Mortgage & Down Payment Hacks: Smart Strategies for Homebuyers in 2025 with guest Michael Dorego

In this episode of Building Wealth Through Real Estate...Brick by Brick, I discuss mortgage options with Michael Dorego, particularly those available to first-time buyers. Michael, a mortgage agent with Northwood Mortgages Limited, shares his insights and expertise on reverse mortgages, dispelling myths and discussing the facts. He explains that reverse mortgages in Canada are heavily regulated and borrowers can typically only borrow up to 55% of their home's value. We also touch on the mortgage stress test, down payment assistance, and the various programs available to first-time buyers and renters. The conversation concludes with an introduction to the mortgage rules that have changed since December 15, 2024.

Reach out to Michael:

Michael Dorego (click on his name for his website)
Northwood Mortgage
mdorego@northwoodmortgage.com
+1 (416) 568-5111

Here are three key facts about Reverse Mortgages:
1.Eligibility and Home Equity: Reverse mortgages are available to homeowners aged 55+ in Canada. They allow you to access up to 55% of your home’s equity, but the amount depends on factors like your age, the value of your home, and your location.
2.No Monthly Payments: Unlike traditional loans, reverse mortgages don’t require monthly repayments. Instead, the loan is repaid when you sell the home, move out, or pass away.
3.Interest Accumulates Over Time: Since no payments are made during the loan term, interest compounds on the loan balance. This means the amount owed grows over time, potentially reducing the equity left in the home.

Ourboro - A co-ownership program designed to assist homebuyers by contributing to their down payment in exchange for a share in the home’s future appreciation.

Down Payment Options By Region

Waterloo Region

https://www.regionofwaterloo.ca/en/living-here/funding-to-help-buy-a-home.aspx

Guelph and Wellington County

https://www.wellington.ca/en/social-services/hs-homeownership-funding.aspx#Wellington-Affordable-Homeownership-Down-Payment-Loan-Fund

Oxford County

https://www.oxfordcounty.ca/en/services-for-you/home-ownership-program.aspx#Eligibility-self-check-list-for-a-down-payment-loan

Lambton County

https://www.lambtononline.ca/en/resident-services/homeownership-down-payment-assistance.aspx

Simcoe County (Barrie area)

https://www.simcoe.ca/dpt/sh/apply-for-the-homeownership-program

Dufferin County

https://www.dufferincounty.ca/housing-services/homeownership-program

Brant County

https://www.brantford.ca/en/living-here/homeownership-program-b-home-fact-sheet.aspx

Bruce County

https://www.

Transcript

WEBVTT

1
00:00:02.900 --> 00:00:11.909
Nico James-Bock: Today we are speaking about mortgage options, particularly those options that are available to 1st time buyers.

2
00:00:11.910 --> 00:00:33.460
Nico James-Bock: What can they expect and how to best prepare my guest on today's episode is Michael Dorego. Michael Dorego is a mortgage agent, a mortgage specialist with Northwood mortgages limited before he joins the podcast

3
00:00:33.840 --> 00:00:47.839
Nico James-Bock: I want to introduce the different types of mortgage options, reverse mortgage. We'll be speaking about reverse mortgages as well as

4
00:00:48.200 --> 00:01:05.929
Nico James-Bock: reverse mortgage myths and facts, down payment assistance the various programs that are available to 1st time buyers and our borrow our borrow is a tool that

5
00:01:06.720 --> 00:01:19.020
Nico James-Bock: buyers can avail themselves of, which is a unique proposition, and can be an ideal situation for those that don't have the full down payment.

6
00:01:19.820 --> 00:01:34.250
Nico James-Bock: Welcome to another episode of brick by brick building wealth through real estate. My name is Nico James Bach.

7
00:01:40.830 --> 00:01:46.849
Nico James-Bock: I am a broker with royal Lepage signature. Realty.

8
00:01:47.720 --> 00:01:59.850
Nico James-Bock: As I mentioned, the guest on today's episode is Michael Dor regal we are going to.

9
00:02:09.340 --> 00:02:14.329
Nico James-Bock: We're going to welcome Michael as he joins the podcast.

10
00:02:14.890 --> 00:02:16.009
Michael Dorego: Hey, Nico! How are you?

11
00:02:16.010 --> 00:02:18.680
Nico James-Bock: I'm well, thank you. How are you doing.

12
00:02:18.680 --> 00:02:19.649
Michael Dorego: Good. Thank you.

13
00:02:20.730 --> 00:02:22.349
Nico James-Bock: There you are!

14
00:02:23.110 --> 00:02:23.899
Michael Dorego: There you go!

15
00:02:24.480 --> 00:02:50.339
Nico James-Bock: I made an introduction a brief introduction. So the listeners and those watching the video now know that my special guest is none other than Michael Dorigo with Northwood Mortgage Limited. Michael, how about you? Present yourself? And then we can get started with the episode.

16
00:02:50.690 --> 00:02:58.179
Michael Dorego: Sure great to see you. Nico, yeah. So Mike Dorigo, with Northwood mortgage I've been a mortgage agent now for the past 8 years.

17
00:02:58.680 --> 00:03:04.009
Michael Dorego: Always with Northrop mortgage other than that, I'm married with 2 kids.

18
00:03:04.330 --> 00:03:08.790
Michael Dorego: And, you know, busy lifestyle, having 2 young kids right, they're both under 10. So.

19
00:03:08.790 --> 00:03:13.190
Nico James-Bock: Yes, yes, so I'm sure you are very, very busy.

20
00:03:13.990 --> 00:03:17.569
Nico James-Bock: A lot of changes in the mortgage world.

21
00:03:17.850 --> 00:03:25.900
Nico James-Bock: so we can get to those immediately I will give you. Are you able to see the screen.

22
00:03:26.360 --> 00:03:27.310
Michael Dorego: I can. Yes.

23
00:03:27.720 --> 00:03:28.410
Nico James-Bock: Okay?

24
00:03:30.550 --> 00:03:44.680
Nico James-Bock: All right. So I guess in my introduction I mentioned reverse mortgages, the mortgage stress test down payment assistance, the various options available to 1st time buyers

25
00:03:44.680 --> 00:04:05.729
Nico James-Bock: as well as the mortgage rules that have changed. There were new rules that were introduced on the 15th of December of 2024. So let's start with reverse mortgages, facts, myths, some insider, I guess, tips that you could share. Let's start with that.

26
00:04:05.730 --> 00:04:20.559
Michael Dorego: Sure. So before I was a mortgage agent, I was actually very much anti reverse mortgages. I just heard a lot of bad things about them. I think there's a general stigma. What I realized was a lot of the misinformation I had.

27
00:04:21.045 --> 00:04:28.359
Michael Dorego: Came from the Us. Version of reverse mortgages primarily the ones that were done prior to 2,008.

28
00:04:28.800 --> 00:04:35.159
Michael Dorego: In fact, in the Us. At 1 point you can get a reverse mortgage up to 95% of your home's value.

29
00:04:35.160 --> 00:04:35.750
Nico James-Bock: Oh, wow!

30
00:04:35.750 --> 00:04:43.252
Michael Dorego: Imagine if the market just dropped 5%, you essentially have normal equity in the house. Right? So, fortunately for Canada,

31
00:04:43.720 --> 00:05:00.440
Michael Dorego: reverse mortgages are very restrictive, and when I say restrictive is that they're very heavily regulated. Rather. And so in Canada, you know, generally speaking, the most you're able to borrow on a reverse mortgage is 55% or so of your home's value.

32
00:05:00.440 --> 00:05:00.800
Nico James-Bock: Okay.

33
00:05:00.800 --> 00:05:19.410
Michael Dorego: And you have to be advanced in your age for that to happen. So a 55 year old, for example, could not get 55% of the home's value be closer to 30 or 40 ish. The reason for that is the reverse mortgage company. They really want the homeowners to have a lot of equity in their house.

34
00:05:19.550 --> 00:05:20.400
Nico James-Bock: I see.

35
00:05:20.400 --> 00:05:25.172
Michael Dorego: Right. So very is a lot of restrictions in place.

36
00:05:25.880 --> 00:05:45.860
Michael Dorego: so again, that's the main thing. There with the reverse. Mortgage is a lot of misinformation. So one of the myths is that you know you don't own the property. The bank or reverse mortgage company does. That's actually not correct. The homeowners are always the owners of the property, that property is theirs.

37
00:05:46.020 --> 00:05:50.940
Michael Dorego: Until they day they sell the home, or they both pass away.

38
00:05:51.380 --> 00:05:51.970
Nico James-Bock: Okay.

39
00:05:51.970 --> 00:06:07.549
Michael Dorego: Right. So even if one person passes away, the person is still alive, gets to live there as long as they want to. The only time there may be an issue is if the property tax is not being paid if the property is not being properly kept up, but.

40
00:06:07.550 --> 00:06:10.530
Nico James-Bock: So they basically have to take care of the property as usual.

41
00:06:10.530 --> 00:06:11.990
Michael Dorego: It? Of course. Yeah, because.

