Tuesday, May 24, 2011

How Debt Consolidation Makes Sense

How debt consolidation makes sense

When it comes to consolidating debt, we get the most online inquires in Canada. That's because debt consolidation, also referred to as a Refinance is quite common these days. It's not because more people are in debt, it's simply because it just makes sense.
Pulling equity out of your home at today's great interest rates can save you as much as 17% a month in interest charges!
The valuable equity that you may already have in your home can be used to consolidate high interest credit card debts, credit lines and even car loans.
In the past, for a client to consolidate credit card and loan debts, a second mortgage was your only choice. Did you know second mortgage rates can be as high as 19%?
Today, you can top up your existing mortgage to incorporate those debts and remove the debt load without having to take out a second mortgage. Why would you choose that expensive avenue over refinancing at today's 5-year rate of 3.99%*.
Victor Peca will guide you through a painless process to get you on the road to a debt free lifestyle.
Actual Example
Victor helps many clients every month, leverage the equity in their home to consolidate the debt and lower their overall payments. The following example was the case for one of our clients. It clearly shows the money they were able to save each month.

Before Debt Consolidation
Existing Mortgage
Property Value
Mortgage Balance
Interest Rate
5.2 %
5 year
Monthly Payments
Credit Cards ($8,000)
Other Debt ($3,000)
Mortgage payments
Total Payments

After Debt Consolidation
Victor Peca Mortgage
Property Value
Mortgage Balance
Interest Rate
3.99 %
5 year
New Monthly Payments
Credit Cards ($0)
Other Debt ($0)
Mortgage payments
Total Savings/Mth
Total Savings/Year
Total Savings 5 Yrs

As this example shows, we were able to refinance their existing mortgage before the term was up and get them the money they needed to pay off all debts and lower their monthly mortgage payment by $152.60. So they saved a total of $552.60 per month and have been able to put that extra money into an investment account for their retirement.
Your next step...
In order to take advantage of this program you must be a home owner and have at least 15% equity or more in your home. If you have any concerns or questions please include them in the application/comments section or email us directly.
The best way to determine whether debt consolidation is the right avenue for you is by calculating what your monthly debt payments total. Include all loans, lines of credit, credit cards and your mortgage. Take that amount and divide it by your gross total monthly income. If the number is higher than 0.50 then don't leave this site. If you are below 0.50 we can still help save you money.
Fill out our online Application at Apply Now and let us do the leg work for you. The secret is to determine at an early stage whether debt consolidation is the best route for you.

Monday, May 16, 2011

32 " Flat Screen TV Referral Program

This is a reminder of my 32" Flat Screen TV Referral Program. How does it work? It is a very Program, all you do is refer me a client that funds their Mortgage with me (min $150,000 mtg) and upon closing, you will get delivered a 32" Flat Screen TV with a 1 year warranty. 
I believe in "You Get by Giving" and that you should show appreciation when someone puts their trust in you with their biggest investment of their lives! This is something that your current lender will not give you! I am a Relationship business builder and will continue to educate and update all my past clients with current mortgage trends, specials, strategies, tips on home improvements and ways to pay down their mortgage quicker.
So please keep me in mind for your next transaction if it is a  renewal, purchase, debt consolidation or if you have a friend or family seeking a Mortgage Broker who Truly Cares about them and along with that get great rates and the best service that should be expected.
Please contact me at 416.888.4934 or visit my website at www.victorpeca.ca. I can also be followed by you via Twitter @victorpeca and by blog at www.victorpeca.blogspot.com.


Victor Peca
Mortgage Broker

April 2011 Housing Starts

OTTAWA, May 9, 2011 — The seasonally adjusted annual rate1 of housing starts was 179,000 units in April, according to Canada Mortgage and Housing Corporation (CMHC). This is down from 184,700 units in March 2011.
“Housing starts moved lower in April mostly because of decreases in multiple construction across the country and in rural starts,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “The multiple segment market in Ontario and Quebec contributed the most to the overall decline in Canada.”
The seasonally adjusted annual rate of urban starts decreased by 1.9 per cent to 160,100 units in April. Urban multiple starts were down by 5.1 per cent in April to 96,000 units, while single urban starts increased by 3.4 per cent to 64,100 units.
April’s seasonally adjusted annual rate of urban starts decreased by 9.4 per cent in Quebec and by 8.0 per cent in Ontario. Urban starts increased by 5.3 per cent in the Prairie region, by 10.4 per cent in the Atlantic region and by 23.5 per cent in British Columbia.
Rural starts2 were estimated at a seasonally adjusted annual rate of 18,900 units in April.
As Canada's national housing agency, CMHC draws on more than 65 years of experience to help Canadians access a variety of high quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.
For more information call 1-800-668-2642.
1 All starts figures in this release, other than actual starts, are seasonally adjusted annual rates (SAAR) — that is, monthly figures adjusted to remove normal seasonal variation and multiplied by 12 to reflect annual levels. By removing seasonal ups and downs, seasonal adjustment makes it possible to highlight the fundamental trends of a series. Reporting monthly figures at annual rates indicates the annual level of starts that would be obtained if the monthly pace was maintained for 12 months. This facilitates comparison of the current pace of activity to annual forecasts as well as to historical annual levels.
2 CMHC estimates the level of starts in centres with a population of less than 10,000 for each of the three months of the quarter, at the beginning of each quarter. During the last month of the quarter, CMHC conducts the survey in these centres and revises the estimate.

