Who Owns the Home After A Home Equity Loan?

The issue of home ownership is often hard to understand for quite a lot of people who’ve never applied for a home equity loan before. In this article we will tackle the common misconceptions and cover the basics of home equity loans. We hope that after reading this article, you will be better equipped on making an informed decision whether applying for a home equity loan is for you or not.

What Really is a Home Equity Loan?

A home equity loan which is also known as reverse mortgage, is a type of loan that allows a homeowner to use the equity they have built up. The equity is the value of the difference between the home’s current market value and any amount still owed. That equity can be used as collateral for a loan, which gives us home equity loan.

How To Get a Home Equity Loan

Applying for a home equity loan typically requires that the homeowner possess a good credit and a good ratio of combined loans to assets. This is because these factors can make the transaction a lot less risky for the lender who will provide the funds for a home equity loan.

The amount that can be tapped for a home equity loan will vary depending on several factors such as repayment goals, value of equity, location of property, current economic and real estate climate, and the lender’s terms.

Debunking Home Equity Loan Myths

Here are the reasons why these common home equity loan myths are really just myths:

  • Pre-approval of a home equity loan does not guarantee that you will be fully approved. It is simply a screening step in the process.
  • You also won’t have to use the money on the house. You can use it anyway you want as long as you pay in the end.
  • Home equity loans are not expensive. The terms are often reasonable and will be discussed with you before you sign any papers.
  • You will not lose your home if a spouse passes as long as you are a co-signatory for the loan. The house will go to the lenders if the owner or person who signed the loan passes or moves out.
  • You also will not have to sign over ownership to the lender. Again, you are your home’s owner until you move out or pass away.
  • It is possible to apply for a home equity loan even if you have an existing loan. It is just that any existing loans will be deducted from your equity.
  • Your heirs will not end up paying more than what the home is worth as well because the debt cannot exceed the home’s value to begin with.
  • Lastly, you will retain full ownership of your home and the lender cannot force you to move out.

The best and safest way to go about getting a home equity loan is to get the help of mortgage professionals who will connect you with the right lenders and help you avoid the possible pitfalls.

Interested in applying for a home equity loan but do not know where to start? Let us guide you from application to approval! Contact us today!

Bank of Canada Expected to Make No Changes on Interest Rates

It looks like the central bank is not going to announce changes in interest rates soon, as can be inferred by economists regarding the matter.

Senior deputy governor Carolyn Wilkins and governor Stephen Poloz of Bank of Canada will provide an update soon; but experts are not expecting them to give an update on the central bank’s outlook that may hint on a future interest hike. This is in view of the cooling Canadian economy in recent months.

Economists Concur

Economists agree that the Bank of Canada is not likely to announce a drastic change anytime soon, and that any changes will be very small. The key target for overnight rate is currently at 1%, already boosted twice this year by 0.25% in July and again in September.

Nomura global foreign exchange analyst Peter Dragicevich shared in a recent research note that they are expecting that the Bank of Canada will give gradually increasing interest rates based on the central bank’s outlook.

Impressive Economic Performance

The strong growth in the Canadian economy is the background by which the bank’s 2 rate increases took place. It was ended in July after 8 strong months of increasing gross domestic product. The latest update was released on October 31 by Statistics Canada.

Economist Benjamin Reitzes of BMO Capital Markets said that there are likely to be changes to the growth outlook in the bank’s monetary policy report because the GDP for the second quarter was way above what the bank expected.

Reitzes shared in a recent commentary that changes in the growth outlook may result to 2017 revised by as much as 3.1%, a figure that will match the best pace in the past 12 years. He added that the GDP for the third quarter is likely to hold steady at 2% and that the same is expected for the last 3 months of 2017.

No Patterns and No Scripts

Bank of Canada governor Stephen Poloz said in a recent speech that the central bank won’t follow a script when it comes to rate hikes, even in view of the Canadian economy’s standing this year. He further said that what the bank will do is just to pay close attention to data changes in the economy to determine possible future changes in interest rate policy. He added too that monetary policy will almost always be data dependent and can swing in either direction with the data.

