The Bank of Canada came out with the 2
reports this week. The first as I am sure you have heard is holding
interest rates firm so there will be no impact on any variable rate
loans people might have. All good news for those trying to lower their
debt load. The news that came out with the report though, while as
careful as ever, does indicate that Canada is doing fairly but global
conditions are not looking to help raise the boat any time soon.
In
summary, the US is not doing too badly with some forward momentum,
Europe is still on the down slope and China and other emerging economies
have slowed "somewhat" more than expected. They also indicate that the
rates of growth might be stabilizing, but the "somewhat" makes me think
they may be being optimistic. It is good news that our commodities are
holding us up as prices have increased.
I did like the call
for our economy to be at full capacity by the end of 2013. I also like
the dichotomy of talking about our growth is related to consumption and
the concern over household debt burden. I heard a comment on CBC that
summed this up well. They want the people that can afford to build debt
to spend and keep the economy going, sort of like the encouragement the
US gave people before the collapse, but they also want those who cannot
afford the debt to pay it down so we do not collapse. Somewhere in
there I guess there is a happy middle ground of debt where people keep
the economy going but do not collapse the system. This also assumes
people are good judges of where that is. All I can say is that I hope
people are getting the advice they need to make good decisions.
The
sad news is for our industry is that they expect housing activity to
decline from historically high levels and a high dollar to continue.
They also expect inflation to get back to the 2% target range by the end
of 2013. The rest of the piece says essentially that they would like
to raise rates, but can't.
So, assuming these very smart people
have a handle on things we are not looking at any major mortgage rate
changes for the next year or so. There will be the small ups and downs
we have come to see, but we will probably remain in historically low
territory for the foreseeable future. Great news for home buyers and
people renegotiating their deals.
Thursday, October 25, 2012
Friday, October 19, 2012
Mortgage Fraud - CMHC provides great information
I could write something up here myself, but I think the CMHC site has a great piece that is worth highlighting. So here is the link and a copy of the piece. I think the more people that see it the better. Thank you CMHC.
http://www.cmhc-schl.gc.ca/en/co/buho/plmayomo/plmayomo_004.cfm
There are several different forms of mortgage fraud. One of the most common is when a con artist convinces someone with good credit to act as a “straw buyer.”
A straw buyer is someone who agrees to put his or her name on a mortgage application for a home that someone else will be buying. Mortgage applications for straw buyers also often misrepresent other important information as well, such as their income, occupation and the real source of a down payment. In return for their participation, straw buyers may be offered cash or promised high returns when the property is sold.
While the promise of an easy payday may be tempting, consumers should be aware that in most cases, the fraudsters are the ones who walk away with all the profits, while the straw buyer is left “holding the bag” when the mortgage defaults. Consumers who knowingly take part in these frauds will also be responsible for any shortfall when the property is resold, and could even be held criminally responsible for their misrepresentation.
To find out more about mortgage fraud, visit the fraud prevention section of the Canadian Association of Accredited Mortgage Professionals (CAAMP) website at http://mortgageconsumer.org/protect-yourself-from-real-estate-fraud.
http://www.cmhc-schl.gc.ca/en/co/buho/plmayomo/plmayomo_004.cfm
Mortgage Fraud
How to Protect Yourself When Purchasing or Refinancing a Home
The promise of “easy money in real estate” can be hard to resist. But consumers who knowingly misrepresent information when buying or refinancing a home could find themselves becoming accomplices to mortgage fraud.What is Mortgage Fraud?
Mortgage fraud occurs when someone deliberately misrepresents information on a loan application, to obtain mortgage financing that likely would not have been approved if the truth had been known.There are several different forms of mortgage fraud. One of the most common is when a con artist convinces someone with good credit to act as a “straw buyer.”
A straw buyer is someone who agrees to put his or her name on a mortgage application for a home that someone else will be buying. Mortgage applications for straw buyers also often misrepresent other important information as well, such as their income, occupation and the real source of a down payment. In return for their participation, straw buyers may be offered cash or promised high returns when the property is sold.
While the promise of an easy payday may be tempting, consumers should be aware that in most cases, the fraudsters are the ones who walk away with all the profits, while the straw buyer is left “holding the bag” when the mortgage defaults. Consumers who knowingly take part in these frauds will also be responsible for any shortfall when the property is resold, and could even be held criminally responsible for their misrepresentation.
What Can You Do to Protect Yourself?
To protect yourself and your family from becoming victims of, or accomplices to, mortgage fraud, be an informed consumer. This means:- Never accept money, guarantee a loan or add your name to a mortgage unless you fully intend to purchase the property. If you allow your personal information to be used for a mortgage, even for a brief period, you could be held responsible for the entire debt even after the property is sold.
- Always know who you are doing business with. If you are buying or selling a home, use only licensed Real Estate Agents and other industry professionals. And never sign anything until you know exactly what you are signing.
- Determine the sales history of any property you are thinking about buying, and consider having it inspected and appraised. Ask for a copy of the land title search.
