Ask Angela: Beware your home is not an ATM !!!!!

Beware your home is not an ATM !!!!!

Almost on a weekly basis, I get a call. Usually from a senior, telling me the most heartbreaking story. It is the same story, just different events with different people, with the eventual outcome is loss of family home. So what is the story I get?

I get a call, asking me if I could help them with their big problem.  The story goes, something like this.  About 5 years ago. there was a sickness, accident or loss of spouse. They run into money problems and refinance the family home. They may refinance in another couple of years, to pay the maxed out credit cards and bills, since they haven't solved their original problem of loss of income. They are virtually living on borrowed money. Then retirement happens or more importantly the CPP cheques arrives. Sticker shock hits them because it is less then they would have ever expected.  Mortgages need to be paid and the deeper in debt they go.  By the time they contact me, it is too late for me to do anything. They are over extended with no way to pay.  Sometimes family members can be called upon to help- but most families do not have those resources.

The senior walks away with huge losses, including the family home for which they worked so hard for. The stress, the guilt of losing the family home weighs deeply.

There are good uses for refinancing your home, but while investigating, always look ahead in time. Will you be able to make the payments in a few years? How about 5 years down the road? How about if you should get sick or lose a spouse.  It would be wonderful to have that magic mirror to see your future, but, you still need to do risk management to foresee what you can.

What other options are there instead of refinance?  Living modestly until the hard times passes?  If you are over 55-  a CHIP Reverse Mortgage may be the better option? Sell the home earlier and buy an affordable smaller house or condo, that can be paid outright leaving no mortgage payment?

An Accredited Mortgage Professional, is an excellent person to ask about your options. Ask them to also do a risk management study on all your options. Be informed and make your decisions with your head and not your heart.  Ultimately it will be your decision, be wise.

If you are or know of anyone struggling with these types of scenarios, help them help themselves, give them a contact name of a trusted Accredited Mortgage Professional.

Angela Kroemer Accredited Mortgage Professional
akroemer@mortgagegroup.com
250-650-4182

 

A Canadian Market Overrview- Canadians lost over $41M by not shopping around!

2013 Mortgages: A Canadian Market Overview infographic

  <a href="http://tiny99.com/765848

">Source</a>

 

 

Beautiful Performance

Attraction's performance from the "Britain's Got Talent"

7 Steps to Buying Property Privately

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Angela Kroemer 

Accredited Mortgage Professional
www.KroemerMortgages.com
akroemer@mortgagegroup.com

250-650-4182

7 Steps to buying property privately
If you decide to buy property privately without the help of a real estate agent, you need to understand how the process works. In this concise, but informative, buyer’s guide, we explain each step of the way to reaching your dream – to put you on the right track and hopefully make you realize that buying real estate privately is neither very different from using an agent, nor as complicated as it may seem.

Step 1: Work out the price bracket you can afford
This may sound obvious, but you would be surprised how many people actually overstretch their budget when buying a property, only to find it difficult to keep up with mortgage payments or realize that they have no money left over for any necessary property renovations.

Consult with a Mortgage Professional, they can easily tell you what you qualify for and how much you can afford based on your income, liabilities and credit report. Also how much of a downpayment you will need, as well as closing costs.

By getting pre-approved for a loan, you will know where you stand.

Keep in mind that this total sum will have to cover the purchase price, transaction fees and taxes and any immediate work you will have to do on the property before you can move in.

Step 2: Find out which areas you are interested in

Do some homework on the areas available. Browse the Internet for information on those areas that catch your interest. Also, use the Internet to make a quick search for property for sale online, to get an idea of what properties are available in your price bracket and where they are located.

Eventually, you’ll have to make the trip and visit the areas you are interested in for yourself. It’s best to drive around so that you can get a better feel of the areas and their surroundings. On your way, keep a lookout for services such as shops, schools, medical facilities etc. It is also a good idea to visit at different times of the day and on different days to get a better idea of traffic conditions, weather and so on.

Step 3: Search for properties in your areas of interest

The best – and most convenient – place to start searching for your property is the Internet of course.

If you don’t find what you are looking for online, you could check the classified adverts in local newspapers or even drive around the area looking out for ‘For Sale’ signs.

There are several companies that have For Sale By Owners. As you can see there are no shortages in For Sale By Owner advertising.

http://comoxvalley.en.craigslist.ca/reo/

http://propertyguys.com/search/?k=courtenay%2C+BC

http://bcforsalebyowner.com/city/Courtenay

http://www.forsalebyowner.ca/listing/house-for-sale-courtenay-BC/123592

http://www.bcislandhomes.com/

http://comoxvalley.kijiji.ca/f-real-estate-houses-for-sale-W0QQCatIdZ35

http://www.usedcourtenaycomox.com/classifieds/house-for-sale

http://www.homesbyowner.com/courtenay

http://comfree.com/homes-for-sale-courtenay


Step 4: Schedule viewing appointments with the property owners
Once you have identified one or more interesting properties, call the owners and get as much information about the property as possible over the phone. Choose the ones you want to visit and arrange a time with the owners for a viewing. Before your property inspection visit, you should come up with a checklist of points to look out for. This property inspection checklist I have prepared is a good place to start.

When you visit a property in the presence of its owner, it is common to feel like you are intruding into someones life, especially if the property is being lived in. However, remember that as a buyer it is your job to inspect the property thoroughly and that the owner actually expects you to do this. Naturally, politeness and common courtesy will go along way in this situation.

Most importantly, don’t shy away from asking the owner any questions you may have. Be sure to find out:
the age of the property
how long the seller has owned it
why the house is being put up for sale
how much condo or strata fees are (if applicable)
the location of and distance to nearby services
which furniture or fittings will be sold with the house (though remember you are buying a house, so don’t be swayed by fancy extras)

Step 5: Get an independent evaluation of the property (optional)
Although this is really an optional step, it is highly recommended that once you are very interested in a property, you have it inspected by a qualified Home Inspector or have an Appraisal done. This will give you an objective appraisal of the property, tell you if the property is overpriced, and even point out any important things you might have missed.

If you are mortgaging the Property, you might want to coordinate with your mortgage professional as most private sales will need an appraisal done, by the Lender, usually paid by you. So, unless you want to pay twice, ask your mortgage professional about the Appraisal. A Home inspection can be done beforehand, by you or a qualified home inspector, for your piece of mind.

