There is so much misinformation out there in the market place to day around the down payment requirements when you purchase a new home so lets have a virtual discussion around the topic.
No, I cannot magically create or make it look like you have a down payment when you dont, that is called mortgage fraud and I could lose my license if I did such a thing.
No, you do not require 10% down if this is your second or third or forth home purchase.
No, banks will not provide you with a cash back incentive and allow you to use it as the down payment, that program died a while ago when new rules were brought down by the federal government.
No, the seller of the house can not gift you or lend you the down payment however if the seller is immediate family they may be able to gift you 5% equity.
No, you can not borrow the money from a friend.
So what can you use for a down payment and how much do you need?
If you are looking to buy an owner occupied home that is 1 or 2 units then you only need 5% down unless the lender feels the deal is too weak and more of a down payment could mitigate the weakness in the application. That 5% down can come from various places such as your personal savings, your Registered Retirement Plan, the sale of an asset, a non repayable gift from an immediate family member or you could borrow it from your line of credit, or credit card. Lenders are under very strict guidelines when it comes to providing a paper trail of this money and this is due to the Anti Money Laundering and Terrorist Financing Act so be prepared to answer a lot of questions and provide a lot of paper.
When you are getting a gift from immediate family that person or persons will be required to sign a gift letter stating that the gift is non repayable and who do lenders deem to be immediate family? Well it can be parents, grandparents, and siblings, that is it. Aunts, uncles, girlfriends, in laws, cousins, spouse, these people do not fall under the immediate family guidelines and while some lenders will grant an exception it is not a guarantee that they will allow these people to gift you the down payment.
So when it comes to the strength of the down payment lenders give more points to the application if the source of funds is coming from your savings, RRSP or sale of an existing asset, fewer points are given if it is a gift and not many points given at all if you are looking to borrow your down payments. If you are starting a new job, have weak credit and are currently carrying quite a bit of debt the likely of you getting approved for a mortgage with a borrowed down payment is slim to nil. Lenders really like to see that your savings habits have been established and that you have the discipline to budget, manage your revolving credit well and save money. Please call me if you would like to discuss your individual situation because everybody has a different story and there are exceptions to every rule.
Canadian home sales activity strengthens in July
Statistics released today by The Canadian Real Estate Association (CREA) show national home sales were up from June to July 2018.
National home sales rose 1.9% from June to July.
Actual (not seasonally adjusted) activity was down 1.3% from July 2017.
The number of newly listed homes edged down 1.2% from June to July.
The MLS Home Price Index (HPI) in July was up 2.1% year-over-year (y-o-y).
The national average sale price edged up 1% y-o-y.
National home sales via Canadian MLS Systems rose 1.9% in July 2018, building on increases in each of the two previous months but still running below levels recorded from mid-2013 to the end of last year. Led by the Greater Toronto Area (GTA), more than half of all local housing markets reported an increase sales activity from June to July.
Actual (not seasonally adjusted) activity was down 1.3% y-o-y. The result reflects fewer sales in major urban centres in British Columbia and an offsetting improvement in activity in the GTA.
This years new stress-test on mortgage applicants continues to weigh on home sales but its effect may be starting to fade slightly in Toronto and nearby markets, said CREA President Barb Sukkau. The degree to which the stress-test continues to sideline home buyers varies depending on location, housing type and price range. All real estate is local, and REALTORSremain your best source for information about sales and listings where you live or might like to in the future, said Sukkau.
Improving national home sales activity in recent months obscures significant differences in regional trends for home sales and prices, said Gregory Klump, CREAs Chief Economist. Regardless, rising interest rates and this years stress test on mortgage applicants will likely prove to be difficult hurdles to overcome for many would-be first time and move-up homebuyers, heading into the second half of the year and beyond.
Hacks to slash your car expenses
(NC) When you consider the rising costs of gas and insurance, owning a vehicle can get pricey. Fortunately, these easy tips can help lower how much you spend on your car so theres more room in your budget for other expenses, like groceries and recreation.
Increase your fuel economy. Did you know that a small spark plug problem can lead to a big expense? A dirty spark plug can cause a misfire, which wastes fuel and can ultimately harm your engine. To combat this, look for a spark plug thats designed for improved fuel economy, like the those from Fram. Try the Autolite Iridium XP Enhanced Alloy Technology line, which is precisely engineered with a focused ignition point for maximum power, efficiency and life.
Get regular tune-ups. When a vehicle is properly tuned, all systems work in harmony, including the fuel, ignition, emission and computer systems. While it can be a hassle getting to regular appointments at your mechanic or dealer, remember that you are investing in the long-term performance of your car, saving you time and money. Regular engine tune-ups bring power and efficiency back to your car, ensuring that its reliable, safe and road-ready.
Change your filters. There are many ways to keep your engine in good shape, helping it to last longer. One is checking the air filter every time you have the oil changed, because engine life and durability are directly related to keeping incoming air clean. Its an air filters job to remove contaminants from the air before it goes into the engine, and neglecting this component results in reduced performance. Fram extra guard filters provide premium engine protection and are proven to let in two times less dirt than the average leading standard retail brands.