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Down payment for home mortgages

In 2014, Calgary mortgage broker Steven Crews, from Verico iMortgage Solutions, did a series of radio broadcasts about mortgages and mortgage financing for Shine FM. Have a listen and you’ll pick up some helpful tips…

If you are a first time home buyer, then why not take advantage of the only advantage that’s available to you. Many first time home buyers don’t realize that they can use the saving in their RRSP toward the down payment…

In fact, if you plan ahead you could get thousands of extra cash from the government using your RRSPs! This is what I talk about here:

The main advantage of being a first time home buyer is that you can withdraw up to $25,000 from your RRSP. This money can be used toward the purchase of your first home.

The minimum down payment to purchase a home is 5% of the purchase price. Saving that down payment is often the biggest hurdle for first-time home buyers. That’s why I suggest that you use your RRSP to save for your down payment.

For every dollar you deposit to your RRSP you will receive a tax rebate. The rebate could be anywhere from 25% to 40% depending on your tax rate. Also, monetary gifts can be deposited into your RRSP. A gift of $1,000 could end up being anywhere from $1,250 to $1,400 when you include your tax rebate. There are a couple of key rules to remember when you utilize your RSP to save the down payment:

  1. The money must remain in your RSP for a minimum of ninety days.
  2. You can withdraw under the home buyer plan up to 30 days after you take possession of your first home. Therefore, you can’t just deposit the money right before you purchase.
  3. Once you withdraw the money through the RSP home buyer plan, you have to pay it back over the next fifteen years.
    • Every year, you either contribute one fifteenth of your withdrawal toward your RRSP or you pay taxes on additional income for that tax year equal to the RRSP you didn’t make that year.
    • For example, A $15,000 Home Buyer Plan withdrawal means you must pay back $1,000 each tax year.
    • If you have to pay $1,000 back to your RRSP each year and 5 years from now you missed the contribution, then you would pay taxes on your annual income plus $1,000. The next year you can contribute again, or not.

It’s important to review all the rules when you take advantage of the CRA Home Buyers Plan, visit the government of Canada website for more info at www.cra-arc.gc.ca or search for “cra home buyer plan” on google.

I also explain a client’s specific situation here and show how they utilized the CRA Home Buyer Plan to save an additional $9,000 when they purchased their first home.

Give your feedback. If you have a question, or topic that you would like to learn more about, let me know. If your question or topic is used on the ShineFM Mortgage Expert segment you will receive something special!

First-time home buyer information

In 2014, Calgary mortgage broker Steven Crews, from Verico iMortgage Solutions, did a series of radio broadcasts about mortgages and mortgage financing for Shine FM. Have a listen and you’ll pick up some helpful tips…

I really enjoy working with first-time home buyers. I still remember buying my first home. It was the biggest investment I had ever made. So much happened, I was surprised by some things and expected others.

I was early in my lending career and I had one mentor who shared his experience with me. Now it’s my turn to share my experience with you…

This is my first expert appearance as the ShineFM mortgage expert. I still hear from some client’s who aren’t sure if they qualify as a first time home buyer and what it means to be a first time home buyer.

I work with many first-time home buyers. You are considered a first time home buyer if you or your spouse hasn’t owned a home within the last five calendar years. You may have owned a home in the past but as long as you or your spouse haven’t owned a home in the last five years, you are once again considered a first time home buyer.

The main advantage of being a first-time home buyer is that you can purchase a home and use your RRSP savings toward the down payment without paying taxes to withdraw the money. You can take out up to $25,000 from your RRSP toward the purchase of your first home.

The RRSP withdrawal can be used for the down payment, but it can also be used for other things. It can cover closing costs, pay for improvements to your home, purchase furniture or other items. You can even use these funds to pay off credit cards or loans if you want.

This RRSP withdrawal advantage can be utilized to help you build up your down payment faster or increase the down payment that you’ve already saved. I will talk about this next time.

Give us your feedback. If you have a question, or topic that you would like to learn more about, let me know. If your question or topic is used on the ShineFM Mortgage Expert segment you will receive something special!

Tips from a Calgary mortgage broker

In 2014, Calgary mortgage broker Steven Crews, from Verico iMortgage Solutions, did a series of radio broadcasts about mortgages and mortgage financing for Shine FM. Have a listen and you’ll pick up some helpful tips…

As a Calgary mortgage broker, I have had the privilege to provide 1-minute expert advice to the ShineFM audience.

I wanted to provide you with valuable information that will help you to make an informed decision when you are ready to:

  • purchase your first home
  • refinance your existing home
  • calculate how much you qualify for
  • purchase a revenue property, or
  • purchase a second residence
  • renew your current mortgage
  • purchase a home when you are self-employed
  • arrange a second mortgage
  • find out how to improve your credit
  • or just pay off your mortgage faster

I have listed the clips that have been heard on air as well as the dates they were heard.

Have a question about your specific situation, contact me directly at 403-870-2669 or complete the form at the right. Feel free to include any questions or comments. If you want me to call you, then type your phone number and the best time to reach you in the comments section.

