Americans buying Canadian Real Estate

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Americans buying Canadian Real Estate

With the value of the Canadian dollar being so low in comparison to the US dollar, it’s never been a better time as it is now for Americans buying Canadian real estate.

Now that the U.S. dollar has so much buying power here in Canada, American’s are finding it difficult to avoid the opportunity to invest in their second home, or vacation property in such places as cottage country in Alberta or Ontario.

If you have considered the possibility of purchasing real estate in Canada we can help you with any mortgage related matters. As well, we would be able to connect you to Realtors in the area you are considering to buy. Contact us to find out more about your options.

Americans buying Canadian real estate

Americans buying Canadian real estate are finding many options of properties to choose from with reasonable down payment requirements from the Canadian lenders.

Another good reason why Americans are buying Canadian real estate is due to their close proximity to Canada, the longest border in the world and only a few hours away in many instances.

Having very similar credit score rating systems in Canada and the United States of America the Canadian lenders accept U.S. credit reports and employment making the mortgage application process fairly routine and the same as the American would go through in the U.S.

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Mortgage for Cottage

Mortgage for Cottage

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Getting a Mortgage for Cottage Could be Within Your Reach

Do you have a dream cottage that you plan to own one day? You’ve probably been doing the whole cottage rental thing every summer, paying a weekly or daily cottage rental fee to go up North to that amazing spot by the lake with the family and friends. Many people feel that cottage ownership is out of reach and reality for them due to high cottage prices. But it doesn’t have to be that way.

mortgage for cottage

Mortgage for Cottage is attainable for more people than you think

Planning is key to buying any real estate, cottage property included. What better time than when you’re young and just started your career to put money aside on a monthly basis. For those families who already own a house and are starting to build equity on their property and paying down the mortgage, it can be an opportunity to use it for a down payment on the cottage.  There are so many different case scenarios that each one should be looked at on its own merits.

How does getting a Mortgage for Cottage work?

Like any other mortgage application for purchasing real estate the same process is involved with getting a mortgage for cottage. Best is to work with a Mortgage Broker or Mortgage Agent as they have specialized experience and skills with mortgages and have access to multiple lenders who would entertain your cottage mortgage application.

There are three main areas that you have to consider when applying for a mortgage for cottage:

(1) Income / Employment

Like any other loan application the lender needs to make sure you can afford to pay the monthly principal and interest payments on their loan / mortgage. Whether you are employed or self-employed it is possible to apply for a mortgage for cottage. You just need to be able to show proof of income and employment or self-employment through such things as pay stub, and employment letters for those who are employed, and business licenses, articles of incorporation, Government tax filings showing self-employed declared income for those who are self-employed.

(2) Down Payment

There is no such thing as a free mortgage. In Canada you need to have at least 5% of the purchase price from your own resources. Meaning you can’t borrow money from individuals (excluding immediate family), or companies, or a lender to pay for your down payment. You must be able to show that you have that money in your bank accounts or other investments. Many people don’t realize that there are still a few lenders out there who will entertain a mortgage for cottage application with as low as 5% down. Remember that the less down payment you provide the more income you will need since the total mortgage amount will be higher than if you had more down payment.

(3) Historically strong and healthy Credit

And the third main item that the lenders look at when someone applies for a mortgage is how strong and healthy their credit report is. There should be at least a two year history of credit activity in your credit report from Equifax and Transunion, who are the two main credit reporting agencies in Canada. Lenders don’t like to see late payments, credit collections, or bankruptcy’s in your report. This is not a good sign that you are able to pay back money you borrow.

 

Trusterra Mortgage is here to Help

We’re here to help from the start to the finish, working along your side until all is done. Have you been considering the idea of cottage ownership? Not sure if you could afford to buy a cottage property? With any questions you have don’t hesitate to Contact Us.  And its no cost to you; a win-win situation!

