Why Home Ownership is Better

Canada experienced an increasing demand in rentals and single family homes after World War II ended. The increased demand led to involvement from the Canadian government and led to the development of the Canadian Mortgage and Housing Corporation (CMHC). When you buy real estate inOttawa and other parts of Canada, you are allowed a mortgage loan of up to 80% of the property’s value. Investors who are increasing their real estate portfolio by adding rental properties are also guaranteed return.

The Canadian Bank Act prohibits most federally regulated lending institutions from providing mortgages without mortgage loan insurance for amounts that exceed 80% of the value of the home or purchases with less than 20% down payment.

Through your lender, if you are a first time homebuyer CMHC Mortgage Loan Insurance enables you to finance up to 95% of the purchase price of a home. The government program is mainly designed to help people with home ownership and has nothing to do with real estate investment.

Home ownership has its advantages. The two basic and most important advantages are that a home has the potential to be your most monetarily valued asset and the second is the emotional satisfaction that one gets after owning a house. Though many first time buyers may perceive the different rules of CMHC to be very strict for Ottawa, there are a few reasons why it is better to buy a home instead of renting one.

The mortgage payments may seem like a hassle but they should be considered as a savings plan. Instead of paying off someone else’s mortgage, (when you pay rent you are indirectly helping the landlord gain profits and make mortgage payments) as a home owner you make the monthly payments for yourself. Keeping up with your monthly payments you gain a two-fold advantage: the value of your home rises over the years and eventually the amount owed becomes smaller because most of the principal loan is paid. You can also get a second mortgage that can be used against built up equity as low interest loans.

As a homeowner you are more relaxed. You do not have to worry about the landlord increasing the rent or selling the house. You can maintain and repair the house and even renovate it the way you want. In a rental property you have to first talk to the landlord and wait for his/her approval.

However, if you have a job that keeps you on the move then it is better to rent a property instead of buying a house. You might not be able to look after the home or keep up with the maintenance and repair if you are not around often.

If you have questions about mortgage rules set by the CMHC and how they apply to you, contact your Ottawa real estate agent and ask them to help you figure out the answers while they help you figure out if owning a home is a good idea or not.

Visit www.bennettpros.com for all your real estate needs.

Seize the Day

Seize the day:
Buying sooner pays off as mortgage rates begin their slow but inevitable climb

I can remember when mortgage rates sat at 21%. That was back in 1981. (Of course, I was only an infant at the time. ) Compared with those difficult days, recent news of a mere 0.60% increase in the big banks’ posted rate seems almost cute.

But, while the overall outlook is good for 2013 and 2014, too much complacency can cost you hard-earned dollars.

You don’t have to be a veteran market-watcher to know that Canada has been enjoying historically low mortgage rates: discounted rates have been hovering around 3%. (That’s for a five-year fixed rate mortgage.) Thousands of first-time homebuyers have jumped at the chance to lock into rates like these.

But, from the Governor of the Bank of Canada to the heads of the big banks, financial experts agree that interest rates cannot remain so extraordinarily low. BMO Capital Markets Senior Economist Sal Guatieri has suggested that a “normalized” mortgage would be closer to 4.99%.

Now, over the past few weeks, it seems the big banks have begun the slow but inevitable mortgage rate hike. How might it affect you? Let’s do some simple math:

Let’s say you’re looking at purchasing a $250,000 condominium. As of press time, the posted rate of several of the big banks is 3.69%. Lock in now, and  (assuming 25-year amortization ), you’ll pay $1,273 monthly.

If you wait till rates normalize at 4.99%? You’re looking at $1,452 monthly – that’s  a difference of $179 a month. Over a five year term, you’re losing $10,740. I don’t have to tell you what you could do with that money.

But perhaps more significantly, an higher rate will decrease the amount you’re approved for – by tens of thousands of dollars. Play around with an online mortgage approval calculator: you’ll be amazed. With an income of $64,000 and a down payment of $20,000, today’s mortgage rate will get you approved for $252,000. At 4.99%, that approval suddenly drops to $228,000. That may mean the difference between buying the home you love and settling for one you can afford. 

I’m all for buying the home you love.

 Visit www.bennettpros.com for all your real estate needs.

Which Type of Home Ownership Would You Prefer?

Owning a house is not as easy as it seems. However, by reading our blog and contacting the right real estate agent in Ottawa, you can get the chance to own a home of any style that you want. With a wide variety of homes available, there are bound to be different type of ownership choices. It does not matter what type of home you own, you can choose the ownership depending on your means and requirements.

Among the different ownership types, freehold is the most common. As an owner, you have full access to the land and the structure built on it. You are responsible for all indoor and outdoor maintenance and repair. As the owner of the freehold interest, you have full right to control and use the building and land, subject to any rights of the Crown, local bylaws about land usage and any other terms that were put forward during the purchase.

