Canada Bank Watchdog to Take Role in Housing Market

  

Thurs April 26, 2012 12:15 PM EDT

By Louise Egan

OTTAWA (Reuters) - In a further effort to prevent the housing market from getting overheated, Canada's bank regulator will oversee the commercial activities of the federal housing agency under legislation introduced by the government on Thursday.

In announcing the legislation, Finance Minister Jim Flaherty said he was giving the bank regulator, the Office of the Superintendent of Financial Institutions (OSFI), the job of making sure that the Canada Mortgage and Housing Corp (CMHC) doesn't stoke an already hot market.

"I've been concerned about the CMHC for some time in the sense that it's become an important financial institution in Canada, and it was not subject to the same supervision by the Office of the Superintendent of Financial Institutions," Flaherty told a news conference.

"So I think this is an important step forward."

Flaherty has tightened mortgage rules three times since 2008 to try to reduce the risk of a housing bubble, and declined to say if Thursday's regulatory move marked the end of his interventions.

"We watch the market closely, and I particularly watch the condo market in Vancouver, Toronto and to some extent in Montreal as well," he said.

"We continue to monitor the housing and mortgage market and we will take action as necessary."

The bill also provides a legislative framework for covered bonds, which are mortgage-backed securities that are sold by banks and guaranteed by the CMHC. The legislation will establish a registry for institutions that issue covered bonds and for covered bond programs.

Once the bill passes Parliament, OSFI will monitor CMHC's commercial activities and report to the finance minister, the CMHC board of directors and the human resources minister.

CMHC's commercial activities include providing insurance for higher mortgages and guarantees for mortgage-backed securities issued by banks.

Some experts have expressed concerns about Canada's housing market, with property prices seen as overvalued in some cities and in the condo market specifically. The role played by CMHC in fueling the boom has come under scrutiny.

"I believe that the federal government's plan to bring CMHC under the direct supervision of the Office of the Superintendent of Financial Institutions is long overdue," said Louis Gagnon, a professor at Queen's University in Kingston, Ontario.

"OSFI is responsible for the oversight of insurance companies and it only makes sense to bring CMHC under its purview, since CMHC is the most systematically important insurance entity in the land and also the most vulnerable one," he said.

The changes are included in a budget implementation bill that follows up on several measures contained in the Conservative government's March 29 budget.

Separately, OSFI is now also tightening mortgage underwriting criteria for banks.

The bill also provides for the protection of covered bond contracts and collateral in the event an issuer goes bankrupt, and it prohibits the issue of covered bonds except within the government's framework.

It says CMHC can only guarantee covered bonds with the approval of the finance minister.

The legislation also contains proposed amendments to the Telecommunications Act to lift foreign investment restrictions on telecom companies that hold less than a 10-percent market share.

(Additional reporting by Randall Palmer; Editing by Peter Galloway)

 

 

About Alberta Election from National Post, Jason Fekete author

Ok, so this is nothing about mortgages, however with the election I found this great article in the National Post.
Jason Fekete, Postmedia news April 20, 2012
Alberta Election, with Campaign Nearing End, Will Have National Implications


OTTAWA — The Alberta provincial election campaign heads into its final sprint this weekend, leading up to Monday’s vote, in a race that is as exciting as it is important for the rest of the country.
Danielle Smith’s upstart Wildrose party is ahead in the polls and appears on the verge of defeating Alison Redford’s ruling Progressive Conservatives and toppling the 41-year Tory dynasty.
At stake are the keys to the premier’s office and control over one of the richest jurisdictions in North America, as two conservative parties battle it out in what’s a messy political civil war.