It should be noted that the bank is equipped to ascertain how things will turn out. They can model how today’s stronger exchange rate and interest rate may impact those with large debts to slow down consumption and housing.

Other factors may affect economic growth. Ontario’s new minimum wage might have a significant impact on inflation rates and the new mortgage rules might switch things around.

Want to know if these recent turn of events can affect your eligibility for getting a home equity loan or a second mortgage? Contact us today so we can talk about this with you.

Need Alternative Financing for Investing? Read This!

No matter how established you are as an investor, there will be times when getting a bank to finance a new property or other investments can be a hassle. Changes are always at play when it comes to financing and getting your loan approved by banks.

The above is how and why asking for assistance from private mortgage lenders can come into play. Thankfully, there are ways to get around with the changing economic climate, as we will share in this article.

Financing Today

It is not a new thing that those who happen to have a lot of properties may still have a difficult time getting a bank to finance a new venture. Banks like security and they will always go for the most ‘secure’ loan. As a result, fewer and fewer financing options are available for investors. Add to this the changing rules on private lending and declining property values, borrowing is simply not as it used to be.

Try a Private Lender

Enter private lenders who provide private financing. They make money from mortgage investment corporations and investors, so they are likely to be more receptive than banks. The interest they charge is a bit higher because they take a higher risk lending to those who were turned down by banks, but they do provide a solid solution for those who are in need of investing funds.

Even investors who have bad credit are able to apply for and secure a loan from private lenders more so with the help of mortgage brokers.. They can then use the loan to fund renovations for existing properties or for financing new investments.

Risk Reduction is Possible

Private lenders can do what banks cannot do because they can opt for lower investor payouts therefore not incurring a huge risk such as those in loans of higher value. Another thing is that because they in an equity-based market, they can decrease loan-to-value ratio with no issues.

Are they always like this? The answer is no. They’ve even become a bit stricter when reviewing a borrower’s financial history lately. With this said, private lenders are still a lot more flexible than banks and do not just rely on someone’s beacon scores, current employment status, or income when considering the approval of a loan.  If you know how to work with private lenders, you’re one step ahead in securing financing for your investment.

Dealing with Private Lenders

There are a few tips that work great with private lenders. These tips are meant to help with securing a loan and paying it back. Read about them below!

  • Transparency and honesty – be honest about your financial situation and other pertinent details. Hiding your true financial status is the biggest mistake you can make.
  • Be ready – find out all the paperwork you need. Get the help of a mortgage broker to be sure about this.
  • Be patient – securing a loan can be a lengthy process with a substantial amount of paperwork needed. Losing your cool won’t make the process go faster.
  • Know what fees needs to be paid – lenders and mortgage brokers do not work for free. Ask about the fees upfront for smooth-sailing later on.
  • Plan an exit strategy – an exit strategy allows you to have a secure financing in place. This is another thing that a mortgage broker can assist you with.

Looking for a mortgage broker? Whether you’re looking for a home equity loan, second mortgage, private mortgage and more, we’re here to help! That’s what we do! Contact us and let us help you with financing your investment!

 

CIBC Report Warns About House Price Increase in Vancouver and Toronto

Economist Benjamin Tal of CIBC World Markets shared that unless housing preferences and policies change, then the Vancouver and Toronto housing markets will continue to rise as increasing demand and tight supply put more pressure in said markets.

Transition Period

The economist also said that the Canadian housing market is currently in an important transition period, with Vancouver and Toronto being in the midst of it. He also stated that the market is likely to stabilize with activity and perhaps even soften as it adjusts to upcoming and recent regulatory changes, which included stricter rules for those wanting to get a mortgage.

Tal further said that conditions will be a lot tougher in the future if the trajectories continue and that it is just a matter of time before this becomes clear to everyone. He added that main centres such as Vancouver and Toronto are more vulnerable to this more so that he thinks the demand for housing in these areas are routinely understated. Is this a real certainty? Tal believes so. At least until some significant changes are implemented in housing preferences and policies because those may change where things are headed as of now.

Government Tries to Cool Down Markets

Housing prices are still rising in dramatic percentages all over Vancouver and Toronto, prompting the government to try to cool down the markets by introducing measures such as Vancouver’s 15% foreign buyers’ tax implemented in August 2016. This action brought in a period of adjustment, with the Vancouver market looking like it has now entered a period of recovery.

