With 2011 wrapping up, it's time for everyone to peer into their crystal ball
and attempt to predict the future of real estate and mortgage rates in Canada.
Below are some of last week's more notable predictions:
- The Economist says that
Canada is one of nine countries whose housing market is overvalued by 25% or
more “ and with prices hovering around those of the U.S. housing crisis, the
article surmises a bust is imminent. The theory is dismissed by many, however,
including Ben Myers of Toronto's Urbanation, who says the Economist's
methodology is flawed because it's too simplistic. It also completely ignores
the strength of our banking sector.
- In the wake of Canada's
most recent disappointing job numbers, the Financial Post wonders if variable rates are on their way down. David Madani, of
Capital Economics, believes the Bank of Canada might cut its lending rate by
0.5% starting in April due to global economic uncertainty.
- With
10-year rates at an all-time low of 4.39%, many are wondering if fixed rates might be on their way down in the short-term as
well.
Confused? You're not alone. We will be watching the market like a hawk.
There's nothing better than buying a brand new home. Not only does a
new build award you the opportunity to put your own stamp on things -
with your own choice of finishes and upgrades - but you also have the
luxury of being the very first to experience that new house smell.
Buying a new home, however, is different than buying a resale - and
there are certain things to be aware of as you head into the commitment:
-
When buying a resale home, you'd typically sign a standard form of
Agreement of Purchase and Sale. With a new build, there's no such
standard form. Most builders prepare their own agreements so it's
important that you read yours thoroughly - and have a lawyer look it
over as well. Clarify as many details as possible.
- When it
comes to financing, many builders will offer you a deal through their
financial institution - likely accompanied by a few incentives. It's
important to know that you don't have to use the builder's lender. Be
sure to shop around - or utilize the services of a mortgage broker - to
see if there are better rates to be had, or a better mortgage to suit
your personal needs.
- When acquiring financing, it's also
important to make sure that your lender's mortgage commitment meets your
specific time frames. A pre-sale home can take a long time to be built -
the last thing you would want is for your lender's mortgage commitment
to expire before the actual closing date.
- Read up on your
builder before signing on the dotted line. If the company is notorious
for extensive delays, broken promises or buildings that stray far from
the written plan, you can likely find that information on the Internet.
I love
surfing the internet for information and there are some blogs I follow because
the authors really know their stuff. Here
are a few good financial articles that appeared over the Internet this week:
Retirement savings
One of
the most difficult things about saving for retirement is figuring out that
magic number. This blog post discusses the two different phases of retirement
and how to save for both.
Insurance
companies are notorious for taking your money when things are good and then
failing to deliver coverage when you need it. This article discusses eight
insurance myths you should be aware of. The most interesting one? When it comes
to standard home insurance, insurance companies will only cover the depreciated
value of a household item if it's stolen or damaged. So even though your stolen
TV may have cost you $3,000, and a replacement will cost you $5,000, an
insurance company may only offer you $1,000 to replace it!
The difference between in-law
suites and rental apartments
With
today's housing costs soaring, many home owners are tempted to offset their
mortgage costs with a rental apartment. If you're buying a place that boasts an
in-law suite, however, beware. It's not the same as a rental - mainly because
it's illegal to rent out.
When
planning for retirement, which vehicles offer the best return on your
investment - investing in RRSPs, Tax Free Savings Accounts (TFSAs),
financial assets that generate capital outside of registered plans, or
making accelerated payments on your mortgage?
That was the question posed by the Certified General Accountants
Association of Canada in its latest research report - and its findings
may surprise you.
While most people would assume RRSPs are the best route to go -
especially given the marketing push they receive by financial
institutions and advisers - they actually don't give you the biggest
bang for your buck if you factor in the amount they're taxed after
retirement. The research report revealed that, for lower income earners
without dependents, RRSP investments are your best savings option if
you're renting, and don't have a home that is generating equity. If you
are a homeowner, it makes more sense to accelerate your mortgage
payments rather than set aside 2% of your annual income in an RRSP
because you'll get twice the return.
If you're in a higher income bracket, a combined RRSP and TFSA is
the way to go if you're planning on investing more than 10% of your
annual income, rather than simply saving in one vehicle or the other,
the report says. This is assuming you take the tax return from your RRSP
investment and reinvest it in a TFSA. This lowers the tax rate after
retirement because you're splitting your savings between the two
vehicles.
That being said, the CGA discovered that - regardless of your income
bracket - accelerating your mortgage payments yields the highest returns
compared to other savings options. However, every situation is
different, and we're not all text book cases. If you're thinking about
saving for retirement, make sure you thoroughly assess your options and
determine which route makes the most sense for your particular
circumstance.
To see the report in its entirety, visit the website here: http://www.cga-canada.org/en-ca/ResearchReports/ca_rep_2011-11_planning_for_retirement.pdf
Whether you're a prospective real estate investor, or someone who's simply
in the market to buy a primary residence, we can all benefit from the nuggets
that were shared via Twitter during the Real Estate Investment Network (REIN) BC
Workshop last Friday (@REINCanada).
Below are a few highlights that attendees wanted to share:
1. Before purchasing a property, always get a survey. That two-dimensional
drawing might bring to light information that you may have missed otherwise -
such as the actual property line of a residence.