Yet, all Canadians arguably have an enormous amount riding on the results of the election — both politically and economically.
“It matters (to Canadians), given that the population centre and the economic centre of gravity is starting to move West,” said Duane Bratt, political scientist at Mount Royal University in Calgary.
“The premier of Alberta should be playing a larger role on the national stage.”
Huge resource, huge target:
Indeed, resource-rich Alberta has become an economic juggernaut in Confederation.
The northern Alberta oilsands contribute tens of thousands of direct and indirect jobs across the country and billions of dollars to the national economy.
Moreover, the federal Conservative government’s environmental policies and regulatory reforms for oil and gas projects are influenced by Alberta’s petroleum-powered economy.
But the province also remains a lightning rod within Canada — and around the world — for the environmental footprint of carbon-intensive oilsands developments on land, air and water.
Also, Ontario Premier Dalton McGuinty has complained the high “petro-dollar” is hobbling Central Canada’s manufacturing sector.
The oilsands are the third-largest proven oil reserves in the world next to Saudi Arabia and Venezuela, but also the fastest-growing source of greenhouse gas emissions in Canada.
Certainly, Wild Rose Country remains a polarizing province. Alberta’s role in Confederation and how Canadians view the province could be heavily shaped by the results of Monday’s vote.
“Twenty years ago, people wouldn’t have cared because Alberta was not the economic powerhouse that it now is,” said David Taras, a political analyst at Mount Royal University.
“It’s very hard to ignore (Alberta’s economic clout). It may not be the elephant in the room, but it certainly is in the room and getting bigger all the time.”
The incumbent:

Leah Hennel/Postmedia News

Conservative leader Alison Redford speaks during the 2012 Calgary-Elbow all candidates forum at Mount Royal University in Calgary, Alberta on April 10, 2012.

Redford, 47, is a one-term Calgary legislative member, former provincial justice minister and human rights lawyer by training, who captured the PC party crown and premiership in October.
She proudly trumpets her progressive values, has long roots in the provincial PC party, as well as the federal Conservatives dating back to Joe Clark’s time in the Prime Minister’s Office.
But Redford has been fighting the provincial PCs’ record, as well as recent political headaches, including revelations that members on a Tory-dominated legislature committee were paid $1,000 a month despite the fact they had not met since 2008.
Redford has since ordered all PC members on the committee to return every penny they were paid for serving on the panel, but not before political damage was done.
Many observers believe the PCs will need to snare progressive voters from the opposition Liberals and NDP, as well as hold on to their bases in Calgary and Edmonton, if they’re to retain power.
The No. 1 contender:

Dean Bicknell/Postmedia News

Wildrose Leader Danielle Smith

Smith, 41, is a former small business advocate, journalist and past PC member who captured the leadership in the fall of 2009 of what was then the newly formed Wildrose Alliance party.
Now known simply as Wildrose, the right-of-centre party — with the charismatic Smith at the helm — has attracted disillusioned Progressive Conservatives and poses the most serious threat to the Tories in their 41 years of consecutive majority rule.
Smith is a libertarian and landowners’ rights advocate who’s targeting true-blue conservative voters and appears to have strong support across the province, especially in rural Alberta.
It’s believed a majority of Alberta’s 26 federal Conservative MPs support Wildrose, an organization with many supporters and organizers, whose political roots trace back to the former Reform party.
Results of several polls have Wildrose leading the PCs and on pace to form a majority government on Monday, despite only holding four of 83 seats in the Conservative-dominated legislature heading into the election.
The other main challengers:
The Alberta Liberals, the official Opposition heading into the election, are led by Raj Sherman, a 45-year-old emergency room physician who was punted from the PC caucus in late 2010 for criticizing the government’s handling of the health-care file.
NDP leader Brian Mason, 58, is a former bus driver and Edmonton city councillor who has been at the helm of his party since 2004. The NDP held only two seats in the provincial legislature heading into the election.
Poll results suggest the Liberals and NDP are well back of the Wildrose and Progressive Conservative parties and may only win a handful of seats each.
Campaign highlights and lowlights:
The 28-day race started inauspiciously for Smith, after the Wildrose unveiled a campaign “bust bus” covered in a decal with the party logo and a picture of Smith’s head and neckline right above the rear wheels. The party quickly changed the decal.
While Wildrose is ahead in the polls, the party’s momentum has stalled somewhat in the last week following controversial remarks from some of its candidates.
An Edmonton Wildrose candidate sparked backlash for a blog he wrote last year that warned homosexuals will suffer for eternity in a “lake of fire.” Also, a Calgary Wildrose hopeful said during a radio interview he thinks he has an electoral advantage because he is “Caucasian.” He later apologized, saying the comment didn’t reflect his true feelings.
Smith is also facing criticism for Wildrose’s promise to explore what opponents say are insular “firewall” policies, such as a provincial police force, an aggressive stance on equalization and an Alberta Pension Plan to replace the Canada Pension Plan.
However, Smith and her party received a boost Thursday when Reform party founder Preston Manning, the patriarch of the modern-day federal Conservatives, appeared to endorse the Wildrose in an op-ed article he penned.
Redford and the Conservatives, meanwhile, have been fighting public outrage over the committee pay scandal, and trying to shore up their health-care credentials following continued accusations that physicians have been intimidated and bullied by the PC government.
The Tory leader also was thrown on the defensive for a few days after a PC staffer resigned from her job in the premier’s Calgary office after questioning on Twitter why Smith doesn’t have children. Smith later explained she and her husband wanted to have children but could not.
Redford, however, got her own boost via an influential endorsement from former Alberta PC premier Peter Lougheed, a political god in the province, who did battle with the federal Liberal governments in the 1970s and 80s.

