Sarnia-Lambton Real Estate Blog

Local REALTORS recommend HST relief for homebuyers

Government of Canada Takes Action to Strengthen Housing Financing

 source:

Government of Canada Takes Action to Strengthen Housing Financing

The Honourable Jim Flaherty, Minister of Finance, today announced a number of measured steps to support the long-term stability of Canada's housing market and continue to encourage home ownership for Canadians.

"Canada's housing market is healthy, stable and supported by our country's solid economic fundamentals," said Minister Flaherty. "However, a key lesson of the global financial crisis is that early policy action can help prevent negative trends from developing."

The Government will therefore adjust the rules for government-backed insured mortgages as follows:

       Require that all borrowers meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term. This initiative will help Canadians prepare for higher interest rates in the future.

       Lower the maximum amount Canadians can withdraw in refinancing their mortgages to 90 per cent from 95 per cent of the value of their homes. This will help ensure home ownership is a more effective way to save.

       Require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation.

"There's no clear evidence of a housing bubble, but we're taking proactive, prudent and cautious steps today to help prevent one. Our Government is acting to help prevent Canadian households from getting overextended, and acting to help prevent some lenders from facilitating it," said Minister Flaherty. "If some lenders aren't willing to act themselves, we will act. These measures demonstrate the Government is committed to taking action when necessary to support the long-term stability of a sector that is so vital to our economy and the financial well-being of Canadian families."

These adjustments to the mortgage insurance guarantee framework are intended to come into force on April 19, 2010.

Backgrounder

Canada's Housing Market Remains Strong

Canada's housing market remains healthy and stable. According to the International Monetary Fund, our housing market is fully supported by sound economic factors, such as low interest rates, rising incomes and a growing population. Moreover, mortgage arrears—overdue mortgage payments—have also remained low.

Today's announcement is part of the Government's policy of proactively adjusting to developments in the housing market that could take root and cause instability. These steps are timely, targeted and measured, and will reinforce the importance of Canadians borrowing responsibly and using home ownership as a savings mechanism.

Mortgage Insurance

Mortgage insurance (which is sometimes called mortgage default insurance) is a credit risk management tool that protects lenders from losses on mortgage loans. If a borrower defaults on a mortgage, and the proceeds from the foreclosure of the property are insufficient to cover the resulting loss, the lender submits a claim to the mortgage insurer to recover its losses.

The law requires federally regulated lenders to obtain mortgage insurance on loans in which the homebuyer has made a down payment of less than 20 per cent of the purchase price (also called high loan-to-value ratio loans). The homebuyer pays the premium for this insurance, which protects the lender if the homebuyer defaults.

The Government ultimately backs most insured mortgages in Canada. It is responsible for the obligations of Canada Mortgage and Housing Corporation (CMHC) as it is an agent Crown corporation. In order for private mortgage insurers to compete with CMHC, the Government backs private mortgage insurers' obligations to lenders, subject to a deductible equal to 10 per cent of the original principal amount of the loan.

In October 2008, the Government adjusted its minimum standards for government-backed, high-ratio mortgages, including:

       Fixing the maximum amortization period for new government-backed mortgages to 35 years.

       Requiring a minimum down payment of five per cent for new government-backed mortgages.

       Establishing a consistent minimum credit score requirement.

       Requiring the lender to make a reasonable effort to verify that the borrower can afford the loan payment.

       Introducing new loan documentation standards to ensure that there is evidence of reasonableness of property value and of the borrower's sources and level of income.

Measures Announced Today

Today, the Government announced three changes to the standards governing government-backed mortgages.

Qualifying at a Five-Year Rate

Current interest rates are at record low levels, which has improved the affordability of housing for Canadians. It is important that Canadians borrow prudently and are able to manage their debt loads when interest rates rise.

Lender and mortgage insurers look at two key ratios when assessing the ability of a borrower to make payments on a mortgage loan:

       Gross Debt Service (GDS) ratio—the ratio of the carrying costs of the home, including the mortgage payment, taxes and heating costs, to the borrower's income.

       Total Debt Service (TDS) ratio—the ratio of the carrying costs of the home and all other debt payments to the borrower's total income.

