| Wednesday, April 13, 2011
 Shawn Mooney (403) 945-8769 mortgages@shawnmooney.com
AIRDRIE, Alberta (403) 945-8769 | 
· Home prices seen 'creeping up' this year Apr 12, 2011 — The "tepid pace" of improvement in employment will result in more moderate increases in housing prices this year, according to a new report by real estate brokerage Royal LePage. · No rate hikes imminent, BoC signals Apr 12, 2011 — The Bank of Canada kept its policy rate of 1% unchanged Tuesday and offered no clues as to when hikes might be in the offing. · The hidden costs of buying a home Apr 11, 2011 — When you're buying a home scraping together enough for the down payment will take the biggest chunk out of your savings. Typically your regular mortgage payments will represent your greatest ongoing expense. Make sure, however, that you set aside enough money to cover the "hidden" costs associated with any home purchase. · Returns without the bricks and mortar Apr 11, 2011 — Want to invest in real estate without the hassle of becoming a landlord? Pretty much every advantage of buying property directly and renting it out can be achieved passively through REITS or funds invested in them. | |||||||||||||||||||||||||||||||||
| Tuesday, April 12, 2011
Shawn Mooney (403) 945-8769 mortgages@shawnmooney.com
AIRDRIE, Alberta (403) 945-8769 |
Three ways to free up monthly cash flow Let's face it - we can all use a little extra money in our pockets. While getting a raise or finding a higher-paying job may be in the cards for some of us, for the rest it's not as easy. That's why it's important to review your existing expenses every once in a while to uncover new ways to 'trim the fat'. Below are three areas you might want to target first:1. Car Insurance. As is the case with mortgages, when it comes to renew their auto insurance policy, most car owners opt to blindly renew with their existing insurance provider, rather than shopping around. If your policy is up for renewal in the coming months, you may want to do a bit of shopping yourself, or ask your insurance broker to do the legwork for you. Some policies differ by as much as $600/year or more - and if you switch your home insurance to a packaged policy, the savings can be even greater. 2. Communications Services. Most households spend the bulk of their discretionary income on communications - such as phone, cable, Internet and cell phones. If your communications bill has ballooned to a larger number than you'd like to see, it might be time to give your communications provider a call. It seems every week they're offering a different promotion that could end up saving you significant cash. Just call their customer service line and, if you have more than one service with them, ask if they can walk you through each one to make sure you're getting the best possible deal. Another option is to re-evaluate your services. If you haven't watched the movie channel in months, or could realistically get away with just using your cell phone instead of both a land line and a cell phone, trim away! 3. Bank charges. If you're the type of person who gravitates towards the nearest ATM - regardless of whether it's your home bank's or not - you may want to spend a bit of time tallying up your bank fees. If you're racking up ATM fee or overdraft charges, it may be time to re-evaluate the type of account you're using. For an additional monthly fee, many banks will increase the amount of times you can use Interac or external bank machines. Depending on how much you're currently spending in bank fees, the higher package may be worth the extra cost. 35 year amortizations are gone - but not entirely While Canada's tighter mortgage rules - which took effect on March 18 - saw the maximum amortization drop from 35 years to 30, that rule actually only applies to insured mortgages.Any mortgage has to be insured if it makes up more than 80% of the value of the home. So if you have a 20% down payment or above - or if you have more than 20% equity in your home upon renewal - you don't require the help of CMHC or its counterpart, Genworth Financial. Technically, that also mean you should be able to get your hands on a 35-year amortization. The thing is, as we've seen with the tightening of previous mortgage rules, lenders seem to abide by the government's new guidelines whether they are offering insured mortgages or not. This time around, however, certain lenders are going out on a limb and continuing to offer 35-year amortizations for "conventional" (or uninsured) mortgages. One lender that comes to mind is ING Direct. Many lenders, however, are still opting to eliminate the 35-year amortization all together. If you're up for renewal, or in the market for a new mortgage, and would like to obtain a 35-year amortization, drop me a line and I'll be sure to tell you what your options are. Don't treat your mortgage like rent! For many first-time buyers it is easy to get into a new