2. Take your tape measure to every viewing. You never know when certain
measurements will come in handy - especially when you're trying to visualize the
property later.
3. When obtaining a mortgage, don't be afraid to go for the going 4-year rate
instead of the traditional 5-year. The rates are often lower, and many times a
4-year rate is all you need.
4. Don't believe the stats - always think regionally. While Canada's real
estate market may be heating up, the regional pocket your interested in may be a
buyer's market - and, resultantly, may offer some great deals.
Yes that's right! We are everywhere. That thing in the park is just a rouse to keep your eyes off the real Revolution. So listen up you 1% because this isn't going away.
Stop acting like sheep. You are so very clever to see a trend and quickly write a marketing campaign around one of your products and show the market just how much you care. Your campaigns are entertaining and clever but really don't play out all that well. So here's some ideas:
on one hand you preach the new trend of savings and have rushed to get budgets bearing your logo to smart phones across the land. Better idea - practice what you preach. Take responsibility for the mess you have created and work with your clients to make it better. (Kudos to Bank of Montreal who seem to do this more than others)
Big buck bonuses area based on quarter earnings: Better idea - adopt a new model for business that encourages investors to buy into a long term vision. Hold back the executive big buck bonuses for 5 years and then rate the overall performance of the bank.
Staff are treated like chattels and measured on performance and out comes on a yearly bases. Better idea - your staff are the 99%. If you want treat the 99% better then start on your own door step. Develop mission statements that mean something. Hire people who believe in your vision and will take pride in their work and not just the top 1% of grads who are all competing for the top spot and will stop at nothing to prove their worthiness.
You're products are all designed to make the 1% more money. Better idea - tell us how you make your money. Most of the 99% have no problem with idea of profits and we appreciate your service. But when you boast record profits as Rome is burning it's a little hard to take. Give more back.
Yesterday I had a the honour of speaking with someone who like me had left the banking system over disillusionment. This person told me they left because they were tired of lying to people. Every month there was a new product to push and a new script complete with answers for objections. When I started Mortgages for Women I did my own research over a two year period. I worked with a marketing firm that did a ton of focus workshops for me. The message was clear. "Give it to me straight, give me a go forward plan, don't base #'s on assumptions, and don't make it sound likes it's all about me." Sound familiar? Yup - that's what the 99% are asking for.
If you have a variable rate mortgage, you're not alone. A new Bank of
America/Merrill Lynch report reveals that 66% of Canadians now have mortgages
that are floating with prime - up from the typical 30%
There's absolutely nothing wrong with having a variable rate mortgage, but
the Merrill Lynch report reiterates that these mortgages would be affected by an
increase in the Bank of Canada's overnight lending rate - something not all
mortgage holders are prepared for.
While the Federal government changed the mortgage rules so that anyone
applying for a variable rate must now be qualified on the five-year fixed, let's
be realistic - not everyone ends up paying that higher rate. To free up monthly
cash flow, most mortgage holders prefer the lowest rate possible so they can
afford additional expenses more comfortably. Judging by the Bank of Canada's
most recent announcement, it doesn't look like it's going to be raising interest
rates anytime soon - but that doesn't mean you shouldn't get your finances in
order now.
At one point, your household was approved on the going five-year fixed rate -
so it might be a wise move to take a look at your budget, trim frivolous
spending and increase your mortgage payment. That move will lessen the blow when
rates eventually rise. Because they will rise - and when they do, they may
increase quicker than you currently expect. As little as a 2% increase in the
lending rate will erase any savings variable rate holders are currently
experiencing. If the Bank of Canada increases its lending rate by increments of
0.5%, you'll only have four months to adjust.
Applying for credit can be very frustrating. If you read enough in the media you would think Credit grows on trees. There are certainly some circumstances where credit may seem easy to get but at the end of the day most credit applications are assessed on the 5 C's of credit. Credit applications are designed to capture your information in a format that addresses the 5C's. Where the disconnect usually occurs in the lack of due diligence a company does to verify the information. So just exactly what are the 5 C's?
1) CREDIT: Lenders will take a look at your borrowing history and see how you pay your bills. This is your credit report and confirms if your payments are made on time.
2) CHARACTER: An application tells a lender a lot about you personally. They are looking how long you've been on your present job and how long you have been in your line of work. Is your income reasonable for the type of job you do. For example if you declare you work in a grocery store and you make $75,000 a year that might raise a red flag. But if you say your the manager of a high end grocery store and you make $75,000 a year that is more reasonable. Make sure your employer and occupation correctly reflect what you do. Someone who moves every six months may not necessarily be a good credit risk to a lender. A lot of recent credit inquires might alert a lender to think you are busy seeking credit and will affect your quality of application. Lenders are looking for a stable client who has a decent job history and some stability of location.
3) CAPACITY: How will you service the debt? Does your income and existing payments leave enough to provide you the "capacity" to service the new debt.
4) CAPITOL: This is your overall net worth. How much do you have in savings and rrsp's? In the case of buying a home your capitol would be your down payment and lenders want to see where it's coming from. If you are borrowing money for your business it's also expected that you will use your own money or "capitol" and lenders want to know where it came from.
