The Truth About CMHC (Canada Mortgage & Housing Corporation)

CMHC is an insurance company. It offers insurance to banks and other home mortgage lenders. The insurance company (CMHC) will pay the banks and other lenders if you don’t pay your mortgage. CMHC does not lend money.

Then the insurance company (CMHC) takes the house and sells it. If there is a shortfall between what the insurance company (CMHC) gets from the sale and what they paid the banks, then the insurance company (CMHC) will come after you.

If you take what’s called a High Ratio Mortgage then you pay the premium to the insurance company (CMHC) for the privilege of insuring the bank against any losses.

To summarize you pay the cost of the insurance to the insurance company (CMHC) and you receive none of the insurance benefits.

The Banks are too lazy to make smart mortgage lending decisions, so instead they have you pay the (CMHC) insurance for them.

CMHC the insurance company is what’s called a Crown Corporation. That means it’s owned by the government and backed by taxpayer money.

So here we have a taxpayer-backed insurance company that has guaranteed around 600 billion dollars in mortgages to the banks.

The recent rule changes and the other changes in the last few years are not because homeowners have abused the CMHC insurance system. It’s because the banks have abused the CMHC insurance system. There are thousands of mortgage loans guaranteed to banks that have no right to be insured in the first place. When the banks couldn’t collect CMHC insurance premiums from the borrowers the banks paid the CMHC insurance premiums themselves. Much easier than actually doing due diligence on the borrowers.

This in effect passed off the liabilities from the banks to the taxpayers and has allowed the banks to leverage up more and more and more.

The Banks make obscene amounts of money from mortgages without the liabilities. But the government would have you believe that we the home-owning taxpayers are out of control, so they need to change the insurance company (CMHC) rules to protect us from ourselves.

When you start to peel back the layers you begin to see this whole issue as a giant shell game being played by the banks and the government on the taxpayers of Canada.

First-time homebuyers tap your RRSP to help with your home purchase

Your thinking about buying your first home... Wish you had saved up a good down payment. Maybe you have, but don't know it. To help first-time buyers get into home ownership, the federal Home Buyers' Program lets you access tax-free money for use towards the purchase of your first home. 

As a first-time homebuyer, you are allowed to withdraw money tax-free from your RRSP, provided you adhere to the repayment plan. You can withdraw up to $25,000 from your plan. If your spouse qualifies as a first-time homebuyer, then he or she will also be able to withdraw $25,000. Between the two of you, you could possibly have a total down payment of $50,000. 

There are conditions, you must enter into a written agreement to buy before you can withdraw money. And, you must meet the repayment terms. Repayment begins the second year following the year of withdrawal. You have up to fifteen years to repay, and each annual repayment must be at least one-fifteenth of the total withdrawal, otherwise, you have to include each repayment amount as income for that year.

A detailed booklet is available on the Canada Revenue Agency website. 

Debunking the Myth: Why Calling the Listing Realtor Might Not Get You the Best Deal

When it comes to real estate, there's a common misconception that directly calling the listing realtor can fetch you a better deal. It sounds logical on the surface: eliminate the middleman, perhaps save on commissions, and directly negotiate. However, this strategy often fails to consider the intricate dynamics of real estate transactions and the primary role of a listing realtor.

The Loyalty of the Listing Realtor

The core responsibility of the listing realtor is to the seller. They're contracted to ensure the seller's best interests are always prioritized. Hence, expecting the same realtor to pivot and act in the best interest of the buyer is unrealistic. It's a clear conflict of interest. It's akin to expecting the same lawyer to represent both the prosecution and the defence in a courtroom. The dynamics don't align.

The Need for a Buyer's Realtor

Buyers benefit immensely from having a realtor dedicated solely to their interests. This agent can provide insights, point out potential issues with properties, and harness their experience to negotiate favourable terms. They're in the game for the buyer, advocating and working to ensure the buyer gets value for their money.

Seeing Beyond the Commission

It's a mistake to focus only on commission savings. Real estate transactions are multifaceted, involving more than just the exchange of money. There's the actual property value against the asking price, potential hidden faults, and other nuances that can be leveraged to negotiate the price. An experienced realtor provides value by navigating these complexities, often saving the buyer more than any commission they might hope to save.

The Perils of DIY in Real Estate

Some buyers might feel they have the acumen to navigate the real estate waters solo, assuming they'll outsmart the system. However, this is often a misguided belief. Just as we rely on professionals for haircuts, dental procedures, or medical diagnoses, the expertise of a realtor is invaluable. They bring market knowledge, negotiation skills, and a network of resources that the average buyer simply doesn't have access to.

Conclusion

In the world of real estate, professional guidance is not just an advantage—it's a necessity. To truly safeguard your interests and ensure you're making a sound investment, it's always best to have a dedicated professional on your side.