It’s no news that the new mortgage rules have thrown everyone into a tizzy! Not only, are there new rules, but now there is new terminology and a new way of thinking we need to adopt, so I thought it would be a great primer to spell it out in this blog post.
Before November 30, 2016 we would assess a Purchase in terms of Conventional or High Ratio. Now we need to look at a Purchase in terms of Insurable or Un-Insurable. Note all refinances are considered Un-Insurable.
So how does this affect you?
When I started investing in real estate, I remember my coach saying to me “always start and end with your WHY. I didn’t know what my Why was when I started or why it even mattered, but as I gained more experience and started making passive income, I stopped to reflect on what my Why was and why it actually mattered.
Everyone has a different reason for getting into Real estate investing; for some they hate their job and want to pursue real estate investing to be able to quit their job; for others they love their job but just need a bit more month before the money runs out; and others just love real estate as a passion. However, no matter what the reason, they all start and end with their WHY!
As a mortgage broker, I am lucky to work with investors and help them start and/or build their portfolio’s. One of my investors’ recently shared his experience of selling one of his properties and how Home Staging made a difference for him in standing out amongst the competition!
As a past home stager, I was reminded how sometimes we overlook important aspects of a property or have our eyes on the wrong things, when looking at all the options in the marketplace.
Many real estate investors start out with a dream of owning many properties but ultimately, many things can sway the dream or the well-thought out plans, such as low inventory, high prices, low cash flow and the inability to qualify.
So you have money but can’t get the returns you want, or you cannot find a property within your budget, so how can you make that money work for you? There are many different options available.
Last week we were all taken aback when the Federal Government released the latest round of mortgage rules. It was not just one new rule but four new rules and it could certainly impact Real Estate Investors to name just segment.
By now we as professionals have all had time to process the changes, blog about it and even bitch about it! We need to take a step back, put things into perspective and focus our efforts on the consumers, who are our clients and potential clients.
As a mortgage broker, I focus on investors and many of the investors I work with, focus their efforts on pre-construction and rent to own to name just two methods. In light of the new mortgage rules, I wanted to discuss how they might impact real estate investors investing in these two particular areas of pre-construction and rent to own.
Booya and the Government changes the mortgage rules again!
This past week the Trudeau Government took us all by surprise by announcing new mortgage qualification rules. The mortgage industry and the media have gone wild with speculation and concern about the future of our industry, but what does this mean for you and how do you navigate these changes going forward?
Currently in place, the Government has required homeowners with less than 20% down to qualify at the BOC rate of 4.64% for any term less than a 5-year fixed rate. Effective October 17, 2016, this requirement will apply to all insured mortgages, including fixed-rate mortgages with terms of five years or more.
This is not my usual mortgage article but I hope you will read on anyways. I am writing about how being a mortgage broker makes me grateful everyday!
I am an avid blogger – I love writing and sharing my knowledge and experience but that last two weeks have been a mental struggle for me. I finally stopped beating myself up and sat down to think why I was struggling and realized it was because I had forsaken my daily gratitude habit, because I have been so busy with work and life in general.
I have learned through various strategies, readings, courses that having the practice of being grateful not only brings peace into my life but the ability to focus and expand that gratitude into all areas of my life, including work and family.
Wholesaling has always intrigued me but here in Canada the deals don’t exist here as they do in the US, so the same money that you can make in the US doesn’t always exist here. Furthermore, you can buy 2-3 properties in the US vs. 1 property in Canada.
This article speaks about investing as a Canadian but the same rules apply for any foreign investor!
Not knowing much about wholesaling, I dove into researching different companies in the US and also spoke to various wholesalers, who I am very grateful to for sharing their knowledge and experiences.
Every once in a while as investors, we come across an amazing deal and usually that deal is a deal because it needs a lot of work – otherwise known as a “handyman special”.
Then the question becomes what is the best way to financing this opportunity and which lenders will consider the “after repair” value and not the “as is” value. Currently there are very few options that exist to renovate properties using the “after repair” value.
Options using the “as is” value literally suck! You can do a purchase plus mortgage, where the lender will give up to 10% or $40,000 max. of the “as is” value for renovations and after all is said and done, you get to include that cost into the mortgage. However the caveat is that you must have those funds in your pocket to begin with. Another way might be to take it out of your existing HELOC or unsecured LOC, but then you are worried about timelines, paying it back, over-extending your lines of credit and worse if another opportunity comes along you have now tied up that money into the current property, waiting to flip it!
Furthermore, how far is 10% of the value going to get you? Not very far in most cases! The rest comes from your own pocket and if you are like me there are typically other uses for that money.
I got a call today from an investor client, who is tired of losing out on bidding wars for existing homes and is considering putting an offer on a pre-construction stacked townhouse. Last year she had purchased a pre-construction condo as an investment but this year she was purchasing a stacked townhome as a second home for her son, who had just graduated school and did not have a job yet, which meant he could not qualify for a mortgage on his own. She had a pre-approval in place for 5% down on a purchase.
She was concerned that even with the 5% down she planned to put down. the builder was insisting on a 20% down payment and all of it was due in 90 days, with no firm closing date. She asked if there was a work-around. I suggested she show the pre-approval to the builder and see if she could reduce it.
She was taken by surprise by the demand for a 20% downpayment and so I thought this would be a timely article as many people are unaware of all the costs and demands that come with pre-construction. Here are some things to consider.