Happy First Day of Spring!!
| This is my first Newsletter of 2019 as I dial back the newsletters to quarterly. I will still continue to send out important announcements as needed. This newsletter will cover both, it’s the first quarter as in its spring and the new budget. There’s a lot of ground to cover there. Hands up if you think this budget is helping home buyers, especially first-time homebuyers? My hands are firmly pinned under my thighs. Ok, the $35,000 from the RSP is helpful, however, not all homebuyers have $35,000 in their RSP. Then there’s the let us loan you 5 or 10%. This is not a very helpful tool? Sure, it helps a crown corporation earn more money, and let me tell you, it is a money maker. They were in a profit position and still raised the insurance fees for no reason 3 years ago. To me the answer was clear, the Feds only needed to say, “Hey, sorry friends, we got it wrong with the stress test. We didn’t realize the trickle-down effect it would have on the economy, housing prices and starts and on first-time homebuyers. Yes, the first time homebuyers fuel the economy with all the stuff they have to buy for their new home, that keep manufacturing going and jobs, we didn’t understand the impact.” Then everyone across the board would be singing the Feds praises for getting it right. Maybe next time? Now to be clear, I don’t think the stress test is necessarily a bad thing, it actually could have been a pretty smart tool if introduced ten years ago… but the stress test was introduced at a time where there wasn’t really any reason to have a stress test. The financial crisis was long over, the default rate in Canada was less than one half of one percent. In short, and in my humble opinion, the Feds got it wrong and this budget is not ACTUALLY helping first-time buyers or any buyers for that matter. Do you know what might have helped? A thirty-year amortization would have had the same effect but without the repayable loan from CMHC. Again, just my two cents. In other news, the snow is melting. I can see the corner of my grass creeping out from under the snow, and in ten short weeks it will be the May 24 weekend otherwise known as my get down and dirty days, I’ll be digging, seeding and planting in the garden. What are you most looking forward to this spring? If you are a gardener that likes to trade plants, call me! I can’t wait to get muddy. Love it. As always, if you have questions, concerns or would like to chat about mortgages. I am listening. Read more from Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres The Star: Federal budget includes new loans to help first-time homebuyers |
Are You Financially Literate?
| Have you asked yourself, how did I get here? I wish I knew how to invest? I wish I had money to invest. One day when I have… Sadly we do not learn financial literacy in school, sure there’s the basic class on housing expenses, but its a class we are happy to forget about as we walk out of our grade 10 classroom, besides living on your own seems decades away. I’ve known Doris Belland passively for a few years now, but I didn’t really understand what she does, something to do with money and finance?? Turns out this lady is a genius. She’s offering financial literacy to women. Men, don’t be jealous! I’m sure you can hire Doris as well. In truth, a large majority of women are happy to let someone else manage the money or don’t take the time to learn about their finances. Doris offers a program that teaches women about money, hidden expenses, Doris teaches you how to invest and take care of YOUR money. I am in awe of Doris and the service she is providing. So much so, I have signed up for her one year program, I encourage all women to sign up and join me in an educational adventure. How much is financial neglect costing you? “As part of the survey, participants were also asked to answer a series of 14 questions concerning their knowledge of topics such as inflation, debt repayment, banking fees and credit reports. On average, Canadian adults answered 8.7 questions correctly, unchanged from 2009, the last time the survey was conducted. Almost one-third of survey participants (31.4%) in 2014 correctly answered 7 questions or less, while 2.7% provided a correct answer to all 14 questions.” Read more from Doris’s blog Use my 12 years of knowledge and experience to help prepare you for your biggest purchase. Purchase with confidence. Jacquie Bushell 613-882-3201 Jacquie@JacquieBushell.ca |
What lenders look for when approving you for a mortgage
Purchasing a home is typically the largest purchase most people will make. There are a lot of factors to consider before you fill in the application.
My job is to provide you with the right amount of the correct information, so you make a qualified decision based on your unique situation.
What you will need to consider
Affordability ratios:
Rule #1 – GROSS DEBT SERVICE (GDS)
What is GDS? GDS is your monthly housing costs expressed as a ratio of your gross* income that generally cannot exceed 36-39% depending on your credit score. This ratio includes – your monthly mortgage payment, property taxes and heating costs ($120 per month) If you are buying a condo/townhouse, the GDS will also include ½ of your condo fees.
The total of these monthly payments divided by your “provable*” gross monthly income will give you your Gross Debt Service.
The math:
Mortgage payments + Property taxes + Heating Costs + 50% of condo fees / Annual Income
Rule #2 – TOTAL DEBT SERVICE (TDS)
What is TDS? TDS is your monthly housing costs -GDS plus other debt expressed as a ratio of your gross monthly income that generally cannot exceed 39-44% depending on your credit score.
The TDS ratio includes your GDS plus other debt that includes but not limited to; car payments, credit card balances, student loan payments, spousal/child support payment…
This ratio cannot exceed 39-44% of your annual gross income.
Total Debt Service.
Housing expenses (see GDS) + Credit card interest + Car payments + Loan expenses / Annual Income
What about the other 56% of your income?? The remains funds will be used up with taxes, groceries, insurances, daycare, school, medical, transportation, utilities all the adulting bills we dislike paying.
Rule #3 – YOUR CREDIT RATING, All parties on the application and title to the property, will need a credit check.
Your credit bureau report CBR provides lenders with an overview of how you utilize credit, your stability, and how responsible you are. Your CBR is an indication of how you will handle credit in the future, and your willingness to make your mortgage payments as promised. Ideally, lenders want to see two trade-lines that have been positively trading or twenty-four months or longer.
EASY, Right? Even if you have a hiccup on your CBR or your ratios are out of line, a good conversation, a plan, can help you move forward into home ownership.
Here’s a couple of tips for perfect credit.
1. Pay your bills on time, every time!
2. Keep your limits HIGH and your balances low! What? You say. Yes, a high limit with a low balance gives you a better score because your rations are low.
3. Card/Loan ratios Keep your balance below 50% of the limit. As your balance edges up and to 75% of the limit or should you reach 90 or 100% of the credit limit, your credit score will begin to tumble. In short, HIGH limits, with LOW balances will give you a solid credit score.
Let’s use my 12 years of knowledge and experience to help prepare you for your biggest purchase. Purchase with confidence. Jacquie Bushell 613 8823201 Jacquie@JacquieBushell.ca
| Mortgage Rates |
| Rates are crazy right not, why you ask? It’s spring and it’s the only time lenders feel generous. Rates: 5 year fixed 3.34% insured mortgage (meaning you paid CMHC) 5 year fixed 3.44% uninsured Variable rate Prime – 1.10% = 2.85% – insured mortgage (meaning you paid CMHC) Variable rate Prime – 0.75% = 3.20% – uninsured |