Home and Mortgage - January 2009
* Christmas Debt Overload
* Be Mortgage Free Sooner
* Market Update
* Re-Energize Yourself
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| Current Mortgage Rates |
| Term |
Rate |
APR |
| Prime |
3.50 % |
3.47 % |
| Variable |
4.10 % |
4.06 % |
| 4 Year |
4.89 % |
4.84 % |
| 5 Year |
4.99% |
4.93 % |
| 10 Year |
6.45 % |
6.36 % |
| * Rates may be subject to change |
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Happy New Year ,
I hope you all had a very enjoyable holiday season and Cheers to a prosperous 2009! This is my new and improved Home & Mortgage monthly update. I hope you enjoy it. On to the 1st article...
Happy New Year...with Christmas Debt?
“Happy New Year” isn't exactly what comes to mind when the credit card bills arrive, and it's time pay up on all those Christmas purchases. According to a recent Bank of Montreal poll, 24% of Canadians who carry over a balance on their credit cards after Christmas said it would take them at least six months to pay off their holiday debt. Yes, red truly is a Christmas color. So much for more and more Canadians living paycheque to paycheque. Now they need more paycheques to pay off that gift giving debt.
If the Christmas season put your credit card debt into dangerous territory, here's a way to get your finances back on track. Chances are you're paying anywhere from 10-20% interest on your credit cards. Meanwhile, you may have enough equity in your home to refinance your mortgage, consolidate your credit card debts, and end up paying mortgage interest in the 5-7% range!
continued on pape 2
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| Term of the Month |
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Conventional Mortgage: A mortgage up to 80% of the purchase price or the value of the property. A mortgage exceeding 80% is referred to as a “Hi-Ratio” mortgage and the lender will require insurance for that mortgage.
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We've decided to wait while the housing market returns to normal. Call us when the seller drops the price from $999,000 to $40,000. |
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Continued from page 1
Happy New Year...with Christmas Debt
The first step is talking to your mortgage advisor. I can help determine how much equity is available and advise whether debt consolidation might be right for you. Even if you have to pay a penalty to break out of your existing mortgage, that cost is usually more than covered by the interest savings of debt consolidation. I'll do the math and show you how much you can save.
The goal of refinancing should be to save interest and get out of debt faster. It's important to understand that you're going to have to change your spending habits-at Christmas and year-round-or you'll be refinancing again before you know it. The best strategy is to use the money you save from consolidation to start a saving plan or to invest in an asset that will generate a return, such as revenue property.
For more info, call me today at [c_phone]. Together we'll make it a Happy New Year! |
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Financial Freedom Tip
An affordable way to become mortgage free sooner.
Some lenders suggest increasing payment frequency from monthly to bi-weekly to help pay off your mortgage faster. But as your local mortgage expert, I have a better suggestion. While paying more often may save you a little money over the life of a 35 year mortgage, as you can see in the example below, it only saves you 91¢ during the first 5 year term!
What I recommend instead is accelerated bi-weekly payments. Like bi-weekly, you're making 26 payments per year. But with accelerated bi-weekly, you increase the amount of your bi-weekly payments to the same amount they'd be if you were paying semi-monthly. As you can see, the extra cost per month is minimal, but the savings are HUGE!
This example is based on a $300,000 mortgage at 4.99% with a 35 year amortization. It shows how much each option saves you after the first 5 year term.
| Payment Frequency |
Payment Amount |
Additional Amount Paid Each Month |
Amortization (Yrs required to pay off mortgage) |
Total Interest Cost Over Life of Mortgage |
Mortgage is reduced by |
| Monthly |
$1,502.39 |
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35 years |
$281,825.52 |
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| Bi-Weekly |
$692.65 |
$0 |
28 Years 9 months |
$281,824.61 |
0 years and 91¢ |
| Accelareted Bi-Weekly |
$751.20 |
$126.86 |
23 Years 9 months |
$273,201.35 |
6.3 years |
I'd be happy to work out how much you can save and show you how to save even MORE by making lump sum payments! For more info give me a call today at [c_phone] .