A condo ownership will allow you ownership of the unit and a shared ownership for the common areas. As a home owner, you will be responsible for the maintenance and repair of the interior of the unit. The condo association will be responsible for everything outside the walls including the common areas and grounds.  The rules for condo are a bit stricter about the use of common area, renovations and noise. The condo association fee covers costs that include common utility bills, taxes and maintenance costs. Though a condo is cheaper than a freehold house, it offers lesser privacy.

Co-ops (co-operatives) are very similar to condos. The difference is that you own a share in a complex or a building instead of owning a unit. If you decide to sell your share, the co-op board has every right to reject your prospective buyer.

You might even opt to get a lease on your property. This gives you the right to use the property for a limited but long period of time. This type of ownership is commonly known as leasehold interest. This type of ownership is available for homes (usually apartments or townhouses) that are built on land that is owned by the city. Usually the contract allows ownership for 99 years. Occasionally, the ownership is made available for detached homes built on First Nation reserves and farm land.

A Strata is another type of ownership that allows you to use and own a particular housing unit which is contained on a larger property. Just like condo ownership, you will have share in the common areas of the property. You can find this type of ownership for different types of properties throughout the city.

Contact your Ottawa real estate agent today and find out which type of ownership and home would best suit your needs given the circumstances.

Mortgage Basics

If you have already had a look at our blog, you surely have seen a couple of posts that explain a few of the most basic mortgage related questions that buyers have. When you look for Ottawa real estate properties, the first and foremost thing you need to do is understand the basics that are involved with buying a mortgage and how the monthly payments are calculated. After this, you get yourself pre-approved for a mortgage. There are few benefits of a pre-approved mortgage that can help you in buying your dream home.

We define mortgage as a loan that is specific for real estate. The loan is provided with one basic condition that if for any reason the borrower is not able to keep up with the timely payments the lender has the right to sell the property so that they can get their money back.

The monthly payments are based on the amortization rate and the time period for which the mortgage loan is issued. These payments are inversely proportional to the amortization time period; the larger the amortization period, the smaller the monthly payment. The time period is usually between 10 to 25 years.

Your mortgage calculations will depend on the amount of the mortgage you qualify for. The pre-approval process can give you a fair idea of the amount that you can avail and the amount you have to pay for down payment. The pre-approval process begins after you provide all the necessary financial documentation to your lending institution. The lender will then check for your credit score with the credit bureaus. It is against this information that the lender will provide you a complete mortgage plan that will include the amortization period, interest rate and the monthly payments that you will have to make.

While many people do not believe in getting pre-approved for a mortgage, we cannot stress its importance enough. Pre-approval will save you many complications that can come once you set your eyes on a particular home. Also, many realtors will not work with you if you are not pre-approved.

The most important reason why you need to be pre-approved for mortgage is that it will give you a clear picture of the type of real estate you can afford. Another reason is that a seller would be more interested in your offer if you have the means to quickly provide the cash.

Therefore before you get yourself pre-approved make sure that you have not provided any false information to the lender. Another reason you might not get pre-approved is if the mortgage inspector values the property to be worth less than the asking price. Thus, when you decide to look for a real estate property in Ottawa make sure that you are pre-approved so that you have a better chance at ownership.

Visit www.bennettpros.com for all your real estate needs.

 

How to Invest in U.S Real Estate

The US investment market is still suffering from the consequences of the recession that hit its financial market in 2007. Although the market has picked up quite a bit areas like Nevada, Florida, Arizona, and California, areas that were hit the hardest are still below the replacement value. The Ottawa real estate market is quite different, but as an investor you should try to have a look for an investment opportunity in our neighbouring country.

The Canadian dollar still holds strongly against the U.S dollar. This in turn means that if you invest in US assets, you are likely to get a decent return over time. Taking a close look at these facts suggests that Canadians have an opportunity to invest in the best US real estate. In addition, you will be able to enjoy the summers with your family in the sun and the value of the property is likely to appreciate in the coming years.

It may sound like a dream come true but there are few things that need consideration before you dive into the opportunity. If you are planning to buy property for purely business purposes then you have to consider the following:

Passive Real Estate Investment does not Exist

You will require local knowledge of the area in which the property is located. You want the house to be located in the perfect neighbourhood and you might even let it out on rent while you wait for the value to increase. A local professional will help you manage the property and keep it occupied without any problem.

Mortgage Issues

If you are planning to find leverage or a loan from an American lender then you are in for a surprise. Even with mortgages cheaper than before, it is very difficult for Canadians to qualify for a mortgage therefore you might have to pay for the home in full. Your Ottawa Real Estate agent can look into alternative solutions

Taxes!