Step 6: Negotiate the price and terms of the sale

There is no reason to shy away from negotiating when you buy property. If the owner already has the home as low as they will go ask for other items like property taxes paid till end of year, home professionally cleaned upon your move in, lawnmower and outside tools (if needed).

How much you can negotiate price-wise will largely depend on three things:
how long the property has been on the market
how urgently the seller wants to sell
and how much interest the property is attracting from prospective buyers
if the home inspection discovers problems with the house
most private sales, are at the lower dollar figure, so low balling on the offer will not work

Keep in mind that by selling privately, the seller is saving thousands of dollars in real estate agent fees, so, in a private sale, check to see if the discount is already there. The seller may also be more willing to drop the price a bit if they have demanding sales terms that you can accommodate (for example either a very short or more drawn out transaction period).

Once you have agreed upon a price and upon a date when the sale will take place, you will sign a Promise of Purchase and Sale Agreement with the seller before a Lawyer or notary, laying out all the terms of the sale, and pay the seller a deposit on the property. This will guarantee you the right to buy the property at the agreed price for a limited time (usually around 3 months) while your lawyer reviews the transaction and you make the necessary financial arrangements.

Step 7: Always have different lawyers to conclude the sale

Once your lawyer has made the necessary research about the property and gives the all clear for the sale to go ahead, have your lawyer send the documents to the sellers lawyer, to be signed. All mortgage documents should also have been sent to your Lawyer.

Ask Angela- Basics of Getting Your Home Ready To Sell

Ask Angela
Question: We are selling our home. How do we get our home ready to sell?

Answer: Depending on the condition of the home there could be several things you should do. For starters:

- walk through your house as if you were going to buy it today. Have paper and pen ready and jot down any flaws or blemishes you see.

-fresh paint is essential if you have not painted in the last 2 years. Keep the colors neutral, now is not the time to experiment with color. If you have previously painted and all the rooms are a different color, you may want to repaint to make all rooms the same.

-get in a cleaning team and wash everything down. Dead bugs in the ceiling lights are not attractive and can turn a buyer off.

-potential buyers will look in your cupboards, under sinks, closets, clean and tidy those areas.

-declutter your home even if it means renting a storage unit for awhile.

-change out any nasty rugs. If they are old replace them.

-if the potential buyers are serious they will hire a home inspector, that will find the obvious flaws, so address those flaws before hand. (leaky plumbing, saggy floors, roof leaking)

-your yard. Make sure all plants and trees are well pruned, alive and healthy. Grass needs to be cut and edges weed whacked. Hire a yard maintenance service to tame your yard and to cut it weekly.

 When you think your house is ready to sell, get a neighbour, friend or family member to walk though your house. Tell them to be brutally honest, they should be able to pick up a few more flaws, and you will thank them when your house gets sold fast.

　
Questions or comments  akroemer@mortgagegroup.com 

Ask Angela- Use of UCCB and CCTB as Income Qualifying For Mortgage

 

 

Ask Angela

Question: I am told that we can use the Universal Child Tax Benefit and the Canada Child Tax Benefit as income to help qualify for a mortgage. Is this true?

Answer: Yes, this is true, and it does help families purchase their homes as the amount can be substantial, but there are a few rules to follow.

For the following calculations, I will use the 5 year fixed term, as this is one of the most popular terms used in today's mortgages.
Any questions or comments? akroemer@mortgagegroup.com

UCCB- Universal Child Tax Benefit is for children under the age of 6 years and is paid in installments of $100 per month per child.
To be able to use this payment, there must be 5 years of payments left, since many mortgages are a 5 year term. If the child is under 1 years of age then we can use this payment.

CCTB - Canada Child Tax Benefit
- is a tax-free monthly payment made to eligible families to help them with the cost of raising children under age 18.
This follows the same rules as the UCCB, needing 5 years of payments remaining. So any child under the age of 13 in your family we can use their part of the payment.


What is the purpose of Private Lenders?

Ask Angela

Question: What is the purpose of Private Lenders, if you already have Banks and what you call Mono Lenders?

Answer: Private Lenders are becoming more important in the mortgage world, as the Finance Minister tightens mortgage rules.

Here is a break down of the functions of various mortgage lending institutions:

Banks:  some banks will give mortgage brokers lower interest rates for the clients. They have a limited amount of options and products. Clients have to exactly fit with their products. The Bank can only offer their own products, options and services.  The bonus when dealing with a bank is that you can have all your banking in one place, ie credit cards, bank accounts, car loans and mortgages. Very Secure

Mono Lenders:  Usually on line and limited amounts of offices. Only product is mortgages. Pays commissions to brokers for clients.  Low over head.  Competition among the many Mono Lenders, keeps interest rates low. Each have their own niche. One may accept lower credit scores while another may have better prepayment options.
Governed by the same rules that all Canadian Banks must follow. Very secure.

Credit Unions:  They are community based, so may finance a project that no one else will if they can see the value in improving the community.  Credit Unions are based in the community, they will look at funding a mortgage, because they know the community and believe it is non risk, while other lenders in major cities have no idea what the community is like. There motto is 'if it makes sense they will finance it'  Great for small town lending, where the other bigger lenders will not lend because of the population limits.  Very Secure.

Private Lenders: More and more Canadians are not fitting in with the strict rules for mortgages. Private Lenders are becoming more popular.
There are a multitude of reasons why borrowers seek to obtain financing from private lenders.
These include:

• greater restrictions on traditional bank and trust company lending requirements, such as loans based on land value rather than borrower income;
• borrower’s that have a non-salaried income and do not therefore satisfy financial institutions’ structured lending guidelines;
• urgency to complete a transaction; and
• borrower’s with poor or no credit history rates
• construction loans

Private lenders vary from individuals loaning small amounts of money, either directly or through their RSP plan, to mortgage investment corporations that not only lend to individuals for personal borrowing, but also finance land acquisition and pre-development phases of residential construction projects.

As you can see there are many choices to choose from and your mortgage broker narrows down the list, to get you a well planned mortgage that will be truly unique and in the best interests for you.

Always, call a mortgage professional, to get a free no obligation quote.  It can only save you money.

