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| 08/13/04 | re: Presentation to first time homebuyers # |
Angelo Cerase
 |
Hello Baback,
10 minutes is not a lot of time!
I'm glad that you, a mortgage broker, will be talking to many first time homebuyers. Unfortunately there are many people that do not understand the benefits of what you do and how much you can help them.
One thing that I encourage that you mention to these new homeowners, is the advantages of having your own personal life insurance, rather than the 'mortgage insurance' the banks offer.
You can spend well over 10 minutes discussing the advantages of owning your own policy instead of the bank owning it, or the client being in control, not the bank. Even mentioning that you will lose the mortgage insurance if you decide to move your mortgage to another bank and you may or may not be approved when you reapply. Or the fact that you name the beneficiary, instead of the bank getting all the money.
But, since your time is limited, just say this:
"Who do you love more? Your family, or the bank?"
pause
"Then why would you want to make the bank the beneficiary of your life insurance, instead of your family?"
If you, or anyone, would like me to go into greater detail about the advantages, just message me.
Angelo
> Baback Panah wrote:
> Hello:
>
>I was asked to give a presentation to fist time homebuyers, I would appreciate any suggestions as to what I should include in this 10 minute presentation.
>
>Kind regards
>
> Post Reply Reply by Private Message (new win) |
| 08/11/04 | Presentation to first time homebuyers # |
Baback Panah
 |
Hello:
I was asked to give a presentation to fist time homebuyers, I would appreciate any suggestions as to what I should include in this 10 minute presentation.
Kind regards
Post Reply Reply by Private Message (new win) |
| 07/25/04 | Upcoming interest rate increase? # |
Angelo Cerase
|
Hi everyone,
I'd like to get everyone's thoughts about the increase in mortgage interest rates that will be coming in the future, both in the US and Canada.
Have you decided to switch from a variable rate to a fixed rate mortgage? Have you decided that a good night's sleep is more important than the increase in the interest rate that you are currently paying?
As a homeowner, what concerns do you have?
If you are buying real estate for business purposes, will some of your investments become unprofitable? Will you dump some of your investment properties, possibly at a loss, if rates climb too high?
Thanks,
Angelo
Here is an interesting article written for financial advisors that I believe many may find interesting:
Don't Bet the House
By Ann Perry
June 24, 2004
Alternatives to conventional fixed-rate loans look risky when interest rates are on the way up.
Don't get caught with your mortgage rate going up and the value of your home going down.
With mortgage rates on the rise as the Fed approaches its first rate hike in more than four years and home buyers scrambling for affordable monthly payments, some alternatives to the standard 30-year fixed and adjustable-rate mortgages (ARMs) could prove risky, say mortgage experts.
"Leverage is the order of the day," says Keith Gumbinger, vice president of HSH financial publications of Pompton Plains, N.J. "You need to be very careful of misusing a mortgage product. A lot of these things have not been tested in a rising interest rate environment."
Gumbinger is especially concerned about heavily promoted "interest-only" loans that allow borrowers to reduce their monthly payments for a period of time, say three or five years, by paying only interest and no principal. After the prescribed time period, the borrower either owes the entire balance or must begin paying both principal and interest on the balance of a 30-year term, typically resulting in a big jump in monthly payments.
The scariest interest-only loan is an ARM, whose interest rate adjusts monthly based on a standard index, says Gumbinger.
If rates were to keep climbing, and you had one of these short-term, interest-only ARMs, says Gumbinger, "you could find yourself in a very uncomfortable squeeze. It's a brand-new shovel to dig yourself a deeper hole."
Other alternative loans that could put homeowners in a bind are so-called pledged-asset mortgages and piggyback mortgages, which both allow borrowing of up to 100% of a home's value.
Eric Tyson, co-author of Mortgages for Dummies, with a second edition due out this summer, said, "People are using products like that to buy a house they can't really afford."
If rates keep rising, he said, "Something's got to give. People will start racking up consumer debt on their credit cards."
In the past year, the average national rate on the traditional 30-year fixed mortgage has inched up from 5.37%, the lowest in four decades, to 6.42% as of June 18, according to Gumbinger. The bulk of that move has been in the past three months.
The rise reflects the bond market's concern that the Fed sees inflation at long last creeping back into the economy.
With the central bank ready to push short-term rates up by increasing its fed funds rate a minimum of 25 basis points at next week's meeting, both short- and long-term mortgage interest rates could continue to climb this summer.
In many parts of the country, that means buyers will be struggling to qualify for increasingly expensive mortgages on homes whose prices have appreciated dramatically in recent years.