Currently, the interest rate used to determine the mortgage payment for these calculations is either the rate fixed for the term of the mortgage or, in the case of a variable-rate mortgage and mortgages with terms of less than three years, the greater of the contract rate and the prevailing three-year fixed rate.

The adjustments to the mortgage framework will require mortgage insurers to ensure that borrowers qualify for their mortgage amount using the greater of the contract rate or the interest rate for a five-year fixed rate mortgage when calculating the GDS and TDS ratios.

This measure is intended to protect Canadians by providing them with additional flexibility to support mortgage payments at higher interest rates in the future.

Limit the Maximum Refinancing Amount to 90 per cent of the Loan-to-Value Ratio

Borrowers seeking financial flexibility can currently refinance their mortgage and increase the amount they are borrowing on the security of their home up to a limit of 95 per cent of the value of the property. This type of refinancing lowers the borrower's equity in their home. The adjustments today will lower the maximum amount of the mortgage loan in a refinancing of a government-backed high ratio mortgage loan to 90 per cent of the value of the property, consistent with the principle that home ownership is a tool for savings.

Discouraging Speculation by Requiring a Minimum Down Payment of 20 per cent for non-owner-occupied properties

This measure will require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation. Currently, borrowers may purchase a residential property with a 5 per cent down payment. Today's change will require a 20 per cent down payment for small (i.e., 1- to 4-unit) non-owner-occupied residential rental properties. Borrowers purchasing owner-occupied residential properties which also include some rental units (e.g., borrowers purchasing a duplex to live in one unit and rent out the other) will still be able to access government-backed mortgage insurance with a 5 per cent down payment.

Moving to the New Framework

These adjustments to the mortgage insurance guarantee framework are intended to come into force on April 19, 2010. Exceptions would be allowed after April 19 where they are needed to satisfy a binding purchase and sale, financing, or refinancing agreement entered into before April 19, 2010.

THIS ARTICLE WAS PROVIDED BY: 

Linda Belan

Mortgage Specialist

BMO Bank of Montreal

Business Development Group

Phone: (519) 344-2443

Cell:     (519) 384-9237

Fax:     (519) 344-4488

linda.belan@bmo.com

Making Money Make Sense 

Open House in Corunna on Sunday

Corunna, St. Clair  -  I invite everyone to visit my open house at 310 Cameron St on July 26 from 1:00 PM to 3:00 PM.

Brand New 1600sq.ft. Raised Ranch. Features include gleaming hardwood floors, open concept, Cathedral ceilings, huge kitchen with eat in area. Ensuite bathroom. This is one of the best priced new homes on the market. Ask about special pricing for a completely finished basement. Asking price is $249,900

Property information

Price Reduced on 308 Cameron St in Corunna

Corunna, St. Clair  -  Announcing a price reduction on 308 Cameron St, a 1,530 sq. ft., 2 bath, 3 bdrm bungalow. Now MLS® $254,900 CAD - price plus GST.

Property information

Price Reduced on 310 Cameron St in Corunna

Corunna, St. Clair  -  Announcing a price reduction on 310 Cameron St, a 1,600 sq. ft., 2 bath, 3 bdrm bi-level. Now MLS® $259,900 CAD - .

Property information

Why Some Houses Don’t Sell & How to Avoid 4 Costly Mistakes

You put your house up for sale and the listing expired without a sale.  What went wrong?  The majority of houses sell during the initial listing time, usually a period of three months or more.  But - as you've found out - some don't sell.

What should you do now?  If your listing has expired and now you really want results, I can help.  Don't get spooked by the death of the first listing.  The home sale you want is still well within reach!

Are You Committed To Selling?
First, although you may feel discouraged, if you still want or need to sell, make a renewed commitment to do what it takes to market the house effectively.

Next, find out what went wrong.  An expired listing usually reflects a problem in one or more of four major areas:  communication, price, condition or marketing.

1. Communication
Why no sale?  What did prospects say about price, about condition?  What feedback did other agents offer?  Teamwork between seller and agent is the key to a good marketing plan. 

