1. Wealth accumulation by paying down debt in the form of mortgage payments, whereas rent pays a landlord’s mortgage down.
2. Your credit rating improves when you own a home.
3. Over time, your net worth increases allowing you to establish a preferred status with your bank, giving you the opportunity to make other major plans such as owning your own business.
4. If you would become unemployed, the landlord still expects the rent payment; most lenders will work with you and perhaps add the missed payments to your mortgage.
5. Owning your home allows you to choose how to live, what colors, what decor, what personal choices you prefer.
6. If you decide not to live in your home, you can make the choice of selling and moving elsewhere, and over time you will have accumulated equity to take with you – tax free!
7. If you require short-term loans, lines of credit, or other revolving credit arrangements, home ownership will provide  greater opportunities to obtain the same credit arrangements at a lower cost.
8. The wealth accumulation achieved by owning your home is tax free, since equity in your principal residence is not a taxable gain.
9. There is a program available for homeowners only, which provides job loss insurance to cover the mortgage payments while you look for work and get back on your feet.
10. A mortgage payment can be fixed for up to ten years!
11. You can control a $100,000 asset for as little as 5% of that amount in cash.
12. Pride of Ownership: you will be amazed how the small repairs that used to bug you in your rental are now a joy when you own your own home.
13. Sweat Equity: what stocks let you add value by painting, landscaping, adding a pool, remodeling a kitchen or bath?
14. Retirement Plan: every mortgage payment and every percent of inflation adds to your retirement.
15. You now have an estate to pass on.
16. You don’t answer to anyone (except the bank, until your mortgage is paid off).
17. You become a respected member of the community.

If you would like even more reasons as to why a purchase could help you, please don’t hesitate to call or email for a personal appointment.

To your financial success,

The Trimor team!

www.TrimorMoney.com | CalgaryMortgageBlog.ca

]]> http://www.trimormoney.com/calgarymortgageblog/2012/01/the-benefits-of-owning-your-own-home/feed/ 0 http://www.trimormoney.com/calgarymortgageblog/2011/11/money-management-101%e2%80%a6same-rules-apply-for-countries-as-individuals/ http://www.trimormoney.com/calgarymortgageblog/2011/11/money-management-101%e2%80%a6same-rules-apply-for-countries-as-individuals/#comments Mon, 21 Nov 2011 17:07:48 +0000 admin http://www.trimormoney.com/calgarymortgageblog/?p=299

Do you understand what’s happening in Greece, Europe and through the rest of the economic crisis we’re seeing these days?

Let us begin with some observations on the basic mechanics of sovereign debt default management, or to the average person, “balancing ones budget.”

If you borrow $1 at a 5% simple interest rate, next year you’re going to owe $1.05.  If you don’t pay any of it back and just roll over the debt, you’d then have to borrow $1.05 next year and on and on and on (compound interest).  This is obviously a slippery slope, even if it’s a sovereign government doing the borrowing.

Though the previous example seems obviously wrong, countries and individuals alike often justify the continued borrowing based on increasing incomes or increasing GDP.  If a country’s GDP growth rate for example, is higher than the interest rate they borrow at, then the debt they owe, although growing, would still shrink as a percentage of their GDP.  But if GDP growth is below the interest cost, then the debt that’s continually rolled over would grow to become a larger percentage of their GDP.  As soon as lenders recognize that’s where the country is headed, the government is going to find it much more difficult and expensive to borrow the necessary new sums of money needed to fund the country and it’s debt burden.

To prevent this from happening, government and individuals need to run a budget surplus, meaning that tax receipts or income must exceed expenditures (a/k/a/ earn more than they spend).  In doing so, a portion of the surplus can be used to reduce the debt, avoiding the downward spiral faced by a number of countries and individuals around the world today.

According to ECB data, Greek government debt was already 120% of GDP in 2008.  The budget deficit was over 10% of GDP in 2009 and almost 5% in 2010.  That, plus the rapidly increasing interest rate costs (higher risk, higher cost) facing Greece, pushed their debt to 156% of GDP in 2010.