Questions or comments-- akroemer@mortgagegroup.com
                                           250-650-4182

Ask Angela- Pre Approvals

Ask Angela- Pre Approvals

Question: I am so stressed out right now. Two months ago my husband and I, received a pre-approval to buy a home. We found one in our price range and went to our mortgage person. Our application was denied because we bought a brand new car a month ago and have payments on the car. What can we do?

Answer: When you get a pre approval it is for that moment, if your finances stay the same or get better (income raise), the pre approval should be good in most cases.
Pre approvals are just a estimate of what you can afford and whether or not you could qualify for a mortgage, based on the information you have disclosed. But, when you change your financial picture, as you did when you took on car payments,your application needs to be updated with the new information and sent in for another pre approval. With the new pre approval, you will find out how much you can spend on a house.
Unfortunately, you will have to search for a new house, less in value, or increase your down payment or pay off the car, to put you back where you were.

OTHER REASONS WHY YOUR APPROVAL WILL GET DENIED:

Looking at the main causes of home buyers going from pre-approved to declined during the mortgage underwriting process, you will find a number of reasons, it can fall apart. Disclose everything to your mortgage broker and when the lenders come back with questions, be prepared to show paper work and a full explanation. There is a fine line between not disclosing and fraud and since the Lenders do not know you personally, it may be hard for them to tell what your intentions were. Mortgage fraud is expensive to the lenders and they want to make sure they are not taking on any undue risk.

Follow these steps for disclosure and your pre approval should get approved:

- owing back income taxes to the government, most people do not disclose this to tier mortgage broker, because they never think about it.

- shopping for additional credit during the mortgage loan process. Many borrowers believe that once they've obtained the initial pre-approval, they are all good, their credit will not be checked again, leaving them free to take on new debts. Well, 99% of lenders today will recheck your credit the day before closing, looking for new debts that could cause you to no longer qualify for the home. Mortgage brokers should be telling their clients not to take on any more debt until the purchase of the home is done.

-undisclosed family relationship with your employer. They're different rules for home buyers who work for a family member. When you work for a family member, there's a higher chance of fraud because that family member may be more willing to lie about how much you earn or your role in the company. Always disclose this to your broker, especially if you are paid more because of family ties, The lenders may look at the average wage in your occupation and if yours is substantially higher they will look deeper or because it was not disclosed, they may not want to do business with you. Too much risk.

- having a relationship with the seller of the home. When a home buyer and seller have a relationship, there's more room for side deals when it comes to down payment and inflating the value of the home. This makes lenders nervous. You see, lenders rely on an arm's length transaction, where the buyer and seller do not know each other, to make sure the buyer has done their due diligence in shopping for the home.

-making large undocumented deposits into your bank accounts. Most mortgage loans require 90 days worth of Bank Statements. So, if Uncle Fred gives you a large amount of money for your down payment because you are his favourite niece or nephew, get him to sign a gift letter to give to your broker, there must always be a paper trail for your deposited funds.

-a drastic change in your employment. This could include changing positions, changing employers, having your compensation structure change, or losing your job altogether. Changing jobs while you're in the middle of the mortgage process can make things more complicated and ultimately affect the credit decision. The lenders are looking for employment stability.

- Owing property taxes on any other property you own.

-not disclosing mortgages that are owed to private individuals.

-failing to disclose child support or alimony payments you're required to make

-failing to disclose or attempting to hide any other pertinent information.

- always be transparent with the lender through your mortgage broker. If you have forgotten a payment, like Dell or Easy home make sure you tell your broker, so they can update your application.

For questions or comments email akroemer@mortgagegroup.com

Is Your Bank Baiting You With Low Rates?

 

 

Is your Bank baiting you with low rates? Always get a second opinion with a mortgage professional. I have the rates and the options. Second opinions are always no obligation, free and I will show you how to save thousands of dollars on your mortgage with the options alone.
akroemer@mortgagegroup.com

How to Trash Your Credit Score in a Hurry

www.kroemermortgages.com

This is certainly a tongue-in-cheek article, but this is precisely what some people do to their credit without knowing how it  lowers the scores.   As mortgage brokers and mortgage professionals in the Comox Valley.  I am constantly telling my client what not to do, but I believe this article tells why in the best way adding humour to a dry and serious subject most people do not want to talk about,


You don’t need a good credit score, right? After all, do you really need lower interest rates? Plus, lower insurance rates are kind of over-rated anyway. There is no need for a mortgage or car loan too. Any mortgage broker or mortgage professional can tell you how to increase your credit score, but have you been told how to trash your credit score in a hurry?

If you are ready to really take your credit score down a notch or two, here are some solid ways to take your rating to new lows:

1. Pay Late
One of the best ways to bring your score down in a hurry is to pay late. Since payment history accounts for the largest chunk of your credit score (35%), paying late can be one of the best ways to drop your score.

Even better is if you can skip a payment altogether. Skipped payments can weigh on your credit score like few other individual items. It’s also worth noting that an account doesn’t have to be credit related in order to affect your score. Repeated missed payments or late payment made to utility companies or landlords can result in reports made to the credit bureaus. And never underestimate the power of ignoring payments altogether and having your account sent to collections.

Bigger payment issues, like foreclosure or filing for bankruptcy can result in a 200 to 300 point drop in your credit score. Now that’s the big time.

2. Add More Debt to Your Budget
Trash your score

The more debt you use, the lower your credit score. With credit utilization accounting for 30% of your credit score, you can do some serious damage just by running up the credit card bills. If you are squeamish about paying late or missing payments, you can live beyond your means and just add more debt.

If you begin using more of your available credit, your credit score will reflect that. Someone with a good credit score will try to keep credit utilization to no more than 30% of what’s available. But if you want to keep your score low, you need to pile the debt higher. Carry a balance from month to month, paying only the minmum or a very little more, and you can work on building up your credit utilization.

3. Ignore Your Credit Report
You can’t improve what you aren’t aware of. One of the best ways to stay in the dark about your situation, and to keep your credit score low, is to ignore your credit report. Your credit report is a history of your credit related transactions. However, sometimes the information is inaccurate. This inaccurate information can impact your credit score.

Now, if you’re committed to keeping a low credit score, you don’t need to even look at your credit report. No reason to dispute errors if they are helping keep your score down. Plus, ignoring your credit report can leave the door open for identity thieves. When one of these scammers open an account in your name, that can be a great help in bringing down your credit score.