As well, make it easy to show, keep the house in showing condition, depersonalize and keep large pets at a distance. As well, tell your REALTOR® of changes to the neighbourhood and property condition.

2. Price
This is the most common culprit for the lack of a sale.  The wrong price attracts the wrong buyers or worse - none at all.

Market conditions and competition probably have changed since you initially listed your house. 
Is your price right?  Are your terms competitive? Activity without offers often indicates overpricing.  Remember, any house, no matter what condition, will sell for the right price. 

With our up-to-date market analysis, you'll know how your house compares to others offered for sale today.

3. Condition

A house in move-in condition invites a sale. We can tour your house and help you see it as prospective buyers do.

4. Marketing
As the old adage says, "Advertising doesn't sell houses, agents do."  Your secret to success is a carefully crafted marketing plan that exposes your property to the widest possible pool of prospective buyers and agents.

If you would like to know why your home did not sell contact me:

George Carr | Sales Representative
CENTURY 21 Results ASAP Realty Ltd
500 Exmouth St.
Sarnia, ON  N7T 5P4
Direct Line: 519-464-7219| Fax: 519-337-7804
Email: gcarr@century21results.com
To view all of our office listings visit: www.georgecarr.ca

The Home Renovation Tax Credit

Ron Mahu

Mortgage Development Manager

Sarnia and Area

519-384-0096

Recent Federal Budget Encourages New Homebuyers

 The government has earmarked $15 million to nudge Canadians with RRSPs into buying homes. Now you can withdraw $25,000 tax free from your RRSP to buy or build a first home - up from $20,000.

The Home Buyers’ Plan (HBP)

The Home Buyers' Plan (HBP) is a program that allows you to withdraw up to $25,000 from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability.

Conditions for Participating in the HBP

Only the individual who is entitled to receive payments from the RRSP (the annuitant) can withdraw funds from an RRSP. You can make withdrawals from more than one RRSP as long as you are the annuitant (plan owner) of each RRSP. Your RRSP issuer will not withhold tax on these amounts.

Generally, you will not be allowed to withdraw funds from a locked-in RRSP.

To participate in the HBP, ONE of the following conditions must apply:

·      You are withdrawing funds to buy or build a home for yourself as a first-time home buyer;  or

·      You are withdrawing funds to buy or build a home for a related person with a disability.

In addition, ALL of the following conditions must apply:

·      You must enter into a written agreement (Offer of purchase) to buy or build a qualifying home. The agreement may be with a builder or contractor, or with a realtor or private seller. Obtaining a pre-approved mortgage does not satisfy this condition.

·      You intend to occupy the qualifying home as your principal place of residence.

·      Your repayable HBP balance on January 1 of the year of the withdrawal is zero.

·      Neither you nor your spouse or common-law partner owns the qualifying home more than 30 days before the withdrawal.

·      You are a resident of Canada.

·      You buy or build the qualifying home before October 1 of the year after the year of withdrawal.

Paying Yourself Back

Your first repayment is due the second year following the year in which you made your withdrawals.

Each year, the Canada Revenue Agency will send you a statement of account with your notice of assessment or notice of reassessment. The statement will include:

·      the amount you have repaid (including any additional payments);

·      your balance for the HBP; and

·      the amount of the next repayment you should make.

You have up to 15 years to repay the amount that you withdrew under the HBP. Generally, for each year of your repayment period, you have to repay 1/15 of the total amount you withdrew until the full amount is repaid to your RRSPs.

For example, if you withdraw funds from your RRSP in July 2009, you must pay at least 1/15th of the withdrawal in 2011 (or the first 60 days of 2012).

For full information visit

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html

 provided by:

Is it time to “move up?”

Is it time to “move up?”

Source: Ontario Real Estate Association

Chances are when you bought your first home you were thinking of it as a “starter home” and dreamed of owning a larger and better home one day.

With today’s mortgage rates in the lowest range they’ve been for almost 30 years, you might be pleasantly surprised that you can afford that “move up” house now. Using the equity you’ve built up in your current home, your carrying charges may not be much larger than what you’ve been used to paying. If you’re curious to find out, ask a REALTOR® to help you calculate carrying costs on a “move up” home.