home and a mortgage and continue to treat the same way you did when you were renting. You can make a significant impact on how quickly you payoff your mortgage by just paying a little attention to it. While renting you get into the habit of paying your regular monthly rent bill month in and month out. With your mortgage it is important to remember that you have the opportunity to pay extra whenever you can. Yes, I know paying extra never sounds like a great idea. Trust me, in the instance it is a fantastic idea! By making additional regular payments you can significantly shorten the time it takes to pay off your mortgage and therefore save yourself thousands of dollars. Lets consider a real life example of a first-time buyer with an aggressive mortgage paydown strategy. Lets call them Jane and Joe. Jane and Joe realized that their mortgage was potentially going to be the biggest purchase they ever made (Yes, more expensive than their house if they took a full 35 years to pay it off). They asked their mortgage broker about some strategies to reduce their mortgage faster. Their mortgage broker recomended bi-weekly accelerated payments to start, that is they took the regular monthly payment (amortized over 25 years) divided that by two and made that payment every two weeks. As any of you who get paid every two weeks knows, that means that there are two months out of the year where they were making 3 payments. The net effect of this was to reduce their amortization to about 21 and a half years. Joe really liked the idea of getting rid of their mortgage faster and once he got into the house and established their budget he started looking for other ways to accelerate the mortgage paydown. The couple had a water cooler that they had brought from their apartment that cost them $26/month, they also had those 'free' (for the first 3 months) movie channels that actually cost them almost $40/mo. Joe quickly removed both of these expenses and called his bank to increase his bi-weekly payment by $50 (now they were down to about 18.x years). The couple took their tax refunds over the next 3 years and applied them to the mortgage each year (down to under 14 years now). They had originally taken a 3 year term at 7.15% in 2000 and when it came up for renewal they were fortunate enough to obtain an interest rate of 4.49% for a new five year term. They kept their payments the same as the previous term so now they were paying off a substantial portion of principal each month. This combined with the application of more tax refunds left them in a spot where today (2011) they are now mortgage free! Now you may not want to be quite as aggressive as Joe and Jane, but the point is that with a little bit of effort and focus you can make a substantial impact on the amount of interest you pay over the life of the mortgage without significantly affecting your lifestyle. Don't get lured into costly credit monitoring services With the recent influx of household debt levels and identity theft, there’s been a lot of talk about the importance of keeping tabs on your credit report. Equifax, TransUnion and now some of the major banks, like RBC, are offering services to help you keep up-to-date on your credit activity while offering you informative reports. These credit monitoring services range in price - usually between $14 and $17 per month and, in my opinion, aren't completely necessary.While they don't make it easy, the major credit bureaus - Equifax and TransUnion - are required to offer you a free version of your credit report once per year. The catch is that you have to provide photocopies of government identification, fill out a request form and either fax or mail it in. You'll receive your credit report in the mail in a week or more. The free report you receive also won't include the information you're likely most interested in your score. Instead, it will simply offer a detailed list of all the loans, lines of credit and credit cards under your account, as well as their balances (as of the last time they were monitored) and their R rating (an R1 rating means you're paying it on time). To obtain your Beacon score (the number banks and lenders use to approve you on a mortgage), you’ll have to pay somewhere around $10 extra. There are online options, but they'll likely cost you a bit more - around $23 if you want both the report and the score available immediately online. Whether you opt to go for the online services or the cheaper snail mail versions, a staggered check of your credit report - one of your TransUnion report at the beginning of the year, say, and an Equifax check six months later - should allow you to nip any suspicious activity in the bud. If you do end up finding an error, make sure you report it to the credit bureaus immediately, to prevent further harm occurring to your credit score. | |||||||||||||||||||||||||||||||||||||
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