Unless you have prior experience and property in the US, you might want to expose yourself to the various US taxes that are involved in the buying and renting of an investment property. Not to mention you will have to file for yearly tax returns. We would highly recommend talking to an account familiar with investing in US properties.

Lack of a Diversified Investment Portfolio can be Disastrous

If you have just one rental estate in the US, you should be ready for all consequences. Deadbeat tenants, uninsured damages and property in the wrong area are all ingredients to a recipe for disaster. It is therefore important that you have more than one type of housing property in the US.

Your Ottawa real estate agent will help you in making the right decision for your real estate investment in the US. They can help you rent, sell and buy homes in the US along with all the help and information you require for mortgage.

Visit www.bennettpros.com for all your real estate needs.

Things to Consider When Buying a House

If you have read the previous blogs, you surely understand that it is not easy to buy a house on your own. There are so many things to consider. Here we will discuss a few of the most important things to consider when buying real estate in Ottawa. These things will help you make purchase decisions and you can also appear real estate savvy to your realtor.

The first thing that you have to do is get a pre approval on your mortgage. You might not be aware of the many elements that work together to help you buy your dream home. A pre approved mortgage loan will help you in the process to buy a home. It will also help you understand exactly what price range is available for you. Also, sellers are more likely to prefer you if you have a pre approved mortgage.

Here's a great video to help you off on the right foot:

 

Your credit rating will play a vital role in your ability to buy a home. It will help in determining the interest rate that you are charged and will also help in determining if you will get approval for the mortgage that you require. It is therefore important that your finances are properly managed and you have a complete understanding of your financial records.

You will also have to search around to see what area or town you would like to live in. You might want to hire an Ottawa real estate agent who will help you through the process if you intend on living in the Ottawa region. The agent will also help you identify sellers who are available in the market and walk you through the budget plan that you have marked.

When you make an offer, make sure that you have gone through all the technicalities and you completely understand what is written in the documents. You will also need to hire a home inspector. You might not be able to understand any architectural issues with the construction until it’s too late. It is therefore important that you have a home inspector go through the house and find if there are any faults in the structure. This will help you during price negotiations and therefore it is imperative.

You will have to study the neighbourhood. Come around at different times of the day to understand if the neighbourhood is ideally located. Is it close to schools? Is the nearby playground a safe place for kids? Are there any offenders in the area?

There is one last thing you need to consider before you sign on the dotted line. The additional costs like property tax, repairs and other such costs need to be considered. You will have to ask your real estate agent to help you understand these additional costs.

Talk to your Ottawa real estate agent and make sure that you consider all the things that are mentioned here before you buy the house. It is after all one of the biggest and most important investments of your life.

Visit www.bennettpros.com for all your real estate needs.

Avoid Homebuyer Traps

It does not matter what type of house you buy, real estate is a major investment and requires a lot of cash. For some buyers the process can be even more costly because they fall prey to costly mistakes and end up paying extra for the home they want or losing it to another buyer, or worst of all buying the wrong house. Your Ottawa real estate agent can help you avoid the different buyer traps that are set so that you can get the house of your dreams.

Blind Bidding

It is important that you study the market before you place a bid. It will help you figure out if the seller is asking the right price or not. Without proper market research you could easily bid a lot for a house or you could bid too low.

Buying the Right Home

As a buyer, it is very easy to be swept away by all the excitement and emotions of buying a new house. You might make a hasty decision and end up with a house that is either too big or small or too far from work. And by the time you realize that you made the wrong decision, it might be too late. Before you go to a real estate agent in Ottawa make a list of the things that you really need in your new home. Follow all the steps that are necessary when you buy a house before you sign on the dotted line.

Clear Ownership

Before you sign the ownership papers make sure that you are the sole owner. You do not want to deal with any tax liens, leases, easements, or undisclosed owners. Have a complete title search before you sign the papers.

Accurate Survey

Make sure that you have a copy of the updated property survey that clearly marks the boundary of your property. If the survey is not updated, you will see that there are structural changes that are not shown. Make sure that you carry out a thorough inspection of the house. By hiring a home inspector you can find the different faults that are present. Remember that the seller is also there to maximize his profit so you need to take all the necessary precautions.

Pre-Approval on Mortgage

Many buyers make the mistake of not getting a preapproved mortgage. A pre-approval on your mortgage helps you shop for a home without worrying if you can afford it or not. It is not only free, but also convenient for you and your real estate agent.

Covered Costs

You need to identify all covered costs. You will be surprised at the number of costs that will come up when you close the transaction. Talk to your real estate agent and ask them about all the hidden costs. Make sure that you see all the paper work before you close the deal.

Your Ottawa real estate agent will help you avoid all these mistakes and many more that you might make unknowingly. Contact Bennett Property Shop today and talk to the best real estate agents in the city.

Visit www.bennettpros.com for all your real estate needs