The average American house has risen in value by 7.7% in the last year, 42% in the past five years, and 210% since 1980, according to the Office of Federal Housing Enterprise Oversight. In pricier states, like New Jersey and California, values have tripled since 1980, and in New York state, they have quadrupled during the same period.
Real estate markets tend to go through cycles, and it is not unusual after a long run-up in prices for them to correct by 10% or 20%, says Tyson. The last downturn started in the late 1980s, following the stock market crash of 1987, and stretched into the early 1990s in most parts of the country.
One measure of whether you're buying into an overpriced market, he says, is to figure the after-tax cost of buying a home versus the cost to rent the same property. If the cost to buy is considerably higher than renting, prices are probably inflated and could be due for a drop.
Here are three loans to be wary of as interest rates rise:
Interest only
While these loans have been around since at least the 1980s, they've grown in popularity and are approaching 10% of new mortgages, says Gumbinger. Once geared for well-heeled homeowners who believed they could employ their cash better elsewhere, such as the stock market, these mortgages are now popular as "budget stretchers," to help buyers make their monthly mortgage payments.
Tyson explains that while most mortgages are amortized or repaid each month partly in principal and partly in interest, interest-only loans include no principal payments in their initial years.
He offers as an example a five-year, interest-only $250,000, fixed-rate mortgage at 6%. The initial monthly payment is $1,250, compared with $1,500 on the same amount borrowed using a traditional, fixed-rate loan amortized over 30 years.
While the borrower has saved $250 a month on principal for five years, after that time the balance must be paid off in 25 years. The monthly payment jumps from $1,250 to $1,610.
An interest-only loan can be suitable for borrowers who know they will be in a home only a few years and would pay down only a little principal anyway. But be sure you understand all of the terms before signing, advises Tyson.
Gumbinger says a popular new form of interest-only loans are three- and five-year ARMs, offered by major lenders, whose rates go up or down monthly according to a major index such as the one-month Treasury or Libor. ARMs typically cap rate increases at 2 percentage points a year, and 6 percentage points over the life of the loan. Rates start in the upper-3% and mid-4% range.
With rates that move so quickly, borrowers could get hammered if inflation surges. Gumbinger says users of these kind of ARMs are taking several risks: that rates won't rise appreciably; that they'll have the income to meet any payment increases even in a recession; and that if they made a small down payment and the market declines, they won't be underwater if they need to sell, assuming average closing costs of 6%.
Pledged assets
Last month the National Association of Securities Dealers, which regulates securities brokerage, issued an alert warning investors to be wary of pledged-asset mortgages.
The association said that unnamed brokerage firms were providing up to 100% financing loan-to-value mortgages to customers who, in lieu of a down payment, pledged their stocks, bonds, mutual funds, and other securities. While these mortgages allowed the customers to avoid paying private mortgage insurance, or PMI, the NASD warned that they could be risky.
Here's what can happen. If the value of the securities falls below a set minimum, the borrower could be required to deposit more cash or securities, and the brokerage can sell the securities to meet a collateral call without contacting the borrower or getting permission about which securities to sell.
Also, because the loan is a 100% mortgage, the interest is usually greater than on a mortgage used with a cash down payment. If borrowers choose an adjustable-rate mortgage and interest rates rise, the NASD cautioned, the returns from the investment portfolio might not keep up with the rising mortgage payments. This is especially prone to happen if the portfolio contains bonds, which decline in value when interest rates rise.
Piggybacks
Piggyback mortgages are typically issued to borrowers with good credit, who don't have the cash to make a 20% down payment and avoid the annoying expense of PMI. Borrowers usually take out two loans from the same lender. The most common combinations are: a first mortgage covering 80% of the home's value, with a 10% down payment and a 10% second mortgage to cover the balance, or a 90% first mortgage with a 10% home equity line of credit, or HELOC.
Many lenders encourage piggyback borrowers to take out a HELOC, which is a variable-rate loan whose interest changes frequently with short-term rates.
Most of the risk with this kind of loan lies with the lenders, notes Tyson.
However, with a HELOC, borrowers could see at least a portion of their mortgage rate rise if interest rates increase.
Gumbinger says that if borrowers want to avoid interest-rate risk, they should keep in mind that today's 6.42% 30-year fixed rate is a bargain when viewed over the last 40 years.
"People still have a window of opportunity to refinance at low fixed rates," he says. "It's important to keep that long-term perspective. In some cases, it's better to bite the bullet and take the 6½% fixed-rate mortgage. You're buying peace of mind."
