A great article posted by the CBC today, entitled “Debt’s Dirty Dozen Danger Signs” highlights an issue we mortgage consultants come across all too often. That is: people waiting too long to ask for help.
As you may be aware, if you have equity in your home, and are feeling overwhelmed by your monthly payments on high interest debts such as credit cards or car loans, it is often possible to give you financial breathing room by doing a debt consolidation (paying off debt by rolling it into a lower interest mortgage). This can lower your monthly payments, and reduce your interest costs by a tremendous amount.
However, there’s a catch. If we get the call from our clients too late – after several mortgage payments have been missed, or credit cards are way over the limit, or debts have gone to a collection agency – it makes it very difficult, and sometimes impossible, to help. For example, most mortgage lenders are not excited about the idea of advancing several hundred thousand dollars, to clients who have already shown that they are consistently not paying their existing mortgage payment, and have not tried to re-negotiate terms with the existing mortgage lender. Because of this, the options we can offer you become very limited.
Your best bet is to call your mortgage professional as soon as you feel you might be running into trouble. We can help you review your options and figure out a plan of action.
Check out the article – it’s worth reading. And if you think you might need us to review your financial options, call now, not later.
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!
If you're like many of us, wading through all the rules on RRSPs, the federal Home Buyer Plan, and the like is sure to put you to sleep. Here's a great article that gives you the scoop on the rules around RRSP withdrawals for your down payment. And it's in plain English!
So, you’ve decided to buy a home? Congratulations!
When my husband and I were house-hunting, it was such an exciting time. We looked for almost 2 years before we found a place we fell in love with (our real estate agents had the patience of saints!). The reason it took so long was: a) we kept thinking prices HAD to go lower – which they didn't, and b) there was a slight disconnect in what my hubby and I were prepared to live with – I would have been okay with a fixer-upper, but my hubby was totally NOT okay with a fixer-upper. As it turns out, we ended up somewhere in the middle.
Being fairly analytical types, we had a list of ten “must-haves” for our house:
1. Within certain price range
2. Maximum commute time from work
3. Four bedrooms
4. Two-car garage
5. Lots of space between us and neighbours
6. Neighbourhood with character
7. Backyard for kids to play in
8. Lots of windows
9. Basement that my 6’2” husband didn't have to crouch in
10. Within walking distance of good school
In the end, we got almost everything we wanted from our list, although we did go over on # 1. You’ll notice that one thing was not on our list – a big modern kitchen. That is why we are now considering a pain-in-the-neck kitchen reno. Anyway, I digress.
Here are my recommendations for finding the perfect home:
1. Decide on your top ten “must-haves” and rank them in order of priority. Doing some research on helpful sites such as CMHC.ca and Genworth.ca will get you thinking about points you might not have considered. Check out CMHC’s “Homebuying Step by Step” guide as well as their great home features checklist.
2. Get pre-approved for a mortgage. A good mortgage specialist will help you develop a mortgage plan. This gives you several key pieces of information. Not only should you understand exactly how much you can qualify for, but you should also get advice on whether you need to fix anything credit-wise to get the best mortgage rates, and whether you need to increase your savings for down payment and/or closing costs.
3. Connect with a great real estate agent. If you don’t already have one, ask around for recommendations. A skilled real estate agent will sit down with you and provide guidance on where in the city you can get a home that fits with your budget and your requirements. Be sure to keep the lines of communication open, so that after every viewing, you can provide feedback on what you liked and didn't like about the place. This can save you a lot of time and effort.
4. Make your offer. Your real estate agent will guide you here as well, based on their experience and understanding of the market. Make sure to include clauses in your offer to give you time to finalize your financing and to get a home inspection.
A little planning can go a long way to relieving any stress associated with this big step in your life. Take your time in doing the research, talk to friends and real estate professionals, and then, trust your instincts. And make sure that you take a good hard look at that kitchen!