Meanwhile in Toronto, the Ontario government introduced the Fair Housing Plan which resulted in signs of slow down and a rebound. Proof is that the number of homes sold in September according to the Toronto Real Estate Board’s numbers is 27% less than the figures for September 2016.

How Demand is Changing

Tal mentioned in his report that a demand is expected to slow down by just 5% to 7% in view of newly introduced stricter lending rules. He added that this may be due to exceptions to the rule, creative borrowers, and increased involvement of alternative lenders.

He also mentioned that the actual housing demand is stronger than official estimates more so that Canada’s immigration quota is meant to rise to 300,000 from 250,000 and will eventually go to 450,000. Imagine how this will play out with how tight the current situation is.

It is to be noted that GTA’s official estimates are actually 10,000 below the real numbers. This is because non-permanent residents and immigrants were not really considered largely due to their younger average age compared to the general adult population. There’s another 9,000 unaccounted for estimates from young adults who are likely to seek having their own place soon.

The good thing about this is that with the above projected higher demand in the near future, then homes will continue to have an increased value. Yes, there is no projected price decline in the next few years.

Interested to know about how this can affect your plans to get a home loan or a second mortgage? Contact us and we’ll discuss it with you!

Are You A-Okay for Winter? Check Out These Tips to Winterize Your Home

Winter has officially started but it isn’t too late to winterize your home! We’ve compiled 15 amazing tips for a winter-safe home! Say hello to an energy-efficient warm and toasty haven that’s wallet-friendly and environment friendly too! Whether you’ve got only a few hours a day or just 1 weekend to fully prepare for winter, our list will take care of all your home’s winter woes.

Tackle Your Furnace

Have an HVAC Professional check-up and tune up your furnace before you even use it this year. An inspection is going to cost you around $100 but that’s nothing compared to the energy savings you’ll get and your family’s safety.

Clean Your Heating Ducts

The same HVAC Professional can take care of cleaning out your heating ducts. Leaks can cost you up to 60% more in your heating bill so better get that duct taped fast!

Reverse Ceiling Fans

A clockwise blade direction pushes warm air down, saving you a few hundred dollars in your energy bill.

Tweak the A/C

Drain any pipes or hoses to help extend the life of you’re a/c since you won’t be using it in winter. Vacuum up pools of water and/or any fluid to prevent it from freezing and damaging you’re a/c.

Trim Nearby Trees

Branches hanging over windows, cars, and roofs can cause major damage when they get too heavy with ice and break.

Regularly Replace Your Furnace Filter

Dirty filters impede air flow and are a fire hazard. You may also want to switch to reusable electronic or electrostatic ones to save some extra bucks in the long run.

Insulation Tune-Up!

Adding fiberglass insulation in your attic can really work wonders for your home’s energy efficiency. Just make sure that extra insulation doesn’t have a paper backing to avoid problems down the road.

Block Air Leaks

Up to 30% of your energy use can be wasted because of drafts. Caulking and lining places with draft can help keep your home warm and save you some cash.

Check Carbon Monoxide and Smoke Detectors

A home fire won’t be fun and not waking up from sleep forever is no joke either. Avoid fires and carbon monoxide poisoning by replacing batteries with new ones and making sure the alarms are working.

Have a 72-Hour Survival Kit

You won’t really know if you will get snowed in or if a major snow storm is going to hit your area so better be prepared and get yourself and your family members a 72-hour survival kit. Don’t forget your pets too!

Install Storm Windows and Storm Doors

This is an easy and clever way to reduce energy consumption by as much as 45%! Whoa! Just do it!

Inspect Your Chimney

Have your chimney swept by a professional before using it. A badly maintained chimney is one of the major causes of home fires during winter.

Make Your Gutters Pristine

Clean your gutters to prevent ice dams from forming on your roof. You won’t like the mess and the cost when that happens.

Wrap Your Pipes

Making your water pipes energy efficient can help conserve fuel, energy, time, and of course money. Think about no more waiting for the hot water for your shower!

