Tuesday, February 7, 2012

Mortgage Insurance and January Stats




The new year has begun with plenty of action in the KW real estate market. Although the number of sales is down, house prices continue to move up. See full media release here: JANUARY STATS

New this week is 672 Spinnaker Cres. MLS 1214962 for $359,900. A lovely 3 bed, 3 bath home in Eastbridge with features like corian countertops, hardwood and ceramic flooring.


Coming up next week is a great 3+1 bedroom backsplit in on a quiet crescent in Country Hills, Kitchener. It's an immaculately kept home that's great for a growing family or for someone who enjoys entertaining.


As part of my continuing education to keep abreast on all things Real Estate, a few weeks I took a course from RBC and Genworth on Mortgage Insurance (Mortgage underwriting).

If you've ever purchases a home with less than 20% down than you have purchased Mortgage Insurance. How do I know? Well, you wouldn't have had a choice, because it's how our Canadian system works. We've all heard horror stories from the U.S of people walking away from their homes because they put so little down that when house prices fell it made more sense just to give up the house. This doesn't happen nearly as often in Canada because we are required to purchase Mortgage Insurance.

There are really only 3 companies that offer Mortgage Insurance: CMHC, which is run by the Government, Genworth and Canada Guarantee which are both private companies.

There are two parts to the pre-approval process for financing. The approval of you: your credit, job situation, your capital, your ability to pay, your likelihood to pay and the approval of the property: how sellable will it be for the mortgage lender to sell if you don't pay your mortgage payments? That's why a lender will give you a pre-approval but won't be able to give you a firm approval until you have an offer in place on a particular property.

Some interesting points from the course:
* If you're self employed you will likely be required to show a minimum of 2 years income. They usually use the average income of those 2 years or use the income from your lowest year.

*RBC has a New to Canada program to help new immigrants who may not have any Candian credit.

*It's fantastic to never have to borrow, but when it comes time to borrow for a purchase like a home it can become a problem if you don't have any credit at all.

*RBC requires a full appraisal to be ordered on all FSBO (For Sale By the Owner) because of the higher risk that the property's value is inaccurate.

* It's a myth that checking your Beacon Score (credit) will lower your score automatically. The system now a days is smarter than that. It can tell if you're shopping around for rates to purchase a house or a car. It will however penalize you if your credit is being checked multiple times to open new credit accounts.


In light of this last note, here's an exercise to try. Go to http://www.econsumer.equifax.ca/. For $23.95 you can check your own credit report. It will give you a number of pages indicating your Credit Score summary, inquiries that have been made of your credit, and even your status. A score of 300-559 is poor, but a score of 760+ is Excellent.


Why check your own score? It's the best way to get a handle on our status for further larger borrowing. It will let you know what habits you have that may be bringing your score down. And it also give you a heads up on identity theft.


It is actually recommended that you check your own score every year and half or so to keep a pulse on things.


Feel free to comment or give me feedback!

Any questions? Email me at Krista@kristajonker.com

Thanks for reading!

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