5) COLLATERAL: What are you using to secure the loan? In the event of car loan the collateral will be the vehicle, if the funds are for a mortgage the house will be the collateral. Proper collateral often reduces the risk of the loan.
The next time you fill out an application for credit pay attention to the questions. You will be able to identify which one of the 5 C's the question applies to. Try to give the lender a proper picture of you situation but don't misrepresent yourself. That's called fraud and comes with it's own consequences.
It's day 2 of Financial Literacy month and time for a rant.............
How often do you and your partner talk about money? All this financial literacy stuff in the news should be telling you how badly you need to get your head around this subject. And honestly, its no big deal . It comes down to this. How much money do you make? How much does it cost to provide shelter? How much does you life style require? How much are you saving?
Isn't it funny that all the corp speakers who have made the system so complicated are now trying to shove literature down your throat? I for one have had enough. The biggest enemy to your money are the people trying to get you to spend it. And it's safety in numbers!
Last night a watched an episode of "Till Debt Do Us Part' and Gail, our BFF in money, sat a whole family down and did a budget. Everybody got her straight talk. I loved the fact that there was no pitch, no product, nobody with all the answers and no body trying to sell the family anything. Straight talk! Every family needs to get busy and get their head around that money doesn't grow on trees. Besides, it makes it easy for parents to say no. If you watched the episode you would have been very proud of the kids and how engaged they were.
When I left the bank it was because I was sick and tired of the scripts. What was so wrong with instead of telling clients a pitch we just said, here's the product, here's how the bank makes money off it, and here's what it does for you. Honestly, that's the talk I have with all my clients. We need services and we don't mind paying for them but we don't want to be ripped off. All we need is a little Straight talk and lot less pitch.
Agree? then leave a comment and help me send a message because you know the "corp speaks" are watching this channel.
November has been officially called financial literacy month. The Government has put a lot of thought into educating Canadians about finance. I applaud their efforts and give a big standing ovation to Finance Minister Jim Flaherty for his speech yesterday given at the Downtown Toronto YMCA. He said Canadians shouldn't need a magnifying glass, a dictionary or a lawyer to understand what they are signing at the bank. HOOORAYYYY!!! Have I not been saying that for years?
I will have a lot to say about financial literacy over the coming month but for today I want to talk about Life Insurance. Like you this is always the last thing on my mind except that today we had some tragic news in our office. Our client who's mortgage was closing today died in a single vehicle car accident last night. We are devastated. I personally loved working with this client. There were a whole pile of circumstances surrounding her mortgage but let's just say her life was about to get a whole lot better. I am sure yesterday was one of the best days she had in a long time.
We worked hard on her mortgage and put together a package that was going to change her life. The day she came into sign the documents she was over the moon. When it came to the form asking her if she wanted life insurance she waived it. I know life insurance gets a bad name especially when it's offered by the lender but just for today I'm going to rant.
Life Insurance sales people would tell you the bank's mortgage life insurance is crap. Bank's will tell you life insurance you buy outside what they offer does not cover the mortgage and therefore crap. So who's right? Seriously, I don't care. But what I do care about is that you have SOMETHING!! Please understand that signing up for life insurance is not a life time commitment. You can cancel policies anytime you want so that's probably a more important question to ask than to waste brain power trying to figure out who's ripping you off.
The life insurance we offer covers you from the day you sign the documents. If you walk out our door and get hit by a bus you are covered. When you are buying a home the closing is coming even in the event of your death and the burden to close will fall on your estate. If you have no insurance prior to arranging your mortgage for goodness sake take the deal. You have the luxury of shopping it around after you leave the office.
I am not a licensed life insurance sales person and I tell everyone that. If making money selling life insurance was of any interest to me I would give up my career as mortgage broker. But just for today I am going to ask you to start Financial Literacy month by reviewing your insurance policies. Let's start with the "hit by a bus" theory and go from there. I agree it's really easy to be over insured but I wish I could have last week back and make my client change her mind. Over insured until you have time to review is better than nothing at all.
Sorry to start the month on a downer and I promise it will get better from here.
Once upon a time there was a beautiful princess and she met a handsome prince. But the beautiful princess had been living with another Prince who decided to let her go and so they were selling their castle because the Princess wanted so badly to buy a new castle with the her new prince.
The Princess went to see the wicked witch who she thought would help her and the new prince buy their new castle. But the wicked witch, being wicked, didn't think it was a good idea. All the money they were using belonged to the princess and by buying a castle in both names she was giving the prince a whack load of her money. So the wicked witch said no and told the princess to wait a few months and buy her own castle and let the prince live with her.
The Princess was so upset that she went to a bank where the wicked witch had no power and they arranged a mortgage for her but in order to do so they asked the prince and his parents to be on title so they could all help look after the princess. They all agreed and probably should have lived happily ever after. The advise of the wicked witch should have been stuffed in a bottle but when ill winds blow across the land strange things can happen.