Bring Out the Biggest Sweaters!

It won’t really be winter unless you’ve been spotted sporting some very winter-y sweaters. They’re not only cosy, they raise up your temperature by about 4 degrees and save you lots of dough on your heating bill!

Excited for winter? Then you’d love it at Oakville! Oakville has a wide array of winter attractions for the whole family. The community is extra warm and welcoming too! Contact us to help you find your perfect Oakville home!

Tap Your Home’s Value in Your Retirement

Are you near retirement but have not saved enough cash? Do you know that you can use your home’s value as extra retirement fund?

Your home is essentially a bank of wealth of the money you paid for it throughout the years.  The equity you’ve built up in it is a cash resource if only you know how to unlock it.

So, how do you unlock it? Below are 3 ways how.

Buy A Smaller House

Downgrading to a condo, a retirement facility, or a smaller house will leave you with plenty of spending money after you sold your current home. This is especially true for hot markets such as Toronto and Vancouver where selling now is very much in the favour of the seller right now.

But what if you wish to remain in your current home? Are there still ways to tap your home’s value then? There are! Two potential solutions are getting a home equity line of credit or getting a reverse mortgage. These are explained below.

Get a Reverse Mortgage

A reverse mortgage gives you flexibility because it allows you to get your money either as advanced in stages or as a lump sum. Another advantage is that there are no required  principal or interest payments. You won’t be required to pay up the loan until you sell the property, move, or die – in which case your estate will be charged. What you will be required to do is to keep paying the insurance and property taxes for the lender.

Reverse mortgages does have disadvantages, the most notable of which is the high cost because the typical interest rate is double that of a conventional mortgage. Note that although you are not required to pay interest payments, they will be added to your balance increasing it significantly over a few years.

Apply for A Home Equity Line of Credit

Getting a home equity line of credit is a less expensive option compared to other choices like a reverse mortgage. A HELOC will let you borrow up to 65% of your home’s value and you can choose to withdraw only the amount you need. You won’t be required to make regular payments nor withdraw an initial amount.

Note that a HELOC requires regular interest payments (you only pay interest on actual withdrawn amount) and that getting approved might prove difficult if you wait until you are actually retired before applying for one because a key factor that lenders consider is having regular income – something you won’t have if you apply for a HELOC too late. Know too that failure to pay down the road will mean that you’ll be forced to sell your home. This is why you have to really evaluate if this is right for you.

Unlocking your home’s value in your retirement can help you in a lot of ways, but understand that some solutions might be better for your specific needs. Ready to tap your home’s equity now? Contact us and we will assist you each step of the way!

 

Fraudulent CRA Phishing Scams Now Used for Identity Theft

Thousands of Canadians have fallen victim to scammers who pretend that they are from the CRA. Unsuspecting victims are usually contacted with threatening texts, emails, or calls telling them that a recent audit has uncovered that they owe a substantial amount to the Canada Revenue Agency. The CRA has been used as a front by fraudsters in the past as well.

Worrying Calls

One victim recalled that a fraudster identified himself as officer Craig Williams from the CRA and called her about discrepancies with her maternity leave and employment insurance. This left the victim confused because she knew her paperwork have been filed months prior and that the caller’s phone number showed that it was a toll-free number from Vietnam. Luckily, she googled the number and knew it was not from the CRA so she called the number and asked for which CRA department the caller is from. The fraudster cut the call.

The incident above could easily be dismissed as just another attempt to scam but one disturbing fact was that the caller knew that the victim is a new mom who’s receiving employment insurance. That is something that is rather specific.

The victim then proceeded to check her social media settings and double checked possible leaks of her financial details but found none.

Similar Scams

Barring details of the story above, many of which are a red flag about the authenticity of the caller, it should be noted that the CRA has been used in many similar scams in the past (and even now).

Extortion schemes are the most common ones, making targeted victims pay for supposed mistakes in their returns. The victims are threatened via email, text, and/or calls and informed that they will be arrested and/or reported if they do not pay via prepaid credit card, iTunes cards, e-transfer, or Bitcoin ATMs. Some victims have been targeted twice by the same scammers.