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| 07/10/04 | brokerage and renovation help # |
allan glass
 |
hello everyone,
i am a real estate broker in the los angeles area and run an investment group focusing on urban environments and affordable housing. i would love to chat with all of you and help with the search to finding homes.
best of luck
allan glassPost Reply Reply by Private Message (new win) |
| 06/20/04 | Three Consecutive All Time Record Months in the GTA # |
Allan Todd - Realtor
 |
The Toronto Real Estate market posted its third consecutive all time record performance in May, with 9,193 single-family dwellings changing hands through the TorontoMLS system, TREB President Cynthia Lai reported today. "This figure is up just slightly from April's 9,168 figure, our previous all-time record, and up 15 per cent over May of 2003."
"The March, April, and May period was the best three month stretch in the history of the city (27,437 sales), and 2004 is on course to be the best year our local resale market has ever seen," Ms. Lai remarked. "As President of the Toronto Real Estate Board, these kinds of results make me very proud. In fact, when I leave office at the end of June, my term will have marked the best twelve month period that the Toronto resale market has ever recorded."
Ms. Lai went on to say that prices continued their upward trajectory in May, with the average going to $325,501, a one per cent increase over last month, and a nine per cent increase of May of last year. Fortunately, inventory also rose, to 22,484 active listings, a nine per cent increase over the previous month. "We have plenty of listings," Ms. Lai said. "And as long as that is the case the price increases we are seeing should be relatively constrained."
Breaking down the total, 3,438 sales were reported in TREB's 28 West districts and averaged $300,128; 1,559 sales were reported in the 14 Central districts and averaged $444,138; 1,848 sales were reported in the 23 North districts and averaged $349,317; and 2,348 sales were reported in TREB's 21 East districts and averaged $265,137.
- Market Watch
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| 06/19/04 | Something to consider # |
Lyse McDonough
 |
First, thanks for the invitation, Allan! Glad I joined your network, it's very informative.
For a small monthly fee, I provide equal access to the legal system through Pre-Paid Legal Services. Now all of us can access top rated lawyers whenever the need arises, have documents and contracts reviewed before signing, have our Wills and Powers of Attorney done, without worrying about the charges. I'm on a Mission to make sure families are protected, it just makes sense!
Come by for a visit, www.TomandLyse.com
Yours in service,
LysePost Reply Reply by Private Message (new win) |
| 06/10/04 | New in Southern California # |
Matt Hoberg
|
Not only am I new to this network, but this is my first official post on all of Ryze.
I have read through a few of the HOME postings and don't see anyone posting from Southern California, so I just wanted to drop a line and see if there are any people from SoCal out there.
Look forward to networking and growing business with all of you.Post Reply Reply by Private Message (new win) |
| 06/10/04 | re: re: re: re: Mortgage Insurance Vs Life Insurance (Term) # |
Les Freeman
|
Just to add to the discussion on Mortgage Insurance vs Individual Insurance, I would point out the following - some of which has already been discussed and some has not.
The beneficiary of Mortgage Insurance is the bank. The bank is concerned with getting it's money. What if the individual needs the money for a purpose other than paying off the mortgage and is comfortable mainting the regular mortgage payment? This could be accomplished with individual insurance.
As time passes, the mortgage balance declines in value. Since the benefit of the insurance policy is the remaining mortgage balance, the benefit is decreasing monthly. The premium paid for the insurance usually remains constant. Therefore you are paying a fixed amount for a declining benefit. With individual insurance, both the premium and benefit remain the same.
With mortgage insurance, if you pay off your mortgage, the insurance is no longer available - What if you still want insurance for other purposes than the mortgage? - ie. helping to support the family or education for children. With individual insurance, you can maintain the insurance as long as you pay the premium - regardless of your health at the time.
There are other advantages to individual insurance which could be discussed in greater detail if anyone wants.
The important part is that for most people, their home is the largest purchase that they will make in their lifetime and it is important to protect it.
> Naoshad wrote:
> I wouldn't be so sure Michael. Mortgage insurance i underwritten at death as opposed to regular individual insurance which is underwritten at time of application. Also if you switch mortgages it becomes health at that point. Therefor the chances of a mortgage insurance paying out vs. life are significantly less even if death is during the term of a mortgage.
>
>Secondly Life insurance should be looked at with the buying decision to maximize the value of the house. Think of it as a turbocharger on an engine. Life insurance, properly structured ccan increase the dollar benefit you get from your house!
>
>Regards,
>
>Naoshad.
>Regards.