42
00:06:11.990 --> 00:06:12.410
Nico James-Bock: Value.

43
00:06:12.410 --> 00:06:24.229
Michael Dorego: The Mortgage Company. They have just as much interest in equity as you do right. Ultimately they want to get paid back eventually. The good thing is, you can never owe more than the house is worth.

44
00:06:24.600 --> 00:06:30.389
Michael Dorego: That is a guarantee across the board. So if somehow you owe a million dollars on a reverse.

45
00:06:30.520 --> 00:06:38.839
Michael Dorego: and the home is worth a million dollars even less. The home is worth 900,000. For example, you can never owe more than the house is worth.

46
00:06:39.130 --> 00:06:39.570
Nico James-Bock: Okay.

47
00:06:39.570 --> 00:06:41.349
Michael Dorego: Of a negative equity guarantee.

48
00:06:41.690 --> 00:06:54.000
Michael Dorego: That's the beauty there. So yeah, you are the owner of the home. It's only due. The money is due upon sale, as I mentioned, and the death of both, or any any homeowers essentially.

49
00:06:54.000 --> 00:06:54.750
Nico James-Bock: Okay.

50
00:06:54.920 --> 00:06:58.980
Michael Dorego: Right. Another myth is that

51
00:06:59.960 --> 00:07:03.039
Michael Dorego: you know. You gotta be in a desperate situation to get one.

52
00:07:03.430 --> 00:07:23.329
Michael Dorego: And the reality is it's not the case, because you know a lot of people who retired. They have investment for portfolios that they're taking money from, but you know the cost of living has gone up right. As everybody knows, everything's more expensive, and what happens is a lot of times, you know. People are having to increase.

53
00:07:23.610 --> 00:07:26.980
Michael Dorego: You know the withdrawals from their pensions.

54
00:07:27.230 --> 00:07:27.660
Nico James-Bock: Correct.

55
00:07:27.660 --> 00:07:32.019
Michael Dorego: Riffs. That kind of stuff Tfsas, just to make, you know, to make ends meet.

56
00:07:32.130 --> 00:07:37.480
Michael Dorego: And and the reality is a lot of seniors. People are retiring with mortgages still.

57
00:07:37.710 --> 00:07:40.829
Michael Dorego: and a lot of debt. I'm telling you. I've seen people, Nico.

58
00:07:40.990 --> 00:07:50.620
Michael Dorego: 65 plus right, with hundreds of thousands of dollars in mortgages and tons of consumer debt. And it's it's eating up most of their income

59
00:07:50.800 --> 00:07:58.779
Michael Dorego: right? So what there! So instead of taking out more money from your investment plans and and depleting the money very quickly.

60
00:07:58.910 --> 00:08:04.280
Michael Dorego: What you can do with the reverse mortgage is, you can actually pay off your entire mortgage.

61
00:08:04.480 --> 00:08:05.949
Michael Dorego: pay off all your debt.

62
00:08:06.370 --> 00:08:12.610
Michael Dorego: and and, you know, go from, for example, having a $3,000 a month debt payment

63
00:08:12.830 --> 00:08:16.019
Michael Dorego: down to 0 in like 60 days or less.

64
00:08:16.470 --> 00:08:16.960
Nico James-Bock: Right.

65
00:08:16.960 --> 00:08:19.429
Michael Dorego: So. So if you no longer have, you know.

66
00:08:19.610 --> 00:08:31.320
Michael Dorego: 3, 4, 5,000 a month in in debt payments, you know. In theory you could start taking less money from your investment plan and have that money last longer, because you're not having to withdraw from it as quickly.

67
00:08:31.550 --> 00:08:32.710
Nico James-Bock: Right? Okay.

68
00:08:32.710 --> 00:08:58.849
Michael Dorego: And that's 1 of my favorite methods, for the reverse. Mortgage is just paying off your mortgage and essentially living mortgage, free in a sense not having any payments right? Another reason people use the reverse. Mortgage, too, is they're not desperate, potentially, but they have an adult adult children who maybe have good credit, good income, whatever it is. But you know they're having a hard time buying their 1st home because they don't have enough down payments.

69
00:08:58.850 --> 00:08:59.600
Nico James-Bock: Right.

70
00:08:59.600 --> 00:09:02.999
Michael Dorego: And and you know the reality is, people are living longer nowadays.

71
00:09:03.000 --> 00:09:03.400
Nico James-Bock: Yes.

72
00:09:03.400 --> 00:09:10.330
Michael Dorego: So you know, someone you know, someone can be 70, and you know their adult child is maybe you know, 50

73
00:09:10.530 --> 00:09:13.250
Michael Dorego: in their forties, and they have never bought a home. Yet

74
00:09:13.720 --> 00:09:24.510
Michael Dorego: what the homeowner can do or the parent can do is they can actually give a living inheritance while they're alive, basically giving their children the down payment to buy their 1st house.

75
00:09:24.510 --> 00:09:26.780
Nico James-Bock: And they would get that through a reverse mortgage.

76
00:09:26.780 --> 00:09:48.129
Michael Dorego: Exactly, and the beauty there is, there's no monthly payments for that, right? So so the homeowner is not taking on a monthly payment. The adult child is not having to pay for that money. And a good thing, too, is that the homeowner, like the parents, they can actually watch their children buy their 1st home. They can watch their grandchildren grow up in the house.

77
00:09:48.360 --> 00:09:53.130
Michael Dorego: And you're basically you're getting to. You're you're seeing your legacy

78
00:09:53.674 --> 00:09:55.499
Michael Dorego: live out while you're alive yourself.

79
00:09:55.500 --> 00:09:59.560
Nico James-Bock: While you're alive, which is a huge advantage for a lot of seniors. A huge.

80
00:09:59.560 --> 00:10:12.019
Michael Dorego: And I call it giving with a with a warm hand versus a cold hand. You're still alive, doing it right. And then one of the gripes that some people have with the 1st mortgage is that, yes, when you pass on.

81
00:10:12.270 --> 00:10:19.970
Michael Dorego: you're going to leave potentially less equity for your children as inheritance. But if your children are buying their own homes.

82
00:10:20.230 --> 00:10:24.670
Michael Dorego: you know they're gonna build. They're gonna build up equity in their own house. Correct.

83
00:10:24.670 --> 00:10:26.229
Nico James-Bock: Money that you've provided.

84
00:10:26.230 --> 00:10:32.139
Michael Dorego: Exactly right. So that's how I look at it again. No one has to do it, but it's an option right.

85
00:10:32.140 --> 00:10:32.590
Nico James-Bock: Okay.

86
00:10:32.590 --> 00:10:56.119
Michael Dorego: Another myth is just that you can lose your home, and, you know, be forced out of the property again. If you pay your property tax. You maintain the home, the property is always yours. There's no issues there now. One of the cool things about reverse mortgages is that you're also able to pay down some of the interest if you want to.

87
00:10:56.240 --> 00:11:00.050
Michael Dorego: So, for example, let's just say for simple math.

88
00:11:00.310 --> 00:11:04.739
Michael Dorego: the monthly interest on a reverse mortgage will be about 2,000 a month. Let's just say.

89
00:11:04.740 --> 00:11:05.170
Nico James-Bock: Okay.

90
00:11:05.170 --> 00:11:12.470
Michael Dorego: So again, because there's no payments, you're not paying anything. What's happening is the reverse. Mortgage company is taking the interest and adding it to the balance.

91
00:11:13.210 --> 00:11:16.409
Michael Dorego: Normal mortgage. The mortgage goes down.

92
00:11:16.410 --> 00:11:16.790
Nico James-Bock: Right.

93
00:11:16.790 --> 00:11:19.330
Michael Dorego: Really goes up because it's going in the reverse way.

94
00:11:19.550 --> 00:11:20.300
Michael Dorego: But.

95
00:11:20.530 --> 00:11:27.180
Michael Dorego: for example, let's say a couple we do reverse mortgage for them. They're paying 3,000 a month before for their bills. Now they're paying 0.

96
00:11:27.360 --> 00:11:34.770
Michael Dorego: They have 3,000 bucks a month in their pocket. If they wanted to take a thousand of it and put it towards the interest they could, and they can minimize

97
00:11:35.270 --> 00:11:38.860
Michael Dorego: the appreciation of the interest drastically by prepaying it.

98
00:11:39.040 --> 00:11:43.329
Michael Dorego: and then still maintaining 3,000 a month cash flow in their pocket.

99
00:11:44.260 --> 00:11:44.680
Nico James-Bock: Okay.

100
00:11:44.680 --> 00:11:54.460
Michael Dorego: In one stone is, you have more money in your pocket, and you can savings and also pay down some of the interest. Should you choose to again. It's not mandatory, but the option is there. Of course.

101
00:11:54.460 --> 00:12:02.320
Nico James-Bock: Okay, what is the qualification process like for reverse mortgages like, what's the procedure just in a nutshell?

