Hey everyone, hope Father's Day is off to a good start on this sunny day in Montreal. Today, I got inspired to write about having a green home. Often we all talk about being green by participating in our city's recycling and composting programs. I think we are all pretty green minded but post-recycling and car pooling we're not sure what next.
Personally, I don't think we do enough for the environment nor are living in a sustainable manner. As home owners or future home owners there are three ways you can help your pocket and help the environment, by: either buying an energy efficient home, making energy efficient renovations to your new home or renovate your existing home.
When buying an energy efficient home (or making energy efficient saving renovations), should you meet certain criteria both CMHC and Genworth will refund 10% of your insurance premium. On a mortgage of $200,000 you would save approximately $500 on your premium. According to the Quebec Government, by making these changes you'd save approximately 20% on your energy costs. Furthermore, through the Quebec Government's Novoclimat 2.0 Program you'd receive an additional $1000 in financial assistance. Is saving $1500 upfront and 20% on your energy bills enough? Let's take this discussion a bit further...
As many of your know I like Mike Holmes and the innovative ideas he shares. If you read his website you will see lots of green home ideas, which includes: roofing, heating and cooling, alternative lighting, power, and improving the building envelope. The aspect I find most interesting is water use. Mike talks about greywater, which is "used water that comes from sinks and drains, as well as reclaimed rainwater collected from a home’s roofs." The greywater is then held, filtered and sent back into the house for re-use. The water cannot be used for drinking, showering or bathing but definitely useful for watering the lawn, laundry, washing your car, and flushing toilets.
Mike states there are no Federal or Provincial building guidelines for greywater systems. In addition "Each individual municipality accepts or rejects proposed greywater systems that homeowners might want to install."
I am glad that Mike and people like him are sharing these ideas. I just wish our governments were a bit more ahead of the times by adopting more green building codes and help bring these topics into mainstream discussion.
Sunday, June 15, 2014
Thursday, June 12, 2014
A reverse what? A reverse who? A reverse mortgage
Afternoon #mortgageland, it's a drizzly day in Montreal but still a great day regardless. On 3 June 2014, Montreal's CJAD 800 AM hosted an interview about reserve mortgages with Kelley Keehn (personal finance expert and speaker). At the time, I tweeted through @cdnmortgages, that I would write an article about that conversation hence voila!
A reverse mortgage is designed for seniors. To qualify you must be 55 and older. Ideally by 55, you have little or no mortgage on your home. Everyone's desire is to have decent quality of life especially in the later stages of life and sometimes that is challenging with shrinking pensions. A reverse mortgage can unlock up to 40% (depending where you home is located) of the value of your home. These funds can be used at your discretion for: travel, pay debts, help others, renovate your home. I agree with Kelley that a reverse mortgage should be a last resort option as it is an expensive option.
A reverse mortgage is payment free because the interest is accrued and added to your mortgage balance over time. When you pass away or should sell your home then your mortgage shall be repaid back to Chip (the sole reserve mortgage company in Canada). Be aware this option does chew through the equity in your home. There are alternative options to a reverse mortgage. For instance, it can make more sense to take on a mortgage or line of credit up and put aside some proceeds to cover your payments over next few years. It's all depends on your needs, the costs and comfort level.
Reviewing article: "The bank said no - now what?"
Good afternoon Montreal Real Estate world. Today, I am reviewing an article that caught my eye in the National Post entitled "The bank said no - now what?" Susan Smith does a great job painting the current mortgage landscape and impact of the post-2008 Federal Government rule changes. However, I'd add a couple things. Susan Smith discusses how the rules changes have impacted certain consumers, I shall solely focus on the self-employed.
The Self Employed: Okay, here is the unplugged truth for anyone self employed. Is it really harder for self employed people to qualify for a mortgage? I'd say it depends on your specific circumstances (declaring income and credit quality are the usual suspects). According to Susan, "The government...tightened requirements for the self-employed, requiring independent validation of income statements." In other words, the Federal Government is forcing the self employed to declare more income on their income taxes. It is much harder to get a mortgage with an "A-lender" under the self employed program without declaring anything reasonable. For example, the most common insured self-employed program would be Genworth's Alt-A program. They require strong credit history, a +680 score, incomes taxes to be filed and up-to-date for 2 years, and no income tax arrears owed. Generally, when applying for a mortgage your income declared on line 150 of your notice of assessment can be multiplied by 2-2.5 of the stated income. Usually, this type of financing referred as "common sense financing." In other words, say you are a plumber or electrician declaring $45,000 personally hence we may be able to an auto-declared income under this program at $90,000 in order to qualify for your mortgage. In such cases your mortgage would incur an extra mortgage insurance premium.
As the article points out, there are alternative lender options like Home Trust or Equitable Bank that exist. Using an alternative bank the interest rate can be between approximately between 3.89-6.99% depending on the term. Rates here as understandably based on risk. The "country’s 2.75 million self-employed workers – a group that, according to Statistics Canada, has a higher median net worth than paid employees." Self employed individuals are made out to sound more risky compared than salaried individuals. The self employed must declare more income whether we like it or not. Sometimes it makes sense to work with an alternative lender for 1-3 years but with a mortgage plan you can switch to an "A -lender" thereafter depending on your circumstances.
The article mentions private lender, I shall write a separate blog entry on that subject.
The Self Employed: Okay, here is the unplugged truth for anyone self employed. Is it really harder for self employed people to qualify for a mortgage? I'd say it depends on your specific circumstances (declaring income and credit quality are the usual suspects). According to Susan, "The government...tightened requirements for the self-employed, requiring independent validation of income statements." In other words, the Federal Government is forcing the self employed to declare more income on their income taxes. It is much harder to get a mortgage with an "A-lender" under the self employed program without declaring anything reasonable. For example, the most common insured self-employed program would be Genworth's Alt-A program. They require strong credit history, a +680 score, incomes taxes to be filed and up-to-date for 2 years, and no income tax arrears owed. Generally, when applying for a mortgage your income declared on line 150 of your notice of assessment can be multiplied by 2-2.5 of the stated income. Usually, this type of financing referred as "common sense financing." In other words, say you are a plumber or electrician declaring $45,000 personally hence we may be able to an auto-declared income under this program at $90,000 in order to qualify for your mortgage. In such cases your mortgage would incur an extra mortgage insurance premium.
As the article points out, there are alternative lender options like Home Trust or Equitable Bank that exist. Using an alternative bank the interest rate can be between approximately between 3.89-6.99% depending on the term. Rates here as understandably based on risk. The "country’s 2.75 million self-employed workers – a group that, according to Statistics Canada, has a higher median net worth than paid employees." Self employed individuals are made out to sound more risky compared than salaried individuals. The self employed must declare more income whether we like it or not. Sometimes it makes sense to work with an alternative lender for 1-3 years but with a mortgage plan you can switch to an "A -lender" thereafter depending on your circumstances.
The article mentions private lender, I shall write a separate blog entry on that subject.
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