- Find out if anyone other than the seller has a financial interest in the home. If a deposit is required, make sure the funds are held “in trust” by the Vendor’s Realty company or lawyer / notary.
- Get independent legal advice from your own lawyer / notary. Talk to your lawyer / notary about title insurance and other alternative methods of protection.
- Be wary of anyone who approaches you with an offer to make “easy money” in real estate. Remember: if a deal sounds too good to be true, it probably is.
- Never give out your personal information until you know who you are dealing with and how your information will be used. This includes requests for information in person, by mail, or over the phone or Internet.
- Never reply to e-mails or phone calls that ask for your banking information, credit card details, passwords or other personal or sensitive information, particularly if you did not initiate the exchange.
- Review your mail, bank statements and other financial statements on a regular basis to look for any inconsistencies. If you don’t receive a bill on time, follow up with your creditors or service providers.
- Shred or destroy all personal and financial documents before you throw them away.
- Inspect your credit report on a regular basis by contacting Canada’s two credit-reporting agencies: Equifax Canada at www.equifax.ca and TransUnion Canada at www.transunion.ca.
Find Out More
If you suspect that you or someone you know has been the victim of mortgage fraud, contact your local police department immediately.To find out more about mortgage fraud, visit the fraud prevention section of the Canadian Association of Accredited Mortgage Professionals (CAAMP) website at http://mortgageconsumer.org/protect-yourself-from-real-estate-fraud.
Friday, October 12, 2012
Value of buying whatever the market.
It is
interesting, this week I heard from some realtors, one side said things
are normalizing and sales will move slower and others remain confident
that the hot properties will disappear in days. I guess really it comes
down to what the seller expects in price, bidding war with high
expectations or OK with something closer to the most recent sale in the
area?
There are more articles out than usual about the state of the market. The naysayers and the "keep the optimism going" crowds battling it out for the hearts of the public. I know that any spin can be put on most of the numbers that are out there, but it does seem to me that the drop in sales is real and if prices drop OK. I do like the piece by Gail Johnson. Basically it supports buying a home in any market, assuming you are planning to stay. The interest rates are low and it is a hard deal to beat.
I was thinking about people buying homes in the 70s, since then we have had some pretty mad swings in the market, but think of this example.
If in 1972 someone bought a home in Toronto for $125,000, today, according to the Bank of Canada calculator, that amount would be $685,810.81 (love the pennies), if nothing major is done to that house over all those years other than maintenance, repairs, paint, carpet, roof, new heating and cooling etc., the house might be worth some $2 million on the market today. In the meantime, the family would have had a house to live in, bills to pay and maintenance. I somehow do not think that the cost of maintaining the home exceeded the $1.31 million markup plus the rent they would have paid had they not bought the house in the first place. So they would probably come out ahead. Therefore, I tend to agree, buying a home is worthwhile if you plan to stay, flipping has risks and sometimes things happen that cause people to move for work or personal reasons, but even that might get worked out if the buying and selling are happening in the same up or down market.
OR Look at things another way. Allowing strictly for inflation a house bought in 2005 for $450K, would now cost $509,860.47, now the actual value of the house because of the recent boom years means it is probably closer to $630,000, again without major renovations. It would mean clients would have to save almost $200K in 7 years, now while possible for some not always feasible.
Why are you considering a home? What are your long term goals, if you are looking longer term but worried about a drop in the value, then consider houses that can be renovated down the road to accommodate the changing needs of the family.
There are more articles out than usual about the state of the market. The naysayers and the "keep the optimism going" crowds battling it out for the hearts of the public. I know that any spin can be put on most of the numbers that are out there, but it does seem to me that the drop in sales is real and if prices drop OK. I do like the piece by Gail Johnson. Basically it supports buying a home in any market, assuming you are planning to stay. The interest rates are low and it is a hard deal to beat.
I was thinking about people buying homes in the 70s, since then we have had some pretty mad swings in the market, but think of this example.
If in 1972 someone bought a home in Toronto for $125,000, today, according to the Bank of Canada calculator, that amount would be $685,810.81 (love the pennies), if nothing major is done to that house over all those years other than maintenance, repairs, paint, carpet, roof, new heating and cooling etc., the house might be worth some $2 million on the market today. In the meantime, the family would have had a house to live in, bills to pay and maintenance. I somehow do not think that the cost of maintaining the home exceeded the $1.31 million markup plus the rent they would have paid had they not bought the house in the first place. So they would probably come out ahead. Therefore, I tend to agree, buying a home is worthwhile if you plan to stay, flipping has risks and sometimes things happen that cause people to move for work or personal reasons, but even that might get worked out if the buying and selling are happening in the same up or down market.
OR Look at things another way. Allowing strictly for inflation a house bought in 2005 for $450K, would now cost $509,860.47, now the actual value of the house because of the recent boom years means it is probably closer to $630,000, again without major renovations. It would mean clients would have to save almost $200K in 7 years, now while possible for some not always feasible.
Why are you considering a home? What are your long term goals, if you are looking longer term but worried about a drop in the value, then consider houses that can be renovated down the road to accommodate the changing needs of the family.
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