If Greece were an individual talking to a bank for a mortgage, it’s a solid bet that they would be hearing “declined” and put on a serious debt counseling program!  The reality is that many of the developed nations around the planet were (and still are) running on a similar treadmill.  The current shocks have been keeping borrowing rates in Canada low.  As the EU countries and the rest of the world work their way through this process, we’ll eventually see better economic times and likely, interest rates bounce upward a bit.  If you would like a non-obligational review of your mortgage needs or a preapproval to shop for your new home protected from rising rates, contact us today!

Helping you make heads and tails of it all,
James C Tworek and The Trimor team!

- with thanks to the team at GoMax Solutions!

If you’d like to see a comparison between Canadian mortgage rates over the past 25 years click on the link here: RateTemplate_Both_MCC_September_2011

Having been in this industry for more than a decade, there seems to be a general seasonal shift between ‘summer’ rates (usually a bit more aggressive to capture the larger market that chooses to move when weather is nice and the kids aren’t in school) and ‘winter’ rates (Canadians tend to ‘hibernate’ through the winter and if they have the choice they don’t want to slip into a snow drift as they move furniture). Having said this, as we have all heard ad nauseum over the past few months from just about every media source, rates are historically low and are still spurring purchase, refinance and renovation activity across Canada.  What is more is that if you take a peek back into the mortgage rates of 2006-2007, Canadians were paying in the low 5%-range to the low 6%-range.  With all of these mortgages coming up for renewal in the coming 6-12 months and today’s market rates being so low, many borrowers will be getting a bit of a ‘bonus’ when it comes to monthly cash flows as they renew previously-high fixed terms into current rates that are 2-2.5% lower than before.

If you are interested in learning more about how today’s low fixed and variable rates could help save you money whether you are renewing your existing term, looking at refinancing debt into your mortgage, renovate your home or looking to improve your rental properties’ cash flows, please contact us and we will be happy to work though your options with you to ensure you receive the very best fixed or variable mortgage for your needs.

To your financial success,

James C. Tworek and The Trimor team!

www.TrimorMoney.com  |   www.MortgageShowDown.ca | www.SuHipoteca.ca

@trimormoney on Twitter

Canada’s national housing agency says it expects the country’s real estate industry will remain healthy in the second half of the year, building on favourable economic conditions in the first six months of 2011

Canada Mortgage and Housing Corp. said Monday that there have been fewer claims under its mortgage insurance programs, which protect lenders from defaults by borrowers.

CMHC attributed the reduced number of claims to continued low interest rates and an improved employment situation.

The agency said it expected fixed mortgage rates to stay relatively flat for most of the year, with the five-year posted rate at between 4.1 per cent and 5.6 per cent, then increase slightly in 2012.

CMHC said variable rate mortgages would remain near historically low levels, although some banks recently increased their variable rates to reflect the higher cost of raising money.

Prices of homes shown on the Multiple Listing Service are expected to grow only slightly going forward because the supply and demand for resale homes will likely stay in balanced territory, CMHC said.

A least one analyst agreed that the real estate market should stay fairly healthy for the rest of 2011, but said it’s already cooling slowly and home prices may decline in the longer term.

“What you’re probably looking at is a period where prices are relatively flat, maybe a little bit lower in the next few years,” said Adrienne Warren, an economist at Scotiabank who specializes in the real estate industry.

“Affordability from a price perspective has deteriorated and that’s going to have to, over time, come back to more normal levels but it doesn’t imply that that has to happen quickly as a type of correction that occurs quickly.”

She said interest rates are low and attractive right now and encourage first time home buyers to enter the market, which drives up prices. Once those rates begin to rise — likely in the second half of 2012 — the current price of homes will become unaffordable for many, putting downward pressure on future prices.

Meanwhile in its report Monday, CMHC said changes to mortgage rules introduced by the federal government earlier this year played a part in reducing mortgage interest payments and allowed Canadians to build equity in their homes faster.

Canadians are finding it easier to pay off their mortgages, with arrears levels improving and the volume of mortgage insurance claims lower than expected.

In March, the federal government put through new rules that reduced the maximum amortization period to 30 years and cut the maximum amount Canadians can borrow to 85 per cent of the home’s value.

After the changes, refinancing activity fell by nearly 40 per cent, which means fewer Canadians took on more debt. Federal Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney have repeatedly warned of the ballooning debt level of Canadian consumers.

