Author Archives: familylending

The Costs of Closing on a Home

Did you know that in addition to the downpayment and mortgage, you’re also responsible for any miscellaneous closing costs associated with your home purchase? These fees can vary in price, but all must be paid prior to taking possession of your home. If you’re currently in the market for a new home, now’s the time to consider these hidden costs so that you can incorporate any additional expenses into your budget.

Eight Closing Costs to Keep an Eye On

1) Appraisal Fee
Your mortgage lender or mortgage default insurer may require you to provide a property appraisal prior to lending you mortgage monies. This appraisal will determine whether the selling price of your new home is reasonable based on current market conditions. Home appraisals can cost anywhere from $300 to $500, depending on where in Canada you’re purchasing the property.

2) Sales Tax
If you’re planning to purchase a newly constructed home, or a home that has been substantially renovated, make sure you remember to factor in the HST or GST on top of the list price. Resale homes are not taxable. Luckily, most provinces have HST/GST rebates in place to help first-time home buyers recover some of these costs.

3) Home Inspection Fee
If you’re making an offer on a home, make sure that it’s conditional on the findings of a professional home inspector. Hiring an inspector is voluntary, but highly recommended. An inspection will help uncover any unexpected (and costly!) issues with your potential new home. Home inspections costs between $300 and $500.

4) Property Insurance
Property and content insurance protects your home and possessions against fire, theft, and weather-related damage. Insurance payments, like your mortgage payments, are ongoing so it’s crucial that you keep this cost in mind when building your budget.

5) Land Transfer Tax
The land transfer tax is based on the amount of money you paid for the land. What’s more, municipalities impose a yearly tax on land within their municipal boundaries.

6) Legal Costs
There are a number of legalities that you’ll need to cover when closing on your home. This could include notary services for conducting a title search, registration fees, and the preparation of your mortgage. These fees are normally well over $500, depending on the lawyer you hire.

7) Mortgage Life Insurance
This special type of insurance is separate from your property insurance and your mortgage payments. It is put in place to cover the cost of your mortgage in the event of death or severe illness.

8) Mortgage Default Insurance
If you’ve qualified for a high-ratio mortgage, (this is normally the case for home buyers with less than a 20% downpayment), chances are good that you’ll require mortgage default insurance from your lender. The cost is usually added onto your monthly mortgage payment and rates range from 1% to 3.25%.

Start building your home buying budget today. Consult with a FamilyLending.ca mortgage broker to learn more about these and other unexpected closing costs.

Chantielle Kennedy writer for Familylending.ca

How to Build a Better Budget

There are many challenges when it comes to creating a solid financial plan. Whether you’re saving to buy your first home or hoping to invest in some property updates, now’s the time to focus on balancing your budget. The sooner you develop a realistic budget, the easier it will be to stick to, and the sooner you’ll be able to realize your financial goals.

Are Your Ready for An Emergency?

When building your budget, it’s absolutely crucial that you set aside an emergency fund of money. Ideally, everyone should have at least one or two months’ wages set aside in a money market account in case of an unexpected surprise. If you don’t have enough money to set aside right now, that’s ok. Set a six month savings schedule that allows you to set a little bit aside every month in order to meet your emergency fund goal. The key is to build your emergency fund quickly, without straining your every day budget. The mortgage brokers at FamilyLending.ca recommend devoting a certain percentage of each pay cheque to your emergency fund until you’re comfortable with the amount you’ve saved.

What is an Emergency Fund For?

You should only withdraw money from your emergency fund when faced with an unexpected expense. (And no, a sale at your favourite store doesn’t count!). Things like major car repairs or an unexpected furnace malfunction are good examples of emergency expenses. If ever you’re forced to dip into your fund, make sure you remember to reinvest the following month so that you’re always prepared for the unexpected.

Should You Make More Or Spend Less?

Now that you have a buffer in place to help you deal with life’s unexpected emergencies, it’s time to focus on your daily spending. This can be tackled in one of two ways. Either you can make more money in order to cover your expenses, or you can decrease your spending. The mortgage brokers at FamilyLending.ca recommend focusing your efforts on downsizing first as this is the easiest option. Before you start eliminating little luxuries, try thinking of more affordable substitutions. For example, if you buy your lunch at a trendy bistro every afternoon, you could just as easily make yourself a delicious sandwich to take with you to work. These small changes will help you cut your expenses quickly and help you save more money over the long term.

Think About What You’re Gaining

Budgeting shouldn’t be just about sacrifice. It should also be about rewards. If you’re having trouble sticking to your investment and saving strategy, the mortgage brokers at FamilyLending.ca recommend setting a mixture of long- and short-term goals in order to increase you motivation. Saving for a downpayment on a home is a great long-term goal, whereas paying off your credit card could be a great short-term focus. It’s much easier to save for something when you know what it is, so try and decide on a number of important milestone purchases when working on your budget plan.

