Ten signs you might need a tune-up

Like your car or your home, your mortgage benefits from a seasonal inspection.  Spring is just around the corner - so it's a great time to make sure your mortgage is in peak form!

Here are ten signs you might need a mortgage tune-up:

1. You are locked in at a higher rate than you could get today - and you want a professional opinion on your options;

2. You're thinking about moving to a new home this year - or considering buying an investment property;

3. You're still carrying way too much post-holiday debt;

4. In fact, you have more than $25,000 owing on high-interest loans or credit cards;

5. You're worried each month about whether your budget will stretch as far as the bills;

6. There's a renovation or home repair project coming up this year - either by choice or necessity;

7. An investment opportunity is available - and you wish you could take advantage;

8. There's a large expense looming - tuition, wedding, new car - and you need to plan ahead;

9. Your income might wobble or take a hit this year - and you want to be prepared just in case; or,

10.  You're planning on retiring in the next five years.
   
If you recognize one of the signs that it's time for a tune-up, give me a call or send an email anytime.  I'm happy to help!


~ Powered by Mortgage Intelligence

Photo credit: [c] by admeijer 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!

Buying a Condo? 5 Tips For Getting the Best Value...

If you're a first-time homebuyer, a current homeowner looking to downsize or a parent considering buying a secondary property for kids moving for school, chances are you've considered condo ownership.

When looking for a condo, finding the best value is all in the combination of the place, the price and the monthly fees.  When calculating how much they will loan to you, mortgage lenders count half of your monthly fees, along with other factors such as property taxes and heat expenses.

Here are five tips from Mortgage Intelligence, to help you get the best value for your condo purchase:

1. Know what your fees cover.  Along with maintenance of the building and common areas, some condominiums will include part or all of your utilities or property taxes in your fees, while others keep them completely separate.

2. Check the reserve fund.  The corporation responsible for the condo development should have a reserve fund that's large enough to cover the cost of repairs to the building's common elements.  A status certificate (or Estoppel certificate in some provinces) will show any planned developments that could increase your monthly fees or require a special one time assessment.  You can find similar details in the condo corporation's annual meeting minutes.  

3. Think twice about upscale amenities.  Keep in mind that building features like pools, saunas, deluxe fitness areas or large common rooms typically require higher condo fees to cover the upkeep. Consider whether you'll really use these features enough to make the extra cost worthwhile.

4. Check the regulations.  Make sure you're aware of any bylaws governing your condo development that could affect your lifestyle. For example, bylaws may restrict household pets, gas barbecues, working from home or renting the unit to a tenant.

5. Consider your neighbours.  Is the building mainly occupied by owners, or renters? Residents who own and have a vested interest in the building may be more careful about upkeep.


- powered by Mortgage Intelligence

Photo credit: [c] Sharon Diwakar for openphoto.net

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

Buy your cottage and keep it, too

We just got back from our cottage on the Ottawa River.  It's wonderful there...  Wild windswept forest, water gently lapping onto the sandy beach (and mosquitoes the size of hummingbirds, but hopefully some long overdue hot dry weather will beat them into submission). 

I always know that summer's coming because the smaller members of our household start negotiating, "Can we go to the cottage tomorrow?  Why not?  Well, when can we go?"  And I find myself wondering, just how much school do those kids really need, anyway?

The reality of our situation however is that taxes, insurance, maintenance, and small renovations really tap into our cash flow.  In addition, with our busy jobs it's hard to get away as much as we would like.  So, like many people, we rent the cottage part of the summer.  It accomplishes two things: one, the rental income helps with our expenses, and two, we have wonderful renters who take care of the cottage as if it were their own, so that we don't have to worry that an empty cottage is just sitting there, vulnerable to thieves.

If you've been bitten by the cottage bug, or a vacation home is crowding in on your daydreams, you have probably realized another reality.  Nowadays, property prices have greatly increased in many of Canada's popular vacation destinations, making it a challenge to purchase the beach house of your dreams.

Some people choose to share these costs by renting, as we have, while others manage the cost through joint ownership with family or friends, or even some combination of the two.  However, before taking the plunge into co-ownership or renting, you need to be sure that you really understand what you're getting into.

Here are a few things to think about:

Does owning a vacation property fit your lifestyle?

In addition to the fun and leisure aspects of a vacation home it is important to factor in the time and cost involved in year-round upkeep. How will the property be used? If your dream is to own a ready-to-live-in relaxing hideaway while your co-owners dream of a northern DIY project, you may not see eye-to-eye when it comes to how you will be spending your weekends.

It’s important to think carefully about how much time you and your co-owners plan to spend at the vacation property. Will you be vacationing as a group, or do you want to trade off on weekends? Will one use the property more than the other? Will it be a 50/50 split?  

How will disagreements be resolved?  Can your relationship withstand potential friction regarding decisions involving money?

Have you thought about what’s involved before you put it up for rent?

While most Canadians buy a second home for recreational use, growing numbers are also buying for investment purposes. Determine in advance how you will split, and claim, the rental income. In the case of a vacation property that you intend to rent out most of the time, the lender may deduct the rental income from your total monthly debt payments when qualifying you for a mortgage. It is important to be aware that not all lenders will take rental income into account – a mortgage broker can advise you on this.   As well, if you do rent the property for the majority of the year, you may have additional expenses - insurance would be more expensive, and you may wish to consider using a property management company.  How do these fit into your spreadsheet?

Can you afford the financing?

While it certainly helps to go in with a co-purchaser, you want to be sure that your waterfront property isn't putting you underwater.  Seek independent advice on what size of mortgage you can reasonably handle - again, a mortgage broker can help you with this.  And as with any purchase, if you think you will need financing, make sure you get a pre-approval to ensure smooth sailing when you put in your offer to purchase.

Regardless of whether you are buying a cottage that you yourself will enjoy, or as an investment, some pre-planning will help make sure it is a relaxing and rewarding venture.  And don't forget your bug spray!

Image credit: [c] Daniel Steger for openphoto.net

Thinking of picking up a little condo in Florida?

With Canadian real estate prices potentially cooling off, quite a few of us are looking south of the border for a vacation or investment property.  Not everyone is aware that there may be U.S. tax issues (income tax, state tax, and /or estate tax) to consider, however.  This Globe and Mail article touches on a few of these at a high level, but if you're serious, talking to a cross-border tax specialist is vital.