>
>> Michael Keong wrote:
>>
>>Angelo ,
>>
>>I agree with you that a Permanent Life insurance or Universal Life Insurance takes precedence over mortgage insurance. The only added benefit that a mortgage insurance has is that the family you leave behind for an untimely death would not be burdened with a mortgage.The property becomes free and clear.
>>
>>
>>Michael.
>>
>>
>>
>>
>>
>>> Angelo Cerase wrote:
>>> Hi Cheryl,
>>>
>>>I am glad you brought up the point of having your own insurance compared to the bank's mortgage insurance.
>>>
>> Post Reply Reply by Private Message (new win) |
| 05/21/04 | New to the Network # |
Ally Brenneman ~~Authorized Agent~~
 |
Hi All, Most of you all know me, and for those who do not.. My name is Ally, I am a CWAHSM of a lovely 3 yr old daughter. I enjoy singing, writting poetry and helping others. I plan in 5 years to go to College and get my Teaching Degree in Sign Language. I look forward meeting you all and learning something new everyday. God Bless, Ally Brenneman ~~Authorized Agent~~ Post Reply Reply by Private Message (new win) |
| 05/01/04 | re: re: re: Mortgage Insurance Vs Life Insurance (Term) # |
Naoshad
|
I wouldn't be so sure Michael. Mortgage insurance i underwritten at death as opposed to regular individual insurance which is underwritten at time of application. Also if you switch mortgages it becomes health at that point. Therefor the chances of a mortgage insurance paying out vs. life are significantly less even if death is during the term of a mortgage.
Secondly Life insurance should be looked at with the buying decision to maximize the value of the house. Think of it as a turbocharger on an engine. Life insurance, properly structured ccan increase the dollar benefit you get from your house!
Regards,
Naoshad.
Regards.
> Michael Keong wrote:
>
>Angelo ,
>
>I agree with you that a Permanent Life insurance or Universal Life Insurance takes precedence over mortgage insurance. The only added benefit that a mortgage insurance has is that the family you leave behind for an untimely death would not be burdened with a mortgage.The property becomes free and clear.
>
>
>Michael.
>
>
>
>
>
>> Angelo Cerase wrote:
>> Hi Cheryl,
>>
>>I am glad you brought up the point of having your own insurance compared to the bank's mortgage insurance.
>>
>Post Reply Reply by Private Message (new win) |
| 04/27/04 | re: Cut Years Off Your Mortgage! # |
Angelo Cerase
|
Hi Allan,
You are always a wealth of knowledge, I'm glad I met you at the recent Ryze Toronto meeting. I enjoy reading your posts.
I agree with you in saying that with today's low interest rates, it's a great time to purchase a home. In fact, I think it's always a great idea to own your own home.
You mention in your post a few ways in which home owners can pay off their mortgage sooner and save thousands of dollars in interest payments, namely making additional payments or shortening your amortization period.
While these are excellent ideas, they do have one drawback - the homeowner is required to put additional money into their mortgage.
What if I told you, and the other members on this list, that there is a way for Canadians to pay off their mortgage sooner, thereby saving tens of thousands of dollars in mortgage interest, while being able to pay the exact SAME AMOUNT of money into their mortgage, AND NOT A PENNY MORE.
Sound too good to be true?
Well, this type of mortgage has only been in Canada for approx. 5 years, our friends in Australia have been benefiting from this money-saving idea for a lot longer, and approx. half of all new mortgages there are of this type.
In fact, paying tens of thousands of dollars less in interest payments is just one advantage of this type of account.
Another advantage is making some or all of your mortgage interest tax-deductible (an advantage our friends in the US have), thereby saving money on your taxes.
I can go on, however since each client is different I first learn about their situation and I create an illustration for them to show them how much farther ahead they can be. Working with me a typical family can easily be ahead at least $100,000 over a 25 year period (typical amortization period for a mortgage) over where they could have been.
All by using the SAME AMOUNT of money they were paying into their mortgage, and NOT A PENNY MORE.
Angelo
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| 04/25/04 | Hello all - New to RYZE and new to this Group! # |
Pam Smith
|
Hello everyone. I just joined RYZE. I sell a downpayment gift program that gets people in homes for 0% down. Our program is typically used for first time home buyers or others that demonstrate the need for financial assistance. It's typically used with an FHA mortgage but can be used for conventional and sub-prime. I work in the Dayton, OH area but our company is nation-wide. Let me know if I can be of assistance.
Thanks.Pam Post Reply Reply by Private Message (new win) |
| 04/25/04 | re: Cut Years Off Your Mortgage! # |
Naoshad
|
Great post Todd. There ARE many ways to cut time of your mortgage. But should you?
