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Monday, February 25, 2008

Mortgage Pre-Approval A Mortgage Pre-Approval: A Smart First Step When Looking for a Home Mortgage Pre-Approval

Mortgage Pre-Approval

A Mortgage Pre-Approval:
A Smart First Step When Looking for a Home

With the spring home buying season just weeks away, getting a pre-approval for mortgage financing before you start to look for a home is a smart move.

With a pre-approval, you’ll get a clear-cut sense of how much you are eligible to borrow. A pre-approval also assures you of a locked-in mortgage rate for a set period – so there is no risk of any interest rate increases while you are house hunting. The great news for those who turn to a mortgage broker is that a broker may be able to obtain a longer pre-approval rate hold.

Keep in mind that the property you intend to purchase – along with your supporting information (such as income, down payment and employment history) – has to meet the financial institution's criteria to be approved for lending. Also, a pre-approval is not a guarantee of financing, and does not eliminate the need to make a conditional offer.

If you are planning on searching for a home this spring, call us today to get pre-approved. He or she can get you an extremely competitive interest rate and length of rate hold – you’ll soon be on track to finding the home that’s ideal for you and your family.


Monday, February 18, 2008

RRSP Strategies

RRSP Strategies

Mortgage brokers weigh in on key RRSP strategies

RRSP season is here and at this time of year, Canadians grapple with issues about finding money to contribute, deciding what to invest in, and determining whether to forfeit the RRSP contribution in lieu of the ‘saving for a house fund’. We offer the following suggestions:

Short on money? Consider your home equity to maximize your RRSP contribution.
Higher real estate values may offer a chance for many to maximize their RRSP contributions by tapping into existing home equity. Of the almost $526 billion in RRSP room available to Canadians in 2006, only $74 billion was actually used, according to Statistics Canada. With a home equity line of credit, a homeowner can withdraw funds at relatively low interest rates on an as needed basis for the purpose of increasing RRSP contributions, including unused contributions from previous years.

Planning to buy a home in 2007? Make a contribution to your RRSP.
Contribute to your RRSP then use up to $20,000 ($40,000 per couple) of your plan’s accumulated assets to purchase or build a home. Under the Home Buyers’ Plan (HBP), the Canada Revenue Agency lets first time homebuyers access their retirement savings without tax consequences. Funds in your RRSP from previous years may be accessed right away. Contributions made to your RRSP by March 1, 2007 can be withdrawn after a period of 90 days, and the resulting tax refund can be used towards a down payment.

Sunday, February 17, 2008

Check the pulse of the Canadian Economy

To check the pulse of the Canadian Economy,
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Monday, February 11, 2008

Looking for a down payment on a home? Check your RRSPs

Looking for a down payment on a home? Check your RRSPs

If you’re a first-time homebuyer, with the federal Home Buyer’s Plan you may be eligible to withdraw funds from your registered retirement savings plan (RRSP) for a down payment when buying or building a qualifying home. Under the program you can withdraw up to $20,000 (or, up to a maximum of $40,000 per couple) without tax penalties.

Here is a basic overview of some of the rules:

  • You must be considered a first time homebuyer, i.e. you cannot have owned an owner occupied home in the previous five years.
  • You must be a Canadian resident.
  • The property purchased must be for a principal residence.
  • The RRSP must be repaid within 15 years, with minimum annual payments of 1/15th of the withdrawn amount.
  • Funds must have remained in your RRSPs for a minimum of 90 days before they can be withdrawn under the Home Buyers Plan.
  • You will have to complete Form T1036, “Home Buyers Plan (HBP) – Request to Withdraw Funds from an RRSP” available at the Canada Revenue Agency website in the RRSP section.

No RRSPs? We can show you how to establish an RRSP with borrowed funds, and use the resultant tax refund for a down payment.

Tuesday, February 5, 2008

Annual State of the Residential Mortgage Market in Canada.

Annual State of the Residential Mortgage Market in Canada.

To start the online presentation, click here

To download the report, click here

Monday, February 4, 2008

Tips for Paying Off Your Mortgage Faster – Part 1

Paying Off Your Mortgage

Tips for Paying Off Your Mortgage Faster – Part 1

For most Canadian homeowners, paying off their mortgage as quickly as possible is a top priority. Paying down extra principal in the early years by whatever means possible can shorten the life of your mortgage – and dramatically lower the interest you'll pay over the long haul. Here are a few tips on how to make this happen:

1. Increase your payment annually to the most you can afford
The upside is that most lenders will allow you to reduce it again to the previous level if it turns out to be too great a burden or your circumstances change.

2. Prepayments give great return on investment
If, for example, you pay an average of 6.0% in mortgage interest, for each $1,000 by which you reduce your mortgage principal, you will save $60 in after tax cash every year.

