately for a client, but they want a larger down payment and offer higher interest rates. After 2 years, most people with a discharged bankruptcy can get bank rates again for a mortgage, but they must have at least 2 tradelines reporting for at least 1 year.

As a realtor, you may have been told not to work with anyone not purchasing within 100 days, but I encourage you to think long term with your clients. Remember, your personal contacts with any client can turn into a referral with friends and family of the individual.

Good luck out there.

Steve Bucher, Mortgage Consultant

www.mortgagebuilder.ca

Statistics prove one thing...whatever the writer wants them to prove. Having watched the media abuse statistics to show "important" information, I have become desensitized to words like 3% change in price, 5% increase in forclosures, and the market is down 34% since Jan 24, 2007. In a normal market, prices fluctuate based on inventory, economy and availability of new product. A sell out of a new condo unit will spike sales for a particular day, in a particular part of town, for a particular period of time. Similarly, a sell off of a high end home development due to forclosure will cause a serious drop in price. What does this mean? Measured over one year averaged, it means very little, but if you take those stats on a month to month basis or even day to day, you can create a picture of a turbulent market. I can pick a weekend in my community where 22 million in real estate was sold in one day (new condo development). Now if I pick a day a year from now and compare it to that period, you will see a 22 million dollar drop in home sales...everybody would get sad from reading a stat like that...but it was a situational condition which created the illusion of price dropping. Have you read a stat like "home sales are up 400% over the same period last year", "prices are down 5% over same period last year"...meaningless.

Stats measured and averaged over an entire year are worth your time examining, but "same period last year" stats are vulnerable to 1 time anomolies like a new condo unit selling out or a local business laying off staff. "Pick a day" stats can say whatever you want them to say. I would suggest media show us a 20 year forclosure rate, a 20 year price index or a 20 year sales picture, but its not that interesting. It does not sell.

So be aware the next time you see a "same period last year stat" and question what the stat would be if the story was written the next month or even the next day.

Take Care

Steve Bucher

www.mortgagebuilder.ca