 

 

4. Apply for Lots of New Credit
If you are running out of room on your current credit cards, you might consider getting a new credit card. Applying for lots of new credit can be a great way to bring your score down a little bit. It’s not as dramatic as missing payments, but this strategy still has its place.

When you apply for a lot of new credit, it can appear that you are trying to run up your balances. Several hard inquiries into your situation in the space of a few months can lower your score a little bit. Soft inquiries, like those for “pre-approved” offers won’t bring down your score, though. If you really want to create maximum impact, you need to get out there and apply for more credit.

Applying for new credit card can just take a few minutes, most big box stores have people set up to take your application.

 

5. Go Get a “Shady” Loan

The types of credit accounts that you have only account for about 10% of your credit score. However, every little bit helps when you are trying for the lowest possible score. One way to ding your credit a little bit more is to get a “shady” loan.

Payday loans and car title loans are valued differently from more conventional loans from respected lenders. These types of loans, along with sub-prime credit cards and cards from retailers, can weigh on your score.

Note- Car title loans is a loan against your car at places like pay day loans. Get a loan in less than a hour using your car title. |It is not the loans you get from a car dealership.


by Miranda

Mortgage Planning- Now And The Future

Ask Angela

Question:  Mortgage Planning, what do I need to know about planning a mortgage?

Answer: There are several steps to mortgage planning. I have outlined the steps briefly, please connect with me for any questions.

1.  make the decision you want to purchase a home

2. talk to a mortgage professional- get a pre approval on what you can afford now.
 Also, look into the future and discuss with your mortgage broker, if they haven't already asked you, what events may be happening in the next 5 years.  Will there be more children, will you retire, will you lose your job because of shut downs, will there be a sickness that will cripple the income?

Some life events you cannot plan for, but other events you can.

With the events you can plan for discuss with your broker.  Right now you may be able to afford a much more expensive house, but if you should start having children, or retire soon the payments may  not be affordable.

If you should lose your job or have an illness that will lower your income, Buying insurance may cover you until you are back up on your feet.

3. put a plan into action on what you need to do to purchase a home.

4. execute the plan, whether it is saving for a down payment, finding the right realtor or finding the right home.

5. now it is mortgage time. You have covered yourself as best as you can.

6. You now have a home.

Have Questions?
Want more information?

Connect with Angela at akroemer@mortgagegroup.com

Bank Rates vs Mortgage Broker Rates

 

Ask Angela

 

Question:  My bank just gave me a sweet deal.  The same rate as a mortgage professional quoted. Should I take the sweet deal my bank offered?

 

 

Answer:  With the limited information, I can give you general information on what to look for.

 

1)  What options came with the banks' deal?

 

2) Will the bank give you good prepayment options? Only once a year, anytime or none at all?

 

3)  What will the difference be in penalty calculations? The banks have higher posted rates which is the rate they use for penalty.

 

If you are not sure of any of the above, ask your bank.  Get your mortgage professional to figure out the difference of any of the above scenarios.

 

You may have a good deal or you may have a deal that will not be a sweet deal in the end.

 

Mortgage professionals always will give you free unlimited, unbiased quotes. 

 

Most people these days sign up for a 5 year mortgage, but need to change their mortgage before the 5 year mark, paying thousands in penalties.  It is much better to pay less than more.

 

Call for a mortgage consultation  250-650-4182

 

akroemer@mortgagegroup.com

 

 



Looking for a 2nd or Private Mortgage?

Can't qualify for a traditional mortgage? If you need a second mortgage, or private financing, call me today.

With all the mortgage changes over the past few years, its becoming more and more difficult to obtain a mortgage.

If your lender's told you they won?t renew your mortgage, you need extra funds and have equity in your home, or you need short term financing call me today.

Reasons for needing a second or private mortgage may include:
-Low credit score
-Prior bankruptcy
-High debt servicing
-Current lender won't renew your mortgage
-You're buying a home and can't get the amount mortgage you need
-Your home is being foreclosed
-You need some quick financing

For questions please call or email Angela Kroemer, Mortgage Professional with TMG The Mortgage Group Canada Inc.
250.650.4182
akroemer@mortgagegroup.com

or visit KROEMERmortgages.com

April 1-Switchback to GST/PST- Housing Market Effects?

 On April 1 2013, British Columbians will see the switch from HST to GST/PST.  Is there any savings for home buyers to wait until April 1 2013?

This is what is being said about the switchback to GST/PST:

-The switch back to GST and PST has been months of headaches for B.C. brokers, and an unwelcome brake on new home buyers waiting for the April 1 deadline.

-People buying new homes are holding off until April 1, so they can save on taxes. There is a savings to be had on new home construction.”

-B.C. homebuyers are waiting until April 1 to buy and save money, when that province’s HST reverts back to separate GST and PST.

 -The builders have been seeing this too,  adding that the concurrent cooling off of the once red-hot west coast housing market has contributed to a quiet winter for brokers.

But another side effect of the return to the GST and PST is the mountain of new paperwork and accounting.

 

What will be the savings?

The province’s harmonized sales tax is 12 per cent, consisting of 7 per cent provincial sales tax and 5 per cent goods and services tax. Given the option to pay 5 per cent instead of 12 per cent on a home worth hundreds of thousands of dollars, homebuyers are waiting the next few weeks – and delaying the usual spring bloom of business for brokers.

 

Ask Angela- Buying a Home in the US

Ask Angela

Question: While I was surfing the web, I came across a website, something about buying a home in the US and you were featured as one of the mortgage professionals, but of course when I have time to read about it, I can't find the site. Can you please send me that site.

Answer: This site is www.canadabuysouth.ca .
It was started to help Canadians find and buy property in the US or International(soon to come). The website is still growing, with the additions of international Realtors and financing.

It is very helpful for anyone who wants to source out a home in the US or internationally. Vacation home buyers, rental home buyers are eager to find the foreclosures in the States.

How do you find a Realtor in the States to help you find what you are looking for? You go to Canadabuysouth.ca.

How do you get the financing for the home. You go to Canadabuysouth.ca and find a mortgage professional for your province.

You can also contact me, tell me where and what you are looking for, I can introduce you to the Realtor that will look after you.

This website is unique as it brings everyone together in one place, with a common goal of helping you with a real estate purchase in unknown territory.