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Home buying step by step – Step 4

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Source: CMHC Canada Mortgage and Housing Corporation

home buying step by step

 

Home Buying Step by Step – Step 4 The Buying Process

Starting Your Search

 

Here are some ways to begin looking for your new home:

  • Word-of-mouthTell everyone you know that you are looking for a new home. Surprising things sometimes happen. For example, you might hear about a home that is just becoming available on the market.
  • Newspapers and real estate magazinesCheck the new homes section in daily newspapers. Look for the free real estate magazines available at newsstands, convenience stores and other outlets. These publications are free and give pictures and short descriptions of homes for sale.
  • The InternetCheck out real estate websites, such as realtor.ca. These websites give information and pictures of a wide range of properties. Most sites let you search by location, price, number of bedrooms, and other features.
  • “For Sale” signsDrive, bike or walk around a neighbourhood that interests you and look for “For Sale” signs. This is a good way to find homes that are being sold by the owner and are not listed with an agent.
  • Visit new development sitesIf you are looking for a newly built home, you can see available models and get information from builders.
  • Work with a realtorFor most buyers, a realtor is key to finding the right home.

 

Useful Tips for Your Search

  • Keep recordsWhether you have a realtor or are looking by yourself, visit lots of homes before choosing one. Some things to compare are the home’s energy rating, utility costs, property taxes and major repairs. These will affect your monthly housing expenses. You can ask to see copies of utility and other bills. Use the CMHC Home Hunting Comparison Worksheet to make sure you get all the information you need to compare homes.
  • Check out the property’s current financingIf the existing mortgage on the home is favourable, it may be possible to take it over from the vendor. It may even be possible to get a vendor take back mortgage, to help close the deal.
  • Think twiceEven if a home seems perfect, go back and take a closer, more critical look at it. Visit it on different days and different times of the day. Chat with the neighbours. Look deeper — don’t be distracted by attractive surface details.
  • Energy RatingSome houses and most new homes in Canada have an Energy Rating that describes the energy efficiency of the home. An energy-rated home usually has a sticker with the rating on the electrical panel. The energy rating is on a 0 – 100 scale. The higher the rating, the more energy-efficient is the home, and the less it costs to operate.
  • CMHC statistics and analysisCMHC has the latest statistical information and analysis of housing trends. Our Market Analysis Centre tracks information for local, provincial and national markets.

 

Making an Offer to Purchase

 

After you have found the home you want to buy, you need to give the vendor an Offer to Purchase (sometimes called an Agreement of Purchase and Sale). It is very helpful to work with a realtor (and/or a lawyer/notary) to prepare your offer. The Offer to Purchase is a legal document and should be carefully prepared.

These items are typically included:

  • NamesYour legal name, the name of the vendor and the legal civic address of the property.
  • PriceThe price you are offering to pay.
  • Things includedAny items in or around the home that you think are included in the sale should be specifically stated in your offer. Some examples might be window coverings and appliances.
  • Amount of your deposit
  • The closing dayThe closing day is the date you take possession of the home. It is usually 30 – 60 days after the date of agreement. But, it can be 90 days, or even longer.
  • Request for a current land survey of the property.
  • Date the offer expiresAfter this date the offer becomes null and void — that means it’s no longer valid.
  • Other conditionsOther conditions may include a satisfactory home inspection report, a property appraisal, and lender approval of mortgage financing. This means that the contract will become final only when the conditions are met.

 

What Happens After You Make an Offer to Purchase?

 

Imagine that your realtor has helped you prepare an Offer to Purchase. This offer includes all the details of the sale. To be extra cautious (since you know an Offer to Purchase is legally binding) ask your lawyer to look at it before showing it to the vendor. The realtor presents the offer to the vendor. What can you expect to happen next? There are three possible responses.

  • Response 1The vendor accepts your offer. The deal is concluded and you move on to the next steps in the buying process.
  • Response 2The vendor makes a counter-offer. The counter-offer might ask for a higher price, or different terms. You can sign the offer back to the vendor, offering a higher price than your original offer, but lower than the vendor’s counter-offer. If the vender accepts this counter-offer, the deal is concluded.
  • Response 3The vendor makes a counter-offer, asking for a higher price or different terms. If a counter-offer is returned to you at a higher price, ensure that you know exactly how much you can afford before you start negotiating. You don’t want to get caught up in the heat of the moment with costs you can’t afford. You reject the counter-offer because the price is still too high, or you can’t agree to the conditions. The sale doesn’t go through, and your deposit is returned.

 

Getting a Mortgage

 

Once your Offer to Purchase has been accepted, go to see your lender. Your lender will verify (and update, if necessary) your financial information and put together what’s needed to complete the mortgage application. Your lender may ask you to get a property appraisal, a land survey, or both. You may also be asked to get title insurance. Your lender will tell you about the various types of mortgages, terms, interest rates, amortization periods and, payment schedules available.