There are many reasons why you may wish to have a larger home including a growing family, the desire to have more bedrooms so the kids can have their own space. Or maybe you want a larger yard, a garage or a home with a private driveway. Whatever your reasons, moving up to a new home can be very satisfying.

It’s also a smart move because the equity in your home will continue to grow and the value of a bigger and better home will be ultimately greater over time. As well, the pride of ownership in a bigger house will probably be even greater than you had when you bought your first home.

When you decide that moving up is the way to go, be sure to enlist the services of a REALTOR®. Your options can be confusing at times, but a REALTOR® can help you make the right choices.

He or she will help you determine the market value of your current home and therefore the price range you should be considering in a move up home. You’ll need to determine where you want to move. Do you want to stay in the same neighbourhood or move on? There are almost as many individual choices on location as there are homes. A REALTOR® is skilled and knowledgeable in all aspects of a real estate transaction and can ensure you make a smooth move.

Moving up to meet your changing lifestyle and needs can be an exhilarating experience. Your home is probably the best investment you’ll ever make so why not take advantage of current market conditions and enhance your investment today.

Survey Shows More Ontario Home Owners Are Renovating Prior To Selling:

Source: REM, November, 2008 Issue #233

 A recent survey (first half of 2008) by Re/Max Ontario-Atlantic Canada shows that the increasingly competitive housing market is prompting Ontario home owners to invest in renovations before listing there homes for sale.

The survey found that 79% of sellers had done renovations prior to selling there home and of those surveyed, 39% did so with selling in mind. Approximately 37% of sellers had made upgrades after listing there home for sale.

According to the survey, homes sellers are spending an average of $21,000 in renovations with the wealthiest owners (avg. income of $150,000+) spending an average of $37,663 and those earning under $30,000 were spending the least with an average of $8,263 on renovations.

The most popular renovations were updating kitchens (cabinets, counter tops,) and updating flooring to hardwoods and updating windows.

Buyers will view an average of nine properties before deciding on the one that is right for them. A home that has had recent upgrades and renovations has a definite advantage to a similar property with no upgrades. The survey also showed that homes  with updated kitchens, hardwood floors, open concept and finished basements appealed most to the buyers who were surveyed.

Canada's Housing Boom Over, But No Collapse In Sight: BNS

The following article was provided to me by Ron Mahu, Mortgage Development Manager at Scotiabank here in Sarnia. If your are looking for a new mortgage or thinking of refinancing, I would definitely recommend Ron. He will work hard to get you the best deal possible.
Here is his contact info:

Lest We Forget

This article was sent to me via email. It seems to have been writing a few years back but it still rings true today:

British news paper salutes Canada .. . . this is a good read. It is funny how it took someone in England to put it into words...

 Sunday Telegraph Article From an April 2002 UK wires:
 Salute to a brave and modest nation - Kevin Myers, 'The 
Sunday Telegraph' London:

Until the deaths of Canadian soldiers killed in Afghanistan, probably almost no one outside their home country had been aware that Canadian troops are deployed in the region.

And as always, Canada will bury its dead, just as the rest of the world, as always will forget its sacrifice, just as it always forgets nearly everything Canada ever does. It seems that Canada's historic mission is to come to the selfless aid both of its friends and of complete strangers, and then, once the crisis is over, to be well and truly 
ignored.

Canada is the perpetual wallflower that stands on the edge of the hall, waiting for someone to come and ask her for a dance. A fire breaks out; she risks life and limb to rescue her fellow dance-goers, and suffers serious injuries. But when the hall is repaired and the dancing resumes, there is Canada, the wallflower still, while those she once helped Glamorously cavort across the floor, blithely neglecting her yet again.

That is the price Canada pays for sharing the North American continent with the United States, and for being a selfless friend of Britain in two global conflicts.

For much of the 20th century, Canada was torn in two different directions: It seemed to be a part of the old world, yet had an address in the new one, and that divided identity ensured that it never fully got the gratitude it deserved.