Did you miss the RRSP Deadline? Pay Down Your Mortgage Instead.

Making an extra payment on your mortgage is money in the hand, says Don Pittis. It's a safe, tax-free investment with a guaranteed rate of return. (iStock)

Did you miss the RRSP deadline?

That might not be a bad thing.

Pay Down Your Mortgage Instead.

In a volatile market, a mortgage is a safe investment with a guaranteed rate of return

Gosh, what an awful time to have to invest in an RRSP. Not that I'm saying don't do it. Just commiserating.

But on the bright side, that means there is finally something really good about being burdened by a mortgage. And it doesn't matter whether house prices keep rising slowly, shoot up in a bubble or if the bubble pops and they move in the other direction.

Let me explain.

Rule No. 1 of investing in RRSPs is "Don't lose your money." Essentially, there are two ways to win from an RRSP. The first is a straight bet that you will one day be poorer than you are now. The other is a tax break on your sheltered earnings.

 

 

The RRSP advantage

The first advantage of an RRSP reminds you of the old life insurance joke: "You bet you are going to die. The insurance company bets you are going to live. And you hope they win."

In the RRSP case, you hope you will get richer and richer as you get older but are betting that you won't. You are betting that, with a lower income in retirement, you will pay less tax on your sheltered savings when you pull them out of your RRSP account than you saved on your taxes when you put the money in.

The second major advantage of a tax-sheltered savings plan like an RRSP is that compound interest and capital gains can accumulate tax-free between now and retirement. If the investment shrinks, all you are doing is sheltering your losses. And in a tax-savings vehicle, that's crazy, because you don't pay taxes on losses.

The trouble is, right now, "Don't lose your money" is not such an easy rule to follow. Not with any certainty.

 

 

Safe vs. risky choices

In general, there are two kinds of RRSP investments. Safe investments that pay low interest and risky investments that may fall in value. Currently, neither is a sure thing. The safest investments — like GICs and the best-quality bonds — pay very low interest rates. That means safe investors suffer from the "real rate gap."

Real rates are not something we talk about a lot because during times of moderate inflation, they don't really affect our daily lives. Especially for working stiffs. You earn money, then you spend it. And in general, while prices rise over time, incomes rise at about the same rate.

But when you are tucking away cash with the plan of spending it 20 years from now, suddenly, everything changes. Real rates really matter.

 

Losing money while you save

The real rate means the difference between what your money will buy now and what it will buy a year from now. To find out whether you are winning or losing on your investment, you calculate how much you earned in dollar terms and then subtract the rate of inflation.

Right now, short-term GICs are paying well below the annual rate of inflation. Longer-term GICs pay a little more, but if interest rates rise, you will likely be stuck well below the rate of inflation over the investment's term. The final result? Safe investments are losing you money.

So, what about putting your money in stocks? Odds are, in the very long term, they are going to go up. But clever people are warning that stock returns are not going to be good over the next decade.

"You may keep up with inflation, but not much more," wrote John Coumarianos in a recent commentary for the Wall Street Journal's MarketWatch website.

Worry-free investment

If you have a mortgage, rather than choosing between a pittance and a nerve-wracking risk, you have a third choice. You can make an absolutely safe, tax-free investment with a guaranteed rate of return by paying off your mortgage.

Elsewhere in this special series on retirement planning, there is a warning about relying too much on real estate to fund your retirement, and that is a perfectly valid piece of advice.

Certainly, it is best to buy a house that you can afford. And, of course, it is always possible to sell your house and buy something smaller, using the difference to pay down your mortgage. But if you already have a mortgage, there is only one way out: you have to pay that money.

Also, the money you owe on your mortgage does not change with the value of your property. Whether the value of your house doubles or falls by half, the money you owe on your mortgage will always be with you. In most parts of Canada, even if house prices tumbled enough that selling your house would not cover the cost of your remaining mortgage debt, you would still owe the balance.

All this means that if you have a big mortgage, at RRSP time, that makes you a very lucky person.

The profits of paying it off

All the banks have mortgage calculators.

Every mortgage is different, and you can use the calculator to find out your own rate of return, but here is one example:

If you add a one-time extra payment of $5,000 during the first year of a $200,000, 25-year mortgage with a four per cent interest rate, it shortens the length of your mortgage payments by an entire year. In other words, a $5,000 pay-down in the mortgage earns more than $12,600 in tax-free cash that the mortgage holder would otherwise have to pay.

In the current economic climate, homeowners with a mortgage are the lucky ones, says Pittis, because they can delay the difficult decision of where to invest their hard-earned retirement nest egg. (Bruce Reeve/CBC)

If you have a four per cent mortgage, it means you are effectively getting a safe and reliable four per cent on your money — and potentially more if rates rise, which they are likely to do since, as these historical charts show, mortgage rates are already hovering around a 40-year low.

    

I say this pay-down "earns" — rather than "saves" — you money, because unlike what you "save" by buying a dress or suit jacket on sale, this is real money in your pocket. For every year you reduce your mortgage, it is like being (in the case above) $12,600 richer, and since you are not used to having it, you can pour that cash into a tax-free account.

The down side? Paying down your mortgage is only a temporary solution. Paying extra cash on a mortgage every year makes it disappear fast. The more you pay, the sooner you will have to make the difficult decision about where to invest your hard-earned retirement nest egg. RRSP or TFSA? Safe investments or stock?

But for now at least, if you have a big mortgage, you are one of the lucky ones.

By Don Pittis, CBC News

Posted: Jan 4, 2013 5:13 PM ET

 

3 Home Buying Clauses to Be Careful With

 

No matter how much you want that home, don’t drop these three important buying conditions.



 Homeownership has always been touted as the sure way to financial security.


No matter how anxious you are to own your own home, don’t rush the transaction. If you’re feeling pressured to make an immediate offer but haven’t taken the time to become familiar with the local market, you won’t know if you’re getting good value for your money. Worse, you may be tempted to do something not so smart in your emotional desire to "win” a bidding war. Take a breath.

 One of the conditions that’s quickly excised is the "financing condition.” Hey, you got a pre-approval, right? You don’t need that conditional on financing clause, right? Wrong! No matter how much you want that home, no matter how sure you are that everything will be fine, don’t do it.