Weeks and weeks later (12 to be exact) the Princess and the Prince were not getting along and they decided to "break up". The Prince agreed to let the Princess take the castle and he would move to a far off land and find another Princess. But when the Princess went to the bank she found out that she might be stuck with the Prince for the next five years. She also found out that her money she used to buy the castle would now be split four ways because everyone on title owned one fourth of the castle. The Princess also needed to get a lawyer to change the mortgage and would have to pay 3/4 of the land transfer tax to rid the Prince and his parents from her life.
Sadly the Princess will have to decided to give her money to the Prince, his parents, the lawyer and the land tax org or to the Real Estate agent in a commission to sell another castle, the second in a year and the rest to the bank in a penalty.
The moral of the story? do I have to tell you? Prince Charming is not a mortgage strategy. (So says the wicked witch)
This October has been quite a month. It started with a life changing breakfast where I met one of my life long inspirational voices, Gloria Steinem. Gloria was speaking at the Canadian Women's Foundation Annual Breakfast where 1,000 women came together and raised $2,000,000 for a very worthy cause. The Canadian Women's Foundation is dedicated to moving women out of violence and poverty and into confidence. You will be hearing more from me on this great organization over the coming year.
But back to Gloria. The message she delivered was a game changer for me. She re-affirmed why it so important for women to be empowered but more importantly she gave me two crucial take aways:
1) "The power is in linking not ranking." So powerful in this day and age of social media. I'm a biggie when it comes to social media and it's the linking that I enjoy. I have met and communicate daily with some of the most amazing women in and around the city of Toronto. Gloria's words resonated with me and made me realize what power my connections hold. When we realize our strength our power will be unstoppable. Labelling will be the enemy of linking so it's important that our links be strong and supportive.
2) "Women worked hard without gratitude and are now trying to extract it from younger women." Gloria's message was to leave the past in the past. Young women today have their own struggles and most of yesterday's battles have been fought and won. She suggested that we go to events with younger women, abandon mentoring because it denotes a one way street and start communicating. As a mom of a twenty-something I am guilty of this and I can see its destruction.
Gloria's message was a lot more, of course, and I encourage you to grab a coffee, sit back and watch the whole thing,
Armed with her message of linking not ranking and to stop looking for gratitude I headed off to the ShesConnected Conference and Blissdom Canada.
ShesConnected was a conference that brings together brands and bloggers. It was a very interesting event and I sure learned a lot. It's clear that brands are making a very big effort to work with Bloggers for a reason. Bloggers have influence, passion, emotion and they are figuring out how to use it. Donna Marie Antoniadis is a pioneer in the field of marrying brands and bloggers and she is creating tremendous opportunities for both. Guest speakers and panelists validated the grass roots movement and the need to connect or link. Didn't Gloria just tell me that?
Then on to Blissdom Canada, a conference for bloggers and writers and yes brands. BlissDom varied slightly because it had a more relaxed atmosphere but perhaps that was because I was more relaxed. But the bliss of Blissdom was the linking. Again, amazing women took the stage and shared their expertise with the audience. More valuable information and opportunities for growth.
But the most amazing part of both conferences was seeing how women connect. From breakfast with Gloria to ShesConnected to Blissdom, the feeling was the same. Sharing of valuable information in the purest format. There was no expert preaching and selling a program from the stage as is too often common at events. Real issues were discussed and the discussions are still going on through social media. Everyone is passionate and passion is respected. Don't get me wrong. I see our differences too but the discussions are constructive. There were no "best of" awards that moved the linking to ranking. I hope everyone realizes how special this makes both these events.
As an older woman (older than the average attendee) I thought of the history that brought women to this place. I heard their complaints and the concerns and couldn't help but think these women have nothing to complain about compared to the struggles of my generation. But then I remembered Gloria's words of wisdom and started really listening to the frustrations of the new generation. I stand in awe of this group of women. They have their own struggles for sure and what I went through moved things foward for them but the past is in the past. There are new struggles. The discussions continue over lunch tables and beyond.
The one thing I feel really good about is this: there is an amazing brain trust of women and they are gathering in numbers. They are making changes and the changes matter now more than ever before. The so called "brands" of yesterday are paying attention. At the core they are women. They think, act, communicate and socialize like women. Collectively, they are finding their voice and change is all around them. I am thrilled to be part of this amazing place in history and can't wait to see what's coming.
When it comes time to choosing a mortgage, many homeowners opt for
the lowest rate they can find, at the traditional five-year term,
without paying attention to the fine print. In many cases, these
no-frills mortgages - and even some that have frills -can make a huge
dent in your wallet if you ever try to break them.
The concept of Interest Rate Differential (IRD) is one that often
comes up in these situations - and is currently in the news thanks to a
single mom's lawsuit against CIBC. The woman, who recently went through a
divorce and was forced to break her mortgage, is suing CIBC for using
vague language in her mortgage contract that is forcing her to pay the
IRD - the amount of money the financial institution will lose in
interest payments as a result of the broken contract. In this situation,
it's around $45,000 because she had eight years left on her mortgage.
The formula that banks use to calculate the IRD are among life's
great mysteries, and often differ between bank to bank, and whether you
have a fixed or variable rate mortgage. If you're signing a mortgage,
it's best to find out what your bank's policy is upfront, just in case
you may have to break it at some point. You may also want to pay a few
extra points to ensure your mortgage is portable (can be moved to
another home, if you choose to move during the term of the mortgage) or,
if you're not quite sure what the future might bring, sign on for a
shorter term. There's no rule that says you have to sign on for five
years - and, in many cases, a lesser term makes more sense, and might
even save you money.