BOC and posted rates.......

The Bank of Canada held the line today and left the country’s pace-setting overnight rate at 1%.
The news, however, is not what the BoC did, but what it hinted at doing.
Governor Mark Carney and co. jostled expectations in their prepared statement, which said:

• “Overall, economic momentum in Canada is slightly firmer than the Bank had expected in January.”
• “…The economy is now expected to return to full capacity in the first half of 2013.”
• “…The profile for inflation is expected to be somewhat firmer than anticipated.”
• “Europe is expected to emerge slowly from recession in the second half of 2012”
• “In light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate.”

This last point, in particular, has put the bond market on edge. As of this writing, 5-year yields are up seven basis points since this news broke, and up 10 bps on the day. (Bond yields lead fixed mortgage rates.)
Prior to this morning’s announcement, the market expected the Bank of Canada to move rates in early 2013. We could now start seeing some economists shift rate hike predictions to Q4 of this year. BMO has already moved up its forecast by six months to year-end 2012, according to BNN.
The BoC will still want to see more data before pulling the trigger, however. Canada remains tightly constrained by cautious U.S. growth, and that growth has had a funny habit of disappointing after optimistic spurts in the spring.
We also have the same contingent of Eurozone countries still battling ongoing solvency fears.
Pending the next few months of domestic data, the storylines in the U.S. and Europe have the potential to continue weighing down Canadian rates.
For now, today’s BoC decision to leave the overnight rate at 1% means that prime rate should remain at 3.00%.
The next Bank of Canada rate meeting is June 5.

Flaherty Says He's Planning Changes on CMHC Rules

By William Selway on April 10, 2012 from Boomerang business week

Canadian Finance Minister Jim Flaherty said he’s planning to make changes to reporting requirements for Canada Mortgage & Housing Corp., the country’s housing agency, particularly with respect to securitization.

Flaherty, speaking to reporters in New York, said there has been a moderation in the country’s housing market, adding he would prefer that the market correct itself, if needed.
“I would prefer the market itself to correct to the extent that a correction is necessary,” Flaherty told reporters after attending a conference organized by the Bush Center.
Policy makers, including Flaherty, have said that parts of Canada’s housing market have become overvalued as households add to record debt levels, encouraged by some of the lowest mortgage rates in decades. Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, said in a planning document last week it will boost supervision of private mortgage insurers while examining “emerging” risks to the financial system in several areas, including residential mortgages.
Flaherty, who has resisted calls from lenders to tighten mortgage rules to stem demand for new homes, said in his March 29 budget the government will enhance the governance and oversight of CMHC to ensure “its commercial activities are managed in a manner that promotes the stability of the financial system.”

Reporting Changes

“We do intend to have some changes with respect to reporting by CMHC, particularly with respect to securitization,” Flaherty said today, adding the country’s banking regulator is “engaged” on the matter.
British Columbia Finance Minister Kevin Falcon, also in New York at a separate event, said he expects home prices in his province to drift “downward,” which he said would be a healthy development. He also said demand from China for high-end homes in Vancouver will probably continue.
Flaherty today also said he expects to see moderate economic growth in Canada amid a global recovery that remains “fragile.”
“There are serious issues that persist in Europe,” Flaherty said, citing investors concerns about Spain’s finances. “They are not quite out of the woods yet.”
To contact the reporter on this story: William Selway in New York at wselway@bloomberg.net
To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

10 Steps to the Buying Process

How do I get there? Is there a road map?

Starting the journey to homeownership can be overwhelming and stressful. But with a little planning, you'll get the home that's right for you. A home that strikes a balance between your "wish list" items and the practical realities of the property, location and the housing market. Before you know it, you'll have a place to call your very own. A place to entertain. A place to decorate. A place to raise a family. It really is an exciting time!