Pre-approvals come with the proviso that they are financing approvals in principal only; they can be revoked by the lender if they are perceived to be a bad decision—if your circumstances change, or if the house appraisal is lower than the purchase price. And that’s why the "conditional on financing” clause is important.


Another clause you should always include is the "conditional on sale of existing home clause,” which eliminates the likelihood that you’ll end up desperate to find a buyer for your home because you’re having to carry two mortgages since your old haunt hasn’t sold yet. If you have to carry two mortgages for three or four months, you’ll be motivated to accept less than your house may be worth.

And don’t skip the "conditional on inspection” clause or you might end up with a house that’s falling down around your ears. Don’t let desperation to buy that house overcome your good sense. Ignoring the potential problems inspections are designed to ferret out can be horribly expensive.

Buying a home is a complex process. Don’t rush into it and don’t rush through it. You’ll likely have to live with your decision for a long, long time. Talk to some friends and family who have bought recently and try to get a feel for the process. Pay attention to the details. And ask lots of questions. The more you know, the better a homebuyer you’ll be.




From Gail Vaz-Oxlade

kroemermortgages.com

RRSP Deadline is March 1 2013

 

www.kroemermortgages.com

 

 

Top Tips for making the most of your retirement savings

 Everyone loves to save tax.  RRSP season is the perfect time to ensure you’re doing just that.
According to Stats Canada, Canadians collectively had $671,000,000,000* of unused RRSP contribution in 2011.
That’s about $30,000 for every working Canadian. Invested today, $30,000 could turn into $60,000** in 10 years time.
I don’t know about you, but that seems to me to be a fairly good incentive to consider what to save this year.
So if you’d like to do more saving for your retirement and, at the same time, save tax consider these three options.  Also for first time home buyers you can borrow from your RRSP- Tax Free - for your downpayment.
1. Make it a bill.

To turn your retirement savings into a bill you might want to consider a RRSP catch-up loan.

A RRSP loan can be an excellent way to take advantage of unused contribution room, generate tax-savings and jump-start your retirement savings.

Setting up a loan is straightforward.  Once you have the loan for the RRSP after 90 days you may be able to use the RRSP for your downpayment, even though you are still paying for that RRSP.

2. Get in the habit.

If you’re not ready to take the leap into a RRSP catch-up loan, consistent savings is where it is at.

In fact, the key to your long-term financial success and wealth is your ability to save. Consistent savings is also a great way to build for the future using the benefits of compounding and dollar cost averaging.

You can start small so you build the habit and set up annual automatic increases. It’s one less thing you have to think about and it removes the possibility that you simply won’t get around to it.

3. Dump in a lump.

Finally, did you receive a year-end bonus? If you haven’t already spent it, why not think about making a lump-sum contribution to your RRSP. You’ll create a tax refund for yourself that you can use later in the year.

Whichever way you save don’t miss the deadline
The deadline for contributing to your RRSP for the 2012 tax filing year is Friday, 1 March 2013.
The maximum RRSP contribution limit for 2012 is $22,970 (or 18% of your 2011 earned income) less, of course, any pension adjustment.
You can determine if you have additional RRSP contribution room by checking your last year’s Income Tax Notice of Assessment or by phoning the Tax Information Phone Service at 1-800-267-6999.
It’s not how you start, it’s how you finish
Whatever your retirement dream looks like, you can make it a reality by planning ahead and following a savings plan that is right for you.
www.kroemermortgages,com

RRSP's For A Down Payment-- Really?

 

 

If you are a first time home buyer you can borrow from yourself using your RRSP for your downpayment.  Every year you pay 1/15th  back and it goes right back in your RRSP without tax penalties.

 

Up to a maximum of $25000.00 for each partner.

 

If you have always worked and never bought RRSP's, you have a  lifetime of RRSP that you can borrow to buy RRSP's to catch up. 

 

 If you do not repay the amount due for a year, it will have to be included in your income for that year.

 

Additional reading  http://www.cra-arc.gc.ca/E/pub/tg/rc4135/README.html

 

Call or email me for specific information regarding your circumstances.

250-650-4182

akroemer@mortgagegroup.com

 

www.KROEMERmortgages.com

 

I am paid by the Lender.

Mom, Dad I Need a Cosigner for My Mortgage

Cosigner

A third party to a loan who provides a guarantee that a loan will be repaid. The guarantee by the cosigner reduces the risk that the lender will lose the money he/she has distributed to the borrower. The cosigner signs an agreement with the lender stating that if the borrower fails to repay the loan, the cosigner will assume legal liability for it. A cosigner may be an institution, but is often a relative or friend of the borrower, especially for personal loans. Persons with little or poor credit history sometimes cannot receive a loan without a cosigner.  A cosigner must list the promissory note as a liability on financial statements.

Now that the Canadian government has tightened up the mortgage rules, some parents are being asked to co-sign  a mortgage for their children.

Why Use a Co-Signer

1. Credit score not where it should be
2. a blemish on the credit report
3. Too much debt
4. No credit score
5. Not at job long enough
6. Messy divorce or separation


The Cons of Being a Co-Signer

Often, an adult child will ask the parent to co-sign, as a speedy way of getting a mortgage for a house and some parents have been told they will just be the mortgage for 1 year.  The facts are the lender does not have to release the co-signer at any time.  You may be on that mortgage for the whole 5 year term or whichever term you picked.  The reasoning is that the lender wants a sure thing, no risk when the co-signer with a proven credit track record is on the mortgage, there is less of a risk.

When you co-sign, it is as if you have to make that payment every month.  This means if the parent wants to take out a new mortgage for themselves, they may not be able to because of debt servicing.  Even though they have never made a payment for their child.  The lender must make sure there is enough money for both payments in case things go bad.

To get your name off as co signer, you may have to terminate the mortgage and have the child get a new mortgage in their name.  There are penalties for terminating the mortgage , is your child prepared to pay the penalty? If not, the parent may have to pay the  penalty to get their name off of the mortgage.

Nothing breaks down a family relationship faster than money.  The old saying never lend money to family- may come into play if something goes wrong. 

The Pros of Being a Co-Signer

There may be  pros to being a co-signer it just depends on what happens in the life of your family.  The  happy feeling of being able to help your children can turn 360 degrees in to being the worst decision of your life.  As there are no guarantees in life and what will happen, you have to decide that you can make those payments for the term of the mortgage no matter what happens.