 

Depending on your down payment, you may have a conventional mortgage or a high-ratio mortgage.

 

Types of Mortgages

 

Conventional Mortgage

A conventional mortgage is a mortgage loan that is equal to, or less than, 80% of the lending value of the property. The lending value is the property’s purchase price or market value — whichever is less. For a conventional mortgage, the down payment is at least 20% of the purchase price or market value.

 

High-ratio Mortgage

If your down payment is less than 20% of the home price, you will typically need a high-ratio mortgage. A high-ratio mortgage usually requires mortgage loan insurance. CMHC is a major provider of mortgage loan insurance. Your lender may add the mortgage loan insurance premium to your mortgage or ask you to pay it in full upon closing.

 

Mortgage Term

Your lender will tell you about the term options for the mortgage. The term is the length of time that the mortgage contract conditions, including interest rate, will be fixed. The term can be from six months up to ten years. A longer term (for example, five years) lets you plan ahead. It also protects you from interest rate increases. Think carefully about the term that you want, and don’t be afraid to ask your lender to figure out the differences between a one, two, five-year (or longer) term mortgage.

 

Mortgage Interest Rates

Mortgage interest rates are fixed, variable or adjustable.

 

Fixed Mortgage Interest Rate

A fixed mortgage interest rate is a locked-in rate that will not increase for the term of the mortgage.

 

Variable Mortgage Interest Rate

A variable rate fluctuates based on market conditions. The mortgage payment remains unchanged.

 

Adjustable Mortgage Interest Rate

With an adjustable rate, both the interest rate and the mortgage payment vary, based on market conditions.

 

 

Open or Closed Mortgage

 

Closed Mortgage

A closed mortgage cannot be paid off, in whole or in part, before the end of its term. With a closed mortgage you must make only your monthly payments — you cannot pay more than the agreed payment. A closed mortgage is a good choice if you’d like to have a fixed monthly payment. With it you can carefully plan your monthly expenses. But, a closed mortgage is not flexible. There are often penalties, or restrictive conditions, if you want to pay an additional amount. A closed mortgage may be a poor choice if you decide to move before the end of the term, or if you want to benefit from a decrease of interest rates.

 

Open Mortgage

An open mortgage is flexible. That means that you can usually pay off part of it, or the entire amount at any time without penalty. An open mortgage can be a good choice if you plan to sell your home in the near future. It can also be a good choice if you want to pay off a large sum of your mortgage loan. Most lenders let you convert an open mortgage to a closed mortgage at any time, although you may have to pay a small fee.

 

Amortization

Amortization is the length of time the entire mortgage debt will be repaid. Many mortgages are amortized over 25 years, but longer periods are available. The longer the amortization, the lower your scheduled mortgage payments, but the more interest you pay in the long run. If each mortgage term is five years, and the mortgage is amortized over 20 years, you will have to renegotiate the mortgage four times (every five years).

 

Payment Schedule

A mortgage loan is repaid in regular payments — monthly, biweekly or weekly. More frequent payment schedules (for example weekly) can save some interest costs by reducing the outstanding principal balance more quickly. The more payments you make in a year, the lower the overall interest you have to pay on your mortgage.

 

New Home Warranty Programs

 

Each province has new home warranty programs.

 

British Columbia

See the Homeowner Protection Office at www.hpo.bc.ca for the most up-to-date list of warranty programs. These include:

 

Lombard Canada New Home Warranty Program: www.lombard.ca

 

Travelers Guarantee Company of Canada (formerly London Guarantee Insurance Company): www.travelersgaurantee.com

 

National Warranty Program Ltd.: (includes Royal and Sun Alliance) www.nationalhomewarranty.com

 

Pacific Home Warranty Insurance Services Inc. (Echelon General Insurance Company): www.pacificwarranty.com

 

Willis Canada Ltd (Commonwealth Insurance): www.williswarranty.com

 

Alberta

Progressive New Home Warranty Program (Echelon General Insurance Company): www.progressivewarranty.com

 

National Home Warranty Program Ltd.: www.nationalhomewarranty.com

 

New Home Warranty Program of Alberta:www.anhwp.com

 

Blanket Home Warranty Ltd.: www.blankethomewarranty.ca

 

Saskatchewan

Progressive New Home Warranty Program (Echelon General Insurance Company): www.progressivewarranty.com