102
00:12:02.460 --> 00:12:21.109
Michael Dorego: That's a great question. So so there's 4 companies that do reverse mortgages in Canada, 4 main ones. There was a time where there was one and and the beauty is that now? Because there's more now there's more option, and there's more, there's more competition, which is good for consumers right, so they have more options now than ever now.

103
00:12:22.590 --> 00:12:34.550
Michael Dorego: Every single mortgage company has its pros and cons right, so some will lend more than others. Some may have a higher interest rate than others. Some will lend in certain areas, some won't

104
00:12:35.104 --> 00:12:38.159
Michael Dorego: so there's there's a lot there's a lot to take in there.

105
00:12:38.400 --> 00:12:38.870
Nico James-Bock: Okay.

106
00:12:38.870 --> 00:12:46.350
Michael Dorego: Most of them 3 of the 4. They will only give you a reverse mortgage if you're age 55, or more.

107
00:12:46.350 --> 00:12:47.080
Nico James-Bock: Okay.

108
00:12:47.220 --> 00:12:51.330
Michael Dorego: But there is one that will do a reverse mortgage for someone of any age.

109
00:12:51.930 --> 00:12:52.620
Nico James-Bock: Oh, really.

110
00:12:52.620 --> 00:13:01.569
Michael Dorego: Have a you just have to have a decent credit score in the 600 Si believe it's 660 any age up to about 43% of the home's value.

111
00:13:01.770 --> 00:13:04.640
Michael Dorego: Okay? So there is pretty much options now for everybody.

112
00:13:05.103 --> 00:13:15.409
Michael Dorego: So again, decent credit score doesn't have to be stellar, it has to be on an owner occupied home, so it cannot be on a rental property. You have to live in the property.

113
00:13:15.710 --> 00:13:18.269
Michael Dorego: and, generally speaking, for income.

114
00:13:18.450 --> 00:13:38.399
Michael Dorego: You just have to make enough to really just cover your property tax and your utility bills. So you don't have to have a very high income, which would make sense because most retirees who are just living off pension like, you know, Cp. And old age security. They're not making more than sometimes 30,000 a year. Right? So they're not very restrictive, whereas with a line of credit, for example, from a bank.

115
00:13:38.590 --> 00:13:41.819
Michael Dorego: a line of credit, you have to make enough income to qualify for it.

116
00:13:41.940 --> 00:13:43.819
Michael Dorego: And the problem with line of credit is that

117
00:13:44.444 --> 00:13:51.059
Michael Dorego: once you start drawing from it to to pay your bills. Let's just say, well, now, you have a monthly payment every month to pay for

118
00:13:51.360 --> 00:14:05.970
Michael Dorego: right? So so what happens is when you, when you drop the line of credit high enough. That minimum payment is eventually going to get very high. And now you're back in the cycle of Oh, darn! Now we got more monthly payments again, and the cycle continues.

119
00:14:06.150 --> 00:14:06.940
Nico James-Bock: Okay. Great.

120
00:14:06.940 --> 00:14:11.200
Michael Dorego: So having to consider because there are 4 companies, they're all gonna toot their own horn right?

121
00:14:11.200 --> 00:14:12.050
Nico James-Bock: Right.

122
00:14:12.050 --> 00:14:15.679
Michael Dorego: Every reverse mortgage company is going to say that they're the best ones to work with.

123
00:14:15.680 --> 00:14:16.690
Nico James-Bock: I know right.

124
00:14:16.690 --> 00:14:36.659
Michael Dorego: As a mortgage agent is. I actually listen. I find out from the clients, hey, what are your goals? You know. How long do you plan on living in the home, for where do you live? How much do you need? Once I get all that information, what I then do is. I then compare each of the 4 companies to find out which one makes the most sense for that family.

125
00:14:36.790 --> 00:14:42.050
Michael Dorego: Right? So again, sometimes, if you need a high amount. You know, one company is going to give you the most.

126
00:14:42.170 --> 00:14:55.359
Michael Dorego: That's the one you need, right? Sometimes, if you need less. Now, we can be more competitive on picking which one is, gonna give you the better rates, right? So I get paid by the company directly. So I don't charge for my services.

127
00:14:55.360 --> 00:14:55.750
Nico James-Bock: Okay.

128
00:14:55.750 --> 00:15:11.220
Michael Dorego: So it's free to use. So if anyone is looking into reverse mortgage, I have a lot of experience in them. I can explain the pros and cons of each one, and then help them choose which one makes the most sense for them. Walk them through the whole process, and they don't have to pay me a dollar for that services at all.

129
00:15:11.220 --> 00:15:34.890
Nico James-Bock: Excellent good to know. We can move on to another option, which is down payment assistance for 1st time buyers, and also for other buyers that qualify depending on the product. This is also another avenue that should be explored for those who want to buy property. Can you

130
00:15:34.890 --> 00:15:50.050
Nico James-Bock: give us a rundown of the 1st option, which is our borrow, a co-ownership program designed to assist homebuyers by contributing to their down payment in exchange for a share in the home's future appreciation.

131
00:15:50.910 --> 00:16:07.489
Michael Dorego: Yeah. So what I like in our borough, too, is kind of like the show dragon's den or shark tank. What you're doing is you're essentially going into home ownership with this company, and they're going to provide some of the down payment.

132
00:16:07.820 --> 00:16:15.589
Nico James-Bock: Help you buy the property in a share for some of the appreciation of the home. So essentially what our borrower does is.

133
00:16:15.950 --> 00:16:17.580
Michael Dorego: They will pitch in

134
00:16:17.910 --> 00:16:28.940
Michael Dorego: up to 15%, help someone buy their their buy. Their house doesn't have to be their 1st home, but it has to be their only home. Can't use it for rentals. Gotta be something you're gonna move into yourself.

135
00:16:28.940 --> 00:16:30.840
Nico James-Bock: It can't be for an investment. It has to be.

136
00:16:30.840 --> 00:16:48.890
Michael Dorego: Not at all. No, they want. They want someone to live there and and take care of the property themselves. What the company thought was, you know, instead of us buying rental properties and and having tenants and maintaining the properties, why don't we just help other people buy their 1st home? Because, you know.

137
00:16:49.340 --> 00:16:55.770
Michael Dorego: generally speaking, a homeowner tends to take care of their property better than a tenant, only because it's their own house. Right? Yes.

138
00:16:55.770 --> 00:16:56.390
Nico James-Bock: Yes.

139
00:16:56.510 --> 00:17:11.099
Michael Dorego: Have a homeowner live there. They will take care of the maintenance of the property, and you know they get to live there, build up equity, and then we'll share in some of that growth with them. So the minimum the homeowners have to have is just 5%.

140
00:17:11.359 --> 00:17:11.679
Nico James-Bock: Okay.

141
00:17:11.680 --> 00:17:17.770
Michael Dorego: Closing costs, closing costs. I recommend having about 3% of the purchase price set aside.

142
00:17:18.050 --> 00:17:29.689
Michael Dorego: And so essentially, you know, you may you put down minimum 5%, our board puts it up to 15. So now you have a 20% down payment, 20% down completely changes.

143
00:17:30.191 --> 00:17:39.680
Michael Dorego: How much someone can qualify for on a purchase. It's it's actually mind blowing. I'll show you in a second after what that what that does

144
00:17:39.960 --> 00:17:53.349
Michael Dorego: again, our board is a silent partner. What they do is to break it down in a nutshell is, let's just use let's just use a 50 50 split. So, for example, the the buyers put down 10%.

145
00:17:53.460 --> 00:18:07.859
Michael Dorego: Our borrow puts down 10%. 10% of the buyer's money equates to 50% of the total down payments 50 50. So what will happen is, let's assume the home goes up in value by a hundred $1,000.

146
00:18:08.754 --> 00:18:17.700
Michael Dorego: Our borrow would be entitled to 50% of that which is 50,000, and the homeowners get the other 50%, which is 50,000.

147
00:18:17.700 --> 00:18:18.360
Nico James-Bock: Okay.

148
00:18:18.360 --> 00:18:31.999
Michael Dorego: So it's an equal split on the appreciation. Now, when you have a mortgage, Nico, as you know, the mortgage gets paid down right. Yes, so the principal pay down of the mortgage, all of that is kept by the homeowners

149
00:18:32.790 --> 00:18:35.030
Michael Dorego: mortgage down by a hundred 1,000.

150
00:18:35.030 --> 00:18:35.700
Nico James-Bock: Right.

151
00:18:35.700 --> 00:18:47.529
Michael Dorego: That 100,000 is all theirs up by a hundred 1,000, that 50,000 is there. So they walk away with 1 50. Now they have 2 options is they can sell the property.

152
00:18:47.650 --> 00:18:55.330
Michael Dorego: take the proceeds like, take their equity out, and then buy their next home. At that point they shouldn't need our borrow. You can buy that place on your own.

153
00:18:55.450 --> 00:18:57.820
Michael Dorego: or they can refinance

154
00:18:58.120 --> 00:19:10.180
Michael Dorego: and pay back our borrow their share, and then they can retain all the equity going forward now to refinance. The property has to go up in value enough, because you can only borrow up to 80% of the home's value.