3. Utilize your RRSP-driven tax rebate as a mortgage prepayment method
Even if you can only prepay annually, make sure tax refunds are set aside for paying down your mortgage. Many Canadians borrow (at prime) to buy an RRSP to ensure the maximum rebate. When applied to the mortgage principal, this refund is a "gift that keeps on giving". Combining the refund with the tax-free interest earned on the RRSP over the subsequent years will quickly outpace the short-term interest costs of the RRSP loan.

4. Increase the frequency of your payments
Make accelerated bi-weekly payments to get a "free" principal reduction equivalent to one full mortgage payment every year — painlessly.

Tips for Paying Off Your Mortgage Faster – Part 2

Paying Off Your Mortgage

Tips for Paying Off Your Mortgage Faster – Part 2

Last week we noted that homeowners have much to gain by paying off their mortgage as quickly as possible. By paying down extra principal in the early years of a mortgage, you can dramatically lower the interest you’ll pay throughout the life of the mortgage. Here are some additional tips on how to make this happen:

5. Make use of double-up privileges wherever possible
Tell yourself that you will "skip-a-payment" whenever necessary... then skip only when you absolutely must.

6. Round your payments up
By adding even a nominal amount of say, $10 per payment, the amount of interest you are saving will be unbelievable, and the extra money is relatively painless to part with.

7. Pay a lump sum whenever possible
By decreasing the principal of the mortgage, your payments will not be allocated as much to interest, thereby accelerating the end of your mortgage.

8. Keep payments the same when mortgage rates have fallen
If the payment amount has not been a problem so far, then keep it the same, thereby paying down the principal faster.

9. Raise payments in line with increased income on an after-tax basis
If your income increases, don't keep your mortgage payments the same. Although the disposable income may be fun to spend on unnecessary luxuries in the short-term, the long-term benefits of being mortgage free faster a far outweighs the short-term sacrifice.

Sunday, February 3, 2008

5 Trade Up Mistakes To Avoid

5 Trade Up Mistakes To Avoid

Unlike the experience of buying a first home, when you're looking to move-up, and already own a home, there are certain factors that can complicate the situation. It's very important for you to consider these issues before you list your home for sale.

Not only is there the issue of financing to consider, but you also have to sell your present home at exactly the right time in order to avoid either the financial burden of owning two homes or, just as bad, the dilemma of having no place to live during the gap between closings.

Five Strategies

In this report, we outline the five most common mistakes homeowners make when moving to a larger home. Knowledge of these five mistakes, and the strategies to overcome them, will help you make informed choices before you put your existing home on the market.

  1. Rose-coloured glasses
    Most of us dream of improving our lifestyle and moving to a larger home. The problem is that there's sometimes a discrepancy between our hearts and our bank accounts. You drive by a home that you fall in love with only to find that it's more than what you are willing to pay. Most homeowners get caught in this hit and miss strategy of house hunting when there's a much easier way of going about the process. For example, find out if your agent offers a Buyer Profile System or "House Hunting Service," which takes the guess work away and helps put you in a home of your dreams. This type of program will cross-match your criteria with ALL available homes on the market and supply you with printed or e-mailed information on an on-going basis. A program like this helps homeowners take off the rose-coloured glasses and, affordably, move into the home of their dreams.
  2. Failing to make the necessary improvements
    If you want to get the best price for the home you're selling, there will certainly be things you can do to enhance it in a prospective buyer's eyes. These fix-ups don't necessarily have to be expensive. But even if you do have to make a minor investment, it will often come back to you ten-fold in the price you are able to get when you sell. It's very important that these improvements be made before you put your home on the market. If cash is tight, investigate an equity loan that you can repay on closing.
  3. Not selling first
    You should plan to sell before you buy. This way you will not find yourself at a disadvantage at the negotiating table, feeling pressured to accept an offer that is below market value because you have to meet a purchase deadline. If you've already sold your home, you can buy your next one with no strings attached. If you do get a tempting offer on your home but haven't made significant headway on finding your next home, you might want to put in a contingency clause in the sales contract which gives you a reasonable time to find a home to buy. If the market is slow and you find your home is not selling quickly as you anticipated, another option could be renting your home and putting it up on the market later - particularly if you are selling a smaller, starter home. You'll have to investigate the tax rules if you choose the later option.
  4. Failing to get a pre-approved mortgage
    Pre-approval is a very simple process that many homeowners fail to take advantage of. While it doesn't cost or obligate you to anything , pre-approval gives you a significant advantage when you put an offer on the home you want to purchase because you know exactly how much house you can afford, and you already have the green light from your lending institution. With a pre-approved mortgage, your offer will be viewed far more favorably by the seller - sometimes even if it's a little lower than another offer that's contingent on financing. Don't fail to take this important step.
  5. Failing to coordinate closings
    With two major transactions to coordinate together with all the people involved such as mortgage experts, appraisers, lawyers, loan officers, title company representatives, home inspectors or pest inspectors the chances of mix-ups and miscommunication go up dramatically. To avoid a logistical nightmare ensure you work closely with your agent.