Keeping Debt in Check!!!!

So many Canadians are taking advantage of low interest rates right now.....and rightfully so. In a historical context money is cheap! In fact borrowing costs are so low right now that many people are forgetting what a normal interest rate schedule looks like. Normalized for peaks and valleys over time, the average cost of borrowing is somewhere between 10 and 12%. That is significantly higher than the current 3 to 5% rates we are enjoying right now. My point is to tread carefully as history WILL repeat itself.

With the above warning in mind it is still is truly a great time to take advantage of some low borrowing costs and use your access to capital to improve your life, just please be pragmatic and objective.  Don’t get me wrong....if the perfect Mexican vacation goes on sale or the new line of Coach purses comes out with a “must-have design” I’m not saying don’t splurge here and there....we all need some fun stuff in our lives.  Use these low rates to consolidate debt, upgrade your home or get into the market for the first time.  just remember that even though money is cheap now, it’s still debt and if debt isn’t managed correctly it can come back to bite you when you least expect it and at the worst times. 

When buying a new home one of the most important criteria lenders look at in when evaluating mortgage applicants is their credit rating.  You don’t want to find your dream home and then have a lender deny your application because your debt is too high, it could be emotionally devastating.  Your closet may be filled with great Coach Purses to match every occasion....but, make sure that they are Coach Purses that are paid off.

This advice isn’t exclusive for new home buyers...this advice also pertains to people who are looking to refinance their existing mortgage.    Take what happened in the United States recently....borrowers got so comfortable with low interest rates and correspondingly low mortgage payments that they would just spend, spend, and spend far beyond their means and far beyond a safe buffer for future rate increases.  When it came down to refinance their homes they no longer qualified for the teaser rates they were accustomed to and to make matters worse the real estate market collapsed leaving them negative equity in their homes. No lender would refinance them and they could not afford the payments even if they could.  A terrible situation indeed, can you Imagine?

Protect yourself by ensuring that you can afford your mortgage and other credit. Maybe only buy 1 or 2 purses that you can easily pay off.  I am sure that even Kerry from Sex in the City had a shopping limit.  Ensure that you can accommodate a 2% rate increase and protect your credit rating vigourously.

So don’t be afraid but have an objective and realistic view of what could happen and where the true risk is at. Industry reports say that Canadian consumers have the highest credit scores in all of North America.  But, let’s keep that up and stay smart with managing our debt.

And no ladies, I am not getting a kickback from Coach but I really do love their purses....sure hope my husband reads this blog as Christmas is right around the corner :-)

How Can I Make Sure My Mortgage Gets Paid......

You're sitting in an office across from a mortgage loans officer. It could be in a bank, a credit union, or another lender. You've signed all the papers for your mortgage.

Now comes a question that you haven't thought about: "Would you like to have mortgage insurance?"  "What's that?" you ask innocently. "If you die, we'll pay off your mortgage so your spouse or family doesn't have to worry about it." You, like many others, are tempted to respond, "Where do I sign?"  But wait a minute! Think about what you're paying for before you put your name on that mortgage insurance document.

Put yourself in charge!

The primary difference between a life insurance policy and mortgage insurance from a mortgage lender is control. With a life insurance policy, you decide who the beneficiary will be; with mortgage insurance, the financial institution is the beneficiary and gets all of the death benefit.

With life insurance, your beneficiary chooses how to spend the tax-free death benefit from your life insurance policy. That could be to pay down the mortgage or other debts, invest rather than pay off a low-interest mortgage, cover living expenses, or make important purchases. These options don't exist when your mortgage lender controls the proceeds.

Many homeowners don't realize that mortgage insurance is often what's called "decreasing term insurance." The amount you owe on your mortgage goes down as you make payments on the principal. At the same time, the death benefit -- the amount required to pay off your mortgage -- goes down by the same amount. But your mortgage insurance premiums stay the same, so you're actually getting less and less for your money every time you make a mortgage payment.

Here's another point worth considering. Many homeowners will change the mortgage lenders during the time they're paying off their home, especially if they can get a lower interest rate somewhere else. If you take your mortgage to another company, in most cases, you lose your mortgage insurance and have to apply again at the new company.

In short, you lose control, value, and flexibility when you sign for mortgage insurance with your mortgage lender.

An alternative to consider
Using an individual life insurance policy to protect your mortgage offers numerous advantages. It's important to note the difference between an individual and group insurance policy. With mortgage insurance, you're a member of a group -- a collection of people who have mortgage debt with the same lender. The lender or insurer may cancel a group policy at any time, and that means you could lose your coverage.

With an individual life insurance policy, you're in control, so you're the only person who can cancel or alter your policy.