155
00:19:10.180 --> 00:19:10.750
Nico James-Bock: Okay.

156
00:19:10.750 --> 00:19:16.279
Michael Dorego: It is possible, but I generally tell people you're probably better off just selling and then moving up after.

157
00:19:16.790 --> 00:19:17.180
Nico James-Bock: Yes.

158
00:19:17.180 --> 00:19:22.710
Michael Dorego: The better idea. Now, to give you an example of the difference in numbers.

159
00:19:24.286 --> 00:19:28.049
Michael Dorego: If somebody if if a couple or a household

160
00:19:28.543 --> 00:19:36.300
Michael Dorego: was making a is making a hundred 50,000 a year. Okay, and they have no debt whatsoever which that's almost impossible nowadays.

161
00:19:36.663 --> 00:19:37.390
Nico James-Bock: No doubt.

162
00:19:37.390 --> 00:19:44.850
Michael Dorego: Whatsoever, and they have a hundred 1,000 for down payment. They have money for closing costs, but they have a hundred 1,000 earmarked for down payments

163
00:19:45.256 --> 00:19:47.629
Michael Dorego: they would need with a hundred 1,000 down

164
00:19:48.688 --> 00:19:55.409
Michael Dorego: they would qualify for a maximum of about 730,000 purchase price.

165
00:19:55.650 --> 00:20:23.370
Michael Dorego: so they could find a home. They could buy a home for about 7 30. And this is because it's it's based on insurance guidelines. So when you have less than 20% down. You have to have an insured mortgage, and the qualifications are very stringent. You have to. Basically, your income cannot be like your. So your mortgage payments and debts, and whatever else, cannot be more than a certain percentage of your income. And that's about 7 30, is the Max. Now, with with our borrow.

166
00:20:23.870 --> 00:20:26.399
Michael Dorego: If they were to put down a hundred, for example.

167
00:20:27.035 --> 00:20:31.190
Michael Dorego: they could buy a home for 900,000 instead

168
00:20:31.827 --> 00:20:45.350
Michael Dorego: with their 100,000 down. And so the down payment on 900 is 180. So they're putting in a hundred 1,000 of the 180, which means that they would keep 55% of the equity appreciation.

169
00:20:45.350 --> 00:20:46.230
Nico James-Bock: Okay.

170
00:20:46.230 --> 00:21:01.869
Michael Dorego: Right and I mean, Nico, you're a realtor, if you if you look at a certain city or town, and you compare homes that are worth 730 versus 900,000. How much nicer are the homes? Probably 900,000 versus 730.

171
00:21:01.870 --> 00:21:07.120
Nico James-Bock: Well, it would vary depending on the city, obviously, but generally it's much nicer.

172
00:21:07.410 --> 00:21:09.850
Michael Dorego: Yeah, better locations, probably more options.

173
00:21:09.850 --> 00:21:10.320
Nico James-Bock: Yes.

174
00:21:10.320 --> 00:21:17.259
Michael Dorego: There's probably some cities where you might not even be able to find a home at the price you qualify for right.

175
00:21:17.260 --> 00:21:17.730
Nico James-Bock: Correct.

176
00:21:17.730 --> 00:21:24.069
Michael Dorego: The idea is, yeah, just basically to to give them more options. So again, you do need about 3% for the closing costs.

177
00:21:24.622 --> 00:21:27.099
Michael Dorego: Our borough, they will actually cover

178
00:21:28.081 --> 00:21:30.670
Michael Dorego: the proportion of land transfer tax

179
00:21:31.060 --> 00:21:39.569
Michael Dorego: according to what they're putting in. So, for example, if they're putting in 50% of the down payment. They'll cover 50% of the land transfer taxes.

180
00:21:39.750 --> 00:21:42.319
Michael Dorego: And because there's 20% down.

181
00:21:42.720 --> 00:22:03.100
Michael Dorego: there's absolutely no insurance premiums whatsoever. So that's roughly, an average about $30,000 just in savings alone, because you're putting down 20%. You wipe out the insurance premiums, and then you also get a reduction on land transfer tax. Now, what are the what are the catches? Well, there's going to be a bit of a lender fee on the mortgage amounts about 1%.

182
00:22:03.100 --> 00:22:03.570
Michael Dorego: Okay.

183
00:22:03.570 --> 00:22:06.910
Michael Dorego: Mortgage broker may charge a bit of a fee to arrange the mortgage.

184
00:22:06.910 --> 00:22:07.280
Nico James-Bock: You're right.

185
00:22:07.280 --> 00:22:11.959
Michael Dorego: We have lawyers and stuff like that. And that's where I see have about 3%. That's usually enough to kind of cover everything.

186
00:22:12.313 --> 00:22:17.770
Nico James-Bock: I see it's for all the other players that are involved in arranging the our board. Okay, okay.

187
00:22:17.770 --> 00:22:31.080
Michael Dorego: Now, the minimum purchase price of the arboro is 5 50. So you have to qualify for minimum 5, 50, and you have to buy in the designated regions that they cover. So on your website, it shows you where, where they where they allow you to buy.

188
00:22:31.080 --> 00:22:31.760
Nico James-Bock: Okay.

189
00:22:31.760 --> 00:22:46.039
Michael Dorego: Major cities. Peel region. No Gta. Waterloo region, you know. Guelph area. Like, you know, Barry, lot of the major areas right? Now again, one of the the pretty much. The only objection I'll get is, you know, Michael.

190
00:22:46.440 --> 00:22:54.110
Michael Dorego: want to buy a house, you know. We don't qualify for enough, our bank said. We don't qualify for enough with the down payment we have or the income we have.

191
00:22:54.260 --> 00:23:09.449
Michael Dorego: But you know our borough, we're giving up, you know, a good share of the equity depreciation, rather like it's hard to stomach it, and I usually tell them I totally get where you're coming from. But here's the thing, though. You've been renting for 10 years. You're paying 3,000 a month.

192
00:23:09.980 --> 00:23:12.479
Michael Dorego: How much that 3,000 a month or rent do you get back

193
00:23:12.780 --> 00:23:25.120
Michael Dorego: after you move? And the answer is 0. Right? So I always tell people, you know, if you can own 25% of the appreciation is that not better than owning? You know, 0% of nothing?

194
00:23:25.120 --> 00:23:26.409
Michael Dorego: Oh, exactly

195
00:23:26.410 --> 00:23:35.069
Michael Dorego: something back, because the easiest way to save for down payment. Nico is actually by owning a property because it goes up in value. You're paying down the mortgage right.

196
00:23:35.070 --> 00:23:36.279
Nico James-Bock: And you get that appreciation.

197
00:23:36.280 --> 00:23:36.840
Michael Dorego: Automatic.

198
00:23:36.930 --> 00:23:38.690
Michael Dorego: It's automatic versus like

199
00:23:38.690 --> 00:23:44.889
Michael Dorego: you're paying rent and then trying to save a thousand bucks a month every month. Now the thing is, too, is as house prices go up

200
00:23:45.100 --> 00:24:03.289
Michael Dorego: the minimum down, payment goes up with it. So it's kind of like a moving target. So I tell people use this sometimes to get on the first, st you know, 1st step of the ladder and build up from there. Now, if someone has good down, payment, good income, everything else. Then this is not necessary, but it's the idea is just having an extra tool there for you when you need it.

201
00:24:03.290 --> 00:24:26.120
Nico James-Bock: Okay, you mentioned that there are certain limitations in terms of geographical location of where this program can be applied. Does that also hold true for the type of property. For example, can a buyer use this program? The our borrow program for pre-construction

202
00:24:26.120 --> 00:24:36.489
Nico James-Bock: example, or a different type of of property, like different types of property, like a common elements. Condo

203
00:24:37.110 --> 00:24:42.759
Nico James-Bock: things like that is what is what I'm asking like, are there limitations from that point of view? Not just geographic.

204
00:24:43.660 --> 00:24:57.809
Michael Dorego: Yeah. So, generally speaking, it's it's condos are fine. Detached homes are fine. I don't really find people using this. I don't really think it's going to be a pre-construction type of product.

205
00:24:57.910 --> 00:25:01.140
Michael Dorego: because when you do put an offer on a home.

206
00:25:01.550 --> 00:25:06.079
Michael Dorego: our borough part of the qualifying, too, is, they have to like the property itself.

207
00:25:06.120 --> 00:25:06.909
Nico James-Bock: I see.

208
00:25:06.910 --> 00:25:08.259
Michael Dorego: They want to invest in it. So.

209
00:25:08.260 --> 00:25:14.340
Nico James-Bock: It has to be physically existing. So obviously in the pre-construction scenario won't be okay. It'll only be on paper. Okay.

210
00:25:14.340 --> 00:25:39.249
Michael Dorego: More. For, like resale homes, someone that you know they have to approve the property. You also want to make sure the property doesn't need a lot of renovations like it should be a home that's pretty much livable. You don't want to buy a fixer, Upper they generally don't want. They do not want the property to need like 10% or more of renovations of the of the purchase price.