Mortgages explained by industry expert

When we think about our mortgage, the urban myth is that we just pay interest in the beginning and then pay principle near the end. At today’s interest rates, that just isn’t true.

Many of my clients are paying rent in the $1,500 per month range. I thought that this would be the perfect payment to compare…

Many First time home buyers compare the rent payment to the mortgage payment and find that they are almost exactly the same, for the same house.

Did you know; every mortgage payment is comprised of an interest portion, paid to the bank and a principle portion paid to you. The principle portion of the mortgage payment reduces the amount of money that you owe to the bank. This principle portion goes toward and grows the equity that you have in your home. Therefore, the principle goes to you.

At today’s interest rates, the principle portion is almost half of the total mortgage payment.

Let’s compare a rent payment of $1,500 a month to a mortgage payment of $1,500 per month. After five years of making principle and interest mortgage payments of $1,500 each month, you would have gained $8,700 of principle every year.

For context, that’s like renting from your landlord for five years, then having him give you over $45,000 when you move out.

In today’s market, you can’t afford not to own your own home!

Let’s look at some more numbers… (if you want)

If you have a mortgage of $315,000 your mortgage payment is $1,489.09 at 2.99% (current rates at June 15/13) and a 25-year amortization. After 5 years, your principle balance is $269,163. Which means that you will have gained $45,837 in equity. If your home increases in value by just 1%. After 5 years, that would be an additional $16,000 of equity.

Have a question about your specific situation, contact me directly at 403-870-2669 or complete the form on the right. Feel free to include any questions or comments. If you want me to call you, then type your phone number and the best time to reach you in the comments section.

Mortgage Broker in Calgary, Alberta, Canada

A mortgage broker is that person who is licensed to help a person in analyzing and choosing the best suited mortgage option for him by offering them the different plans by the different lenders. They generally work individually but are even employed by the different firms. With their thorough understanding of the market and the needs of the client, they help them to find the most suitable loan plan.

Reasons to hire a mortgage broker

There are many different types of mortgages available in the market, each having a different technicality and parameter, which at times be extremely confusing for a person. So, a Mortgage Broker in Calgary and Alberta is the most appropriate person to be consulted for any sort of mortgage related information. It is the duty of the mortgage broker to explain the various options available to his client and help him shortlist the best one for him. He is also responsible to advice them about the legalities and the various other aspects of the loan.

A broker can always help his client get a better deal. Since they have good connections in the industry, they can help their clients get good interest rates on their mortgage, thus saving them a lot of money. They can also help the clients save a lot of time by cutting down a lot of time consuming factors during the process.

Again, since the broker works for his client, he will always make them his first favor and not the lending companies. And this point reinstates the fact that the Mortgage solution providers in Calgary and Alberta will always work upon getting the best deals for his clients. Working directly with a company can land a person into troubles since their primary focus is to make profits ay any cost. However, a good broker ensures that his client gets all the best things from the deal possible.

A broker takes care of the specific needs of his clients. Every person has a different requirement in terms of his mortgage, and it is the responsibility of the broker to help them get those needs fulfilled. The whole process is made simpler and easier and a considerable amount of paperwork is reduced in the process if one hires a broker. This is because most of the work is taken over by the broker himself and the client just needs to sign a single application form. All the formalities are lightened on the client as the broker takes them upon himself to complete. Also, through his contacts and sources, he gets the approval of the deals really faster and easier.

Mortgage pre-approval in Calgary, Alberta, Canada

In most of the cases the realtors would suggest the buyers to get a pre-qualified mortgage loan as a first step towards buying their houses. But before getting into any conclusion, it is important that a person should understand the basic difference between the two terms, pre-qualification and pre-approval loans. This is because they are often interchanged while use and hence become confusing and misleading at times. It’s true that they are related but in reality they signify totally different levels of approval.

Pre-Qualification Mortgage Loan

Pre-qualification does not generally include any credit report or any in-depth look at the true ability of the house of the buyer. One just needs to provide the information about his income and liabilities to the lender and they calculate the maximum amount he can borrow without any verification of the information.

Pre-qualification does not guarantee an interest rate or loan approval but gives a general idea of the price range that can be afforded before actually starting the lookout for the house.

Pre-approval Mortgage loan in Calgary

This process is a more formal one. In this process the lender would check the credit report of the buyer and would also look closely at his total income and net worth. Then only he will confirm the maximum amount of loan, the loan programs and the rate of interest for a particular period of time which he is eligible to get. The Mortgage solution providers in Calgary have explained that the pre-approval mortgage loans gives the confidence to the buyer to shop for a home but at the same time it does not guarantee the approval of the loan by the lender. But it surely strengthens the position of the buyer as the sellers willingly accept the proposals of the pre-approved buyers.

It is hoped that this article alerts the buyers with the basic difference between the pre-qualification and the pre-approved mortgage loans in Calgary and provides them with some financing options which will help them to reduce the total cost of their dream homes and the total time required to pay it off. It is however, at the discretion of the buyer and the strength of his assets and liabilities that he can choose for a particular type of mortgage loan for his perusal. It will be again a very good decision if the buyer takes the help of an expert mortgage solution provider in the matter.

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