Another benefit if you choose the life insurance route: the value of the death benefit doesn't decrease as you make mortgage payments. A life insurance policy with a face value of $100,000 will be worth that much as long as you make the premium payments.

Control leads to flexibility
If you have a life insurance policy to protect your mortgage, and a better mortgage rate exists at another company, you can transfer your mortgage to that company knowing your insurance remains in force. You don't need to re-apply, and you're protected from the danger of losing your insurance because of a change in your health.

If price is a concern, be sure to consider all your options and what value you get for your money. Depending on the policyholder's age and the amount of the insurance policy, individual life insurance may be cheaper than the lender's mortgage insurance. It's worth talking to an advisor to see how the policies compare.

Articles supporting mortgage insurance rather than a policy to protect your mortgage have indicated the lender probably won't ask you to fill out a medical questionnaire. If you're applying for a large mortgage, however, banks in particular will likely demand that you fill out a more detailed health application, and perhaps ask for a blood or urine sample. Usually the more detailed medical information required by insurance companies actually protects you. If you don't fill out a medical questionnaire with a lender, that lender could use a serious medical condition as a reason to refuse to pay your beneficiary.

In short, these articles often fail to explain the benefits of value, control, flexibility, and security when an individual life insurance policy covers mortgage debt.

The final choice is up to you. Weighing your options will help you get the most out of your money.

© Sun Life Assurance Company of Canada, 2007

For information on how to BEST protect your Mortgage contact Jennifer Yndestad-Lawler at:

Cell: 778 987 6503

Email: jennifer.lawler@sunlife.com

Website: www.sunlife.ca/jennifer.lawler  

Selling Your Home Using The Right Pictures!

Have you ever been READY to really sit down and scroll through the hundreds of property listings on MLS?  You start your search, microscope in hand (well you feel like you should have one) and you come across a street or a building that you have always wanted to be in.  You start getting really excited to see the pictures of this dream home, and low and behold you see a blank image?  I think we have all been there, and how frustrating is it? Then you see it has been listed for 7 days already, and still nothing but words.

What homeowners don’t always think about is, without good pictures your home just becomes another address.  If a potential purchaser can’t even see what your house looks like, why would they even bother pursuing it?  Nine times out of ten they will click on to the next property.  Whether you have your home listed by an agent, or perhaps your trying lady luck yourself, great pictures showcasing your beautiful home is your first step in selling.  If people can’t see it, they are probably not going to bother looking at it!

I can’t stress enough how important pictures are!

You want to have a great shot of the exterior.  Curb appeal is very big, so your outside shot has to get people to your door.  On the inside of your home, you always want to zoom in  (so to speak) on the best attributes of your place.  If you have a chef’s dream of a kitchen, then make sure there are a couple angles of that.  The fireplace might be a one of a kind slate, or perhaps a custom Egyptian marble bathroom.  No one knows there home better than you!   These areas need to be captured.

Unique pictures are intriguing to people.  The quality of the shots are also extremely important.  What good is a blurry shot of your beautiful and expensive Brazilian hard wood? Perhaps you just spent a lot of money on designer paint throughout your home, and you want that shown in your listing.  Unfortunately the only camera your realtor has is an old cell phone that he keeps in his glove box.  That lovely terra cotta throughout your home now looks like a rusty orange.

Remember, in our minds we think that pictures don’t lie! 

We all want our homes to stand out from the rest.  In a way that people want to get in and see it for the uniqueness and beauty, not because they want to go and have a good laugh.  Then again if there are no pictures, I guess you just won’t be seeing anyone.

If your realtor doesn’t talk about coming in to do pictures, then talk to her/him about it.  If you don’t feel comfortable that they can showcase that magnificent home of yours, bring someone in that can.

Believe me, at the end of the day, the minor investment for a good photographer can put thousands more in your pocket when you sell**

For more information on how to get the "BEST" pictures for your home contact Samantha Zaharia at:

www.samanthazaharia.com

www.barakaphoto.net

The Most Important Score You "Should" Know!!!

Let’s talk about scores. If you like sports, you know that the score of a game determines who wins and who loses. As sport imitates life, one of the things you definitely want to do is control the variables as much as you can. You don’t want to be down by 2 in the 3^rd period of hockey, you want to be in the lead and able to protect your advantage. In your life there is a score attached to you that dictates a very similar outcome similar to winning and losing a game, which many people do not take seriously enough.  I’m sure that you have already guessed what score I am talking about...your credit score. A superior credit score allows you to garner more money, secure better rates and negotiate more favorable terms and conditions. Conversely, a poor score leaves you very few options and you are at the mercy of a lending system that punishes those perceived as higher risk players.