211
00:25:39.250 --> 00:25:39.690
Nico James-Bock: Okay.

212
00:25:39.690 --> 00:26:00.680
Michael Dorego: So I always recommend to buyers. Put a 5 day condition of finance, because you might be approved for the mortgage, but our borough has selected property, and another stipulation is they do not want you to over buy the property as well. You've got to make sure it's you're buying it at the proper market value, because again, they want to make sure that there's going to be equity growth there for everyone.

213
00:26:00.680 --> 00:26:27.699
Nico James-Bock: Okay, all right, fair enough, on the topic of regional options you and I have spoken before about the different programs that are available in other regions programs that a lot of people are not aware of. I wasn't aware of some of the programs that you mentioned. I have 3 highlighted here. Can you go through some of the different down payment assistance programs by region.

214
00:26:27.970 --> 00:26:40.999
Michael Dorego: Sure. So, Nico, you're not the only one most realtors do not know. This program exists, and neither do clients or buyers. So different regions have programs where they want to take

215
00:26:41.110 --> 00:26:46.010
Michael Dorego: renters and put them into homes. They want to open up

216
00:26:46.260 --> 00:26:54.639
Michael Dorego: rental units for people, because, as you know, there's, you know. Generally speaking, there's hard. People have a hard time finding rentals right? Right? So every region is a bit different.

217
00:26:54.910 --> 00:27:04.679
Michael Dorego: But the the rules are almost all the same, in a sense where the region themselves will give you either 5 or 10% down to buy a house.

218
00:27:04.920 --> 00:27:08.447
Nico James-Bock: Now within each region they're gonna have some different rules.

219
00:27:08.940 --> 00:27:12.789
Michael Dorego: In general, you should be renting in that area.

220
00:27:13.210 --> 00:27:16.140
Nico James-Bock: Already for 6 months to a year. Correct?

221
00:27:16.140 --> 00:27:16.720
Nico James-Bock: Okay.

222
00:27:16.720 --> 00:27:22.510
Michael Dorego: So I'll give you an example. You got someone living in Waterloo region. They've been renting for a year.

223
00:27:22.810 --> 00:27:25.719
Michael Dorego: They're good to go. That's the 1st box to check off.

224
00:27:25.720 --> 00:27:26.540
Nico James-Bock: Okay.

225
00:27:26.540 --> 00:27:31.030
Michael Dorego: Then what happens is, each region will have a maximum income you can make

226
00:27:31.360 --> 00:27:37.749
Michael Dorego: in order to qualify for the program. So if you're making like 300,000 a year. It's probably not going to be for you.

227
00:27:38.220 --> 00:27:40.049
Michael Dorego: So each region has a maximum income.

228
00:27:40.270 --> 00:27:51.999
Michael Dorego: and then there's a maximum purchase price. So you know, for example, Waterloo region, it's around 600,000. That's generally going to be enough to get you to start a home, maybe like a townhouse or a condo.

229
00:27:52.190 --> 00:27:56.829
Michael Dorego: The idea is to get you into a starter home, not into your dream house right.

230
00:27:56.830 --> 00:27:57.280
Nico James-Bock: Okay.

231
00:27:57.726 --> 00:28:00.849
Michael Dorego: So yeah, maximum income maximum purchase price.

232
00:28:01.050 --> 00:28:14.141
Michael Dorego: Now, what I do is when I'm working with a with a buyer buyer couple is I check to make sure that they qualify for the regional down payment first, st right? And also make sure they qualify for mortgage as well, too, because one of the things

233
00:28:14.660 --> 00:28:21.010
Michael Dorego: Some regions require you to apply ahead of time, and what they need is a mortgage Pre-approval which I would provide if they're pre-approved.

234
00:28:21.140 --> 00:28:38.160
Michael Dorego: You go to them when you have a live offer on a property. So, hey, I've got an offer on this house, and then they will very quickly verify that you're approved for the down payment. Again. This is a program where you want to have a 5 day condition of financing, because.

235
00:28:38.160 --> 00:28:39.670
Nico James-Bock: Right, which is always a good idea.

236
00:28:40.200 --> 00:28:41.260
Michael Dorego: Course, absolutely.

237
00:28:41.260 --> 00:28:44.520
Nico James-Bock: There are no guarantees in terms of financing.

238
00:28:44.520 --> 00:28:51.350
Michael Dorego: The reality is, you know, you can have a couple or person who's qualified for a mortgage. But then the lender doesn't like the property, and that's why.

239
00:28:51.350 --> 00:29:05.870
Nico James-Bock: Yes, a lot of people don't get that, that. It's a two-step process. You have to qualify as a borrower, but also the property that you're buying has to qualify. So that is a hugely important point.

240
00:29:06.150 --> 00:29:08.866
Michael Dorego: Exactly right. So now again,

241
00:29:09.570 --> 00:29:15.269
Michael Dorego: the good thing with this program is that the money they're giving for down payment. There's no monthly payments attached to it.

242
00:29:15.390 --> 00:29:21.689
Michael Dorego: So 0 monthly payments? Okay, it's fully forgiven after 20 years. So if you live in the property for 20 years.

243
00:29:21.690 --> 00:29:22.320
Nico James-Bock: You know.

244
00:29:22.320 --> 00:29:23.990
Michael Dorego: You actually don't have to pay anything back.

245
00:29:24.550 --> 00:29:25.100
Nico James-Bock: Really.

246
00:29:25.360 --> 00:29:38.780
Michael Dorego: Exactly. Yeah, nothing. It's it's basically you have free money as long as you're there. For 20 years now most people will not live there for 20 years. Eventually they're going to want to refinance, maybe take out some money, maybe renovate the house. So if you decide to sell or renovate

247
00:29:38.950 --> 00:29:42.089
Michael Dorego: sorry sell or refinance within 20 years.

248
00:29:42.190 --> 00:29:45.229
Michael Dorego: You just have to pay back the down payment money they gave you.

249
00:29:45.230 --> 00:29:45.630
Nico James-Bock: For the final.

250
00:29:45.630 --> 00:29:48.030
Michael Dorego: 10% down, which was never yours to begin with. Anyway.

251
00:29:48.030 --> 00:29:48.740
Nico James-Bock: Right.

252
00:29:48.740 --> 00:29:52.339
Michael Dorego: And then you have to give them 5 or 10% of the appreciation.

253
00:29:52.340 --> 00:29:52.960
Nico James-Bock: Of your patience.

254
00:29:52.960 --> 00:29:56.480
Michael Dorego: House goes up by a hundred $1,000 you keep.

255
00:29:56.980 --> 00:30:03.250
Michael Dorego: Let's say if they give you 5% down, you keep 95,000, and you give them back the 5 grand.

256
00:30:03.250 --> 00:30:04.470
Nico James-Bock: Plus the down payment.

257
00:30:04.470 --> 00:30:06.579
Michael Dorego: It's probably like the cheapest way to borrow money, because it down.

258
00:30:06.580 --> 00:30:07.030
Nico James-Bock: Yeah.

259
00:30:07.030 --> 00:30:11.779
Michael Dorego: Years. To begin with, you're really just paying on the appreciation 5 or 10%.

260
00:30:11.880 --> 00:30:12.540
Michael Dorego: Okay.

261
00:30:12.540 --> 00:30:13.080
Nico James-Bock: Sorry.

262
00:30:13.080 --> 00:30:15.206
Michael Dorego: A really great way to get in

263
00:30:15.750 --> 00:30:34.869
Michael Dorego: again, every region is different. So I usually try to find out, okay, where do you live now and then. Where are you looking to move to? And then what I do is I reach out to the city, get all the updated numbers because they do change, the prices do go up sometimes every year the income qualifications go up as well. Sometimes regions are out of money. So right now Guelph

264
00:30:34.980 --> 00:30:44.389
Michael Dorego: and Wellington County is currently out of money. So that's where my job is to touch base with them. See where they're at with everything, and then walk the home buyers through the process. Okay?

265
00:30:44.390 --> 00:30:46.360
Nico James-Bock: You had provided. Yeah, go ahead.

266
00:30:46.690 --> 00:30:51.870
Michael Dorego: Yeah. And then, and then the only thing you have to have for this program is just the money for the closing costs.

267
00:30:51.920 --> 00:30:52.540
Michael Dorego: All right.

268
00:30:52.540 --> 00:31:02.599
Michael Dorego: the down payment, the closing cost. It's only one and a half percent of the purchase price. So so, for example, if you're looking to buy a property for 500,000.

269
00:31:02.920 --> 00:31:08.000
Michael Dorego: You only have to have one and a half percent, which is $7,500. That's about like

270
00:31:08.270 --> 00:31:13.229
Michael Dorego: 2 to 3 months rent nowadays. Right? So I say, get about 3 months worth of rent.

