Tough times

It has been a while since I last posted and was trying to think what type of information would be most beneficial. We hear so much about interest rates being the lowest in years and how it is such a great time to refinance. This is true, however it is also important to realize what is a great rate and is it really my best interest to purchase a home or refinace durring these tough ecomomic times.

Being a mortgage broker you would think that I should say "everyone should purchase a home at their earliest possibility". Why pay rent when you can own and start building equity (asset value in a real estate purchase). Sometimes it is far better to rent! More important you need to make sure that when you are buying a home that you have some financial cushion or resources to make it through the various challanges or responsibilities of life. We live in an age where everyone wants something fast, now and easy. The reality is that most good things in life take time, energy and work.

Are you prepared or have you started to save for not only a down payment, closing costs (legal bills, moving costs, etc.) and the ongoing maintenance that are part of home ownership? Do you have adequate savings that would cover at least 3 months of your monthly obligations in event you lost your job, became ill or other life change? If not, then perhaps making that home purchase today should perhaps wait until you are better prepared.

If deep inside you are somewhat skeptical or feeling reservations about buying a home or using the equity in your home to pay out some debt, just because your bank or broker is telling you that now is the time because rates will never be this low again! Just remember, are you prepared for the rough times... If yes then perhaps they are right. If not, then wait because the best rate is the rate of the day when you know that you are well prepared and have your financial house in order!

These are tough times. BE SMART... ASK QUESTIONS...GET ANSWERS!

Mortgage "SMARTS" Can Save You Money

If you are shopping for a house, you may have heard of some new mortgage products on the market, with amortization periods of up to 30, 35 and 40 years. While they can mean an attractive smaller monthly payment, you should be aware of the potential consequences - such as the amount of interest you would have to pay, over the years.

Do the math and know your options before signing a mortgage contract

The Financial Consumer Agency of Canada (FCAC) recently released an update to its suite of on-line mortgage tools. FCAC's mortgage qualifier calculator and mortgage payment calculator are designed to help consumers determine, first, if they qualify for a mortgage - given their current income level and debt load
- and then how to calculate their optimum schedule of payments. FCAC's mortgage calculator can show you how many years and how much money you can save by making pre-payments on your mortgage.

These tools, together with the Agency's FCAC's on-line mortgage quiz and its publication The ABC's of Mortgages, can help you better understand your rights and responsibilities as a consumer, as well as the terms and conditions associated with the different mortgage products that are available.

Despite knowing the extra costs involved, you may still have a good reason to opt for a 30- or 40-year mortgage product. A longer amortization period may be the only way you can afford a house in today's expensive housing market. However, if you are thinking about a long-term mortgage, you should consider making accelerated bi-weekly payments. By doing so, you can save tens or even hundreds of thousands of dollars in interest over the years.

You can find more information on mortgages by consulting FCAC's Frequently Asked Questions (FAQ) database, which contains answers to a number of mortgage-related questions - from penalty calculations, to insurance products, to interest rates. To view the Frequently Asked Questions, visit the Agency's Web site at: www.fcac.gc.ca and go to the "For Consumers" section.

To obtain a free copy of The ABC's of Mortgages, call FCAC, toll-free, at:
1-866-461-3222 or visit their website at www.fcac.gc.ca.

FCAC is a federal government agency that protects consumers' rights and provides them with information about the financial products and services. - News Canada