Ten per cent fewer Canadians bought mortgage insurance immediately after the new rules began, and the level was five per cent lower than sales before the changes came into effect.

CMHC reported its net income for the quarter was $383 million, up $61 million from $322 million in the same quarter last year. Revenues were down slightly at $3.3 billion, versus $3.4 billion.

The agency’s predictions for the rest of the year echo a revised forecast by the Canadian Real Estate Association released earlier this month. CREA said it expected higher national home resales this year, reversing upward its previous forecast of a one per cent dip.

National average prices will be in the range of $347,700 to $374,300, growing to between $349,500 to $385,000 in 2012, CREA predicted.

CMHC said sales of existing homes should range between 429,500 and 480,000 units in 2011 and between 410,000 and 511,900 units in 2012.

Earlier this month, the CMHC said that national housing starts rose to 205,100 units on a seasonally adjusted basis in July, 11.6 per cent higher than the 188,900 reported in the same month last year and 4.3 per cent more than the 196,600 recorded in June.

The uptick, driven by strong construction on condos and apartment buildings in urban centres, is likely due to builders catching up to robust demand last year rather than expectations of coming growth, it said.

Home building activity has been increasing through the first seven months of 2011, but starts are still down 4.6 per cent from a year ago.

Predictions for the Canadian market were in stark contrast with the most recent figures from the United States, which showed that country’s depressed housing market is still trying to get back on track.

The U.S. National Association of Realtors said Monday that its index of sales agreements fell 1.3 per cent in July to a reading of 89.7. A reading of 100 is considered healthy by economists

The association also said a growing number of buyers had cancelled contracts after appraisals showed the homes they wanted to buy were worth less than they bid.

Today we can can still preapprove you with at prime -.75 – get in while the gettin’s good!
To your financial success,

The Trimor team!

My wife and I own a few income properties of our own: we purchased them through the boom times of 2005 through 2008 here in Calgary. Some of them, we’re happy with. Some of them have been headaches and a lot of hard work. We’ve earned our stripes and taken some hard knocks, but to do it again (which we’ll inevitably do) it will be with a completely different focus… and with the help of professional mentors.

My limited scope of ‘buy and hold’ Real Estate Investment experience has been focused mostly between renovated, furnished downtown condos for executive rental… I’ve actually never completed a ‘flip’ before, although having worked in the personal finance and mortgage brokerage world for the past 12 years, I’ve both helped and seen many clients, not to mention colleagues that are professional investors, go through the process several times to varying degrees of success.

Can investors get away with quick flips today? Yes… but IMHO not as easily. Markets are more balanced, the ‘rush’ factor isn’t as prevalent as it used to be and first-time homebuyers are taking their time in looking for the ‘right’ home, not just the ‘right now’ home. Sum: you can’t pump the same amount of juice out of a flip – with the same lacklustre renovation job – as you once could.

So this begs the questions: what does a ‘TRUE’ Real Estate Investor do that unsuccessful real estate investors don’t? If it’s really a viable business model, how do they do it?

To get to the bottom of this, my natural instinct was to turn to my friend and colleague, Dave C Bonk of Royal LePage Solutions. Dave has been an entrepreneur for over 12 years and involved in several businesses relating to Calgary Real Estate with a current focus on real estate, acquisitions, sales and consulting. Dave has extensive experience in most aspects of residential building, finance structures, sourcing properties to purchase and sell or hold. From a young age Dave quickly learned to “work smarter, not harder”. If he was going to focus his energies on his “day job” as a property investor, he had to maximize his “per transaction” profits: with this in mind, he surrounded himself with several mentors and professional colleagues that he could symbiotically grow with. He also earned his license as a Realtor here in Calgary as a strategic move: if a guy is aiming to maximize profits, access to the MLS system and the ability to earn commissions on his transactions is paramount. Dave has been instrumental to my own continuing education in the Real Estate Investment field and is a great source of motivation for myself. I can say that for all of the “investors” that I’ve met in my career, I will assert that Dave is one of the few true, bona fide professionals in this field.