Alarming Criminal Activity

Identity theft and identity fraud have been identified by the Canadian Anti-Fraud Centre located in North Bay, Ontario. Their office tracks identity theft, mass-marketing fraud, and identity fraud. They recorded a loss of about $100 million from 30,000 victims of mass marketing scams last year and logged 26,500 individual cases of identity fraud where criminals used another person’s identity to scam service providers, stores, and banks out of $14 million. As for identity theft, they’ve received more than 10,000 complaints last year.

Identity Theft On The Rise

One targeted victim for identity theft remembered a call from someone claiming to be from Visa verifying recent transactions made with his car. He discovered that a deposit of $4,000 has been made in his account. Because he works in finance and knew how bad people may use his details, he changed his social security number and thought that was it. A few months down the road, he received a call from a detective following the arrest of a man who’ve been using his identity.

We’ve shared with you some alarming cases of identity fraud and identity theft. Luckily for the people involved above, their quick thinking helped minimize the harm done to them by fraudsters.

Want us to help you with a possible case of identity theft or identity fraud? Contact us today at  Haywood Hunt Private Investigation Agency and we’ll assist you with the private investigation services we offer.

Auto Insurance System Reform Being Pushed by Ontario to Slash Rates and Fight Fraud

Ontario has the highest auto insurance premiums in Canada despite the province having low rates of collisions and deaths – a big factor to that is the prevalence of auto insurance fraud.

Changes Ahead

Ontario is looking into ways to push for changes in the auto insurance industry to help try to combat fraud and eventually reduce premiums. This is in view of the reported cost of auto insurance fraud totaling to an estimated $1.6 billion a year as shared by Finance Minister Charles Sousa. He said it is now time to put a stop to the fraud, a move that may create new challenges for real crash victims.

Sousa shared that there are plans for the government to develop standard treatment plans for commonplace collision injuries such as whiplash and sprains. They will also create neutral and independent examination centres for the medical assessment of more serious cases and tackle fraud in the system by establishing a Serious Fraud Office. He hopes that getting rid of fraud will significantly reduce costs and subsequently lower premiums.

The Numbers

Ontario found out earlier this year via a government-commissioned report that the province pays Canada’s most expensive auto insurance premiums despite having the lowest numbers of fatalities and accidents. The higher cost is for covering loses due to auto insurance fraud.

All of the above comes at a time when the Liberal government is still working on their promise of a reduced rate. Although they are about halfway of their goal right now, they missed their self imposed deadline in August 2015.

Lawyers Say New Plan Will Unfairly Target Victims

Personal injury lawyers are not fans of the proposal, pointing out that the new process will work unfairly against real victims.

Michael Smitiuch of Smitiuch Injury Law based in Toronto stated that it seems the current government has a talent for punishing people who truly needed help the most as it will create unnecessary  roadblocks for victims. The lawyer also said that a cookie cutter approach like what the province is proposing will not be enough to adequately meet the needs of injured victims. He further voiced out that he sees more problems in the future regarding claiming of benefits and making sure that they are paid out.

Neinstein Personal Injury Lawyers’ consultant Sebastian Gallagher said the proposed system will do the opposite of providing clarity and lessening confusion.

A Different Time for The Same Mistakes?

Critics expressed that the new plan have concerning similarities with the failed Designated Assessment Centres introduced in 1994 and shut down in 2006. The DAC failed because the process was usually long, drawn out, and a sinkhole of resources.

Should the new proposal be implemented, proving fraud or the absence thereof might become even more difficult. Some people will do anything for fraud. Luckily for you, we specialize in uncovering cases of it through the use of our legitimate private investigation services in Mississauga and techniques. Contact us should you wish to get data on someone or place them under personal surveillance the right way.

New Mortgage Regulations To Be Announced

Risks of high real estate prices and household debt will be addressed by the new OFSI residential mortgage lending guideline updates.

Mortgage Updates

Some of the risks that are part of partaking in the mortgage market will become significantly lower when tighter mortgage lending rules are implemented with the oncoming stricter regulations. The updates will be finalized by the end of this month, said the federal financial regulator.

