2012 - Borrower-Driven Global Economic Stimulus

2012 brings in new and innovative mortgage solutions for homeowners and investors alike. There is also an understanding by lenders of their role in both the local and global marketplace, and the lender's role in helping to stimulate the economy both in a local and global sense. Mortgage financing transactions help effect economic activity since real estate purchases are very large in dollar volume and real estate projects have the potential to create far more jobs and economic spinoff's than other business projects. Take advantage of the capital opportunities that are available from your lender, today.

Many Canadian lenders are sitting on surplus cash because of the strong Canadian economic climate and the recent reduced corporate business tax. If you have equity in your current real estate or have at least 25% cash to put down towards a real estate purchase transaction  and your lender is not lending you money - for whatever reason - then go find another lender. If you have hired the services of a mortgage brokerage firm and they cannot help you, then go find a new mortgage broker.

For active borrowers, both retail and investor, 2012 will be a great year to borrow money from lenders. Do it for your yourself, do it for your family, do it for your local economy, do it for your country and in some way, you will have done it for the global economy.

One more thing, for Canadians, 2012 is the Year of the Accredited Private Lender (APL); "the highest standard of "quality-in-lending" for the equity mortgage borrowing community". Learn more about the APL and why they are important to you at www.privatelender.org.

Email us at info@mortgagequote.ca if you have any questions or comments.

Investment in Foreclosures - myth or reality for the average person?

Foreclosure investment: an elusive myth or apparent reality?

It is raining foreclosures. Canada is experiencing significant increases in foreclosure. Many

seasoned investors are spending much time and resources to identify “distressed” (read:

foreclosed) properties, in an effort to acquire them at significantly below market value. Upon

acquisition, the investor can improve the property and sell at a higher price or simply keep it as a

rental property. This article will briefly introduce you to the idea of foreclosure, why investor’s

like to find them and an example of how buying a foreclosure works.

What is a foreclosure?

Many have heard the term foreclosure in their life, but few understand what it means. Practically

speaking, foreclosure is the legal process of transferring property ownership from the borrower

to the lender.

Why is a property foreclosed upon?

Normally, foreclosure is caused due to non payment of a mortgage. This can happen for a

number of reasons including, loss of job, divorce, disability or other even death.

Other reasons causing foreclosure is one that is more common in today’s climate: lenders failing

to renew mortgages. Yes, it is true. For years may have treated a mortgage renewal as a simple

signature on a renewal notice sent to you in the mail. In the last 12 months however, some

lenders are no longer renewing mortgages either because the lender is out of business or because

they no longer offer the mortgage product, such as revenue property mortgage.

As the borrower, you may have made all your payments on time, however upon renewal date,

the lender has the right not to renew, despite your good payment history. If you cannot find a

replacement lender within a reasonable amount of time, (sometimes up to 90 days) the existing

lender will initiate foreclosure.

Why do savvy investors seek foreclosures?

Experienced investors seek foreclosures because they know that the court system uses a

valuation system to value properties that are in foreclosure at a far lower amount than market

value. The value they use is called forced sale, cash value. The general idea of forced sale, cash

value is to determine what a person would pay for the property, if it were to be purchased using

all cash, not bank financing. Like in many things in life, a buyer usually gets a good deal if they

pay for something with all cash, instead of credit. You may normally experience this type of

pricing in garage sales, flea markets or shopping bazaars. Hard to believe, but this same concept

applies in the foreclosure system.

During the foreclosure process, the courts order an appraisal on the subject property in order to

determine both the market value and forced sale, cash value. In general terms, if the borrower’s

mortgage is worth more than the forced sale, cash value then most likely the borrower will end

up losing the house to the lender. If the forced sale value is higher than the mortgage amount

owing, then the borrower will be given time to either refinance or sell the house, before the lender is given a chance to take it over.

The savvy investors seek those properties where the mortgage amount owing is far less than the

forced sale, cash value so they can negotiate a purchase from the current home owner at a value

is both low enough to generate a high margin and that will be enough to payout the lenders on

title.

Why do people who are in foreclosure sell their houses to investors at a value far less than what

the market will offer?

Many times homeowners who are in foreclosure simply do not want the stress. In other cases, it

may be cheaper to sell the house fast, rather than incur legal fees that can average over $12,000.00

just for the lender’s lawyers ---not including the borrower’s lawyers, court costs, court appointed

realtor costs, bank late interest, fees, other charges and arrears payments. If the foreclosure goes for a long time, over 6 months (or into the years - yes this can happen), total foreclosure costs can come to over $20,000.00, not including the loss in house value because of the stigma associated with foreclosure.

Example of a foreclosure purchase:

For example, let’s say a property has a market value of $425,000.00, based upon comparable

sales in a neighborhood. The property is in foreclosure, so the court appointed appraisal firm

determines a forced sale, cash value of $360,000.00. Additionally, let’s say the owner of the

property owes the lender a mortgage amount of $280,000.00. In this example, we have “market

equity” of $145,000.00 and “hard equity” of $80,000.00. Despite the equity in the property, the

homeowner may be happy just to have another person write them a check for $50,000.00 above

the amount owed to the lender and walk away from the headache.

Hard to believe but yes, this happens. Of course, the investor does not get the instant $95,000.00

equity for free, they must also have enough money or financial strength to either payout the

existing mortgages or bring the arrears payment up-to-date and convince the lender to let them

take over the payments.

Now the new owner can fix the house up, or better yet, if the house is already in great shape, just

clean it and list it for sale. If the investor is not interest in making a fast dollar, but would like

to make more profit, over the longer term, then they may simply keep it as a rental and sell it in

years to come.

Where to find foreclosures:

Mortgage brokers specializing in foreclosures

Other Investors

The court house

Realtors

MLS

Websites

Apply Now for your mortgage or contact MortgageQuote.ca for details at 1-866-948-7283.