First time homebuyer alert


Making your move now could save you thousands

By Cameron McNeil
As a first time homebuyer, you may be eligible for a high-ratio mortgage. This means you could own your home with as little as a five per cent down payment. This type of high-ratio mortgage requires Canada Mortgage and Housing Corporation (CMHC) financing or insurance – which means, to a degree, CMHC is guaranteeing your loan with the bank. Net, you do pay a bit more than a traditional mortgage but you can own your home sooner and without a large lump sum deposit (typically 20%) at time
of completion.
CMHC is increasing the premiums again effective June 1, 2015. This will affect you if you have less than a ten per cent down payment.
EXAMPLE – BUYING A HOME WITH5% DOWN (95% Loan-to-Value)
YOUR NEW HOME COSTS $262,500
LESS 5% DEPOSIT $12,500
LOAN PRINCIPAL $250,000
CURRENT PREMIUM $7,875
NEW PREMIUM $9,000
ADDITION TO PREMIUM IF YOU BUY AFTER THE DEADLINE $1,125
* Based on a 5 year term @ 2.79% and a 25 year amortization. Figures are estimates only. Taxes and additional fees are not included.
If you are interested in learning more about CMHC programs, please contact your bank er or visit the CMHC website at www.cmhc-schl.gc.ca/.
FAQ:
1. When do I need mortgage loan insurance?
Typically lenders will require mortgage loan insurance if a borrower (you) has a down payment of less than 20 per cent of the purchase price of the home.
2. Is there a maximum purchase price for CMHC Mortgage Loan Insurance?
Yes, the maximum purchase price or as improved property value must be below $1,000,000.
3. Who arranges CMHC Mortgage Loan Insurance?
Your lender will arrange for the purchase of CMHC Mortgage Loan Insurance. When you negotiate your loan terms make sure to ask that the mortgage be
CMHC insured.
4. Does CMHC Mortgage Loan Insurance only apply to traditional single-family residential properties?
No, CMHC offers mortgage loan insurance products on various property types including condominiums, townhomes, duplexes, owner-occupied properties, and many more.
5. I recently purchased a home which closes before June 1, 2015, and my mortgage will be CMHC-insured. Will the premium increase affect me?
No, CMHC’s new premium rates will be effective for new mortgage loan insurance requests submitted to CMHC on or after June 1, 2015, regardless of the closing date of the home purchase.
6. I am planning to buy a home in the coming months and will require a CMHC-insured mortgage. Will the premium increase affect me?
Your lender must have the property information and address in order to submit the request for mortgage loan insurance. The request must be filed before June 1, 2015. If you want to avoid the premium increase, we suggest finding your home, sign a Purchase and Sales Agreement and meet with your lender all before May 25, 2015 – this will give you a few days buffer before the final deadline.
Cameron McNeil is the owner of MAC Marketing Solutions, one of B.C.’s and Alberta’s leading real estate sales and marketing firms. Cameron also co-founded TAC Real Estate, a resale firm, and MPC Intelligence, a real estate market-research firm. Together with his experienced and dedicated team of sales, marketing and administration professionals, he has transacted more than 14,000 new homes and $5 billion in sales. Email him at cm@macmarketingsolutions.com or follow him on Twitter @mac_marketing

Original article: The Province
Read original aricle here.