Photo credit: [c] Miroslav Vajdic for openphoto.net
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!
Think of your mortgage renewal as a valuable opportunity. It's a chance not only to take advantage of today's great rates, but also get a mortgage product that better fits your current needs.
When you receive a renewal notice from your current lender, don't simply sign it without knowing all your options. If you do so, you could be paying a higher rate than you need to, and end up with a mortgage that might not be best suited to your requirements.
Often, by the time your mortgage comes up for renewal, you are most likely in a different financial position than when you first obtained it. As our financial and life circumstances change, so does the mortgage product that is best for our needs and goals. For example, you may wish to access your home's equity to consolidate other debts (especially high interest credit card debt), or perhaps help pay for a renovation or investment property.
So make sure to review your options thoroughly. Feel free to call me to discuss your situation. We can discuss your interest rate options, and help you with a customized mortgage strategy.
At renewal time, take the time to ensure you get the most from your financing. We can speak to any concerns you may have about interest rate trends and advise you on what to do as your mortgage renewal approaches.
- powered by Mortgage Intelligence
Photo credit: Thanh for openphoto.net
Did you know that Canada's first batch of Baby Boomers is hitting retirement age this year? And, according to Ipsos-Reid, almost a quarter of them worry whether they have enough for retirement. They're not alone. Almost 40% of Canadian adults haven't saved a penny for retirement.
If this is your situation, you may not realize that you might actually be living in your nest egg. If you expect to be mortgage-free by retirement, this opens up several options for your retirement plan. If at all possible, you should explore these options, with the help of a good financial advisor, well before you stop working.
Here are three options to consider:
1. Plan on selling your home and downsizing at retirement.
Selling your home and moving into a smaller home or condo should serve to minimize your living expenses. In addition, you can use the surplus cash from the sale of your home to invest in a nice diversified portfolio of investments that ensures safety and income, as well as some growth. Make sure you talk to a good financial planner and/or investment advisor to get the best mix of investments for your long term needs.
2. Leverage the value of your home by setting up a home equity line of credit.
If your home is, or soon will be, mortgage free, and if you still have a source of income to qualify, setting up a "HELOC" will enable you to access the funds tied up in your home. Although there are some initial setup costs, there is no ongoing cost for having an unused HELOC available to you. And once you have it set up, you can use it when needed, either by writing cheques, doing a transfer to your bank account, or sometimes even using an ATM. If you do carry a balance, the interest rate charged is much less than on an unsecured line of credit, and you only need to pay the interest monthly. So, if you're eventually on a limited income, the payments should not be burdensome. And if you’re able to periodically make extra payments, there is no penalty to pay off part or all of the outstanding balance whenever you choose. Talk to an experienced mortgage advisor to find out if you qualify and for what amount.
3. Arrange a reverse mortgage.
If you don't qualify for a HELOC, and you feel strongly about staying in your home, this is another option to investigate. The way a reverse mortgage works is that you determine a maximum amount that you will borrow - no more than 50% of the value of your home - based on your age. You can then receive the funds in one bulk payment, several payments, or installments, based on your requirements. No monthly payments are required; rather, your interest on the reverse mortgage accumulates over time. The mortgage is paid off when your home is sold or when you and your partner (if applicable) permanently move out of your home. While there are costs associated with the setup of the reverse mortgage, it is quick to arrange and the money received is not taxable (and therefore, does not impact OAS and GIS). As long as you continue paying your property taxes and property insurance, and keep up with any maintenance, you have the security of knowing that you can keep your home as long as you wish. If this is an option you wish to contemplate further, you'll need to get advice not only from a mortgage advisor, but also a good financial planner and legal advisor.
Whether you decide to downsize, set up a home equity line of credit, or arrange a reverse mortgage, make sure you get advice from the experts in considering your options. I can't emphasize enough that the earlier you explore which option is best for your unique situation, the less stress you will experience when it is time to implement your plan.