Every house hunter has a story - and a real estate lesson they learned along
the way. Nothing proves this point better than BMO's recent Great
House Hunter Contest . While the contest is said and done - it ended on
October 10 - there is still plenty to learn from the finalists' stories:
- When hunting for the perfect house, never underestimate
the valuable role friends and family can play. While you likely don't want 17
members of your extended family trailing behind as you tour potential dream
homes, they can be an incredible resource in locating said dream house.
- If you are making an offer on a home and appliances are
to be included, make sure to write down the make, model, and serial number of
the appliance(s) and/or take pictures of them. It'll come in handy to ensure
that the item that is supposed to be there when you take possession of the home
is the one that you saw when you made the offer. Also include that information
in the offer to purchase so that everyone is aware of the details of what is to
be left.
- Look at a lot of houses, even ones that you aren't
interested in so you can get a feel for certain features. You can never really
judge a house by simply looking at the listing information.
- When buying your house, don't think you can do all the
renovations yourself and juggle everything else. I fell into that trap. We
lived in a construction zone for six months until I ended up hiring a
contractor to complete the rest of my work. While doing it yourself can save
you a lot of money, it can add a lot of stress as well. Start with small
projects before going onto the big ones!
- Get a feel for the market in the area that you
targeting. This can be easily accomplished in part by looking onto MLS. However
MLS shows the asking price, not the final sale prices. They often differ. Are
your expectations in line with your finances?
If you have a real life story email it to me.I would love to share it on my blog and of
course I will discreet.
What do you love about your community? Is it your neighbours, your
street parties or your sports teams? Royal LePage wants to hear about it
- and the company is willing to award $20,000 to the individual who
shows the greatest neighbourhood pride.
The contest, which is being held until October 21, encourages
entrants to submit videos explaining why their neighbourhood is the
greatest. The third place winner will receive $1,500 and the second
place winner will bring home $3,500. That's a great incentive to enter. I just know so many creative people with home town pride and i would love to see someone I know win this money.
So what's so great about your community? If you decide to enter let me know by commenting and I'll be sure to check out your entry. I know so many people on Social Media and would love to see some buzz on twitter about this. This is a really great idea by Royal LePage.
As Canadian consumer debt levels creep higher and higher, many
articles have been written about how a U.S.-style recession is destined
to hit Canada. That's why it's refreshing to come across the odd article
that opposes this Chicken Little-type view - like this one in the Montreal Gazette .
The article brings up a number of good points as to why Canada isn't like its American counterpart. Among the highlights:
- While Canadians' debt-to-income ratio is now equal to that of
Americans' when things went south back in 2008, this ratio isn't an
accurate tool to predict a Canadian recession. After all, when looking
at income, Canadians don't have the burden of healthcare costs to pay
for. With the average American spending approximately 19% of their
take-home pay on their health, their income is actually much less than
ours - and their debt-to-income ratio, therefore, much higher.
- You shouldn't just look at debt and income when measuring the
debt burden - you have to look at assets too. When you incorporate this
into the equation, you'll find that Canadians are typically much better
off than Americans. Here, debt amounts to just 24% of a household's
average net worth, compared to 29% in the U.S.
- Canadians are still more conservative when it comes to mortgage
borrowing - and while some of us are using our homes like credit cards,
most of us aren't. In fact, an average of 63% of a household's home
value is equity in Canada, compared to 39% in the States. Forty percent
of Canadians also don't have any mortgage debt, compared to 31% in the
U.S.
This week on my facebook page, Mortgages for Women.com Inc I asked the question "what is the #1 reason people refinance their house?" Most people suggested the number one reason to refinance was to consolidate debt. The fact that it was #1 by a big majority even surprised me and I wonder if the media has anything to do with it? If you are thinking of refinancing to consolidate debt here are a few things you should know.
1) It's going to cost you money. Regardless how the ad spins it you need to plan to be out of pocket. In order to refinance you need to break your current contract (all mortgages are contracts) and for that you need a lawyer. If your lender has in house service that in house service costs money and they will break your old contract and register the new one just the same as your own lawyer would do. You may also be asked to pay for an appraisal and of course there is the penalty for breaking your current mortgage contract.
2) Get your eyes off the new monthly payment. Don't be seduced by the new monthly payment. There is a reason why you were able to payoff all your debts and end up with a lower monthly mortgage payment than you had before. Only one of those reasons is the rate. If you only had 15 years left of your mortgage and you roll all your debts together into a mortgage with 25 years to pay then of course your payment will be lower. Best to pay attention to amortization schedules over monthly payments.
3) Get it absolutely right. If your going to refinance do it right. Make sure you have a plan and budget going forward. One of my favorite budget work sheets is on the Financial Consumer Agency of Canada Website. Put some forethought into your refinance. You will want to work out a plan that will get you back on track and keep you there. There is not much point in refinancing debts like car loans into a payment with a 25 year amortization. That car will be in junk yard long before you pay it off.