271
00:31:14.002 --> 00:31:15.420
Michael Dorego: You have enough

272
00:31:15.873 --> 00:31:26.269
Michael Dorego: for closing costs. So really, if you think about it, you know, if you qualify for this program, you know, you can buy a house with just 7,500 down, which is kind of unbelievable. Think about it right? So.

273
00:31:26.270 --> 00:31:26.730
Nico James-Bock: Okay.

274
00:31:26.730 --> 00:31:38.590
Michael Dorego: But both programs have their pros and cons with the regional program. You have to have good credit because it's an insured mortgage with our borrow, you can actually have a lower credit score, and still qualify.

275
00:31:38.590 --> 00:31:40.110
Nico James-Bock: And still qualify. Okay.

276
00:31:40.110 --> 00:31:45.370
Michael Dorego: And again, you have to have your 5% down at least regional. You can have one and a half percent down.

277
00:31:45.780 --> 00:31:50.350
Nico James-Bock: Okay? And just as a

278
00:31:50.580 --> 00:32:03.759
Nico James-Bock: a point of reference, I guess with some of these down payment assistance programs, they are only for 1st time buyers correct like those that are going from a rental or a home family situation, and being a 1st time buyer.

279
00:32:04.430 --> 00:32:06.209
Michael Dorego: So you don't have to be a 1st time buyer. In fact.

280
00:32:06.210 --> 00:32:07.080
Nico James-Bock: No, it could be anything.

281
00:32:07.345 --> 00:32:09.999
Michael Dorego: You just. You just can't be a homeowner right now.

282
00:32:10.630 --> 00:32:14.434
Michael Dorego: So so you keep as so. If you're renting, for example.

283
00:32:15.600 --> 00:32:20.470
Michael Dorego: our borrow you can. You can use our borrow because you're looking to buy a home to live in.

284
00:32:20.470 --> 00:32:20.840
Nico James-Bock: Right.

285
00:32:20.840 --> 00:32:27.799
Michael Dorego: With the regional same thing. You should be a renter now, if you're living in your parents basement and you're going to move out.

286
00:32:27.800 --> 00:32:28.340
Nico James-Bock: Yeah.

287
00:32:28.340 --> 00:32:32.760
Michael Dorego: The basement is a separate contained unit that they could rent out.

288
00:32:33.120 --> 00:32:43.340
Michael Dorego: That's okay. You're considered a renter. If you're just if it's a non self contained unit. It's just a regular basement, and you happen to be just living down there. There's no separate entrance. There's no kitchen, nothing.

289
00:32:43.340 --> 00:32:44.020
Nico James-Bock: Yeah, yeah.

290
00:32:44.020 --> 00:32:47.729
Michael Dorego: Not considered a rental unit. They they really want you to open up.

291
00:32:48.150 --> 00:32:50.049
Nico James-Bock: A rental unit for someone else.

292
00:32:50.050 --> 00:32:51.210
Nico James-Bock: Okay, all right.

293
00:32:51.210 --> 00:32:54.140
Michael Dorego: Yeah. So again, you could have. You could have owned a house in the past.

294
00:32:54.382 --> 00:32:55.350
Nico James-Bock: Yes, that's what I.

295
00:32:55.350 --> 00:32:57.309
Michael Dorego: You don't. You don't own one right now.

296
00:32:57.310 --> 00:33:15.439
Nico James-Bock: Right now. Okay, okay, excellent. So speaking of home buying again, what are some of the hacks that you can recommend or suggest, I have a few on the screen now, and with regards to the

297
00:33:15.920 --> 00:33:44.529
Nico James-Bock: down payment assistance programs, as I mentioned before, you and I had spoken before, and you had actually provided me with a list of those regions that do offer these programs. So I'll include that list in the show notes. So with regards to home, buying some of the hacks, some things that homebuyers should be aware of, to make it a little bit easier like to make the process a little bit easier, less intimidating.

298
00:33:45.210 --> 00:33:48.959
Michael Dorego: Yeah. So number one way. I see Nico is marry someone rich. Right?

299
00:33:51.220 --> 00:33:52.719
Michael Dorego: If you can do that.

300
00:33:52.720 --> 00:33:53.720
Nico James-Bock: Can't do that failure.

301
00:33:53.720 --> 00:33:54.140
Michael Dorego: I'm done.

302
00:33:54.140 --> 00:33:54.890
Nico James-Bock: Which.

303
00:33:54.890 --> 00:33:56.223
Michael Dorego: Didn't work for me. But

304
00:33:56.940 --> 00:33:59.891
Michael Dorego: 1 1 thing I found that it really has helped is

305
00:34:00.480 --> 00:34:08.290
Michael Dorego: You have a lot of married couples or just couples in general, or even just individuals, and they got they got good income. They got good credit.

306
00:34:08.460 --> 00:34:31.048
Michael Dorego: but they're just getting priced out just a little bit, you know, like they've been pre-approved for 750, and they're putting offers in. They're getting beat by 30, 40 50,000 60,000. But you know their mortgage company or bank is saying like you are tapped out of this amount. You know. They don't have more down payment. They're not getting a raise anytime soon. So the best method I find is

307
00:34:31.540 --> 00:34:38.929
Michael Dorego: This works, by the way, with less than 20% down. So the key has got to be an insured mortgage. Less 20% down is we use what's called a guarantor.

308
00:34:39.100 --> 00:34:50.840
Michael Dorego: Now, what is a guarantor? Essentially, it's somebody that goes on the mortgage with you, but as also as a silent partner. So, for example, I always say, Hey, you know.

309
00:34:50.960 --> 00:34:57.019
Michael Dorego: you guys, you know, are your parents alive, either one. Yes, they are okay. Good. Do they have good credit? Yes.

310
00:34:57.524 --> 00:35:07.720
Michael Dorego: Do. They have decent financial? Do you have decent financials? Are they in a lot of debt, or are they mortgage free? What are their finances like? Oh, they're not bad, Mike. My! You know my parents both still work.

311
00:35:08.120 --> 00:35:11.169
Michael Dorego: They have a small mortgage, etc, etc. Okay.

312
00:35:11.591 --> 00:35:17.629
Michael Dorego: You know. What are the odds of them going on the mortgage with you as a co-applicant or a co-borrower.

313
00:35:18.100 --> 00:35:36.580
Michael Dorego: Oh, you know, Mike, I'm not sure they're comfortable, because if they go on my mortgage my mortgage will now go on their credit. Report. You know they have. They have some plans to maybe buy a new home, or they want to refinance, and they don't want our mortgage to affect their financing. The beauty is as a guarantor.

314
00:35:37.314 --> 00:35:41.940
Michael Dorego: The the the buyer's mortgage, like the children's mortgage.

315
00:35:41.940 --> 00:35:42.350
Nico James-Bock: Yeah.

316
00:35:42.350 --> 00:35:45.640
Michael Dorego: Does not go on. The parents credit report at all.

317
00:35:46.413 --> 00:35:47.360
Nico James-Bock: It doesn't.

318
00:35:47.360 --> 00:35:53.209
Michael Dorego: Because they're guarantor. Now the key is that they do not have any ownership in the home

319
00:35:53.920 --> 00:35:57.909
Michael Dorego: at all, and they do not go on the title or the mortgage whatsoever.

320
00:35:58.120 --> 00:36:04.609
Michael Dorego: They're only responsible. They are responsible for the mortgage payments. If the buyers do not make the payments.

321
00:36:04.610 --> 00:36:05.230
Nico James-Bock: Okay.

322
00:36:05.230 --> 00:36:13.999
Michael Dorego: That's the same across the board. The beauty here is you can use the the guarantors income to help bump up your purchase price.

323
00:36:14.860 --> 00:36:15.419
Nico James-Bock: Does that make.

324
00:36:15.420 --> 00:36:16.840
Michael Dorego: Okay. So I'll give you example of it.

325
00:36:16.840 --> 00:36:17.270
Nico James-Bock: Does.

326
00:36:17.270 --> 00:36:38.050
Michael Dorego: During Covid. I had a young couple. They're recently married. The wife was pregnant. They're having a baby soon, and they were renting and the rental place was too small, they need more space. So they were thinking about buying. But the problem was because of Covid. You know, the the husband was a photographer. Business dried up because you couldn't take wedding photos right like

327
00:36:38.050 --> 00:36:40.410
Michael Dorego: right once a waiting for the mask on right. So.

328
00:36:40.410 --> 00:36:41.160
Nico James-Bock: Oh yes!

329
00:36:41.160 --> 00:36:49.240
Michael Dorego: So business go down right? So what happened was they just didn't qualify to buy anything decent that they were looking for, to know, to basically help them with what they needed.

330
00:36:49.380 --> 00:36:53.349
Michael Dorego: So what happened was we put her parents on as guarantors.

331
00:36:53.770 --> 00:36:59.660
Michael Dorego: And we're able to bump up the purchase price, and what they did was they very smart? They bought a duplex

332
00:37:00.650 --> 00:37:10.079
Michael Dorego: able to rent out the other unit, and that tenant pretty much pays all the mortgage for them. So they own a place, and they're living essentially mortgage payment free.