The new updates will come in effect 2 to 3 months after the final changes to the residential mortgage lending guidelines or B-20 of the Office of the Superintendent of Financial Institutions (OSFI). This was shared in a speech at Economic Club of Canada in Toronto by OSFI head Jeremy Budin.

The superintendent shared that the majority of changes will be quite similar to what was proposed in July, which includes a stress test for uninsured mortgages and prohibitions on co-lending arrangements that aim or seem to circumvent regulator requirements.

Budin says that they are doing this because they plan to act before lending risks become actual problems.

New Mortgage Stress Test

If implemented, the stress test will mean that homeowners will have to prove that they have the means or capability to continue making payments should interest rates increase. The stress test include those who were not required mortgage insurance, to begin with, and those who have a downpayment of 20% or more.

Rudin’s statements came after the Bank of Canada hiked up their interest rates twice this summer amidst unexpectedly strong economic numbers. He told reporters that the upcoming changes are to help provide support to the lending system as nobody can predict what will happen to house prices in the future.

Crackdown on Co-Lending

Budin said that the OSFI’s crackdown on bundled or co-lending mortgages (those mortgages wherein unregulated providers team up with federally regulated lenders to finance a property) is geared at making sure that financial institutions stick to rules that specify how much they can lend.

He added that the system needs to attain more integrity but that he also acknowledges that the changes to rules may push those thinking of buying a home to use riskier financing options, for instance, shadow banking. He further said that they recognize the fact that some lending activities might move outside the federal sphere but that does not stop them from acting on their responsibilities and mandate.

Safety Measures?

The more limiting lending rules by the banking regulator came into fruition after Ontario government chose to implement some changes in April in an effort to cool down the housing market. They’ve implemented a foreign buyers tax similar to what was implemented in Vancouver for the same purpose.

Note that the latest figures from the Real Estate Board of Greater Vancouver show that home sales in September of this year is higher than that of last year and that the home price index is up by 10.9% compared to the same period a year ago.

Worried about your home loan application because of this update? We can help! Contact us today for assistance and more information on how we can give that to you.

6 Things You Must Know About A Home Equity Line of Credit

Getting a home equity line of credit is increasingly becoming popular for homeowners who need some extra spending money. It is also relatively easy to qualify for compared to other types of loans as long as what the homeowner owes is less than the equity built in the home.

The above are just some of the important things to know about getting a home equity line of credit. The following are a must read if you’re trying to finalize your decision about getting a HELOC.

Know Your Exact Equity

Because a HELOC lends you money against the value you already own in your home, you have to know what percentage of the home you already paid for. That value is your equity. To get that, you have to subtract what you still owe to the current value of your home. Divide the result by your home’s value and multiply by 100. The end result is your equity.

Example, your home is worth $300,000 and you still owe $210,000. Your equity is $90,000. $90,000/$300,000 is 0.30. Multiply that by 100 and you get 30% equity.

Find Out If You Are Eligible

A good credit score and a minimum 20% equity are usually the most common requirements. Your lending professional can also help you with this.

Understand Draw and Repayment Periods

Your HELOC has a draw period and a repayment period. The draw period is the span of time wherein you have access to the money and can be as long as 10 years. The repayment period is the span of time wherein you are expected to pay and can’t withdraw more money. This can last up to 20 years. Note that you are expected to pay the interest on the outstanding balance and the principal for both period.

Your Interest Will Be Variable

A HELOC will only charge you interest on amount withdrawn, no matter what full amount you have access to. This is why your interest will change by how much you withdraw along with other factors such as the prime rate. A HELOC’s interest is also lower by comparison to other types of credits or loans. Some lenders may also offer you a fixed rate.

Enjoy Spending Flexibility

A HELOC allows you to withdraw the amount you need when you need it (subject to terms and regulations). It gives you freedom similar to withdrawing from a savings account or using a credit card.

Use Your Equity in A Smart Way

Most people use a HELOC to invest on home improvement or for college funds. It can also be used to consolidate debt so you can save money in the long run. It can also be used to fund a dream wedding or a much deserved vacation.

Still have questions about getting a home equity line of credit? Let us answer them for you! Contact us for assistance about getting a home equity line of credit today! Your HELOC approval await you!