Canadians have been told through repetition that the two things they must do is "Pay off your mortgage" and "contribute to your RSP". Problem is this doesn't always work and isn't as easy as it sounds.
Wealthy people don't borrow money for personal items they pay cash for them. They borrow to invest. Successful people don't put money into an asset that they can't leverage.
It's possible to structure your affairs so that your house provides liquidity, your mortgage payment build money for you while reducing the tax you pay, and in the worst case scenario you can take a holiday from the mortgage payments.
Work with someone who can show you how to integrate your house and mortgage into a truly complete financial plan. And make sure they don't ask you for money! If I can't find the money for a client, then I'm not doing my job!
Regards,
Naoshad.
> Allan Todd - Realtor wrote:
> With today’s low interest rates, deciding to buy a home is one of the best decisions anyone can make. Financing such a big purchase, however, often means combining savings with money borrowed through a financial arrangement, commonly referred to as a mortgage.
>
>Mortgages allow you to pay back the principal, or amount borrowed, plus interest, in regular installments. The taxes on your home can also be added to the mortgage payments. Most mortgages are amortized over 25 years — that’s the length of time it takes for you to pay the debt off in full.
>
>For most home buyers, paying off the mortgage is a long-term commitment. That’s why it’s important to begin looking at options before buying, or before renegotiating your existing mortgage. When home buying, your Realtor can help you calculate how much mortgage you can afford and provide advice on the many options available.
>
>But even if you find yourself locked into a long-term mortgage you can afford, there may still be ways to pay it down and be mortgage-free sooner.
>
>Pre-payment options
>
>Most financial institutions now offer generous pre-payment options. Although many limit how often you can use an option, it is well checking into them and comparing what one lender offers over another. Many lenders now permit an annual lump sum payment on your mortgage with the amount going directly to reducing your principal. A lump sum payment of $2,000 a year on an $80,000 mortgage, for example, can significantly cut years off your mortgage.
>
>Other pre-payment privileges include doubling up payments whenever you have extra cash. Some lenders allow additional payments against the mortgage balance up to the equivalent of a full monthly payment on every payment date or several times throughout the year. Accelerating payments by paying every two weeks instead of monthly, for example, can also result in substantial savings over the life of a mortgage.
>
>While taking advantage of pre-payment privileges can save you thousands of dollars in interest costs over the life of your mortgage, it also pays to consider all your options. You may be reducing the principal, but you are not reducing your existing payment obligations. You still must make your regular payments.
>
>Pre-payment critics also say that if your interest rate is reasonably low, you may be able to put the extra money to better use. When you pre-pay $2,000 a year, you reduce your principal, but in Canada, you get no tax benefit. Put the same amount of money into a registered retirement plan and you get a tax break. If you invest this amount in a mutual fund at 10 per cent and your mortgage rate is seven per cent, you’re making three per cent more on your investment.
>
>Lower your amortization period
>
>The average mortgage must be paid off in 25 years. By selecting a shorter amortization period you can cut years off your mortgage. The shorter the period, the larger the payments, but the more you save on interest and the long-term cost of the loan. Shortening the amortization period is a great idea when interest rates are low and you can afford the larger monthly payments.
>
>Re-finance your mortgage
>
>This is only a good idea if you have a fixed, long-term mortgage and rates have fallen more than two per cent. But the cost of refinancing a loan to get a better rate can be very high. To have your closed mortgage discharged, you will usually have to pay either a three-month interest penalty or an “interest differential”, which can cost considerably more.
>
>You can reduce the penalty, which is based on the outstanding principal, by exercising a prepayment privilege and reducing the principal first. This can be done using your own money or by arranging with another lender to borrow enough to discharge your mortgage and pay the discharge penalty. Whatever you decide, seek expert advice before re-financing, or you may end up paying more than if you stayed the course.
>Post Reply Reply by Private Message (new win) |
| 04/24/04 | Cut Years Off Your Mortgage! # |
Allan Todd - Realtor
|
With today’s low interest rates, deciding to buy a home is one of the best decisions anyone can make. Financing such a big purchase, however, often means combining savings with money borrowed through a financial arrangement, commonly referred to as a mortgage.
Mortgages allow you to pay back the principal, or amount borrowed, plus interest, in regular installments. The taxes on your home can also be added to the mortgage payments. Most mortgages are amortized over 25 years — that’s the length of time it takes for you to pay the debt off in full.
For most home buyers, paying off the mortgage is a long-term commitment. That’s why it’s important to begin looking at options before buying, or before renegotiating your existing mortgage. When home buying, your Realtor can help you calculate how much mortgage you can afford and provide advice on the many options available.
