| By :
Molly Wider
Home ownership has generally been heralded as the ultimate financial achievement and, if all goes well, a solid way to create a foundation of wealth. The perception is that homeowners are not throwing their money away on rent. Instead, the thought process is that the new homeowner is putting their money toward an asset that can only appreciate in value. Agreed, home prices have, for the most part, been a good financial investment over the past few decades. The last two generations have had these concepts instilled in their thinking when it comes to real estate. They've been taught to save for a down payment to buy a house then work hard to pay off their mortgage. They've also been encouraged to 'get in soon'...and that's exactly what they've been doing. According to the Canadian Association of accredited Mortgage Professionals, the combination of inevitable bank rate increases with the new rules for qualifying first-time home buyers is causing a surge in the demand for mortgage brokers as potential homeowners are having to look harder for their first mortgage. Many borrowers will not understand what the changes mean and how they will impact them as a consumer. The new April 19 rule requires all potential homebuyers to qualify for the standard five-year, fixed rate mortgage, even if they plan on a lower-rate variable mortgage. Also, rental property income will no longer be given the same consideration as before when qualifying for a mortgage. CMHC reported their 2009 survey showed that approximately 25% of all mortgages were conduced through mortgage brokers instead of with a bank. 42% of these first-time purchasers were between the ages of 25 and 34. This number is expected to rise with tighter qualifying rules for the first-time buyers who are looking for the best deals. Some also think the trend of the mortgage broker is rising due to the current generation of home buyers growing up in a different era. Although mortgage brokers can offer market expertise, they generally cannot offer any more guidance than the banks. However, brokers have access to a menu of options a bank may not have. One of the benefits of an independent mortgage broker is that they have access to all banks and can sometimes use the lower interest rates of one bank as leverage against another. Brokers do not work for any one bank, which means they can shop around to provide their clients with the best deal. While one bank may decline a borrower, another lender may approve them. If you are like many others who have bad credit are hoping to get into the market but are concerned about how the new rules are going to affect you, you may want to think about a private loan. There are many private financial lending institutions that specialize in bad credit loans that you can put towards the house of your dreams.
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