4) If the advise your getting doesn't feel right it isn't. Do as much homework as you can. If you don't feel you are getting good advise listen to your inner voice. You have to live with the fall out not the person approving your loan.
So why did the survey surprise me? Most refinance loans I do these days are for home improvements. I think I'm bad (or good) at discouraging people from refinancing to consolidate debt. If you have any questions don't hesitate to email me. I will send you a list of things you need to get together before you make the refinance decision.
As urban centres across Canada (and the world) become more
populated - and developers try to find more ways to squeeze more money
out of their projects - you've probably noticed that condo units have
gradually decreased in size. Whether you're looking to downsize and take
advantage of the benefits of city living, or you're a first-time buyer
looking for an affordable way to get into the market, chances are you'll
have to find ways to adapt to these smaller living quarters.
The first thing to look for when purchasing a small condo? An accompanying locker. This blog post
from truecondos.com highlights the disconcerting trend of the
disappearing locker space. As developers look for new ways to make more
money from their condo projects, they're cutting back on locker and
parking spaces in favour of more units. Learning to live in less than
1000 square feet can be difficult enough - doing it without a place to
store those winter coats and sporting equipment can lead to a very
cluttered, and uncomfortable, existence.
Another way to avoid clutter in a small space is to
invest a bit of time and money into establishing an effective
organizational system. Multi-functional furniture, that either fills
more than one purpose or features hidden storage compartments, can go a
long way. Investing in racks and organizational systems to declutter
those out-of-sight areas - such as closets and kitchen cupboards - can
also greatly increase the space of your apartment. This video,
from unclutter.com, showcases how implementing some boat-inspired
storage techniques can make a sub-300 square foot space livable.
And lastly, if you're looking to save a bit of a cash but city living isn't for you, why not build one of these hobbit-like low-impact woodland homes? Not only are they cozy, but they're easy on the environment as well!
This week I got a call from a friend to do something I've never done before. Somebody was raising funds for The United Way of Toronto by auctioning off two tickets to TIFF complete with after party passes. My friend and I decided to go all out. After all this was for a charity we both love. We put in our bid and didn't hear anything so I had forgotten about it completely. Then on Thursday I got the call that we had won the tickets and nobody thought to tell us. The scramble was on. What to wear, how to get there..... details, details, details.
Not having a lot of time to think about it turns out to be a good thing. I had no idea what this was really going to be like and in the end that helped. I pulled together an outfit, made a hair appointment, got my make up done professionally and dawned the biggest heels I could walk in. My limo was a Beck Taxi and my purse was too big and I looked like a first timer. The movie was a thrill. So much fun to sit in a theater and watch a movie with the actors and director sitting there with you.
And then there's the after party or should I say parties. Of course our passes were vague and we had to keep asking for clarification. (Further pegging us s first timers) But the drinks were flowing and atmosphere was totally relaxed. The food was amazing and the after party for the after party was stacked with celebs. My heart was in my mouth all night and I sat in the shadows with my friend and marvelled how we didn't recognize a single person. I have to get out more. Okay - Ben Mulroney was obvious as was Bill Nighy but clearly there were more. I did get a chance to chat briefly with Cameron Bailey and he is so down to earth and loves when people of Toronto embrace the festival. It's what makes the event so special. The whole town is in a festive mood and the parties are everywhere.
I tweeted but my blackberry was letting me down. Foursquare couldn't find me and thought I was still in Cobourg, my media card kept telling me it was full and the few pictures I did take uploaded to Twitter but not to facebook. Good thing blackberry is Canadian or I'd have iPhone this morning.
With all that aside I had a great time. It reminded me what a great City Toronto is and how accessible these events are. My first time doing TIFF in style is behind me and next year I will do it again and for sure I'll know better. Lots of outdoor up in the sky patios so leather is better than strapless anything. Your ride matters. Check to make sure your phone is working before you go. You can wear anything and pull it off as long as your purse isn't too big. Heels are a must. And being a first timer is easier than you think.
We are so blessed to have an great arts community to Toronto. As a person who can get too caught up in the day to day grind of running a business it's so nice to have distractions. It's also great to try new things and let go of old things. I'm putting some old things behind me realizing there is world full of adventure. I'm happy that I stepped outside my comfort zone and did something new. Today I feel alive, reborn and accomplished. I know I didn't climb a mountain but maybe that's next.
Among the slew of insurance options that come with purchasing a new
home, you've likely come across the term "title insurance". But what
exactly is it - and is it worth forking over the extra money?
In a nutshell, "title" refers to your ownership of a property - so
"title insurance" protects both you ( the owner) and the lender against
loss resulting from title defects or fraud. While other types of
insurance may protect your home from things that may happen in the
future -such as fire or flooding - title insurance protects your home
from things that may have already happened, but weren't immediately
evident upon the purchase of your home. Some examples, as cited by title
insurance company, Stewart Title, include:
- someone else owns an interest in your title
- existing liens against the title
- violations of municipal zoning by-laws
- encroachments onto an adjoining property (other than fences and boundary walls)
- setback violations
- realty tax arrears
- outstanding municipal utility charges, provided such charges form a lien on title
- existing work orders
- lack of legal access to the property
- un-marketability of the land due to adverse matters that would have
been revealed by an up-to-date survey / RPR/ Building Location
Certificate
- fraud, forgery and false impersonation to the extent they affect the validity of title
Many homeowners find title insurance to be a worthwhile purchase because
it's a minimal one-time fee with no deductible, and stays in effect for
the amount of time you own the home. While title insurance is typically
acquired at the time a home is purchased, there are options available
to those home owners who are refinancing. For more information, give us a
call - or check out one of Canada's title insurance companies, such as
Stewart Title, First Canadian Title or Chicago Title Canada.
