Home and Mortgage Essentials - January 2012 Issue!

The latest issue of our newsletter covers some great topics - how to choose the right home for you, the final days of the Eco rebates, and some housing market stats. Click at left to get the newsletter. If it doesn't appear properly on your computer, please don't hesitate to get in touch, and I will email you the PDF version. Enjoy!

Top Ten for 2012!

Everyone loves to make forecasts for the New Year. With that in mind, we’ve put together a glimpse into the year ahead for Canadian homeowners – so you can plan for some great opportunities!

1. Low rates early in the year! So many financial experts were wrong last year when they predicted we’d see a rise in mortgage rates. But their loss is your gain. We are beginning 2012 once again at historically low mortgage rates.

2. “Green” money available until the end of March. The popular Eco-Energy Retrofit Grant is still available until March 31, 2012. You can access up to $5000 for improvements for energy-saving renovations to your home, but you’ll need to act fast. Before you begin work, you must arrange for an NRCan-licensed energy advisor to perform a residential energy assessment of your home. After the work is complete, a post-retrofit evaluation must be done by March 31, 2012. Full details are available at www.oee.nrcan.gc.ca. To register, go to www.oee.nrcan.gc.ca/register.

3. The wealth train is leaving the station! At some point rates will begin to rise to more normal levels of 5 or 6 per cent, and it’s possible the trend upward might start in 2012. If you are carrying household debt outside your mortgage, you have a great opportunity right now to board the “wealth train”. Roll your high-interest debt into a low-rate mortgage. Start spending sensibly, saving smart, and you’ll be well on your way to slashing your debt and building your wealth. When interest rates begin to rise, debt derails even the best financial plan. Do it now.

4. Never renew with your eyes closed. When your mortgage comes up for renewal your lender sends out a note suggesting you renew at their current offer. Never renew your mortgage with your eyes closed! This is your moment of opportunity to negotiate the best possible deal. Who knows if the same lender is the best choice? If a renewal is in your financial future this year, bring us your renewal notice. There are some great options out there; we’ll help you look around.

5. Check out the re-advanceable mortgage.  This is a terrific mortgage concept for those who want to pay down their mortgage and have flexibility should an unexpected opportunity or expense arise. The re-advanceable mortgage is the perfect solution. If an emergency comes up, an unexpected investment opportunity, or a special renovation project, you can access your equity without a fuss. It may be the “last mortgage you’ll ever need”.

6. Time to build an income buffer? It’s a bit ironic, but it’s always hardest to get money at the very time that you need it. If there is even a chance that your household income could take a hit this year, then talk to us about building a financial buffer using today’s low mortgage rates. Maybe you won’t need it. But if you do, you’ll be grateful you made the arrangements when you did. With the European debt crisis still wreaking economic havoc worldwide, unemployment and income fluctuations are still a risk.

7. Speed up your mortgage pay-down. Before rates rise, take the opportunity to beat down your mortgage principal. Build a plan to take advantage of your lender’s prepayment privileges! Consider changing from monthly payments to weekly or bi-weekly payments, and take some or all of your tax refund and put it against your mortgage principal. Your interest costs will go down with every dollar you’ve reduced on your principal amount.

8. Build a financial cushion. Your high-interest credit card should never be your emergency fund. This year, build a financial cushion: get in the habit of putting a small sum from every paycheque into a special emergency fund. A nice plump emergency fund is smart saving.

9. Staying put? Instead of moving to get the home you want, consider the many benefits of staying put. The right renovation – an addition, a new family room, a fresh kitchen – might be all it takes to turn the house you’re in, into the home of your dreams. It is almost always less expensive to renovate than to relocate – if an upgrade to your lifestyle is what you’re after!

10. Get your annual mortgage checkup. It’s your financial “medical”; early detection of problems can save your financial life! We like to know how your mortgage is working for you – and look for opportunities to make the most of your greatest budgeting asset! Book a mortgage review and make sure your plan incorporates what may be ahead in 2012: it could pay big dividends in the year ahead!

~ Powered by Mortgage Intelligence

Photo credit: [c] Gábor Suhajda for stock.xchng
 

Home and Mortgage Essentials - December 2011 Issue

Did you know that Canadians are responsible for almost 25% of foreign purchases of U.S. property? It's not the first time I've talked about the fact that more and more of us are taking an interested look at the bargains available in those warm locales to the south. If you're thinking this might be for you, make sure you talk to specialists in cross-border taxation, local real estate experts in the location you're considering, and of course, a mortgage specialist like me if you are looking for advice on financing your purchase. 

The December issue of our monthly newsletter touches on this and more. Click on the image at left to check it out!

Home and Mortgage Essentials - November 2011 Issue!

Curious about where home trends are heading?  Click the image at left for a sneak peek at what homes are projected to look like in 2015.  It has some great stats on mortgage paydowns too!

Home and Mortgage Essentials - October 2011

Click the newsletter image at left to see our October 2011 issue of Home & Mortgage Essentials. This month, it contains tips and mortgage solutions for freelancers, as well as the latest Canadian housing market overview.

After clicking, click again if you would like to enlarge the image further.

If you would prefer a pdf version, email me and I'll get one to you.

Happy reading!

Are We in a Housing Bubble?

In a recent issue of CIBC World Markets' Economic Insights, one of my favourite economists, Benjamin Tal, addresses what we've all been wondering...  Are we in a housing market bubble?  Is a crash imminent?

Tal states that any such suggestion is "probably wrong".

His reasons for this conclusion:

First, while average house prices have indeed been increasing, the main markets that are pulling up the average are Vancouver (a "highly skewed" market) and, to a lesser extent, Toronto.  Pulling out the data from these markets reveals a much more moderate 3.7% year-over-year price increase.