Increase Your Income Potential
Simply increasing your income isn’t enough to help you get out of debt or save for the future. You need to have a budget in place in order to handle the extra cash properly. Once you have a well-thought-out budget in place, you can start making changes that will enable you to make more income and improve your investments.

Build yourself a better budget, one dollar at a time. For more help with financial planning and investment advice, contact the mortgage brokers at FamilyLending.ca.

Also please contact one of Financial Advisors at FamilyLendingFinancial.ca

Chantielle Kennedy writer for FamilyLending.ca

Rolling the Dice, Fixed vs. ARM ( Adjustable Rate Mortgage)

Rolling the dice is perfectly acceptable when you’re in a casino in Las Vegas. I know from first-hand experience that playing “craps” in Vegas can be a rush. For those of you who may not be familiar with the rules or finer points of “craps”, and would like to give it a try next time you’re in Vegas, DO NOT ATTEMPT TO PLAY UNLESS YOU UNDERSTAND ALL RULES! Now that you’ve rolled your eyes and are thinking thanks for enlightening me Bozic, the fact is many do play without understanding all the rules. Why? Because that’s where the action is and where all the noise is coming from. The noise draws you to the table, and when you get there you think I want some of this. You find yourself placing bets, not even understanding what your odd’s are. You might even start mimicking the bets being placed by other gamblers at the “craps” table. You look down at the table and you’ve got all your bets covered. Come on shooter, make this a magical role. Then you hear the most dreaded words at a “craps” table, seven out…seven out. For those uninitiated that means all your chips are gone! That’s when you start thinking if you only had played blackjack instead you could have played for much longer. But that’s gambling and it’s a part of the experience. That’s okay for Vegas but maybe not so much so when choosing between a fixed rate mortgage and an ARM.

The reality is that many borrowers are rolling the dice today. I’m setting aside those borrowers that can withstand the rate variances, and have the stomach to ride out an ARM for 60 months. I just wonder about borrowers who truly don’t understand the rules of the game. I wonder if some borrowers are placing mortgage bets based on what their neighbor or co-worker did with respect to their mortgages. Maybe borrowers are being influenced today by advertising. The 50/50 mortgage is getting a lot of airplay today, and that product was designed for those that wanted to play it safe or safer. Maybe it’s all about today and they’ll worry about tomorrow, whenever tomorrow comes. Maybe all of the above plays a part in the decision-making process but the biggest influence is the brokers personal bias.

All I know is that at some point in the not too distant future rates are going up. The warnings and predictions have been there for all to see for some time now. For example, Bank of Canada Governor Mark Carney recently said the following, “Low interest rates today do not necessarily mean low rates tomorrow,” warned Carney. “Risk reversals, when they happen, can be fierce; the greater the complacency, the more brutal the reckoning.” There’s no ambiguity there, and I’m thinking he might be one of those people “in the know”. The way I look at it any five year mortgage, under 4%, is free money. It’s also 60 months of peace of mind for the borrower. I can’t help but think if borrower’s get squeezed by a rate hike, and then they ask you how did this happen, irrespective of the facts all they will hear is, seven out…seven out.

Until next time

Cheers

Boris Bozic.
Contact FamilyLending.ca for more information.

First-time Home Buyer Help: Mortgage Pre-Approvals and Down Payment Options

First-time Home Buyer Help: Mortgage Pre-approvals and Down Payment Options

Purchasing your first home can be a stressful experience. From listings to viewings, paperwork to inspections, there are a lot of things that first-time home buyers need to think about prior to making an offer on a potential home. Luckily, the mortgage brokers at FamilyLending.ca are here to help make your first time-home buying experience as easy as possible. This includes providing you with expert financial advice and assistance on the FamilyLending.ca blog. Today on the blog, we’ll help you understand the importance of mortgage pre-approval, as well as discuss the different types of down payment options available to first-time home buyers.

The Many Benefits of Mortgage Pre-approval

Securing a mortgage pre-approval is an important first step before purchasing your new home. Taking the time to obtain a pre-approval will demonstrate to sellers and realtors that you are a serious buyer, and could potentially help you during purchase negotiations.

A mortgage pre-approval will also help you set a realistic budget for your house hunt. This is because a mortgage pre-approval will tell you exactly how much money you can spend on your new home and what your mortgage payments will be. A mortgage pre-approval also allows you to lock in your interest rate for up to 120 days. With interest rates on the rise, it’s only logical that first-time home buyers should complete the mortgage pre-approval process as soon as possible.

Get A Mortgage Pre-Approval Now

Securing a mortgage pre-approval is easier than you think. The mortgage brokers at FamilyLending.ca can help get you pre-approved today – simply fill out our online mortgage pre-approval questionnaire to get the ball rolling.

