Do you know your debt-service ratios from your mortgage amortizations? Three out of four first-time home buyers in Canada need to bone up on basic facts about the buying process and home financing, according to a new report released today by Genworth Financial Canada.
Genworth's latest First-Time Homebuyer's Monitor survey tested Canadians' knowledge of mortgage and home buying terms and concepts, revealing important gaps that could be filled by more home buyer education. Only 25 per cent of those surveyed correctly answered more than 7 out of 10 questions in the 'mortgage quiz', and less than one per cent of respondents answered all 10 questions correctly.
The First-Time Homebuyer's Monitor explores the varying degree of mortgage knowledge and understanding among buyers. Results indicated that first-time home buyers have a lack of understanding of common mortgage terminology such as:
- Credit rating
- Mortgage term
- Variable or fixed interest rates
- Mortgage amortization
- Mortgage default insurance
- Debt service ratio
Potential first-time home buyers can test their own mortgage knowledge to see how they rank against other survey recipients on the categories above.
"Today's mortgage products provide home buyers with a lot of choices. To make the right choices it's important to be as informed as possible," said Peter Vukanovich, President of Genworth Financial Canada. First-timers should speak to a mortgage professional and study online resources, he says.
This article has omitted Toronto and Ontario Land Transfer Taxes, Canada Mortgage and Housing or Genworth Insurance Fees, Fintrac Reporting Requirements and Buyers Agency. What will your realtor do for you?
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