October 9, 2013

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How The Economic Machine Works by Ray Dalio

I came across this fantastic video recently, and while it’s not specifically mortgage related, it is a fantastic look at how the current economy issues are affecting the housing market.  It’s a long video (30 minutes), but if you’re at all interested in the economy and finances, this is the clearest and most concise explanation of economics I’ve ever heard or seen.  Enjoy!

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

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July 31, 2013

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Do you have to disclose if someone died in your home?

Generally, you are not required to share information about the house as long as you don’t hide anything or deliberately lie about anything. You do not have to offer information that your spouse or parent died at h0me, or that there was a suicide or even a murder in the home.

Keep in mind, however, that some buyers are more sensitive than others. If you sell to a sensitive buyer who might not have bought if she or he had known about the death, you could run the risk of a lawsuit after closing. In this case, the wiser choice might be to let the buyer know and let them make that decision with full knowledge.

Cesia

Cesia is a real estate lawyer at Wall-Armstrong and Green, a boutique law firm in Barrie focusing on real estate and estates. When she's not online, she can usually be found in her garden.

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July 29, 2013

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Using the Home Buyers’ Plan for a Down Payment

Did you know that Canadians can use money (up to $25,000 per calendar year) from their RRSPs (Registered Retirement Savings Plan) tax-free for a down payment on their first home? It’s a program called the Home Buyers’ Plan (HBP), however there are some conditions for participating (the RRSP contributions must stay in the RRSP for at least 90 days before it cab be withdrawn; it has to be paid back usually within 15 years; the purchase has to be the principal residence).

If you’re looking to buy your first home, but don’t have a down payment saved yet, using your RRSPs can help you purchase a home now instead of slowly saving for a down payment. In addition, if you can use your RRSPs to increase your down payment to at least 20% of the purchase price of the home, you could avoid paying mortgage default insurance and save thousands of dollars.

For more information on the Home Buyers’s Program, visit the CRA information page on the HBP or have a chat with your favourite mortgage broker and we can help guide you through the process.

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

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July 22, 2013

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To Rent or Buy? That is the Question

Article courtesy of Genworth Canada.

 

Most Canadians at some time in their lives have probably asked themselves whether it is better to rent or buy a home.

Purchasing a home is one of the biggest decisions most people ever make in their lives. Ultimately, it is a personal choice. But it helps to look at the pros and cons of buying to determine whether home ownership is right for you.

 

Some Advantages of Buying a Home

Owning a home is generally considered to be a sound, long-term investment that can provide satisfaction and security for you and your family.

A recent survey by real estate company, Re/Max, found that house prices in Canada have appreciated by 53.7 per cent over the last decade, or more than five per cent a year. Prices skyrocketed most dramatically in Montreal (85.9 per cent), Calgary (81.7 per cent) and Halifax (77.3 per cent).

Each month when you make your mortgage payment, you are building equity in your home. Equity is the portion of the property that you actually build through your monthly payment versus the portion that you still owe the lender.

At the beginning of your mortgage, more of your payments go toward paying off the interest and less toward paying off the principal. However, the longer you stay in your home and the more mortgage payments you make, the more principal you pay off and the more equity you accumulate. Most mortgages also offer you the option of making additional monthly or annual payments to reduce your principal faster.

There is also a tax advantage. If your home is your principal residence, any profit you make when you sell it is tax-free. A home can appreciate, or increase in value as time passes, building more equity. As you build up equity, it’s usually easier to afford another more expensive home in the future thanks to the profit you’ll make when selling your current home.

As an owner, you can also decorate and improve your home any way you like. Ownership tends to give you a sense of pride and can give you and your family stronger ties to the community.

If you do decide that home ownership is right for you, it’s important to choose a home you can afford. If you can’t afford to buy your dream home, purchasing a more modest home can be a great place to start building equity that one day may allow you to buy the home of your dreams.

 

Some Disadvantages of Buying a Home

It’s easy to get caught up in the excitement of buying a home. So it’s important to remember that home ownership has some additional responsibilities as well.

For one thing, a home can be expensive. Chances are, your mortgage payments will be more than what you are currently paying in rent. There are also added costs of home repairs and maintenance.

Owning a home ties up some of your cash and is likely to reduce your flexibility to move to a new location or change jobs. While your home might increase in value as time goes by, don’t expect to get a big return quickly. There are no guarantees that your home will increase in value, particularly during the first few years. In the beginning, you could actually lose money if you sell because your home may not have appreciated enough to cover the real estate fees and moving, renovation and other costs. Real estate is usually considered a good investment over the long term, however.

When making the decision about whether or not to buy, it’s important to carefully choose a home you can afford, and then weigh the pros and cons. Millions of people enjoy the rewards of home ownership. But ultimately it is a personal decision based on your personal priorities.

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

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Mortgage Monday Rate Updates

July 15, 2013

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Mortgage Monday Rate Update – July 2013

We’ve been doing these Mortgage Monday Rate Updates for going on two years now, and haven’t had much movement the entire time… but finally, there’s actually some movement to report. For those that are shopping for a new house, or looking to do a refinance (or even just a simple mortgage renewal), rates and numbers are an important part of the mortgage equation. When rates change even the slightest of percentage points, it could cost or save you thousands of dollars. Every once in a while, here on the Mortgage Monday posts, I’ll update you on what’s going on in the world of mortgage rates.

  • The Bank of Canada interest rate continues to be stuck at 1.00%.  The next meeting is in a couple of days, but indications are it will continue to stay where it is for a while yet.
  • The Bank of Canada prime lending rate is also holding steady at 3.00%. It has also been holding steady since Fall 2010 – if the bank rate goes up, the prime lending rate will follow.  We probably won’t see this start to move up until late 2013 or even 2014.
  • The qualifying rate (the rate you would need to qualify at for a variable mortgage) for a 5-year mortgage is still 5.14%. With fixed rates starting to rise again, Canadians may again look to the variable rate mortgage for long-term savings.
  • The current best variable rate (can change on a daily basis) is still in the prime-0.40% (2.60%) ballpark, though many lenders are currently offering in and around ‘prime’ as their variable rate.
  • The current best 5-year fixed mortgage rate (this can change daily) has started to creep upwards over the past month and is now in the 3.29%-3.59% range (for a full-featured mortgage, and closer to 3% for a limited, no-frills mortgage), depending on qualifications and options. Again, always contact your mortgage broker for current best rates and options for your situation (and as we’ve talked about previously, The Best Mortgage Rate is Not Always the Best Option).
  • While the “hot term” in Canada these days may be moving away from the 10-year and back toward the more common 5-year term, the full-featured 10-year fixed mortgage continues to be popular with rates continuing to stay below 4% (check out my posts from last year on the 10-Year Mortgage Below 4% and Should You Consider a 10-Year Mortgage?).  Based on the history of lending rates, locking in for 10 years at below 4%, or 5 years for around 3% is nothing short of fantastic.

While I’m happy to provide an update on what’s going on as rates, if you’re interested on getting personalized mortgage advice, speak to your favourite mortgage broker who can help you decide the best rates and options for you.

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

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