I had the pleasure of talking with Dave this week and he was kind enough to provide me with some insight into his “Top 5” list of how to be a successful Real Estate Investor:

#1 – Patience, Patience, Patience, not only Location, Location, Location

This is Dave’s Number One rule to Real Estate Investment. While the latter rule applies for hopeful sellers and long-term holders, “for your highest chances of the most success whether it’s an acquisition or a sale, don’t paint yourself into a corner to ‘have to’ buy or sell. If I’ve ever been in a rush to buy or sell its usually meant that I’ve left something on the table. Be prepared; know what you want, and when you see it, pounce like a cow. ”

#2 – Make your money on the Buy

Imagine a $500,000 bungalow in a just-off-downtown neighbourhood here in Calgary. Let’s imagine that apples to apples, there are several “like” properties for sale at the same time: if you’re able to purchase one of them for $475,000 before doing anything else, you’re already $25,000 (5%) up on the rest of the market. This goes a long way to absorb renovation costs and other expenses throughout the buy-reno-flip process and adds to your total profit at the end of the day. There are several ways to achieve a strong acquisition including seller motivation, foreclosure, homes in disrepair, job transfers, divorces, etc. “ I strive for win-win deals; you know it’s a win-win when both parties leave the negotiation slightly put off”

#3 – How can you maximize your potential returns through this process?

Dave does countless hours of market research before making any moves whatsoever. “After researching the market for hours and sometimes days or weeks, I may only go see one or two key properties. Recent sales, comparables, market influences, property-specific influences… are all taken into account. I also always recommend that investors bring their ‘team’ along with them: inspectors, family member, dad, contractor buddy, financing guy (if required)… This enables you to move quickly and all decision makers are present as the right properties don’t last and often: they need to be moved on quickly”

Once he’s ready to buy, Dave’s perspective is “The best way I know how to get a good deal on a property is to pay cash and close quickly. If I’m up against a standard retail buyer and his offer has multiple conditions, financing deadlines, inspections, etc… and mine doesn’t, I’m already in a better position.” Many buyers who want to get into the exciting game of house flipping will need to put a financing condition on an offer, by having a strong pre approval in place will speed this condition along and make your offer more appealing to a seller. Make sure that your mortgage broker has all of the tools they need to be able to help you get the financing you need, as efficiently as possible. No one wants to chase anyone for paperwork, or at the very worst, have a transaction fall apart because it took you 2-3 weeks to order your Notices of Assessment from Revenue Canada.

#4 – Best form of Real Estate Investment

“Flipping houses and consulting for others who wish to do the same is my job, it pays the bills. Getting money to truly work for me comes from long-term holds and is hands-down the best form of Real Estate Investing. Buy for revenue: buy secure, not sexy. Your renters pay off your mortgage (long-term profit for ‘free’), you should be able to eke out some positive cash flow (ongoing cash flow income) and ideally, due to the markets rising and general inflation, the property goes up in value. Buying an undervalued property to fix up and either live in or rent out delivers double benefits to the investor. You’ll have the security of equity in your property while the tenants pay the bills.”

#5 – Have your team and your toolkit put together first.

Ensuring that you have all of your costs and timelines measured out with a solid and reputable team is paramount. “I’m not grabbing the yellow pages and calling around to find the best contractors – I’m using just about the same team on every project I do and I make my contacts available for my clients who I consult for. This includes everyone from my lawyer, mortgage guy, drywallers, electricians and suppliers.”

Of course, experience and reputation with your team helps to finish a project faster. “Most of my clients who I help buy and sell houses for profit are contractors or people who aren’t afraid of a renovation. Just knowing how and fix a house isn’t enough. Let me put it this way: sometimes the trick isn’t knowing how to fix issue, its knowing which issues to fix. Having the right team in place right from the purchase and financing to ongoing consulting along the way and finally the final sale – this saves time, frustration and generally a lot of money.”

Investing in Real Estate is a daunting task that involves substantial time, investment and potentially, risk. This risk can be mitigated by having a sound amount of mentorship and education as well as planning and the right people on your team. If you are interested in having David consult with you on your next investment property purchase, you can reach him via his websites: www.DaveBonk.ca, www.FlipAHouse.ca or www.SellerFinance.ca .  As always, the mortgage professionals here at Trimor are happy to provide you with your mortgage financing questions and needs!