To help keep you on track, below is a step-by-step guide to buying your first home.

STEP 1 - Build a Budget
An effective budget will map out your plan to set aside money for your down payment and additional costs. It will also help determine the price of home you can afford. Click here for more information on building a budget.

STEP 2 - Investigate Mortgage Options
There are many different types of mortgages. If you don't have the 20% down payment for a conventional mortgage, you can get a high ratio mortgage, combined with mortgage default insurance, that allows for a smaller down payment. You should be pre-approved for a mortgage before you start house hunting. For more information on mortgages, click here.

STEP 3 - Choose a Realtor
Your realtor will play a vital role in your homebuying experience. The best realtor will be a combination of a personal advisor, consultant and negotiator. He/she will show you homes that match your criteria, guide you through the homebuying process, negotiate the best possible price for your home and deliver your closing documentation.

STEP 4 - Get a Lawyer
It's important to hire a lawyer who specializes in real estate. You could find yourself in a bidding war for the home you want, and it doesn't hurt to have a lawyer look over any offer to purchase before you submit it. A real estate lawyer will also conduct a title search and check for outstanding taxes and liens on the property.

STEP 5 - House Hunting

• Create a wish list
  House hunting can be a lengthy process. To save yourself time, know exactly what you want in a home beforehand. Think about your immediate needs, future plans and lifestyle. When you look at homes, you may be tempted to concentrate on the home, but don't forget to look at the whole property: the lot, the neighbourhood, the surroundings. How close is the home to facilities and services important to you?
   
• Bring your checksheet
  When you're ready to begin shopping for a home - often called "house hunting" - bring along this House Hunting Checksheet. You may end up seeing multiple homes in one day. This checksheet will help you compare and keep track of the homes you visit. And help you remember the features you did or didn't like.
   

STEP 6 - Make the Offer
Your agent presents the offer to the seller. This document includes the price, conditions, deposit and closing date. The seller either accepts, rejects or counters the offer (also called "signing back" the offer).

STEP 7 - Home Inspection or New Home Warranty
Hiring an inspector is voluntary, but it's a smart idea for resale homes. You can choose to make your offer to purchase the home conditional on the outcome of your inspection. If your inspection reveals major problems, you can negotiate those repairs with the seller before your deal closes, or legally withdraw your offer.

What is a New Home Warranty?
New Home Warranties are typically used when you buy a brand new home. The builder provides a New Home Warranty to cover things like deposits and completion dates, along with labour and materials for at least one year after the home was built. It also protects you against structural problems for a minimum of five years.

STEP 8 - Finalizing The Deal
Finalizing the deal will include the final approval of your mortgage, a meeting with your lawyer to finalize details like insurance and conditions, and the results of a title search.

STEP 9 - Moving Preparations
There's a lot to do before you move. Line up utilities and other services like phone, cable and internet. If you rent, you must give your landlord notice. Also, forward your mail to your new address and hire a moving company. Preparing these things well in advance will help you make a smooth transition to your new home.

STEP 10 - Closing Day
This is the day you legally get possession of the house. Your lawyer completes the paperwork (so the home is in your name), payments are finalized and you receive the deed and the keys. Congratulations on your new home!

From Genworth Financial Canada Website, click for more information & Videos  www.genworth.ca 

Thinking outside the box!

Million Dollar Habits

This is great motivation for any week! I came across this article and found it inspiring... a good pick me up! :)  Have a read and let me know what you think, www.arianaleroux.com

 

Million Dollar Habits

This week we came across a message from Brian Tracy that we just had to share. How can you not love the title of Brian's message, who wouldn't want to know the habits of millionaires? Well the good ones anyways!


Psychologist Abraham Maslow once wrote, “The story of the human race is the story of men and women selling themselves short.” The average person settles for far less than he or she is truly capable of achieving. The truth is we’re all extraordinary. You came into this world with more talents and abilities than you could ever use. You could not exhaust your full potential if you lived 100 lifetimes.
Your brain has 20 billion cells, each of which is connected to as many as 20 thousand other cells. The possible combinations and permutations of ideas, thoughts and insights that you can generate are equivalent to the number one followed by eight pages of zeros. According to brain expert Tony Buzan, this number is greater than all the molecules in the known universe.
In other words, whatever you have accomplished in life to this date is only a small fraction of what you are truly capable of achieving. The challenge is that you come into the world with no instruction manual. As a result, you have to figure it all out for yourself. Most people never do. They go through life doing the very best they can, but they never come within shouting distance of doing, having and being all that is possible for them.

