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Posts Tagged ‘buying a home’

As a Buyer, You Don’t Pay The Realtor’s Commission

So many first time buyers wonder, “do you have to pay a real estate agent if you are buying a home?” For some, the thought of having to shell out extra cash when they are already doing all they can to save for their down payment is enough to make them walk away from the entire process before they even get going. Many are surprised to find out that the answer is actually no. A home buyer does not pay their agent, rather the agent earns their commission from the seller side of the transaction.

Need help finding an agent? Connect with Earl Taylor

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As a result of its annual review of its insurance products and capital requirements, CMHC is increasing its mortgage loan insurance premiums for homeowner and 1- 4 unit rental properties to reflect its increased capital targets.
CMHC’s capital management framework is consistent with international practices and Canadian guidelines for mortgage insurers. Higher capital targets are consistent with Canadian and international industry trends and make the financial system more stable and resilient. As CMHC mortgage insurance is backed by taxpayers, capital holdings reduce Canadian taxpayers’ exposure to the housing market, and contribute to the long term stability of the financial system.
For the average Canadian homebuyer requiring CMHC-insured financing, the higher premium will result in an increase of approximately $5 to their monthly mortgage payment. This is not expected to have a material impact on the housing market. Effective May 1, 2014, the premiums will increase by 15%, on average.

The premiums** and premium surcharges will be as follows:
Standard Premiums Loan-to-Value Ratio Total Loan Amount Increase to Loan Amount
Up to and including 65% 0.50% 0.60%
Up to and including 75% 0.65% 0.75%
Up to and including 80% 1.00% 1.25%
Up to and including 85% 1.75% 1.80%
Up to and including 90% 2.00% 2.40%
Up to and including 95% 2.75% 3.15%
90.01% to 95% – Non-Traditional Down Payment 2.90% 3.35%

Self-Employed Borrowers without Third Party Validation of Income Loan-to-Value Ratio Total Loan Amount Increase to Loan Amount
Up to and including 65% 0.90% 1.75%
Up to and including 75% 1.15% 3.00%
Up to and including 80% 1.90% 4.45%
Up to and including 85% 3.35%* 6.35%
Up to and including 90% 5.45%* 8.05%

*Rental Loans (1–4 Units) Loan-to-Value Ratio Total Loan Amount Increase to Loan Amount
Up to and including 65% 1.45% 3.15%
Up to and including 75% 2.00% 3.45%
Up to and including 80% 2.90% 4.30%
Note: Premiums shown with “*” do not apply for Refinance transactions.
**For purchase/new construction loan applications, the premium rate is applied to the Total Loan Amount. For portability and refinance loan applications, the premium is the lesser of the premium rate applied to the Increase to Loan Amount; or the premium rate applied to the Total Loan Amount.
Premium Surcharges Extended Amortization Surcharge (for each 5 year period beyond 25 years) 0.25% Blended Amortization Surcharge 0.60% Conversion surcharge for self-employed borrowers without traditional documentation to support income verification 1.75%
CMHC’s new premium rates will be effective for new mortgage loan insurance requests submitted on or after May 1, 2014. The current mortgage loan insurance premiums will apply for applications submitted to CMHC prior to May 1, 2014, regardless of the closing date. As is normal practice, complete borrower and property details must be submitted to CMHC when requesting mortgage loan insurance.
CMHC reviews its premiums on an annual basis and has adjusted them several times since being commercialized in 1998. Adjustments have included both increases and decreases to the premiums. Going forward, CMHC plans to announce decisions on premiums in the first quarter of each year.
To help you respond to consumer inquiries, CMHC has information available on the new premiums at http://www.cmhc.ca

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