Mississauga Real Estate Blog

Well, if you have not heard the news, Canada Mortgage and Housing, the government run mortgage insurer announced it will be cutting back the 40 year amortization mortgage to 35. Also in the announcement is the fact that you must have 5% down instead of 0%.

This is not a bad thing when you look at the overall picture of the market. Right now our neighbours to the south are suffering a major market adjustment. By the time the US finally starts to recover, they could be looking at Real Estate worth half of what it once was. So why is this.

1. Anyone with a heart beat could get a mortgage. In fact I am sure there was a few given to those that are no longer living as well.

2. You can actually get more money then your home is worth. Home is worth 200k and debt was 300k. It is funny as well as ridiculous all in the same breath. The question I have, why bother paying it off when your value goes down so low and you owe so much.

3. The interest on these loans is tax deductible. I am sorry Mr. Bush. How much is the country in debt?

4. There is over 1 million foreclosures, yup, 1 000 000 powers of sale. Now for all you bargain hunters, that truly is the place to get a deal.

So what is CMHC really saying. Simple, put up a little, not a lot of your own money so you the buyer has an invested interest in the property and actually work on paying the debt off. Chances are you will fight a little harder to keep your home instead of running away at the first sign of stress.

So is this going to slow down all the first time buyers in the market. It might in the short term, but this also gives you a chance to set a goal and save that 5 percent. I can guarantee that once you do that you will truly feel different about the home you are buying.

Talk to you soon.

Todd