But even if you find yourself locked into a long-term mortgage you can afford, there may still be ways to pay it down and be mortgage-free sooner.
Pre-payment options
Most financial institutions now offer generous pre-payment options. Although many limit how often you can use an option, it is well checking into them and comparing what one lender offers over another. Many lenders now permit an annual lump sum payment on your mortgage with the amount going directly to reducing your principal. A lump sum payment of $2,000 a year on an $80,000 mortgage, for example, can significantly cut years off your mortgage.
Other pre-payment privileges include doubling up payments whenever you have extra cash. Some lenders allow additional payments against the mortgage balance up to the equivalent of a full monthly payment on every payment date or several times throughout the year. Accelerating payments by paying every two weeks instead of monthly, for example, can also result in substantial savings over the life of a mortgage.
While taking advantage of pre-payment privileges can save you thousands of dollars in interest costs over the life of your mortgage, it also pays to consider all your options. You may be reducing the principal, but you are not reducing your existing payment obligations. You still must make your regular payments.
Pre-payment critics also say that if your interest rate is reasonably low, you may be able to put the extra money to better use. When you pre-pay $2,000 a year, you reduce your principal, but in Canada, you get no tax benefit. Put the same amount of money into a registered retirement plan and you get a tax break. If you invest this amount in a mutual fund at 10 per cent and your mortgage rate is seven per cent, you’re making three per cent more on your investment.
Lower your amortization period
The average mortgage must be paid off in 25 years. By selecting a shorter amortization period you can cut years off your mortgage. The shorter the period, the larger the payments, but the more you save on interest and the long-term cost of the loan. Shortening the amortization period is a great idea when interest rates are low and you can afford the larger monthly payments.
Re-finance your mortgage
This is only a good idea if you have a fixed, long-term mortgage and rates have fallen more than two per cent. But the cost of refinancing a loan to get a better rate can be very high. To have your closed mortgage discharged, you will usually have to pay either a three-month interest penalty or an “interest differential”, which can cost considerably more.
You can reduce the penalty, which is based on the outstanding principal, by exercising a prepayment privilege and reducing the principal first. This can be done using your own money or by arranging with another lender to borrow enough to discharge your mortgage and pay the discharge penalty. Whatever you decide, seek expert advice before re-financing, or you may end up paying more than if you stayed the course.
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| 04/17/04 | Buying A Home: How to Save for You Initial Investment # |
Allan Todd - Realtor
|
Owning your own home has a lot of payoffs, especially these days when mortgage rates are still among the lowest in 50 years. There are also many housing options available in a wide range of prices.
Simply put, you can carry a home of your own for no more than what you would pay in rent. And, unlike renting, your payments go toward increasing the equity in your home.
So, what’s stopping you? For most people who have never owned a home before, it’s the initial down payment and the ability to keep up with the monthly financial obligations (mortgage payment, insurance, utilities, maintenance).
The effort to save for and buy a home may require you to make significant changes in your way of life. For most people, it means changing their spending and lifestyle habits to support the additional costs of saving for, paying for, and maintaining a home.
One of the best ways of saving for a down payment is to take advantage of government programs available to first-time home buyers. A real estate professional can help you understand how these programs work and ensure that you get the maximum benefit possible.
RRSP Home Buyers’ Plan
Contribute to a Registered Retirement Savings Plan (RRSP) regularly and to the maximum allowed. The federal government’s RRSP Home Buyers’ Plan enables eligible taxpayers to withdraw up to $20,000 tax free from their plan to buy or build a qualifying home. The amount of money withdrawn must be repaid within 15 years.
If you buy the qualifying home together with your spouse or other individuals, each person can withdraw up to $20,000 tax free. A government form must be completed for each withdrawal.
Generally, an RRSP holder can participate in the Home Buyers’ Plan only once in a lifetime. The pamphlet, Home Buyers’ Plan (HBP) - For 1998 Participants, is available from Revenue Canada and will help you determine if you are considered a first-time home buyer.
A qualifying home is a housing unit located in Canada. You must also agree to occupy the home as your principle residence no later than one year after buying or building it. Once you occupy the home, there is no minimum period of time that you have to live there.
Ontario Home Ownership Savings Plan (OHOSP)
OHOSP is a provincial program where participants receive interest on the money they deposit and may receive a tax credit. If you earn less than $40,000 a year, or if you and your spouse have a combined income of less than $80,000, you can benefit from the program. To be eligible, you must be an Ontario resident over 18 years of age with a social insurance number and have never owned a home.