The Key to Success

I started off in life with few advantages. My father was not always employed and my family never seemed to have any money. I began working and paying for my own clothes and expenses when I was 10 years old, doing odd jobs around the neighborhood. When I was old enough, I got a job washing dishes in the back of a small hotel. My biggest promotion at that time was up to washing pots and pans.
I left high school without graduating and worked at laboring jobs for several years. I worked in sawmills stacking lumber, and in the woods slashing brush with a chain saw. I dug ditches and wells. I worked in factories and on construction sites. For a time, I was a galley boy on a Norwegian freighter in the North Atlantic. I earned my living by the sweat of my brow.
When I could no longer find a laboring job, I found work making straight-commission sales, cold calling from door to door and office to office. For a long time, I was one sale away from homelessness. It was not a great way to live.
Then one day I began asking a question: “Why is it that some people are more successful than others?” Or more specifically, “Why is it that some salespeople are more successful than others?”
With that one question, I did something that changed my life and began the formation of a habit that had a profound effect on my future. I asked the most successful salesman in my company what he was doing differently from me. And he told me. And I did what he told me to do. And my sales went up.
In the Bible it says, “Ask and ye shall receive.” I soon developed the habit of asking everyone, and in every way possible, for the answers that I needed to move ahead more rapidly. I began to read books on selling, and put into action what I had learned. I listened to audio programs while I walked and, eventually, as I drove around. I attended every sales seminar I could find. I continually asked other successful salespeople for advice. And I developed the habit of immediately taking action on any advice or good idea that I received or learned.
Not surprisingly, my sales went up and up, and eventually I surpassed everyone in my company. Soon they made me a sales manager and asked me to teach other people what I was doing that enabled me to be so successful.
Before long, I was recruiting people with newspaper ads, teaching them the sales methods and techniques that I had learned, and sending them out to call on prospects and customers. In no time at all, they were making sales and moving upward and onward in their own lives. Many of those early salespeople are millionaires today.
The Law of Cause and Effect

What I learned from this experience was the great Law of Cause and Effect. This is the foundation principle of Western philosophy and of modern thought. It says that for every cause, there is an effect.
Everything happens for a reason. Nothing happens by accident. This law says that, even if you do not know the reason why something happens, there is still a reason that explains it. Here is one of the most important of all success principles: “If you do what other successful people do, you will eventually get the same results that they do. And if you don’t, you won’t.”
Nature is neutral. Nature does not favor one person over another. The Bible says, “God made the rain to fall on the just and the unjust.” When you do the things that other successful people do, over and over again, you will eventually get the same results that they do. It is not a matter of luck, or chance, or accident. It is a matter of law.

This was an extraordinary idea for me. Even today, I am awed by the immensity and power of this simple principle. If you want to be happy, healthy, prosperous, popular, positive and confident, just find out how other people who are enjoying these benefits got that way, and do the same things they do. Think the same thoughts. Feel the same feelings. Take the same actions. And, as sure as two plus two makes four, you will eventually get the same results as others do.

Have a great week unless you choose otherwise.


Drago @Adamadgroup   on twitter!

Is being a landlord, the road to riches?