Deciding on a Down Payment

There are many different down payment offers available to first-time home buyers. The following are three popular down payment options:

A Conventional Mortgage A conventional mortgage requires a down payment of at least 20% and involves either a fixed or variable interest rate. Conventional mortgages are the most affordable option since they don’t have to be insured against default.
Low Down Payment Insured Mortgage Don’t have a large down payment, but still want to buy a house? Then consider applying for a low down payment insured mortgage. Many lenders now offered this type of financing for both new and resale homes. These mortgages have a much lower down payment requirement than conventional mortgages – some are as low as 5%! The one big drawback to low down payment mortgages is that they must be insured to cover potential default of payment. These insurance premiums can be quite high, resulting in a higher carrying cost than that of a conventional mortgage.
Cash Back Mortgage

There are options where you may receive a Cash Back option to your mortgage. This type of mortgage allows the buyer to have as little as the closing costs and 1% down payment. They tend to carry a little higher interest rate (about 1 % higher than best rates). There are other options than using cash back mortgages and best to consult with your mortgage broker.

Using Your RRSP as a Down Payment The federal government’s Home Buyer’s Plan allows first-time home buyers to use up to $25,000 per person in RRSP savings for a down payment on a home. This means that a couple can pull a total of $50,000 from their RRSP to help fund their first home. This withdrawal is not taxable, provided you repay it within a 15-year period. To qualify, the funds you plan to use must have been in your RRSP for at least 90 days.

Talk to our Agents at Family Lending Financial for any of your RRSP questions or needs today!

Mortgage pre-approvals and down payment decisions are just a few of the factors you’ll have to consider when purchasing your first home. For more first-time home buyer help, consult with a FamilyLending.ca mortgage broker.

At FamilyLending.ca we do more than help with your financing, we make the whole home hunting process easier.

Chantielle Kennedy writer for Familylending.ca

Saving Strategies for Canadian Homeowners

Save Smart: How to Manage Money and a Mortgage

According to a recent Canadian Payroll Association survey, nearly 60% of Canadians don’t have enough money in the bank to cover even one month’s worth of necessary expenses. Too many homeowners are living on the edge of financial disaster, spending money that they should be saving. If you’re finding it difficult to save, now’s the perfect time to reassess your financial strategy, curb your spending, and improve your investment portfolio. Keep more of your money with these saving tips from the mortgage brokers at FamilyLending.ca.

Saving Strategies for Canadian Homeowners

Saving is easier than you think. All it takes is a little financial knowledge and foresight.

Saving Tip #1 – Pay Yourself Saving is simple when you don’t have to think about it. The mortgage brokers at FamilyLending.ca recommend setting up a savings or investment plan that automatically transfers money from your paycheque into your savings account. Not sure how much you should be saving? Start with 10% of your gross income. Whatever amount you choose, make sure you don’t spread yourself too thin.
Saving Tip #2 – Get Rid Of Debt Carrying consumer debt can really hurt your ability to improve your savings. Let’s pretend that you’re carrying a credit card charge of $1,000 plus 18% simple annual interest. Every year, you’re paying an additional $180 in interest charges. Pay off that debt and you’ve saved $180. That’s the same as investing $1,000 in something that earns an 18% return after tax. The more debt you carry, the more money you waste paying off high interest charges. Eliminate debt and you’ll automatically save more money.

Save Money on Your Mortgage

Are you paying more than you have to on your mortgage? Refinancing your mortgage could save you thousands of dollars. The mortgage brokers at FamilyLending.ca recommend refinancing your mortgage if:

Your mortgage rate is more than 2% higher than current rates, and you have less than 2 years until maturity. Remember to always check with your mortgage holder to determine if there’s a penalty for getting out of your current arrangement.
You’ve built up enough equity in your home. The more equity you have, the more likely you’ll be able to refinance and tolerate a floating or variable rate mortgage. This type of mortgage is known for offering lower interest rates, but unpredictable monthly payment requirements. Speak with your FamilyLending.ca mortgage broker to determine if this is an option for you.

Expect Ups and Downs When Investing

It’s no secret that too much risk can hurt your investment portfolio’s growth rate, but so can sticking to ultra-safe investments that pay one percent or less. When reassessing your investments, make sure that:

You’re in it for the long haul. Don’t chase every market fad in hopes of making a quick buck. Studies have shown that it’s long-term discipline that provides the highest average returns.
You diversify with a healthy mix of stocks and bonds. A good rule of thumb to stick to: the fixed-income holdings in your portfolio should equal your age. This is because as you get older you’ll want to be more conservative in your approach.
Know when to sell. The financial experts at FamilyLendingFinancial.ca recommend that no holding should make up more than 5-6% of your portfolio.

Need more help making senses of your money? Then contact the mortgage brokers at FamilyLending.ca. Or our financial gurus at Family Lending Financial are here to help you save.