While there is no limit to the amount of money you may deposit in your OHOSP, you can only receive OHOSP tax credits on annual contributions of $2,000 ($4,000 per couple) or less. Depending on your annual income and the amount of money you invest, you can earn up to $500 individually or $1,000 a couple in OHOSP tax credits. Participants are eligible for tax credits for five consecutive years and must close the plan and use the funds to purchase a home by the end of the seventh year. Otherwise, OHOSP tax credits must be repaid with interest.
An OHOSP plan, with interest earned at competitive rates, may be opened at any participating financial institution. To qualify, a home must be located in Ontario and be suitable for year-round residential occupancy. In addition, you must live in the home for at least 30 consecutive days within two years of the date of purchase.
Source: OREAPost Reply Reply by Private Message (new win) |
| 04/14/04 | ebook available # |
Cathy Goodwin
|
Hello Allen and everyone,
My book, Making the Big Move, was originally published by New Harbinger. It just went out of print, and I have made available an ebook version.
Introductory offer -- good till April 23rd -- $9.95.
Goes up to $19.95 on the 23rd.
http://www.movinglady.com/book.html
If you'd like to become my affiliate, you can sell this ebook for 20% commission!
http://www.movinglady.com/affiliate.html
Thank you! Post Reply Reply by Private Message (new win) |
| 04/12/04 | Should You Buy a Home Now? # |
Allan Todd - Realtor
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Buyers frequently ask; "Should I buy a home?" Or more specifically, "Should I buy a home today?".
I have always felt that the answer to that question is almost always an unqualified “Yes!”
The reasons are relatively simple.
First of all, the price of new and resale homes has steadily increased ever since the early-1940's. Although local markets may vary - and prices will go up or down with the economy, the general trend has consistently been rising values. Delaying the purchase of a home will make your entry into the market at a higher price.
The second item that concerns the home buyer is interest rates. We are presently enjoying the lowest interest rates in fifty years, so any delay could mean paying significantly higher interest rates in the future.
So should you buy a home now?
I invite you to bring your thoughts to the group!
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| 03/26/04 | Creative Finance Solutions (Was re: re: re: Buying with really bad credit) # |
Anissa Hollingshead
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I am a Realtor and I work extensively with buyers who are not able to qualify for conventional financing, usually for credit reasons. What Ben has been talking about is something I do quite regularly, though some of the specifics usually wind up being a bit different. I find contract for deeds to be a wonderful option for buyers who have credit issues that prohibit getting a mortgage, but the buyers are otherwise ready to be homeowners. I explain the difference between getting a contract for deed and a mortgage to my buyers as a difference primarily in the source of the money for the financing. When a buyer obtains a mortgage, they are going to a bank and borrowing the money to purchase the home from the bank. In a contract for deed, instead of getting financing from a bank, the buyer obtains their financing from an individual, whether a seller directly or an investor. There are also some legal differences that it is important for a buyer to be aware of - such as the different processes for foreclosing on a mortgage vs. cancelling a contract for deed - but the source of the money is the primary difference.
Upon purchasing a home with a contract for deed, the buyer still "owns" the home in the same practical sense that one obtaining a mortgage owns the home. They may benefit from the payment of interest towards the CD for a tax deduction, they hold equitable title to the property and can make improvements to the home, etc, subject to any specific limitations that may be laid out in the CD. However, while when purchasing a home with a mortgage, at close of escrow the deed to the property is transferred to the new buyer. With a contract for deed, the buyer has the executed contract for deed at the closing, but does not obtain the deed itself until the terms of the CD are fulfilled. This does not impact the buyer's day to day use and enjoyment of the property, but it is a legal difference to be aware of.
In working with CD's I find two primary sources for my buyers:1) sellers who are sometimes investors looking for the extra profit potential of a CD as Ben had mentioned, or who may be very motivated because of a transfer or other situation that necessitates quickly selling their property and 2) investors who will purchase homes for buyers, either with cash or underlying financing, and then resell them to the buyers on CD terms. I think it is important not to completely sweep away the significance of there being underlying financing on a property with a due on sale clause. That is something I always disclose to buyers and sellers that I may work with, and advise them to seek legal advice to ensure they are comfortable with proceeding with a transaction.