 

National Home Warranty Program Ltd.: www.nationalhomewarranty.com

 

New Home Warranty Program of Saskatchewan: www.nhwp.org

 

Blanket Home Warranty Ltd.: www.blankethomewarranty.ca

 

Manitoba

Progressive New Home Warranty Program (Echelon General Insurance Company): www.progressivewarranty.com

 

National Home Warranty Program Ltd.: www.nationalhomewarranty.com

 

New Home Warranty Program of Manitoba: www.mbnhwp.com

 

Blanket Home Warranty Ltd.: www.blankethomewarranty.ca

 

Ontario

Tarion Warranty Corporation: www.tarion.com

 

Quebec

Garantie des maisons neuves de l ’APCHQ:www.gomaison.com

 

Garantie des maisons neuves de l’ACQ: www.acg.org

 

La garantie des maîtres bâtisseur: www.maitresbatisseurs.com

 

New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador

Atlantic Home Warranty Program: www.ahwp.org

 

Lux Residential Warranty Program: www.luxrwp.com

 

Progressive New Home Warranty Program (Echelon General Insurance Co.): www.progressivewarranty.com

 

Closing Day

Closing day is the day when you finally take legal possession and get to call the house your home. The final signing usually happens at the lawyer or notary’s office.

 

These are the things that happen on closing day:

  • Your lender will give the mortgage money to your lawyer/notary.
  • You must give the down payment (minus the deposit) to your lawyer/notary. You must also give the remaining closing costs.
  • Your lawyer/notary
    • Pays the vendor
    • Registers the home in your name
    • Gives you the deed and the keys to your new home

 

Moving

 

Hiring a Mover

When planning your move, friends or relatives may be able to recommend a professional moving company. Don’t forget to ask the mover for references. Ask the mover for an estimate and outline of fees (Do they charge a flat rate or hourly fee?). Once you’ve chosen a mover, ask them to come to your home to see what will be moved in case the estimate needs to be changed.

 

You’ll want to ensure that your belongings are insured during the move. Your home or property insurance may cover goods in transit. Call your broker or insurance company to be sure. Ask if you are fully covered. Many moving companies offer additional insurance coverage. Be aware that professional movers are not responsible for items such as jewellery, money, or important papers. Move these yourself to keep them safe.

 

If you decide to do your own packing, keep in mind that you will need the proper materials, and that packing can take up a lot of time.

 

Moving Day

On moving day, go through the house with the van supervisor and give him (or her) any special instructions. The supervisor will note the condition of your goods on an inventory list. Go through the house with the supervisor to make sure the list is complete and accurate. When the van arrives at your new home, mark off the items on the mover’s list as they are unloaded. If you paid for the movers to unpack boxes and remove packing materials, remember that they will not put dishes or linens into cupboards.

 

Moving day is almost always tiring. But, planning ahead will make the transition as smooth as possible.

 

Moving Costs

The amount you spend depends on your decisions about many things. Here are some to think about:

  • Do you want to hire professional movers?
  • If so, will it be a large company, or a smaller local moving company?
  • Will you need to buy insurance to protect your items in transit?
  • If you plan to move yourself, will you rent a vehicle?
  • Will your current auto or home insurance policy cover your items during the move?
  • Will you have to pay utility companies a fee to connect their services in your new home? Are there other utility charges (such as a deposit)?

 

Post-Closing Costs

 

Changing the Locks

When you move into your new home you’ll want to change the exterior door locks for security. After all, you want only the people you choose to have the key to your new home. You can change the locks yourself, or call a locksmith to do the job.

 

Cleaning

Both your old home and your new home should be given a thorough cleaning at moving time. Whether you’re buying cleaning supplies and doing it yourself, or hiring someone to clean for you, the costs can really add up. Plan for this expense.

 

Decorating

You might want to re-paint, replace some light fixtures, refinish the floor, re-carpet, or do any number of other re-decorating tasks. Plan your budget, and consider postponing some projects for a period of time.

 

Appliances

If your offer to purchase didn’t include appliances, and if you don’t have your own, you will have to buy them when you move into your new home. Some appliances might have installation charges.

 

Tools and Equipment

When you own your own home, you can no longer call the landlord to do repairs. You’ll need to own some basic hand tools and possibly some gardening and snow clearing equipment.

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