Yet it's purely voluntary contribution to the cause of freedom in two world wars was perhaps the greatest of any democracy. Almost 10% of Canada's entire population of seven million people served in the armed forces during the First World War, and nearly 60,000 died. The great Allied victories of 1918 were spearheaded by Canadian troops, perhaps the most capable soldiers in the entire British order of battle.

Canada was repaid for its enormous sacrifice by downright neglect. It's unique contribution to victory being absorbed into the popular Memory as somehow or other the work of the 'British.'

The Second World War provided a re-run. The Canadian navy began the war with a half dozen vessels, and ended up policing nearly half of the Atlantic against U-boat attack. More than 120 Canadian warships participated in the Normandy landings, during which 15,000 Canadian soldiers went ashore on D-Day alone.

Canada finished the war with the third-largest navy and the fourth largest air force in the world. The world thanked Canada with the same sublime indifference as it had the previous time.

Canadian participation in the war was acknowledged in film only if it was necessary to give an American actor a part in a campaign in which the United States had clearly not participated - a touching scrupulousness which, of course, Hollywood has since abandoned, as it has any notion of a separate Canadian identity.

So it is a general rule that actors and filmmakers arriving in Hollywood keep their nationality - unless, that is, they are Canadian. Thus Mary Pickford, Walter Huston, Donald Sutherland, Michael J. Fox, William Shatner, Norman Jewison, David Cronenberg, Alex Trebek, Art Linkletter and Dan Aykroyd have in the popular perception become American, and Christopher Plummer, British.

It is as if, in the very act of becoming famous, a Canadian ceases to be Canadian, unless she is Margaret Atwood, who is as unshakably Canadian as a moose, or Celine Dion, for whom Canada has proved quite unable to find any takers.

Moreover, Canada is every bit as querulously alert to the achievements of its sons and daughters as the rest of the world is completely unaware of them. The Canadians proudly say of themselves - and are unheard by anyone else - that 1% of the world's population has provided 10% of the world's peacekeeping forces.

THE IMPORTANCE OF A HOME INSPECTION BEFORE BUYING

 Source: Ontario Real Estate Association

A home inspection prior to purchasing a home or condominium can bring peace of mind when you sign the sales contract. Knowing what to expect both inside and out will help you make an informed decision about the value of the home and the future upkeep. A home inspection accomplishes two important goals. First, it gives you a chance to determine the condition of the house, its structural soundness, and the condition of its mechanical systems. Second, it brings any problems to the seller's attention at a time when they can be resolved before closing a sale.

If you sign a contract before inspection, consider including a clause that the sale is contingent upon a satisfactory structural inspection, and specify when the inspection is to be carried out. That way, you are protected.

Comprehensive Inspection

A comprehensive inspection includes a visual examination of the structure from top to bottom, including the heating, air conditioning systems, the interior plumbing and electrical systems, the roof and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement and visible structure. Following the examination, the inspector will provide a report that not only points out possible defects or areas of concerns, but also the positive aspects of the structure as well as the type of maintenance that will be necessary to keep the home in good shape.

Even the most experienced homeowners lack the knowledge and expertise of a professional inspection firm. For example, watermarks in the basement may indicate a chronic seepage problem, or simply may be a result of a single incident.

Professional Assessment

A professional assessment will provide complete information about the condition of the property you are considering and will help avoid any unpleasant surprises after the sale. In addition, a home inspector can remain totally objective, while you as a prospective homebuyer may be emotionally involved. The inspection fee for a typical single-family house can vary depending upon the geographic area. The particular features of the home such as size, age and special structures will be taken into consideration.  A decision to have a home inspected is a good investment.  You might save many times the cost of inspection by being aware of defects, maintenance requirements, and upgrading requirements.

Good decorating should not sell you on a house. Remember, you're also buying structural and mechanical systems. Walk through a house twice before you hire an inspector. The first time, look at the rooms, the floor plan, and envision your own decorating ideas for the house. The second time, go back and look at the condition of the walls, doors, appliance, and plumbing. If the home still looks good after two visits and you're getting serious about the purchase, hire an inspector. Inspectors should be licensed in building-related fields; architects, contractors, and structural engineers are good examples. When interviewing a potential home inspection firm, carefully inquire about the specifics of their work and company. Ask how long they have been in business, ask for references from previous customers. Find out what type of insurance they carry and do they guarantee inspections?