If you plan on co-signing just for 2 years, only take out a 2 year term. That gives your child 2 years to get their credit score high enough to take on the mortgage by themselves.

It is nice to think about helping your children and your children will appreciate it, but make sure you look after yourself first.

True Story About Co-Signing

Many years ago, my father co-signed for a car loan for me. I had been married and had no credit score to my name.
At the dealership my father told the loans person that the loan was to be put into my name, as I was the one needing the credit rating,  The loans person agreed.
We signed the papers. I drove away with my nice new to me car.
Fours years later when I had finished paying off the car, my father received a nice letter from the dealership, thanking him for the business and paying the loan off in a speedy manner.
I checked my credit report and the loan had never been in my name.

So, the moral to this story is, if you think co-signing will help raise your child's credit score, it probably won't.  Their name may be placed in 2nd line and may not show up on their credit report at all.

Gardening: Plants in glass are post-holidays rage

 

As we look to add some warmth and colour in our homes after the bright and cheery Christmas season, there is a new trend sweeping the world with a different style of décor.

Glass containers – balls, baubles, vases and hangers – filled with easy-to-care-for indoor plants are all the rage.

They’re called aeriums, and they are filled with plants like tillandsias, succulents and other fun and carefree tropicals.

Aeriums need some indirect window light to ensure quality growth, but that’s about it.

All you truly have to do is mist tillandsias and air plants with warm water once a day, or for succulents, simply check to see if the media in which they are growing is somewhat moist.

In a glass environment, resilient tropicals just need a bit of misting or a moisture check once a week.

It’s really that simple.

I love the fact they are equally at home on a window sill, coffee table, desk or any convenient place in your home or office.

They can also hang in windows, from the ceiling or from decorative light fixtures.

The old terrarium look has been taken over by larger clear glass vases and bowls containing a single specimen plant displayed with artistic flair. All that’s needed is a bit of well-drained soil and some horticultural charcoal on the bottom and for a finishing touch a covering of moss, a creeping evergreen fern or colourful stones in the colours of your home décor.

For a very ‘in’ look, heart-shaped anthuriums with their beautiful foliage and vibrant blossoms can have the soil carefully washed off revealing colourful white and pink roots, and they can look beautiful for months sitting in a clear glass vase of water.

Peace Lilies (spathiphyllum) don’t perform quite as well, but they too look great displayed this way.

Hardy water plants, like water rushes (Jucus effusus) do very well in household situations. Both the straight and curly forms can expose their attractive white roots in a clear glass container of water.

This whole new trend of introducing beautiful plants in glass containers is catching on, not only because they are unique but also because the care they require is minimal.

Folks who previously had difficulty looking after plants can now relax and enjoy.

Almost all of these aeriums are self contained, fit into spots where traditional plants can’t and are tidy and clean. They are a lot of fun, and many garden stores now carry them for you to try.

Empty clear glass containers are also available if you’re feeling particularly creative to plant your own.

Aeriums are a nice and easy way to add warmth and life into your winter home.

Brian Minter owns Minter Gardens near Chlliwack.

 

How To Make A Baby = Awesome

How To Make A Baby = Awesome

Posted on Jan 15, 2013 in Other News

Canadian photographer Patrice Laroche surely will have no trouble explaining to his kids about the birds and the bees.
During his wife Sandra Denis’ pregnancy, the artist created hilarious explanatory photo series titled “How to Make a Baby”.
The creative couple planned and carried out their project throughout the whole period of 9 months, taking pictures in the exact same settings as Sandra’s belly expanded.
The pregnancy saga of Sandra and Patrice basically denounces all the traditional cabbage and thestork stories.
.

30 Wasteful Ways The Government Spent Your Money

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For taxpayers concerned with out-of-control government spending, 2012 started on a bright enough note. Last January, the Department of National Defence announced it wanted to buy 20,000 custom-printed stress balls for its staff. Once Defence Minister Peter MacKay caught wind of the plan, he quickly cancelled the contract, calling it an “unnecessary expense of taxpayer money.” Noble words, but it was a brief reprieve. As Maclean’s found once again when researching this project, whether it was Ottawa, the provinces, municipalities or the organizations they oversee, governments couldn’t help themselves when it came to doling out cash. What follows is but a fraction of the foolish, wasteful and blatantly stupid ways governments found to spend taxpayers’ money. To uncover this year’s 99 items we pored over press releases and auditor generals’ reports, sifted through proactive disclosure statements and delved into media databases across the country, ferreting out examples of spending that occurred in 2012 or came to light last year. There will be those who take issue with some items on this list, arguing, for instance, that funding rock concerts boosts the economy. But the reality is that at every level of government, we’re in far worse fiscal shape than we were even a year ago, despite all the talk of cutbacks and austerity. And as this list makes clear, those who control the public purse have yet to really change their ways.
Luxury hotels, hemp body cream and subsidized hip-hop concerts: our second annual list of waste shows spending by all levels of government is still out of control. Find 33 of those stupid things below. And check us out tomorrow to see 33 more stupid things your government did with your money.

Sports & Leisure — when blowing money is the name of the game

1 Bad slice: The City of Abbotsford, B.C. handed a $115,000 “one-time grant” to a struggling municipal golf course, claiming its problems stem, in part, from poor weather. In a report, city staff said “good weather” was among the things “being worked on” to turn it around.
2 Sore loser: Former Regina mayor Pat Fiacco expensed more than $4,000 worth of tickets to sporting events, including $1,055 for Montreal Alouettes season’s tickets, nearly 3,000 km away. The tickets were the result of a bet Fiacco made with former Montreal mayor Gérald Tremblay that the Saskatchewan Roughriders would beat the Alouettes in the 2010 Grey Cup. The Riders lost—and so did Regina taxpayers.
3 Cheap seats: Sam Katz, mayor of Winnipeg, is a big fan of the Blue Bombers, but apparently not enough to pay for tickets out of his own pocket. The mayor billed taxpayers $2,033 for a pair of season’s tickets, even though critics pointed out that other politicians, like Premier Greg Selinger, paid for their own sporting tickets.
4 Losing bet: Vancouver Canucks goalie Roberto Luongo clearly knows when to hold ’em and fold ’em. The B.C. Lottery Corp. paid him $160,000 last year for an endorsement deal that included a $10,000 entry fee into the World Series of Poker event in Las Vegas—pocket change for a man with a decade left on a $64-million hockey contract.