In Canada, all of your credit information is collected and held by two organizations. Equifax and Trans Union are the two companies that manage the data and hold your very precious credit score in their hands. This score is extremely important to lenders and it dictates how you will be treated. Are you the shining example of a winning team that the banks can rely upon to make your payments or have you lost a few games and are deemed to be slightly less viable for the playoffs?

Here is how your score works. Every time you have a credit obligation such as a loan, credit card or retail card of any sort where credit has been extended to you, your progress is tracked.  When you make your payments on time, you build yourself a good score. If you miss a payment and the party who has extended credit to you reports it, your score is degraded.  Specifically, credit scores range from 300-850, with 723 being the median. Scores below 600 are considered high risk borrowers, 620 being the dividing line between good and bad, 640 or above being "pretty good", 650 as average general credit-use behavior, and above 690 or 720 being excellent. Scores are based on payment history, outstanding debts, credit history, new credit, and credit in use.

Action for you to take immediately and going forward can be summarized below:

1)      Find out what Trans Union and Equifax have listed in your credit score. You can write for a free copy or pay for an instant download at their respective web sites. http://www.transunion.ca and http://www.equifax.ca

2)      Dispute any discrepancies on your credit score by contacting the two companies and diligently follow-up with any proof or documentation they request

3)      Do things to build a good score.

a.       Make payments on time

b.      Don’t get credit you don’t need

c.       Use credit wisely but consistently..inactivity can hurt you as well!

The Government of Canada offers a free publication called Understanding Your Credit Report and Credit Score. This publication provides sample credit report and credit score documents, with explanations of the notations and codes that are used. It also contains general information on how to build or improve credit history, and how to check for signs that identity theft has occurred. The publication is available online at the Financial Consumer Agency of Canada. Paper copies can also be ordered at no charge for residents of Canada.

Mortgage Madness - Fixed vs. Variable Rates

Hello out there in home buying land. Lets talk mortgages! I know I know, not as exciting as “So you think you can dance” or “Canadian Idol”, but hey…it is one of the most important decisions you can make in your life…AND…you are in control. So join me to get informed and let’s get going on your new purchase or renewal!
Ah, the debate continues…..does a variable rate provide a better return than a fixed rate? Will you make the right decision? Well don’t be afraid. Fear the lunch special at your work’s cafeteria but don’t fear your mortgage decision, it is not so scary. The nice thing about interest rates right now is that both fixed and variable rates offer great value! They are at a historical all time low. All you need to do is decide if you like the smooth ride of a Rolls Royce or the high octane excitement of a Ferrari. Both are great vehicles and will take you where you want to go! Here are some nuggets to ponder while you are making your decision to go fixed or variable…..
In Canada, we are currently coming out of the lowest rate environment in our history. Rates have nowhere to go….but up…or sideways a while longer. Depending on the economic recovery and the Bank of Canada’s strategy to stimulate growth and control inflation, the prime rate climb could be a mid to longer term duration. Prime has been bouncing around the all time lows for some time now with small pushes up and then pullbacks. Let’s simplify what this means.
The Prime Rate is adjusted by the Bank of Canada (BOC) when the BOC wants to either stimulate the economy or adjust for inflation risk levels. Sounds confusing right? Basically, the BOC will want to stimulate the economy, rates down, when we are all hoarding our money and counting coupons. Conversely the BOC will want to slow things down, rates up, to control rapid price increases when we are spending mad loot on diamond encrusted cell phone cases. The best way to encourage Canadians to spend money is to make it less expensive to borrow it. As soon as the economy strengthens (people spending again)….we will see the BOC raise the prime rate (like they did over the past couple of weeks) to control inflation.
Well that all sounds rosy doesn’t it? Not to strike fear into anyone’s heart, things can get nasty when the BOC and Economy don’t cooperate to make our life easy. Rates can and have moved relatively quickly in the wrong direction for home buyers or folks renewing. A relatively recent example being the late 80’s debacle where many people lost their homes, trailers and doghouses when the prime rate moved into double digits! While that scenario is highly unlikely to re occur, if you are a person who is more comfortable in a conservative, predictable and risk averse financial situation, you may want to go with a safe and predictable fixed rate over a variable rate. Fixed rates will provide a predictable monthly payment over the term of your mortgage.

However, if you like to have your finger on the pulse of the economy and can handle the stress of watching the prime rate fluctuate then you might want to consider choosing a variable rate. The variable rate historically has given a better return over the long run but spikes over the course of some years can cause problems for people not prepared to handle an increase in monthly payments less predictably.
Ok, you can get back to your favorite reality show now and focus on what’s important. Who has the immunity idol? Is that guy really singing about chickens? One last thought…..do your research, evaluate your options and find knowledgeable people to help you make your mortgage decision. Hey…I’m available, give me a call. I'd be happy to help!