By Tina McFadden
CALGARY — Leaky faucets, broken water heaters, late rent — these aren’t the only issues that landlords have to deal with.
In the 12 years Rod Faulkner’s been renting out properties in Calgary, he’s dealt with unpaid gas and water bills, one physical threat and three trips through the civil court system to sue for damages.
“In the 12 years, people have scammed me in just about every way imaginable,” says Faulkner, who owns 12 Calgary revenue properties. “And every time I get scammed, it costs me money, and I learn a new lesson.”
Property managers can help landlords head off some of the challenges associated with rental properties. Typically, property management companies advertise vacancies, screen tenants, arrange for any maintenance work, deal with tenancy problems and collect rent. However, they typically charge 10 per cent or more of the monthly rent, as well as a tenant finder fee.
“All it takes is one bad tenant and costs go through the roof,” warns Gerry Baxter, executive director of the Calgary Residential Rental Association. “It’s very expensive to get rid of bad tenants. . . . More than anything, I think (being a landlord) is a challenging business.”
But the tenant headaches are still worth it, according to Faulkner, because the capital appreciation on revenue properties can pay off big-time — that is, if you can find a good deal in Calgary’s high-priced real estate market.
“Property values have definitely increased, and it’s harder to find a good property nowadays,” Faulkner says.
Realtor Janet Miller, who owns two rental properties in Calgary and one in Sparwood, B.C., says she’s figured out a way to pick good tenants — and keep them. She checks references for all tenants, and then undercharges in rent. For instance, on a single family home that would normally rent for $1,200, the rent may be dropped by $100.
“If we drop that rent to $1,100, for tenants it’s huge,” she says.
“For us, it’s not that much.”
The benefit is twofold. First, tenants don’t turn over very often. Second, the tenants rarely bother Miller with complaints.
By keeping her rents low, Miller says she also minimizes the maintenance factor with tenants.
“We have tenants who truly believe that they are flying below the radar, and they do not want to phone us when the doorbell fails,” Miller says. “They just go out and fix it. . . . They want to talk to us as little as possible because they know that they’re getting a crazy good deal.”
Faulkner doesn’t have any trouble finding tenants. But he says you need to pick your tenants carefully: “It’s a bit of an art to pick a tenant.”
And his guiding mantra when considering a property is: “Right building, right price, right neighbourhood.”
He looks for properties near downtown or the C-Train stations, as well as in neighbourhoods that exhibit pride of ownership. His portfolio includes townhouses, duplexes and triplexes, as well as the harder-to-come-by multiplexes.
He says multiplexes with four to 12 units are harder to find because they’re owned by guys like him who have accumulated properties and know how profitable multiplexes are.
“They’re not usually willing to sell them,” he says. “You can get 50, 60 years of good solid returns out of a building like that.”
A good revenue property should be “cash positive,” says Faulkner, meaning it should pay down your mortgage, and ideally, provide positive monthly cash flow after expenses.
Faulkner has managed to find the right properties at the right price (his latest purchase was less than a year ago), and he believes you can still find positive cashflowing properties in Calgary today. Again he says it all comes down to the right property, price and neighbourhood. He factors in rising interest rates when determining whether the price is right.
A systems engineer, Faulkner, 42, plans to retire in less than 10 years — many years earlier than he could retire without the revenue properties. He expects to earn approximately $200,000 in cash flow annually from his revenue properties. Alternatively, he says he’ll be able to sell his entire portfolio for $4 million to $5 million. Of course, that’s assuming he continues to make the right purchases and the economy goes well.
“You have to believe in the Alberta economy, that we’re going to have a constant influx of immigrants,” he adds. “Calgary’s forecast to grow and grow and grow.”
As a realtor for MaxWell Canyon Creek, Miller advises clients looking for revenue properties. During the past year, about 20 per cent of her buying clients purchased rental properties. She has recommended single family homes and condos — it all depends on her clients’ needs and goals.
If clients can’t come up with the mandatory down payment for a revenue property (20 per cent), she’ll suggest renting out the property they’re living in, and buying a new primary residence for themselves with five per cent down.
Miller, unlike Faulkner, believes it’s highly unusual to find revenue properties in Calgary that cover all your costs or provide positive monthly cash flow. However, she’s not looking to make money on her rental properties each month. If she starts to make money, she shortens the amortization on the mortgage and reinvests the money into the property. That way, she keeps her mortgage payments high, pays off her mortgages faster, and deducts the mortgage interest and other expenses.
In the meantime, her tenants are paying down her mortgages. By the time Miller and her husband retire, the mortgages will be paid off.
“And somebody else will have bought the houses for us,” says Miller with a laugh. She expects the income from their rental properties to account for a significant portion of their retirement income.
“The beautiful thing about buying a house instead of stocks is that somebody else is paying off the investment for you,” she says.
“I really believe in real estate as an investment.’
What real estate can do is diversify stock portfolios, says Frederick Montilla, a financial consultant with Investors Group.
“If you speak to affluent Canadians, they have a combination of everything — they’re totally diversified,” he says. “That means they have money in the stock market, they have money in their pension, they have money in their corporations, and they have rental properties as well.
“The person who has an investment property will be better off than the person who is just investing in the stock market because the person buying rental properties has two advantages — the value of their property is appreciating while their tenant is paying their mortgage, and their mortgage is depreciating,” says Montilla.
“The only problem is (real estate) is not liquid,” adds Montilla. “But if you were to compare both, the rental property will outperform the stock market returns.”
In Faulkner’s case, the revenue from his rental properties has enabled him to launch an additional business. He recently opened a liquor store in Canmore, The Market Beer, Wine & Spirits.
You have to look at your rental properties as a business, he says. “Some people get attached to them. They feel it’s their home, and when a tenant puts a hole in the wall, they feel personally affronted . . . . You have to be detached from it . . . . The only reason you’re putting in the extra effort is to make money on it.”