In the market I work in, however, (Minneapolis/St Paul metro) little or no money down CDs are extremely rare. Demand in the market place is always going to determine what terms are generally found for CD's, but in the three years or so that I have been focusing in this area, I have found the vast majority of CD's requiring a minimum of 10% down. The interest rates are also generally above market - for a long time also right around 10%, though in the past couple of months I have seen the number of CD's around increasing and the interest rates decreasing some, now more often in the 8-9% range. The buyers that this is attractive for are people who want to buy and enjoy all the benefits of ownership, but who don't have the credit and/or income on paper to qualify for a mortgage. I hear from a ton of buyers who have shaky credit and no money down who are looking for a CD, but in my market place it's not going to happen.
I do work with a lot of lease option properties as well to try to increase the number of those buyers that I am able to help, but even then, some amount of down payment is necessary. Now having said all that, there are of course always going to be unique situations in any market where you may come across a seller that will agree to terms much more favorable for a buyer than what I have mentioned here, so it's not impossible or nonexistant, but it is certainly an anomaly in our market.
Anissa Hollingshead
LDH Management, Inc. & Dooley Real Estate Service, LLC
www.homeownershipoptions.com
www.renttoownmn.com
> Ben Maxwell wrote:
> The purchaser is the only one on the title. The Seller creates a new second mortgage for the difference between the existing mortgage, and the purchase price(minus downpayment). The Buyer takes title and the seller records a mortgage. The Buyer then pays the first mortgage to the bank(without the bank knowing or caring), then the buyer pays the seller the difference to cover the extra interest rate and the second mortgage.
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| 03/25/04 | re: re: Buying with really bad credit - creative solutions # |
Ben Maxwell
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The purchaser is the only one on the title. The Seller creates a new second mortgage for the difference between the existing mortgage, and the purchase price(minus downpayment). The Buyer takes title and the seller records a mortgage. The Buyer then pays the first mortgage to the bank(without the bank knowing or caring), then the buyer pays the seller the difference to cover the extra interest rate and the second mortgage.
> Fernando DiDomenico wrote:
> Are you sure about that? If that is true, it is news to me. I can't see how a bank or any lender will hold a mortgage without you being on title. Also, what security would the purchaser have without having his name on title.
>
>> Ben Maxwell wrote:
>> I was just talking with some other loan officers in my office and I thought this would be a great place to share the same convesation that I had with them.
>>
>>Many people just flat out don't qualify to by a home with little money down. If you find yourself in this situation, consider getting some information on Land Contracts or Contracts for deed (same thing, different names).
>>
>>Basic outlines:
>>
>>It is what is commonly referred to as Owner financing. This scares many people away, but for no reason. Basically the logistics are that an owner, who has the mortgage on the current property, keeps that mortgage, then sells the property to buyer, title and all. The seller collects a montly mortgage payment form the buyer to encompass the entire purchase price, minus a small downpayment. The seller will usually charge a yeild spread, basically 1-2% interest above his mortgage rate. He then make money on that mortgage and the equity he has. So many investors love to offer land contracts. This allows the buyer to buy without qualifing for a loan, with a small downpayment. The buyer can then continue paying on the loan, or since he/she has been on title(at least 1 year usually) they can then refiance, which is a lot eaisier to qualify for at higher loan to value.
>>
>>Many people worry, because of non-assumable loans and the due on sale clause for most mortgages. The fact is, if the payments are coming in, the lenders aren't going to care who is paying them or who has title. The only time that will become an issue is if the interest rates skyrocket and they want to get rid of that loan for a loan at a higher interest rate. But usually, they won't even know the title has changed names because they aren't looking for it.
>>
>>Anyway, this is a great way to get into a house for those with no other options. There is nothing illegal or immoral about it. It is done day-in and day-out across the country.
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>>A good source for finding these deals is calling local real estate investment groups and networking to find an investor that does a lot of land contracts. Make sure you use an attorney to help with your closings and to go over the paperwork. And do your homework.
>>
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| 03/25/04 | All-In-One Borrowing accounts/mortgages # |
Angelo Cerase
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Does anyone on this list have any personal experience (or know someone who does) with the All-in-One borrowing accounts/mortgages?
For those of you that may not be aware of this type of mortgage, it is an account that combines your mortgage, short-term savings account, chequing account, and line-of-credit all in one.
It looks like a great idea since with a traditional mortgage the bank only gives you about 2.5% on a savings account(most likely a lot less), nothing on a chequing account, perhaps 3% on an investment certificate, and then turns around and charges you at least 4% on your mortgage, 9% on a line of credit, and 18% on a credit card.
I know that it is very popular in Australia where about 1/3 of all mortgages are like this. However, I believe this type of mortgage was either invented there or they were one of the early adopters of it. It's only been available in Canada for a few years now, and I am not sure how long it's been available in the US.
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