5 Le’go the money: Ontario’s Municipal Property Assessment Corp. spent $170,000 on a one-day team-building event that included an exercise playing with Lego.

6 Out of bounds: The City of Whitehorse coughed up $1.3 million for Mount Sima, a struggling nearby ski hill. The money was diverted from the city’s infrastructure fund, which had been topped up by the federal government. That was on top of $1.6 million the city gave the hill a year earlier for a ski lift.

7 Meanwhile: Ottawa shovelled $1.5 million into 10 Quebec snowmobile clubs for snow grooming

8 the feds pumped $13,000 into a Tsawwassen lawn bowling club in Delta, B.C., to create “jobs, growth and long-term economic prosperity”

9 the City of Ottawa spent $48,000 on a “deluxe” three-sided bike cage for city employees

10 Saanich, B.C., faces an $818,000 deficit on the city-owned Cedar Hill golf course

11 Kitchener, Ont., transferred $1 million into a “golf stabilization reserve fund” to prop up two money-losing golf courses

Other folks’ money — corporate handouts and subsidies for all

12Korpporät welfår: Ikea is a Swedish retailing behemoth rolling in kronor, but when it came to opening its first store in Winnipeg, that didn’t stop the city and province from offering a combined $22 million in subsidies. Did we mention Ikea’s annual sales of $30 billion are roughly three times what Manitoba brings in each year from all forms of taxes, fees and transfers?
13 Paper chase: In December 2011, Nova Scotia’s provincial government handed $24 million to the owner of the Bowater Mersey paper mill in return for a swath of company land in the hopes of staving off its closure. By June the mill had gone out of business.

14 Something fishy: For more than a decade, Supreme Sturgeon and Caviar of New Brunswick raked in some $3 million in grants and loans from the federal government before falling into receivership in 2010. Resurrected by new owners as Breviro Caviar, it’s now back in the subsidy business, winning $200,000 from Ottawa in marketing funds and $50,000 to “hire expertise in caviar production.”
15 Flat battery: The B.C. government said it would spend $2.7 million to build hundreds of electric-car-charging stations across the province in an effort to encourage drivers to buy vehicles such as the Chevy Volt and Nissan Leaf. That’s in addition to a $5,000 rebate to drivers. Yet just 210 electric vehicles have been sold in the province—effectively translating into an $18,000 per vehicle subsidy for the carmakers.
Meanwhile: Four months after getting $3.8 million from New Brunswick to create 300 new jobs, Radian6, a social media monitoring firm, said it would slash 100 jobs globally (16); a CBC News analysis found $20 million doled out by Newfoundland to attract out-of-province business generated just 58 full-time jobs (17).

Cultured club — the same old song and dance for taxpayers

18 TV time: British Columbians saw $48,000 go to bringing Entertainment Tonight Canada to Vancouver for three days. Included in the provincial payout was $16,000 in airfare from Toronto and $12,000 worth of hotel accommodations.
19 Tear down the haul: The federal government subsidized Quebec City’s summer festival to the tune of $1 million, in part to help pay for a show by former Pink Floyd band member Roger Waters. The Plains of Abraham was the last stop on the aging rocker’s Wall Tour, which earned a total of $158 million from worldwide ticket sales.
20 Party on: The B.C. government sponsored a $3-million rock music tour last summer called JobFest, where attendees (when there were any) were offered on-site career counselling. Roughly $100,000 went to promotional kits, including glow sticks, guitar picks and glossy posters, mailed out to local businesses and media.
21Moving pictures: Winnipeg city council voted to spend $10,000 to transfer a work of art from the old Winnipeg airport to the University of Manitoba, even though city staff recommended denying the request.
22 Stamped out: 2012 marked the 100th anniversary of the Calgary Stampede, and though it bills itself as the “Greatest Show on Earth,” the federal government still felt the need to kick in $5 million to promote it—including putting a chuckwagon food truck in New York City.

23 A black eye: In May, Halifax councillors voted to cut a cheque for $360,000 to cover bad debts stemming from a money-losing Black Eyed Peas concert two years earlier.

Showing off — The price of looking good is on the rise

24 Maybe he’s born with it: Not one to be caught without his game face on, it was revealed the office of Finance Minister Jim Flaherty expensed $130 worth of cosmetics for an apparent beauty emergency ahead of a televised budget announcement. Flaherty’s staff scrambled to purchase concealer, blush, loose powder and shaving supplies to do the minister’s makeup after a cosmetician cancelled at the last minute. For anyone wanting to replicate the look, Flaherty wears a combination of Maybelline, CoverGirl and Smashbox.
25 Funny money: The Bank of Canada spent nearly $40,000 to promote its new $20 bill. The spending included $35,832 to a company to design and install seven-storey images of the new polymer note on the bank’s headquarters in downtown Ottawa in May. In total, spending to promote the new bill equalled 1,942 of the new $20 notes.
26 Fumble for fame: Four small cities, including Guelph, Ont., and Langley, B.C., forked over a total of roughly $100,000 to have former football great Terry Bradshaw appear in short promos about them that were meant to attract new American business to small-town Canada. The videos found airtime mostly off hours, while the famous QB, who narrates the promos, couldn’t sound more bored.
27 Over-planned: The recession may have ended a while ago, but that hasn’t stopped Stephen Harper’s government from spending millions on advertisements featuring its Economic Action Plan stimulus slogan. The government spent $16 million in three months on feel-good commercials about Canada’s economic prosperity.
28 Top gun: Despite getting a mock jet for free from manufacturer Lockheed Martin, Defence Minister Peter MacKay still managed to spend $47,000 on a 2010 press conference where he posed with the fake plane.

29 Centless spending: Eliminating the penny was supposed to save the government, but not without a final splurge. Finance Minister Jim Flaherty stamped the last Canadian penny in a photo op that cost $56,000.
30 Gold medal waste: The federal government spent at least $4.5 million on ads that ran during the two weeks of the London Olympics, but shelled out just $214,000 to Canadian athletes who won medals during the Games.

Thank you to McLeans Magazine
 Jason Kirby, Tamsin McMahon, Rosemary Westwood, Nick Taylor-Vaisey, and Mika Rekai on Monday, January 7, 2013