http://LeahCoss.ca
Hi, everyone. It's Leah Coss with The Mortgage Center and I wanted to talk about CMHC fees also known as Genworth fees, AIG fees, Canadian Guarantee fees. Kind of list all the companies that are out there that do insurance but it's also called mortgage insurance. Now in this blog, I'm not getting into exactly what mortgage insurance is. I can give you kind of the quote notes which is this is mortgage insurance set. It is mandate by the government that you pay if you put less than 20% down on a purchase of a home or refinance. This is insurance that actually doesn't protect you. This protects the lender and it is a very good thing that it's there. This is why our economy didn't take a total tailspin much like our fellow people down south in the US. It is a very important thing. Check out my other blogs if you want to know exactly what this mortgage insurance is, especially if you want a contrast between the mortgage insurance that you would get to protect yourself.
That said, the common questions that I get about CMHC or mortgage insurance fees is how can I avoid them? How can I reduce them? Is there some sort of private sector out there? Is there a way of just not paying it, not telling anyone? What is the slap on the wrist? Well, unfortunately, there is absolutely no way of avoiding this. It is automatically worked into your mortgage and it is a government mandate. You can't get around it. The notary knows it has to happen. The lender knows it has to happen and automatically, when you apply for a mortgage putting less that 20% down, you are going to have to pay it, OK?
Again, it is a very good thing for our economy that it is in place. That said, if you're looking to avoid it altogether, the only way of doing this is saving up at least 20%, or if you are going to refinance, leaving at least 20% in your home. Then you don't have to pay it. However, there are still some instances and typically more for self employed people with rentals where you have to pay it. But those are somewhat rare occasions and it's typically for much higher risk files.
For the most of you, you are not going to have to worry about it if you have 20% skin in the game. That said, if you're looking to reduce the amount, the longer the amortization that you take, the higher the fees that you'll have to pay. The other thing is that the more down payment that you put in, the less you are going to have to pay.
Someone putting 5% down is going to pay higher fees, percentage wise, than someone putting 15% down. If you get a 25 year amortization, you'll pay the less than if you have a 30 year amortization. Basically, just the higher the risk or the longer it's going to take to pay back, the more you are going to have to pay. [dog barking] There's my dog. Shush! What are you barking at? [laughs]
So, that's kind of how that works. If you have any questions about the exact percentages, I'm not going to go over that in this blog but maybe I'll do one down the road. Feel welcome to email me if you have questions about it specifically. But otherwise, that's how it works. It's in place for a reason. It's a very good thing that we did have it in place and still do. But that's it.
If this video was helpful, please do give it a thumbs up. Don't forget to subscribe so that you don't miss the rest of my videos that are going to help you out with understanding your mortgage. I guess that's about it. Leave a comment down below or email me, contact me. I can give you a preview right over the phone. But that's all for now. I'm Leah Coss with The Mortgage Center. I'm a Canadian mortgage broker, not able to help you guys in the US. I'm sorry but hopefully, I will be talking to you soon.
http://LeahCoss.ca
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Loan Modification Approved, Foreclosure, Mortgage Relief, Short Sale, Baileyhomes4u.comby mbaile1243 views
Hi Leah, very good video thank-you. One question I have is on how we can help our son who is planning to buy a new home and is facing the CMHC insurance cost as he doesn't have enough for 20% downpayment. Could we arrange so that the amount he needs to make the 20% on HIS house is financed through a second mortgage with OUR house being used as the collateral for the loan? As both would be conventional mortgages (we own all of our own house), this should avoid the CMHC insurance right?
wshockey 2 months ago