To your financial success,

James C Tworek

Partner, Director of Corporate Development | The Mortgage Centre, Trimor Home Finance www.TrimorMoney.com | www.SuHipoteca.ca | www.CalgaryMortgageBlog.ca

@trimormoney on twitter

If you’ve lived in one place long enough, or if you’re thinking about moving into a new area that you don’t know much about, speaking to the community association or other local groups that have the common goal of creating a bond between residents and helping improve the area overall.  These groups can help to reduce or eliminate issues faced by your neighbourhood and can help improve it for everyone that lives there, visits the area or may be thinking about buying in it.

Two simple, cost-effective ways for you to participate in improvement of your neighbourhood:

Start a block watch program

A block watch program is invaluable to a community.  It can provide a greater sense of security for everyone involved, and offer an opportunity to form friendships with neighbours who share your concerns.  To get started, contact you local police department. It can provide advice for forming a block watch.  Your program can be as large or as small as you choose.  This program can range from simply keeping an eye on your neighbours’ homes, or involve regular meetings and newsletters.  Recruit members by talking to friends and neighbours, asking parents at local schools and even going door-to-door.  For a meeting place, ask your local library or community centre about renting a room.

Forming a block watch does require some time, work and commitment but the benefits for your community are well worth it.

Join a neighbourhood committee

The benefit of a committee is that together you have a unified voice that’s harder for local government to ignore and easier for an entire community to hear.

A committee may act on any number of issues.  It can petition for a much-needed crosswalk to a stop sign in the area, organize a volunteer group to remove graffiti, or help restore a park to make it more welcoming to parents and children.  A neighbourhood committee can raise funds for neighbourhood improvements, petition local government and more to achieve a community’s goals.

Above all, by encouraging participation from all members of the community, a neighbourhood committee can provide a sense of belonging for everyone.

We’ll be back next week with some strategies to maximize good neighbourhood behaviour.

Helping you get the most out of your home ownership experience,

James C. Tworek and the Trimor team!

www.TrimorMoney.com

www.CalgaryMortgageBlog.ca

If you’ve come to Canada from a different country, you can probably do quite well with basic communication in English or French.  Regardless of profession or comfort level with one or both our national languages, sometimes it’s just more comfortable for you to work with financial concepts in your mother tongue.

We understand that!

Trimor’s diverse team of 26 agents (and growing) has the ability to help you with your mortgage and home financing needs in a variety of languages, including:

Arabic

Dutch

English

French

German

Hindi

Punjabi

Russian

Spanish

Tagalog

Contact our team today to get the mortgage financing help you need in your mother tongue!

To your homebuying success,

The Trimor team!

www.TrimorMoney.com

www.CalgaryMortgageBlog.ca

When it comes to getting approved for a mortgage, a bankruptcy can make it more challenging, but not impossible. The hardest part is being patient. It takes time to get through the bankruptcy process, and more time to renew a financial reputation.

Steps to get approved after a bankruptcy:

1.       START SAVING – once the bankruptcy has been discharged, set aside as much as possible for a down payment.

2.       RE-ESTABLISH CREDIT – apply for a secured credit card. A secured credit card is a bank credit card where the funds are deposited before they are spent. On a credit report, the secured credit card shows up as a regular credit card. After six months or longer, request a regular credit card – it will transfer across on the credit report.

3.       BUY RRSPs – first time homeowners can withdraw up to $20,000 from RRSPs to use as a down payment. Plus, since an RRSP generates a larger tax refund, the extra money can be added towards more savings.

4.       BE REALISTIC – bankruptcies are rough, but the freedom from debt is incredible. Keep that liberation by house-hunting sensibly.

5.       CONTACT US – to find out if all the steps have been reached to qualify for a mortgage after bankruptcy.

TIMELINE: Most homebuyers qualify after 2 years from a bankruptcy discharge and 1 year of established credit.

NOTE: Be careful to avoid entering a CONSUMER PROPOSAL. They are not the best option when personal financial stability has failed.

OUR BEST ADVICE? Bankruptcy can be a humbling experience. We as a team are well aware of the financial challenges facing many Canadians today – especially post-recession. No matter what scenarios borrowers face, it is our priority to be knowledgeable, honest and sensitive. Let us help them get back on their feet.

To your homebuying success,

The Trimor team!