333
00:37:10.540 --> 00:37:32.590
Michael Dorego: And what could happen is later on, when they do qualify on their own. We could have the guarantor removed if they want to. But the beauty there was when I talked to their parents, they did say, Mike, we would rather really not have their mortgage in our report. And the beauty was that that was the case. It was never gonna go on there because they're guarantors, and that's what they liked about the program the most.

334
00:37:33.030 --> 00:37:43.339
Michael Dorego: And what I do. I do talk to the guarantors myself, because I want them to know exactly what's happening right? They need to know the ins and outs right? So now, as as a guarantor.

335
00:37:43.590 --> 00:38:00.069
Michael Dorego: you don't use one to increase your purchase price by 200,000 or more. Because and you know, it's got to be a reasonable amount, because the insurance company, like Cmhc. Or Canada guarantee or sage, and they have to also approve it as well, and we want to make sure you're not going way above your means.

336
00:38:00.210 --> 00:38:16.690
Michael Dorego: So you know this is great because you have. People that maybe like have a newer job. You know they have a bonus coming in, but they haven't got it yet, so you cannot use bonus income unless you've had it for 2 years. But I know if they stay there for 2 years. They're now going to have bonus income. So they're, gonna you know, be making more money than they are now.

337
00:38:17.300 --> 00:38:23.560
Michael Dorego: or or maybe they got a you know, a raise coming up or something. So we know that they're not going too much above their means.

338
00:38:23.680 --> 00:38:29.390
Michael Dorego: and that they should be able to qualify completely on their own within the next one to 3 years or so.

339
00:38:29.680 --> 00:38:31.419
Nico James-Bock: Okay, all right. That makes sense.

340
00:38:31.420 --> 00:38:32.709
Michael Dorego: Within reason. Right?

341
00:38:33.561 --> 00:38:37.009
Michael Dorego: Another another house buying hack we call it

342
00:38:37.130 --> 00:38:41.890
Michael Dorego: is you know, people want to invest in real estate. They want to buy rental property.

343
00:38:42.500 --> 00:38:47.360
Michael Dorego: The problem is, you need 20% down to buy rental property right? Not everyone has it.

344
00:38:47.490 --> 00:38:55.530
Michael Dorego: So what you could do is you could actually tell the Mortgage Company that you're going to rent out your current home

345
00:38:56.410 --> 00:38:58.880
Michael Dorego: and then live in the new one instead.

346
00:38:58.880 --> 00:38:59.410
Michael Dorego: And if

347
00:38:59.410 --> 00:39:09.200
Michael Dorego: the beauty there is, you just have to have the minimum down payment on the new one. So just, for example, if you're buying a property for 500,000, the minimum is just 5%,

348
00:39:09.590 --> 00:39:14.630
Michael Dorego: which is 25,000. But if you're buying it as a rental, you have to have 20%.

349
00:39:14.630 --> 00:39:15.070
Nico James-Bock: Percent.

350
00:39:15.070 --> 00:39:16.410
Michael Dorego: A $100,000.

351
00:39:16.410 --> 00:39:17.050
Nico James-Bock: Right.

352
00:39:17.050 --> 00:39:29.370
Michael Dorego: Right, and then what we do is when we do the mortgage for you, we get what's called a market rent appraisal. So it's an appraisal on your current home, and the Appraisal Company will determine how much you could rent your house out for.

353
00:39:29.670 --> 00:39:39.030
Michael Dorego: and then basically help you transition from that home into the newer one. Now, the story has to make sense, too, because if you're living in a 5,000 square foot house.

354
00:39:39.610 --> 00:39:43.080
Michael Dorego: and you're gonna say, you're gonna move into a condo and you're

355
00:39:43.080 --> 00:39:46.110
Michael Dorego: married couple with 3 kids. They're not going to believe that. So.

356
00:39:46.110 --> 00:39:46.550
Nico James-Bock: Really.

357
00:39:46.550 --> 00:39:55.160
Michael Dorego: From a condo into a detached home, for example, or a townhouse a bigger property that makes more logical sense. You're moving up.

358
00:39:55.160 --> 00:39:55.520
Nico James-Bock: Yes.

359
00:39:55.520 --> 00:39:58.190
Michael Dorego: You're going to take the current property and rent it out.

360
00:39:58.340 --> 00:40:00.350
Michael Dorego: So that's a great way to just

361
00:40:00.710 --> 00:40:04.470
Michael Dorego: own a rental property without needing 20% out. For example.

362
00:40:04.820 --> 00:40:05.810
Nico James-Bock: Excellent.

363
00:40:05.940 --> 00:40:07.470
Nico James-Bock: Yeah, excellent, very helpful.

364
00:40:07.470 --> 00:40:11.179
Michael Dorego: More. There's 1 more I want to talk about. It's self-employed.

365
00:40:11.330 --> 00:40:13.460
Michael Dorego: So you and I are self employed, Nico. So you know.

366
00:40:13.460 --> 00:40:15.770
Nico James-Bock: Is also very challenging in order to get financing.

367
00:40:16.522 --> 00:40:32.020
Michael Dorego: The main problem with being self employed is that the banks keyword is the banks. They will pretty much qualify you, based on your net income. So the income you claim after taxes. Now, what do most business owners do? Nico, is they write off their income.

368
00:40:32.020 --> 00:40:32.890
Nico James-Bock: Exactly.

369
00:40:32.890 --> 00:40:36.839
Michael Dorego: And their income is too low on paper. So what happens is they don't qualify for very much.

370
00:40:37.430 --> 00:40:43.269
Michael Dorego: So the key now is, if you have 20% down 20% or more. Of course.

371
00:40:43.430 --> 00:40:49.370
Michael Dorego: as a mortgage agent, we have lenders that will qualify you, not based on your net income.

372
00:40:49.580 --> 00:40:51.890
Michael Dorego: but based on your revenue.

373
00:40:52.150 --> 00:40:52.850
Nico James-Bock: Oh, okay.

374
00:40:52.850 --> 00:40:58.890
Michael Dorego: Imagine. If you're a business owner, you're making 500,000 in your revenue, but you're showing 50,000 net.

375
00:40:59.050 --> 00:41:03.490
Michael Dorego: The bank will use 50,000, which is not enough nowadays to buy pretty much anything.

376
00:41:03.490 --> 00:41:04.100
Nico James-Bock: Right.

377
00:41:04.100 --> 00:41:07.969
Michael Dorego: Our lenders, they will use the 500,000 revenue instead.

378
00:41:08.130 --> 00:41:17.110
Michael Dorego: qualify for a lot more purchasing power. Now the question is, if you're self-employed, and you don't have 20% down. What do you do? Well.

379
00:41:17.500 --> 00:41:18.740
Michael Dorego: combined with Arboro?

380
00:41:18.940 --> 00:41:22.140
Michael Dorego: Take your 5 or 10% down, go to our borrow

381
00:41:22.350 --> 00:41:39.200
Michael Dorego: and sorry the lenders that our borrow uses will, in fact, use your revenue instead. I've had cases where a couple would qualify for like 300,000 more purchasing power, buying power versus going through a bank and buying based on their net income.

382
00:41:39.200 --> 00:41:40.310
Nico James-Bock: On their net income.

383
00:41:40.310 --> 00:41:48.400
Michael Dorego: Beautiful. And then the great thing, too, is you don't have to really increase your tax amount for 2 years to qualify with a bank right? Because, remember.

384
00:41:48.730 --> 00:41:52.180
Michael Dorego: you know, the the higher income on paper, the more tax you have to pay.

385
00:41:52.180 --> 00:41:52.860
Nico James-Bock: Exactly.

386
00:41:52.860 --> 00:41:56.537
Michael Dorego: Right. So so for me, it's like, if you have 20% down

387
00:41:57.060 --> 00:42:04.159
Michael Dorego: let's let's get you a, you know, a better option. And if you don't have it, let's use our borrow and and make it happen that way instead.

388
00:42:04.160 --> 00:42:08.449
Nico James-Bock: Which is a great option, especially for those that are self-employed.

389
00:42:10.870 --> 00:42:19.929
Nico James-Bock: Okay, I think we've covered most of what we designed to cover. Thank you so much for your participation.

390
00:42:20.170 --> 00:42:24.170
Michael Dorego: Sorry we just have the new changes, the new changes to insured mortgages.

391
00:42:24.230 --> 00:42:26.189
Nico James-Bock: Yes, right from.

392
00:42:26.190 --> 00:42:27.550
Michael Dorego: A lot of information.

393
00:42:27.550 --> 00:42:29.470
Nico James-Bock: On December 15.th I know.

394
00:42:29.470 --> 00:42:31.929
Michael Dorego: Okay, yeah, yeah. It's old news now. Right? It's been already.

395
00:42:31.930 --> 00:42:40.269
Nico James-Bock: No, I've pushed it out to all of my database, and so they are aware of it, and to my social channels. Go ahead.

