Choosing the right neighbourhood for you and your family is top priority among most homebuyers, even ahead of price! That’s why it’s essential to know where you want to live and what you’re looking for in a neighbourhood before you even start shopping for a new home.

Following is a checklist of some important questions to help you determine what you’re looking for in your ideal neighbourhood:

• Do you want to live in a city, town or in the countryside?
• Is the neighbourhood stable, improving or declining?
• Do sales in the area support the home’s price?
• Do you want to be close to work, schools, shopping, transportation and recreation? Or, is proximity to friends and family more important?
• What kind of shopping options are available? Are there local boutiques, big box stores or a farmer’s market?
• What about zoning and land uses? If the neighbourhood has mixed-land use that includes commercial, what is the trend and how could this affect your lifestyle and future sale?

• What do actual homeowners like/dislike about the neighbourhood? (Your potential neighbours will likely be open to answering some questions if you tell them you’re researching neighbourhoods.)
• Does the neighbourhood have a friendly feel to it? What is the neighbourhood’s crime rate?
• Are the homes and yards well maintained?
• How’s traffic? Is it particularly heavy and, if so, when?
• What do the property taxes cost and how are the municipal services?
• Is there is a bar or pub close by? If so, how noisy will it be in the evenings?
• What are the city’s plans for the neighbourhood? Are there any improvements in the works? Are there any commercial or industrial developments, or group housing, approved or under review?

These are just some of the questions you’ll need to answer in order to locate your ideal neighbourhood. As always, if you want additional feedback on specific neighbourhoods, your answers are just a phone call or e-mail away!

On February 16th, 2010, Federal Finance Minister Jim Flaherty announced three changes to the mortgage insurance rules, which will come into effect on April 19th, 2010. 

The good news is that most mortgage consumers will not be significantly impacted by the three latest changes. The intentions of the new rules are to curb speculation housing and encourage homeowners to use their homes as a savings tool, rather than borrowing home equity to pay down loans and credit cards.

Rule #1
Minimum down payment requirements for non-owner-occupied homes will increase to 20% from 5%, and the way that rental income is considered has been scaled back as well. This rule will have the most dramatic impact of all three changes, but only on real estate investors. Being required to put more money down and being able to use less potential rental income for qualifying purposes will displace many new real estate investors (who currently only make up around 4% of all mortgage consumers in Canada).

This change is intended to avoid any kind of future housing bubble in Canada by curbing speculation building. The recent economic downturn caused builders to stop building and many new homes sat vacant through the early stages of 2009. When rates started to drop and buyers began to gobble up property that had been on the market for some time, the supply/demand ratio started to lead to higher demand and higher prices.

Rule #2
All borrowers will have to meet qualification standards for a five-year fixed-rate mortgage even if they choose a mortgage with a lower interest rate and shorter term (such as one- or three-year terms).

Current standards for mortgage qualifying are typically based on a lender’s three-year fixed rate (if you’re opting for a variable rate, home equity line of credit, or one-, two- or three-year fixed-rate product, which typically carry a lower interest rate). This qualifying standard has, in the past, been sufficient to protect consumers from rates increasing over the term (at least on paper). Essentially, the government is forcing

people to prepare for a likely rate hike over the next five years.

Considering the average difference between discounted three- and five-year fixed rates is only between 0.30% and 0.49%, this should truly not have a drastic impact on the average mortgage applicant – if, in fact, the new rules intend to have mortgage applicants qualify based upon discounted rates. It is still unclear if the upcoming alterations are meant to have Canadians approved based upon “posted” five-year rates, which would mean a difference of over 2%!

Rule #3
The maximum amount Canadians can withdraw when refinancing their mortgages will be reduced from 95% to 90% of the value of their homes.

This final change will likely have the most impact on those Canadians who have a current government-backed insured mortgage and would like to take advantage of the equity in their home to do some debt consolidation in the future. In recent times, with rates at historical lows, it’s been advantageous for consumers to roll their unsecured debt into their mortgage to decrease monthly payments – so much so that the government has sought an end to this trend of high loan-to-value mortgages.

This does not, however, stop consumers from overspending and taking on large amounts of credit card debt. In some cases, the ability to borrow the equity in one’s home to pay off debt has saved people from bankruptcy and kept them in their homes. Hopefully this change doesn’t backfire on the government’s intentions.

Only time will tell if the government’s measures to curb spiking house prices and encourage equity savings will be a positive change for Canadians.

Prior to this announcement, there was wide-spread speculation that the government was going to change current mortgage policies to include a minimum 10% down payment, an increase from the current 5%, and a reduction in amortization from a maximum of 35 to 30 years. Luckily for first-time homebuyers in Canada, these rumours have not proven true.