Second, while he does believe that "prices in the Canadian market and its sub-segments are higher than can be explained by factors such as income growth, rent and household formation", the "pace of any correction is likely to be gradual".   He demonstrates that we only have a small segment of the population that is vulnerable to interest rate hikes (families with less than 20% equity and/or whose debt payments total more than 40% of their gross income).  Further, he maintains that such interest rate increases are expected to be moderate. 

Tal concludes that there may indeed be a period of time where housing "underperforms" compared to other assets, but that eventually we will see a return to equilibrium.

If you're house-hunting and wondering whether to get into a bidding war on one of those "hot" houses, this is something to keep in mind.  More and more, the answer is you probably shouldn't.

 


Photo credit: [c] Jasenka Petanjek for openphoto.net

Rate watch - rates on the rise

A couple of the chartered banks announced rate increases yesterday and today, and with bond yields going up recently, it is likely that the other lenders will do the same. 

If you're in the market for a home and don't have a pre-approval yet, or you've been considering refinancing soon, don't delay calling your mortgage consultant.  Lock in these low rates while you have the chance!

Home sales down, prices up in April 2011

According to the Canadian Real Estate Association, home sales activity was down 4.4% in April 2011.  This softening was expected due to the tightening of mortgage regulations in March.

Home prices were up 8% compared to April 2010, buoyed by continuing increases of multi-million dollar home sales in Vancouver.  

To see the full article, click here.


Photo credit [c] Liz Orfao for openphoto.net

Rates drop - but only slightly

The bank posted 5 year rate has dropped from 5.69% to 5.59%. That .10% is not significant but it is allowing fixed rates to continue to edge down. Overall, rates are lower than they were a few weeks ago, and a lot of our lenders are beating the posted rate by 1.5% or more. 

It would be nice to see rates stay at these levels throughout the summer!

Rates on the rise again

TD has announced that they are raising fixed rates for 1 to 5 year terms by as much as 35 basis points.  The other financial institutions are expected to follow suit in the next few days, as rising bond yields are increasing their cost of funds, and putting upward pressure on mortgage rates. 

What does this mean to you? 

If you're planning to purchase in the next 4 months or so, you should lock in your pre-approval rate now, just to be safe.  And if you have a mortgage coming up for renewal in the near future, contact your financial institution or mortgage broker to see if you can lock in your rate early. 

Want to be mortgage-free sooner? Pre-pay now!

Signing up for a mortgage may seem like a life-time commitment.  For most of us, it is the biggest debt we'll ever take on.  What many people may not realize is just how big a dent they can put in their mortgage by making pre-payments. 

Making extra payments or larger payments early on can add up to significant interest savings and shorten the life of your mortgage, leaving more money available for RRSPs and other investments, as well as improving your cash flow for changing lifestyle needs. 

Here are some strategies for making prepayments:

Add a bit to your monthly payment

Most of us can find an extra $50 per month by cutting out a restaurant meal.  Add that money to your mortgage and you’re saving a lot in interest down the road.   Most lenders allow you to increase your payment amount by a certain percentage every year.

Make a yearly pre-payment 

Paying an extra one or two thousand on your mortgage once per year on the anniversary date of the mortgage could yield significant savings over the life of the loan.  For many borrowers, the money for such a prepayment comes from a tax return. 

Make a larger prepayment early in the mortgage

Note that lump-sum mortgage prepayments have a much greater impact on the total amount of interest you’ll pay, the earlier they are made.  Check your mortgage contract to see how much you can pay down your principal, and how often you can do so.

If you're paid bi-weekly, sign up for "bi-weekly accelerated" payments 

If you split your monthly payment in half, and pay that amount every two weeks, it's an easy way to sneak in an extra payment every year.  This can save your thousands in interest and allow you to pay off your mortgage years earlier.

Please call me if you have any questions or would like to further discuss your options!

Photo credit: Microsoft Clip Art

$25,000 Giveaway Contest!

This year at Mortgage Intelligence we are celebrating our 500,000th mortgage client with our biggest giveaway ever!

We invite you to enter for a chance to win $25,000.  You can use it for a down payment, home improvements, or just about anything. 

Click here to fill out a ballot on my website.   Good luck!

Rates bouncing down - then up - then down - so what should you do?

Should you lock in your mortgage rate or stay variable? 

An insightful article on the Canadian Mortgage Trends site discusses the pitfalls of trying to pin down market factors and interest rate changes over both the short and long-term.   The reality is that while we all wish we had that proverbial "crystal ball", it simply doesn't exist. 

As mortgage brokers, we are constantly being asked to predict the unpredictable.  Forecasts, especially long-term forecasts, should be taken into account, but with one caveat: the farther out the forecast, the less likely it is to be accurate. 

It is important to remember that, in any economic times, YOUR long-term financial goals are the most important factor.  From this, you can structure your mortgage term, and mortgage features, to best position yourself to achieve those goals.

Photo credit: [c] Adrian Van Leen for openphoto.net

How Good Are Your Negotiating Skills?

A recent paper published by the Bank of Canada found that there is a significant amount of variability in mortgage rates for customers, resulting in a difference of thousands of dollars over the life of the mortgage.  They state that "the burden of gathering multiple quotes lies on consumers", and "consumers also differ in their bargaining ability".  They compare shopping for a mortgage to shopping for a car, a house, or health insurance.


The study also shows that people who use a mortgage broker pay lower rates on their mortgage, since the mortgage broker takes on the legwork of searching for the best mortgage rate and terms.


So, how good are your bargaining skills?