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Market Update
From rates to recession |
It's buyer's market! Prices are dropping and probably will continue to drop until spring or later. Mortgage rates are very low; historically speaking anything below 6% is an excellent rate. However, most lenders are looking at deals much more carefully these days. Certain mortgages packages are being cut, especially LOC's (Line of credit). It is increasingly difficult if you are BFS (business for self) as more documentation is necessary, broker creativity is definitely required.
The VRM (variable rate mortgage & LOC rates are being affected the most. Due to the credit crunch the VRM rate is higher than what you would normally expect and LOC's are much harder to obtain.
An important reminder in this tight market, proof of closing costs (1.5%) is being asked for more commonly these days. Make sure to have the funds available and documents to prove it when purchasing your next home. $0 down “is” still available, you just need the deposit. The deposit may even be borrowed and paid back after you move in. If you are concerned about the market dropping further, unless you are planning to sell next year, you will be fine purchasing with limited down payment.
We don't expect mortgage rates to rise anytime soon, if anything they will drop further. The inflation for November clocked in at only was 2.0% in Canada. This is exactly the marker where the government would like to see it. With inflation currently not a concern, we don't expect rates to increase in the short term. I suggest continuing to enjoy your VRM (if you have one) for a while to come.
On the other hand the fixed rates are incredibly low, one might consider locking in if they see a raise in 2009. For purchasing, I suggest the following rates: one year fixed term, then switch/transfer to a VRM (the current VRM rate is higher than the norm). Or a four-year fixed term to ride the traditionally lower rates following a US presidential election.
Perhaps you have concerns of recession? After most massive economic booms, you will feel a small recession. Recession by definition is two consecutive quarters of negative economic growth, also referred to as GDP (Gross domestic Product). If you follow the GDP, you will see that Canada isn't doing nearly as poorly as the generally negative press is indicating. Fear sells; let's not forget that. but we are still relatively strong in Canada, especially our banking systems, which are, rated number one in the world for solidity. If you look at the numbers of the stock market and the housing starts right now ... we are in the same place as we were 3 years ago! Due to excessive inventory and concerns of a price drop, people are hesitant to purchase. This will change into the New Year, as spring will once again allow the real estate market to bloom. |
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| Re-energize yourself with a simple 1-day cleanse
If you're feeling run-down and stressed, your body may be telling you it's time for a cleanse. This simple 1-day detoxifying cleanse will help you kick start the New Year with more energy, mental clarity and vitality.
Here's how it works:
Foods to avoid: During your cleanse, avoid alcohol, white sugar, coffee, fats and oils (including olive or coconut oil), dairy products (even organic ones), wheat, gluten and all flour products, nuts, seeds, starchy vegetables (such as potatoes, peas, winter squash, yams and beets), and all animal or flesh protein, eggs, and soy protein.
Dinner the night before. Eat a large organic green salad topped with grated carrots, red onion, tomato, cucumber or sprouts. For dressing, use fresh lemon juice, organic raw apple cider vinegar, sea salt and herbs. Have a generous portion of steamed organic vegetables. Drink pure water or herbal tea.
Breakfast. When you get up, drink a large glass of water with the juice of half a lemon. For breakfast have fresh organic fruits such as apples, pears, melon, kiwi, grapefruit or oranges (avoid bananas). Drink at least four glasses of water throughout the morning.
Lunch. Eat a large green salad. Drink at least four glasses of water throughout the afternoon. If you're still hungry, eat as many apples as you'd like.
Dinner. Eat a large serving of steamed vegetables and/or vegetable soup. You may also have salad.
The morning after. Have a large glass of water with lemon juice. Then gradually return to your normal diet, revitalized and refreshed!
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| This Issue of Home And Mortgage is Brought to you by Your Mortgage Specialist, Darren Popoff |
With over 20 years of sales, marketing, and project management experience, I understand what it takes to get the job done. I also know that life is built on relationships and as your personal Mortgage Specialist, my relationship with you the client is of the utmost importance. There is more to a great mortgage than just the rate and the term; it's also about your needs now and in the future. As a Mortgage Specialist I work for you and not the lender, therefore my main task is to ensure that you get the best possible mortgage that meets your needs.
Your 110% satisfaction is my guarantee! Call me today at (604) 818-9262 to find out how I can create a mortgage that's right for you, not your bank! Read More
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