First Time Home Buyer: The Importance Of A High Credit Score

Credit is the other major challenge many new homebuyers face. Securing affordable financing based on applicants credit score, which may be bruised or simply not yet established. The first step to improving your credit score is to understand how your credit is evaluated.

In order to determine your credit worthiness a mortgage broker has to take a look at your credit report. A credit report is detailed history of how consistently you meet your financial obligations, such as loan, bill and credit card payments. A “credit score” is a number that is calculated based on personal information from your credit report and other sources – this can include your debt payment history, how often you seek new credit accounts and how much of your credit limit you use. This number represents your overall credit-worthiness or presumed reliability when it comes to meeting financing obligations – the higher the number the better.
Credit Health: Borrowers with high credit scores and good credit report gain access to better rates and a wider range of mortgage products. Keep your credit healthy by following these simple guidelines:

• Always pay your bills on time
• Use only up to 50 per cent of your credit card’s limit, and pay it off each month.
• Check your credit report for mistakes by ordering  from Equifax and Trans Union
• Do not go over your limit, as credit cards 9 times of of 10 have something called a "shadow limit"; while you can go into these funds, it lowers your score when you do

When mortgage lenders review mortgage applications, they take into account both the applicants’ credit report and credit score, as well as other factors such as income, employment history and size of down payment. Applicants with bruised credit may find themselves paying higher interest rate or even being denied financing entirely, that’s why it is recommended to seek professional advice before applying for a mortgage financing. In case if credit is weak, a mortgage broker can give a proper advice to prepare a new homebuyers before they step into one of the largest purchases in their lifetime.
While improving one’s credit takes time, a more immediate solution to weak credit is once again through the help of family member. By agreeing to co-sign on the property, family or friends can help borrowers who have trouble qualifying due to income or credit that in not yet well established. A consigner has the same legal responsibilities as homebuyer, and is responsible for paying mortgage if the principle borrower fails to do so. Co-signers do not have to be family members, but many lenders require that they live in the property.
It’s wise for homebuyers to seek out a mortgage professional like a mortgage broker and sit down and look at all the various options because each lender has its own guidelines. Moreover, consigners need to be aware that providing assistance to family member now may limit their own future borrowing potential. If the consigner is ever  considering getting a loan in the future – a car loan or mortgage, or increasing their existing mortgage – they may no longer qualify because now the lender will include that monthly payment in their debt ratio and overall qualifying process.
Still, family assistance in purchasing a home is a popular route, and the Genworth Family Plan is another option for families looking to buy together. So long as they have good credit, it allows parents to purchase a home for their children or even their elderly parents who wouldn’t qualify on their own, and with only five percent down (as opposed to 20 percent, which is generally required for secondary properties). For this option it is important to talk to a knowledgeable professional because we can really guide you and give a good home mortgage advice.

Check out the fine print behind the discounted no frill mortgages....

Spring market 2012 is heating up with some low-rate no-frills mortgage promotions. They are certainly attention getting but these mortgages often come with restrictions that can cost you in the long run. That’s why it’s important to check the fine print:

1. A  fully closed mortgage means you’re not leaving the lender unless you sell your house, so your options are limited and you have no negotiating power if your needs change in the next 5 years.
2. Low or no prepayments gives you no or limited ability to chip away at your principal to reduce your overall cost.
3. Maximum 25-year amortization can take away important flexibility like taking a 30-year amortization but setting your payments higher using a 25-year or lower amortization, which keeps open the possibility of reducing payments later should you need breathing room for an emergency situation or special need.

Who really knows what life might be like a few years down the road? The lack of flexibility associated with a no-frills mortgage could end up causing you some major headaches.