Canadians may be overly optimistic when it comes to predicting their "debt freedom day"?, a new report
by CIBC reveals. But that doesn't mean debt freedom is out of grasp -
it just takes a little more effort and planning than one would expect.
According to the CIBC report, regardless of an individual's age group,
most Canadians believe, on average, that they will be debt-free 10 to 15
years from their current age. In reality, very few will actually reach
this goal - only 18% of 45 to 54-year-olds are debt free, and only 35%
of 55 to 65-year-olds have achieved their debt freedom goal.
If you're hoping to eliminate your debt over the next decade or so, it
should be noted that it is possible - it just takes a bit of work. If
you're interested to hear how others have done it, check out these
stories of debt freedom: http://www.milliondollarjourney.com/how-to-become-mortgage-free.htm http://zenhabits.net/the-10-key-actions-that-finally-got-me-out-of-debt-or-why-living-frugally-is-only-part-of-the-solution/ http://sarawharding.hubpages.com/hub/How-We-Became-Debt-and-Mortgage-Free http://thecompleteself.com/blog/how-we-became-debt-free-from-40k-in-past-due-debt-to-over-30k-extra-cash-in-the-bank-part-1-of-3/
While these case studies may not represent your ideal path to debt
freedom, there are a few common truths to debt elimination that every
person should expect to follow:
1) Becoming debt free doesn't come without sacrifice. Whether you're
planning on paying off your mortgage in three years or becoming
completely debt free in 15, you're likely going to have to evaluate your
spending, buy only what you can afford and forego a lot of items that
fall into the "want" category.
2) Establish a plan - and stick to it. Whether you sit down with a
financial planner to talk about your goals, or establish a budget and
pay-off plan yourself, the idea is to establish a path, stick to it and
revise when necessary.
3) Start saving. Cash is king, and the bigger cushion you have, the
better. While it's often difficult to do, the bigger your cushion for
retirement, emergencies and luxury spending, the less likely you'll be
to accumulate debt.
4) Avoid credit when you can. This goes with the above point - almost
all the individuals in the above case studies eliminated their debt
first, and then set out on a goal to eliminate credit from their lives.
Whether it's a credit card or a line of credit, it's quite easy to
borrow more than you can pay off.
"A mortgage has a beginning, a middle and an end,"? Marta Stiteler, a
financial planner with the Pillar Retirement Group, told the Hamilton
Spectator. "Lines of credit are perpetual. A lot of people don't even
really see them as debt. Their incredible popularity has made this
carrying of debt last forever."
The
average Canadian homebuyer takes 11 months to plan their purchase,
according to CMHC. If you’re thinking about buying in the next year, our
four-part series will explain how you should be dividing your time.
Part 4: The Home Search
Now that you’ve been pre-approved for a mortgage and know your housing
price range, it’s time to start looking!
While a Realtor can definitely
help you find that ideal home (at no cost to you, since the seller pays
their commission), it’s wise to have a sense of what you’re looking for
before heading in.
If you’re worried about the direction of the real estate market in your
area, your best bet is to find a home that will suit your needs for the
next five years or more, if you can afford it. Sit down and think about
what your short-term and long-term priorities are, how many bedrooms
you’ll need to grow into, what your ideal area looks like, and whether
your lifestyle is best suited to a condo or house. You might also want
to take into consideration such things as commute times and proximity to
sports teams and other community activities.
If your price point doesn’t allow you to purchase a home that you can
grow into, try to find one that will give you the most bang for your
buck – and the biggest return on your investment. This can mean
purchasing in an up-and-coming area, or buying close to soon-to-be-built
infrastructure improvements like public transit lines. The old real
estate adage, “location, location, location!”, still rings true, so if
you can buy the worst house on a nice street it is likely worth the
investment. In the same sense, you may want to buy a home that’s a
little more expensive but well-located, so that you can rent out the
basement for some extra income.
Again, a Realtor is probably the best person to discuss your strategies
with. They’ll be able to highlight areas that make sense for you, your
budget and your current lifestyle.
The
average Canadian homebuyer takes 11 months to plan their purchase,
according to CMHC. If you’re thinking about buying in the next year, our
four-part series will explain how you should be dividing your time.
Part 3: The Budget
So
now that you have a preapproval, and you’ve been taking strides to trim
down your household spending over the last few months, it’s time to
come up with a real budget that will determine the type of house you can
afford.
This is usually a number that is significantly lower than the “maximum”
made available to you by your lender (mainly because your lender only
takes certain expenses into account, such as heating costs and
outstanding debts, when determining this magic number. Others, like
food, are completely left out of the equation).
