Archived blog posts for : 2012

Monday, July 23, 2012

Additional mortgage changes

by Amalia Liapis on Mon, Jul, 23, 2012 12:33 PM

Categories:2012,banking,mortgages

Still more new mortgage rules

The government has announced that as of July 9, 2012, new rules will apply to government-backs insured mortgages where the borrower has less than a 20% downpayment.

The government will:
• reduce the maximun amortization (pay back) period on a mortgage to 25 years from 30 years;
• lower the maximun amount borrowers can refinance to 80% loan-to-value (LTV) for 85%;
• limit the Gross Debt Service (GDS) ratio to a maximum of 39% or income. The GDS ratio represents the amount of household income spent on the mortgage, property taxes and heating;
• limit the Total Debt Service (TDS) ratio to a maximum of 44% of income. The TDS ratios represents the amount of household income spent on all debts including the mortgage; and
• limit government-insured mortgages to homes prices at less that $1 million. Buyers of homes prices at $1 million or more must have mumimum 20% downpayment.

The new rules apply to mortgages on residential property with four units or less. They DO NOT apply to:
• mortgages with a 20% downpayment or more which don't require government-backed mortgage insurance;
• borrowers renewing their existing insured mortgages, where there are no new funds being added to the mortgage; or
• development or construction or multi-unit bulidings of five units or more, owned by a landlord.

Federal Finance Minister Flaherty explained that the reasons for the changes are to "keep the housing market strong, and help ensure households do not become overextended."
This explanation doesn't make sense to Cameron Muir, BC Real Estate Association's chief econmist.
"Instead of helping make the housing market strong, the new rules will erode the purchasing power of first-time buyers who will be restricted to borrowing less money for their homes."
Muir explains the effect of the changes is the equivilant to having a 1% increase in interest rates. This translates into about $50 more on each monthly payment for every $1000,000 of mortgage loan.
What this means is new buyers who can afford a home today with a benchmark price of $625,100 will now only be able to afford a home prices at $550,550 under the new rules. This is a potential loss of $74,550 in buying power.
"Given that the market is already slowing, the new rules are totally unnecessary," says Muir.

Refinancing
What will the new rules cost buyers refinancing a home values at $625,000?
• When refinancing at 85%, the home owner can access up to $531,250.
• When refinacing at 80%, the home owner can access up to $500,000.

What about the new rule limiting mortgage insurance on homes prices a $1 million or more?

Four years of tightening borrowing rules
This is the fourth time in four years that the government has tightened borrowing rules.
• In 2008, the government reduced the maximum amortization period to 35 years from 40, required home buyers to have a minimum downpayment of 5% (compate to the previous 0% down), and introduced new loan documentation standards.
• In 2010, the government required all borrowers to meet standards for a five-year fixed-rate mortgage, reduced the maximum amount borrowers could refinance to 90% from 95%, and for non-owner-occupied investment properties, requred a minimum 20% down payment.
• In January 2011, the government reduced the maximum amortization period for government-backed insured mortgages to 30 years from 35 years and reduced the amount borrowers could refinance to 85% from 90%.

What will the new rules cost home buyers?

Note: calculations assume a 10% downpayment. $625,100 is the benchmark price of a home in the REBGV area as of June 1, 2011.

Article from RealtorLink, July 13, 2012, Volume 13, Number 14

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Friday, July 20, 2012

Why use a Realtor®?

by Amalia Liapis on Fri, Jul, 20, 2012 09:06 PM

Categories:Real Estate

The REALTOR® Commitment

You're trusting a REALTOR® with your most valuable possession: your home. REALTORS® take this responsibility very seriously. Here's what a REALTOR® promises:
• Your REALTOR® is highly trained
• Your REALTOR® is continuously trained
• Your REALTOR® does everything by the book
• Your REALTOR® is an ethical business person
• Your dealings with a REALTOR® are insured
• Opportunity for recourse
• Your REALTOR® will grant you access to the exclusive Multiple Listing Service®

For more information about the REALTOR® commitment, plus buying or selling your home, including step-by-step guides, checklists, expectations and questions for your REALTOR® and information about REALTORS®' extensive training and Code of Ethics, visit www.howrealtorshelp.ca.

Real estate transactions are among the largest financial investments that most people make. A trained professional can help make the experience pleasant and rewarding. In fact, with the assistance of a real estate professional, property sells faster and for a higher price.

The following information is taken from the Working With a REALTOR® brochure, a standard tool used by all REALTORS® in BC that explains agency relationships and describes which personal information is collected, as well as how it's used and distributed. Click here for a PDF version.

View article online at http://www.bcrea.bc.ca/working-with-a-realtor-/why-use-a-realtor

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Tuesday, July 3, 2012

Property Taxes Special Edition

by Amalia Liapis on Tue, Jul, 3, 2012 09:53 PM

Categories:2012,Taxes

It's Property Tax Time

By now home owners and businesses through out the province have received their annal property tax notices in the mail. Property taxes are due July 3, 2012.

Property owners who haven't received a tax notice, should contact their municipal finance department and arrange for a duplicate notice. Property owners are responsible for ensuring that the local government and BC Assessment have your correct mailing address. Property owners must pay property taxes whether or not they receive a notice.

What taxes do property owners pay?
Take a close look at a property tax notice. About 50% of the amount owing is levied by the local municipality. Municipalities are also required to collect the remainder for other taxing authorities and have no control over these levies. Here is a summary:
Municipal tax – is set by council and staff in the municipality’s annual budget process. It’s based on revenue needs for infrastructure and services.
Regional district tax – is set by the regional districts for services such as regional water and sewage treatment. For example, Metro Vancouver tells their municipal governments what their revenue needs are, and the municipalities collect on their behalf. In rural areas, the province Surveyor of Taxes collects for regional districts.
School Tax – is set by the BC government to fund schools. Residential rates vary by school district. School taxes are paid by residential and non-residential property owners.
Hospital tax – is set by the regional hospital district to help fund local health facilities. For example, Metro Vancouver hospitals are funded by the province not by property taxes. Outside Metro Vancouver, hospital taxes are still levied.
Other taxes – are set by local taxing authorities and collected by the municipality to fun BX Assessment, the Municipal Finance Authority of BC and TransLink.

For questions about taxes levies by other taxing authorities, contact:
• BC Assessment Authority, 6074-241-1361
• Greater Vancouver Transportation Authority (TransLink), 604-432-4000
• Metro Vancouver, 604-432-6200
• Municipal Finance Authority, 250-383-1181 (Victoria)
• School Taxes, 250-590-0239 (Ministry of Finance, Victoria)

Avoid late payment penalties
Property owners must pay their taxes by July 3, 2012 of there is a 5% penalty. Property taxpayers who don’t pay be September 4, 2012, face an additional 5% penalty. Property owners failing to pay for three consecutive years, could forfeit their property to tax sale. Information about tax sale dates can be found on local government websites.

The upside of property taxes
• Property taxes help fund a range of local capital projects and services, including:
• Animal control and shelters
• Archives/libraries/museums
• Bicycle lanes/paths/walkways
• Building Regulation
• Community centres
• Energy efficiency upgrades
• Environmental protection
• Garbage and recycling
• Heritage planning
• Local road maintenance
• Parks/trails/green space
• Police/fire/emergency services
• Safe drinking water
• Sewage treatment
• Sidewalks
• Swimming pools/tennis courts/skating rinks/playing fields

Artice from The Open House, Volume 7, Number 7, June 29, 2012

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