396
00:42:40.450 --> 00:42:48.800
Michael Dorego: So yeah, big change there, it's it's basically as a 1st time buyer. Now, if it's a married couple, only one of them has to be a 1st time buyer.

397
00:42:49.290 --> 00:42:52.010
Michael Dorego: You can now get a 30 year amortization

398
00:42:52.290 --> 00:43:13.070
Michael Dorego: on the mortgage before it was 25 years. Now it's 30 that really bumps up the buying power and also reduces the monthly payment because you're stretching out the payments over 30 years. The other change now is that before on a million dollars plus mortgage 1 million plus, you had to put down 20%, which was.

399
00:43:13.070 --> 00:43:13.909
Nico James-Bock: Which is mandatory.

400
00:43:13.910 --> 00:43:14.700
Michael Dorego: 1,000.

401
00:43:14.700 --> 00:43:15.240
Nico James-Bock: Right.

402
00:43:15.240 --> 00:43:16.460
Michael Dorego: Now.

403
00:43:17.020 --> 00:43:29.029
Michael Dorego: a million dollar property only needs 75,000 down massive reduction. Basically, it's 5% on the 1st 500,000 and then 10% on the rest.

404
00:43:29.030 --> 00:43:29.400
Nico James-Bock: Okay.

405
00:43:29.400 --> 00:43:40.220
Michael Dorego: It's 10% on the rest up to 1.5 million. So before old rules, 1.5 million, you needed 300,000 down now it's only 1, 25.

406
00:43:40.220 --> 00:43:40.670
Nico James-Bock: Okay.

407
00:43:40.670 --> 00:43:52.050
Michael Dorego: So so you know, it just gives more access to buyers. Helps reduce the monthly payments, helps bump up the purchase price just a lot of lot of benefits there for people buying for the 1st time.

408
00:43:52.290 --> 00:43:53.609
Nico James-Bock: Okay, excellent.

409
00:43:54.500 --> 00:44:06.199
Nico James-Bock: Those changes that took effect on December 15th were a welcome change, especially for 1st time buyers and those that were sitting on the fence, for the most part

410
00:44:06.420 --> 00:44:25.529
Nico James-Bock: because of the historically high interest rate environment that we were in for the better part of 2024. So yes, those are welcome changes, and I'm seeing now that a lot of people are inquiring about those changes and getting more active in the market. As a result of them.

411
00:44:27.090 --> 00:44:32.129
Michael Dorego: Yeah, I've seen a massive increase in in people wanting to buy now. They're coming off the fence now.

412
00:44:32.170 --> 00:44:32.750
Nico James-Bock: Yes.

413
00:44:32.750 --> 00:44:40.000
Michael Dorego: With, you know, with the expected rates to drop tomorrow and hopefully quarter percent.

414
00:44:40.600 --> 00:44:41.200
Nico James-Bock: Yeah.

415
00:44:41.200 --> 00:44:57.860
Michael Dorego: So definitely more yeah, people are more open now to buying, as we all know. You know, prices have come down a bit from 2021 I'm personally seeing people putting in offers and getting homes at asking or below, obviously depending on the region, of course. But

416
00:44:58.400 --> 00:45:06.949
Michael Dorego: like I said, you know what? It's not easy to buy a home. It does take some planning. Yes, but there's programs in place that are there to help.

417
00:45:07.190 --> 00:45:11.570
Michael Dorego: We just have to know that they exist and then work with someone that knows how to use them.

418
00:45:11.570 --> 00:45:13.020
Nico James-Bock: How to use them. Yes.

419
00:45:13.020 --> 00:45:13.460
Michael Dorego: Right, yeah.

420
00:45:13.460 --> 00:45:32.569
Nico James-Bock: That's the most important aspect is to get a mortgage broker involved a qualified mortgage broker and get their take on what your options are to present them to you, because that's really what's needed. The banks are interested in their criteria, their bottom line, but a mortgage broker gives you all of the options that are available.

421
00:45:32.570 --> 00:45:34.567
Michael Dorego: Exactly. And Nico the other thing to mention, too.

422
00:45:35.030 --> 00:45:40.690
Michael Dorego: in my 8 years of doing mortgages, and many times I've seen people who were told that they're pre-approved by their bank.

423
00:45:40.960 --> 00:45:50.659
Michael Dorego: only to find out that they actually were not qualified for the mortgage after the fact. Just last week I got a phone call from a realtor called me in a panic because her client

424
00:45:50.790 --> 00:45:54.910
Michael Dorego: wanted to buy a home to downsize into such as a home that's fully paid off

425
00:45:55.020 --> 00:46:19.990
Michael Dorego: in Toronto, wants to buy a property in Hamilton region, and she did the right thing. She went to her bank 1st bank of many years, hey? I'd like to buy a property. I can buy it essentially in cash, and then sell my house after I'd like to get a line of credit to buy the property in full, and then, when I'm ready to sell my home, I'll pay off line of credit and be mortgage free. Long story short, they told her she was qualified.

426
00:46:19.990 --> 00:46:20.380
Nico James-Bock: And.

427
00:46:20.380 --> 00:46:26.889
Michael Dorego: Offer in the home finds out, or you made a mistake. You're not qualified, after all. So what happened was

428
00:46:27.460 --> 00:46:33.509
Michael Dorego: What we did in her case. When I saw her. Her numbers I knew for a fact she would never qualify for a line of credit through the bank.

429
00:46:33.878 --> 00:46:37.780
Michael Dorego: I don't know what happened there, but someone made a mistake. What we did instead happens.

430
00:46:38.000 --> 00:46:39.400
Michael Dorego: it happens, yeah, it happens so.

431
00:46:39.400 --> 00:46:40.539
Nico James-Bock: It happens a lot.

432
00:46:40.710 --> 00:46:46.429
Michael Dorego: We got a reverse mortgage. I got her. I got her paperwork. I got her approval within 24 h only

433
00:46:47.360 --> 00:46:51.880
Michael Dorego: open, fully open reverse mortgage again with no monthly payments.

434
00:46:52.150 --> 00:46:55.130
Michael Dorego: So we're going to buy the property. It is in cash.

435
00:46:55.400 --> 00:46:59.140
Michael Dorego: and then she can list and sell the home when she's ready to.

436
00:46:59.400 --> 00:47:03.039
Michael Dorego: She can pay off the reverse mortgage penalty free.

437
00:47:03.350 --> 00:47:06.390
Michael Dorego: and there's no monthly payments to carry it as well.

438
00:47:06.430 --> 00:47:06.970
Nico James-Bock: Right.

439
00:47:06.970 --> 00:47:08.250
Michael Dorego: So, just.

440
00:47:08.250 --> 00:47:10.270
Nico James-Bock: Huge, huge.

441
00:47:10.270 --> 00:47:11.990
Michael Dorego: Oh, the relief! We're so happy!

442
00:47:11.990 --> 00:47:12.700
Nico James-Bock: Could, imagine.

443
00:47:12.700 --> 00:47:16.379
Michael Dorego: Much. I didn't think this was possible. I thought I was gonna lose the house.

444
00:47:16.380 --> 00:47:17.280
Nico James-Bock: Well, of course.

445
00:47:17.492 --> 00:47:20.819
Nico James-Bock: How are you used by the bank? Can be devastating. Yeah, if you don't know the.

446
00:47:20.820 --> 00:47:22.770
Michael Dorego: This is like a dream house, for you know.

447
00:47:22.770 --> 00:47:23.140
Nico James-Bock: Yeah.

448
00:47:23.480 --> 00:47:35.929
Michael Dorego: She's downsizing, but it's like the right location, the right home she wanted. She can, you know, when she sells her property she'll have a lot of money left over. She can live very comfortably. But again she did the right thing, but she got the wrong advice, and that

449
00:47:36.430 --> 00:47:49.800
Michael Dorego: to a lot of people right? So what I do is I make sure that when I'm working with someone I'm properly vetting them upfront, make sure they're fully qualified, and if they're not, we tell them ahead of time, not after you had an offer accepted on the house.

450
00:47:50.360 --> 00:47:51.030
Nico James-Bock: Excellent.

451
00:47:51.030 --> 00:47:51.700
Michael Dorego: Yeah, right, so.

452
00:47:51.700 --> 00:47:59.940
Nico James-Bock: Yes, yeah, you are. You are a fundamental resource for those looking to

453
00:48:00.190 --> 00:48:23.439
Nico James-Bock: just to make any kind of change in their real estate portfolio. You have a wealth of knowledge and experience. I'm going to include all of your information in the show notes, and this episode will obviously be on Youtube and on all the podcast channels. Thank you so much for your time.

454
00:48:23.550 --> 00:48:41.569
Nico James-Bock: That concludes this episode of the podcast building wealth through real estate. My name is Nico James Bach, a broker with royal Lepage signature in downtown Toronto. My special guest today is Michael Dorego from Northwood Mortgage. Thank you, Michael.

455
00:48:41.850 --> 00:48:43.039
Michael Dorego: Thanks, bye, now.

456
00:48:43.040 --> 00:48:43.650
Nico James-Bock: So.