MORTGAGES -- A TRICKY, SCARY BUSINESS

(Special) - One of the greatest days in my life came a few months ago when I made my final payment and discharged my mortgage, a mere 22 years, three jobs and one career change after buying my house! 

No matter how you slice or package it, getting a mortgage can be a tricky and scary business. There are multiple mortgage options available, and for most people a mortgage is the single largest piece of debt they will ever hold that can take years and years to pay off. A mortgage is, quite simply, a huge financial commitment and responsibility.

Due to the recent financial crisis, Canada now has some new, tougher rules about who qualifies for a mortgage. You now must show that you can carry a five-year, fixed rate mortgage. In the past, if you chose a variable rate mortgage with a lower rate or shorter amortization term, you could qualify for the loan with a lot less money. Now with the new rule, if you can afford more than you borrow, you won't run into trouble if interest rates rise, which many financial experts expect will happen. As well, now if you are buying extra property - not your main home - your down payment must be at least 20 per cent of the purchase price. This will help ensure that people who buy multiple properties don't take on too much mortgage debt. The new rules also changed the amount you can borrow against your home. In the past you could borrow up to 95 per cent of the value of your home. Now you can only tap into 90 per cent when you refinance.

Financial experts have expressed concern lately that low interest rates and rising house prices could pressure home buyers, particularly first timers, into the market. The Bank of Montreal said in a survey that as many as one-third of respondents believed their expectation that housing prices and interest rates would increase left an impression on their decision whether to make a purchase in the short term. In other words, economic factors have created a sense of urgency among home buyers.

Mortgage insurance company, Genworth Financial, recently did an interesting survey on tips to reduce house-hunting stress that revealed some interesting gender differences about how men and women approach mortgages and financial matters in general. More women (73 per cent) than men (60 per cent) said having a simple and easy to understand mortgage structure is important. More women than men want the security of low monthly mortgage payments and women experience more anxiety than men when thinking about their financial future. Men generally enjoy planning their financial future more than women but women and men almost equally say that owning a home provides a greater sense of security and well being.

Genworth suggests the following tips can make the home buying process a lot less stressful for both sexes. First, agree on what kind of house you want and set a price limit before you start looking. Get your financing in place, check your credit rating (you can get your credit rating through the two main credit bureaus in Canada, Equifax Canada and TransUnion Canada), educate yourself as much as possible, and get a pre-approved mortgage.

 This year, Genworth launched the first National Education Homeownership Week, a week-long initiative designed to educate first-time home buyers on basic mortgage terms and concepts. The event covered such topics as the importance of good credit and how your credit history is established, how to reconcile what you want with what you can afford, home buying basics and tips on purchasing and owning a home. "Facts are your friends," said Genworth President, Peter Vukanovich. "Any homebuyer needs to have a realistic understanding of their financial situation and comprehend the home buying process. Our goal is to help Canadians buy their homes affordably and ensure they understand all the options available."

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