The best way to come up with a realistic price tag is to look at where
your money is currently going and work backwards from there to see
what’s left over for mortgage costs and household expenses. At this
point, it’s important to be realistic. You’ve already determined what
extravagances you can do without – and which ones you definitely must
hang onto. If you’re a couple that enjoys going out for dinner more than
once a week, embrace this fact. There’s absolutely no use in saying
that your weekend dine-outs will end once you sign that mortgage. In
fact, chances are you’ll continue to dine out – and the additional cost
will leave a growing balance on your credit cards.
It’s also important to keep in mind that ownership carries more costs
than renting. Be sure to factor in condo fees, property taxes and
unforeseen maintenance costs into your monthly housing budget. You may
also want to factor in non-housing related costs – for example, if
you’re moving from the city to the suburbs, you’ll likely have to pay
for the additional costs of a car. If your new home is taking you
further away from work, your gas bill will likely increase as well.
Once you know how much money you can devote to housing on a monthly
basis, put those mortgage calculators back to good use and figure out
how much of a total price tag you can afford. Once you have that maximum
number, try not to look at homes that fall outside of it. It’s easiest
just to avoid the temptation all together.
he average Canadian homebuyer takes 11 months to plan their
purchase, according to CMHC. If you’re thinking about buying in the next
year, our four-part series will explain how you should be dividing your
time. Part 2: The PreApproval
There
is no better tool to help you obtain a true picture of your housing
budget than a mortgage pre-approval. Unfortunately, less first-time
buyers are taking the time to get one.
According to TD Canada Trust’s First Time Homebuyers report, 91% of
first-time buyers were pre-approved for a mortgage before house shopping
in 2010, and that number fell to 76% in 2011.
There’s no real reason
why less homebuyers should be taking advantage of the opportunity to
get pre-approved for a mortgage – especially if you’re dealing with a
mortgage broker. With one glance into your credit score, we can use the
information to see which lenders are willing to approve you for a
mortgage, at what rate and for how much.
While this approval isn’t
etched in stone – the lender will still want to see proof of income and
other personal details upon approval, and if you’re putting less than
20% down, your mortgage insurer (i.e. CMHC or Genworth) will also have a
final say – it nevertheless gives you a good picture of what type of
funds are available to you, and at what rate.
Not only does this help
you put a more accurate budget together – and ensure your house hunting
endeavours fall within your allotted price range – but, in many cases,
it also allows you to secure the best available rate. Most lenders will
hold their best rate for you for 90 days (and sometimes 120 days) upon
pre-approval. If you don’t find a home within that time (or if you just
haven’t had a chance to start looking) you can obtain another
pre-approval hassle-free.
For the amount of effort it takes to call up
your mortgage broker and obtain a pre-approval (which is close to zero),
it’s definitely worth the added convenience. In many cases, we can do
the legwork online, and have it turned around within a business day or
less.
The
average Canadian homebuyer takes 11 months to plan their purchase, according
to CMHC. If you’re thinking about buying in the next year, my four-part
series will explain how you should be dividing your time.
Part 1: Getting your ducks lined up
While you don’t necessarily need a year to plan your home purchase, a little
preparation never hurt anyone – in fact, it’s been known to save people
money. Below are a few things you can do right out of the gate that can save
you hassles (and plenty of headaches) in 11 months’ time:
a)
Become one with your credit score
There’s
nothing worse than finding your dream home and realizing, upon talking to the
bank, that you don’t have good enough credit to obtain a mortgage. That’s why
the more in tune you are with your credit score – and the earlier you’re in
tune with it – the better.
Both of Canada’s two major credit bureaus – Equifax and TransUnion – offer
one free credit report per year. Take advantage of this offering to make sure
you don’t have any outstanding bills you didn’t know about, or incorrect
charges on your report. If you do, a year is usually enough time to clear up
any minor blemishes so that your score is in tip-top shape when it comes time
for that pre-approval. Remember – the better your score, the better your rate
(and the more money you’ll save in the long run).
b) Establish your household budget
If you
don’t already have one, now is the time to sit down and draft an accurate
household budget. This means going through your expenses, tracking your
spending and figuring out which luxuries you can’t live without – and which
ones you might be able to trim.
This will likely be a work in progress, and something you’ll revise over the
coming months as you (and, potentially, your partner) receive raises, change
jobs or simply learn to reign in your spending. Once you get into the habit
of it, you’ll be able to determine how much you can really afford to spend on
housing every month, which will come in handy later on.
c) Estimate your potential mortgage payment.
While
you don’t have to know the details quite yet, it pays to know roughly how
much your “ideal” home is going for price-wise, where interest rates are
sitting, and how much you’re aiming to have for a down payment.
Once you have these numbers in mind, you’ll be able to plug them into an
online calculator and figure out how much a monthly mortgage payment is
likely to cost. Once you know this magic number, determine the difference
between that and the current rent you’re paying – and sock it away. Not only
will this help you get used to the added costs of a mortgage payment, but it
will also help you establish a bit of a savings fund – either to strengthen
your down payment or use as an “emergency fund” for the day something
inevitably needs repair in your new home.