A home inspection usually lasts about three hours. Professional inspection companies will be happy to answer all your questions. Avoid firms that issue only a verbal report. The report should be in narrative form, not just a checklist of items inspected. The home inspector should also issue a written report with accurate cost estimates for any major defects discovered during the inspection. You may find it valuable to accompany the inspector as he goes through the house.

Property inspections are not limited to residential properties. Many inspectors help homeowners with analysis and solutions to specific problems such as energy conservation, wet basements or cracked foundations. Inspectors also inspect work upon completion to ensure that a contract has been properly fulfilled.

If you are considering purchasing a home, the Ontario Real Estate Association advises that you invest in an inspection by a reputable and qualified inspection firm. Buying a home is one of the biggest decisions you will make. Know what you are buying and what your future upkeep obligations will be.

Is Now A Good Time To Sell Your House?

Source: Ontario Real Estate Association

Thinking of selling your home but not sure if now is the “right time?” Talk to a REALTOR® for sound advice on when to sell your home in the least amount of time for the best possible price.

First a REALTOR® will help you examine your reasons for wanting to sell. The most common reasons why people decide to sell their homes include changes to their financial status, an employment transfer, a growing family or retirement. Today’s low interest rates have also made it attractive for many homeowners to “move up” to a larger home.

Whatever your reason, selling a house is a complicated procedure so it’s imperative to have a qualified real estate professional on your side.  Because selling a home involves large sums of money and complicated legal documents, a REALTOR’s expertise can help a homeowner avoid costly mistakes.

Real estate cycles
Buying your home was probably the best investment you ever made. That’s because over the long term, real estate has proven to be a sound investment while at the same time offering you and your family shelter and a feeling of pride of ownership. 

However, real estate is subject to the law of supply and demand which creates cycles in the market. A shortage of homes generally means prices rise. This cycle is commonly known as a “seller’s market.” Alternately, a surplus of homes can result in a slow down in home sales or even a reduction in prices and is often referred to as a “buyers market.”

One of the most important services a REALTOR® provides is market analysis. Most people don’t have the time it takes to conduct the comprehensive market research required to accurately price a home. A REALTOR® can give you up-to-date information on what economic and other factors are impacting current market conditions.

Which market is best?
Obviously, you will want to sell your home quickly and for the highest possible price. In a “seller’s market,” you often see many buyers competing for the same house resulting in top prices -- sometimes even over the original list price. However, if you are planning to purchase another home after the sale, chances are you will be competing in the same seller’s market faced with higher prices.

In a buyer’s market you may find you have to wait longer to sell your home for a fair price. The upside to selling your home in a buyer’s market is you’ll have more selection and pricing options when you go looking for your new property.

Although the current market cycle should influence your decision to sell, remember there are trade-offs to selling in either a buyer’s or seller’s market. Some people are concerned that if they trade up to a larger home in a buyer’s market they will lose some of their home’s equity in the sale. But, while you may sell your home at a “discount,” it’s likely you will purchase your larger home at an even greater discount. The advantage is you then own a larger asset with even greater potential for appreciation.

Seasonality
In Ontario, changing seasons and the weather can affect buyer demand. For example, fewer buyers may be out looking at homes during the cold and snowy winter months, but as a seller you will be competing with fewer homes on the market. Spring tends to be an attractive time for real estate sales as gardens start to look nice again and people come out of hibernation. Buyers with school-aged children like to purchase in the spring so they can move in over the summer. However, homes sell throughout the year so think of the season as only one factor in deciding when to sell your home.

There are many important issues that come into play when deciding to sell your home. A REALTOR® can help you to determine if now is the best time for you.

Houshold Tip of the Month (February)

One way to save on your heating bills is to install a programmable thermostat. You should set the thermostat lower while you are sleeping or away. Also consider closing of the heat vents and doors to rooms that are seldom used. This will dierect the heat to the rooms you use most often.