Wednesday, May 11, 2011

Owning a Home During A Separation

We all know that marriage isn’t always forever. And when a separation occurs, a home is often involved. Since most couples have a joint mortgage – one where both names are on the mortgage and title of the home – when separation or divorce proceedings occur, many wonder what will happen with the home.
When the marriage comes to an end, there are two obvious options concerning the home: 1) sell the property and split the proceeds according to your agreement and go your separate ways; or 2) one person buys the other party out of the mortgage and the title of the property.
The first option is a straight-forward transaction where you put the house up for sale, sell and split the proceeds. The second option, however, is slightly more complicated.
The decision between the options is a personal one borne out of the specific circumstances of the parties involved. Perhaps there are young kids involved that need to stay in the house, the market is down and there will be a loss on the property that neither party can afford, one party can afford to buy the other party out, etc.
Once the decision is made, how do you go about buying the other person out of a mortgage?  Well, essentially, you are refinancing your mortgage using a single income (the person who is buying the other party out of the house) and qualification, versus the original purchase, which was based on joint income and qualification.
If you are the one buying your partner out, the first step is to ensure that you can afford the mortgage payments. This is imperative because the lender will ask for proof that you are capable of covering the mortgage in order for you to apply on your own. In addition to covering the mortgage amount, you will have to come up with whatever dollar amount you have agreed on to buy the other partner out. This may come out of the equity in your home if it’s sufficient.
In essence, if you can afford the mortgage on your own, the most common means of buying out your partner post-separation and transferring title out of the joint name and into your name, is to refinance. I can help you through each step of this process.
If you are not in a financial position to buy your ex-partner out of the house, and you agree to both stay on title and have payment arrangements, there is one warning to be taken very seriously. Just because one person is responsible for the payments (even with a court order), if the mortgage goes into default, both parties on the mortgage will be affected.

The most important piece of advice when dealing with a mortgage during a separation is to become informed. Know your options, talk to professionals about your options, and make an informed decision regarding your home and mortgage.

Rising condo fees cool market for brokers

While tougher mortgage rules have rekindled interest in condos, rising fees coupled with first-time buyer fears have limited the ability of brokers to capitalize on it.
“Condo fees are escalating, and with the government’s new amortization limits  and concerns about interest rates increasing, first time buyers are encountering greater hurdles to condo ownership,” said Michael Pezzack, a broker with Buyingblock.com, a web-based real estate and mortgage hub for Toronto first-time homebuyers. “That means less business for us.”
Condo sales were down 21.3 per cent year-over-year last month in the unsinkable Vancouver market, even as the number of detached houses purchased climbed 2.3 per cent. Another key market condo market, Toronto, saw new condo sales slip just under 5 per cent in the first quarter of 2011 compared to the first three months of 2010, according to the latest data. The number of pre-existing units changing hands dropped nearly 10 per cent over the same period.
The slippage runs counter to what many industry players had predicted following the government’s move on March 18 to tighten mortgage rules in order to discourage Canadians from taking on more debt. Then, many brokers suggested the decision to drop the maximum amortization to 30 years would increase the number of homebuyers turning to the condo market, unable to qualify for pricier single-family houses.
While lowering that ceiling has fueled interest in the condo market, a 4-to-5-per cent rise in condo fees over the last two years coupled with fears about a pending interest rate hike have kept many potential buyers from making a commitment, Pezzack told MortgageBrokerNews.ca. Here, again, it may be a question of affordability, with lenders using 50 percent of the condo fee when calculating debt-service ratios. Even a modest rise can block urban buyers from gaining a foothold in more desirable neighborhoods.
The result is some first-time buyers are simply deciding to wait it out, rather than further scale back their expectation, said Ranjit Dhillon, principal broker at Centum Mortgage Smart Inc., in Etobicoke.
“When the banks stopped giving 35 mortgages that was the time when people started calling the brokers,” he told MortgageBrokerNews.ca. “But that doesn’t mean that they are buying the condos now.
Dhillon and others point to buyer concerns that there may now be an oversupply of units in key urban centres – with the inevitable price adjustment soon to follow. “Many prefer to wait and see,” he said.
His analysis comes on the heels of a new poll suggesting two-thirds of young urban Canadians who recently bought or intend to buy a condo would prefer a house.  The 2011 TD Canada Trust Condo Poll also backs up Pezzack’s suspicions about condo fees.
About 95 per cent of respondents list those fees, which cover amenities and building maintenance, as the most important feature to look for in a condo. Four-in-five also said they’d be unwilling to pay more than $400 a month.

By Vernon Clement Jones | 11/05/2011 8:00:00 AM

Monday, May 9, 2011

How Can I spend Less on Debt

How can I spend less on debt?

Here are some good ways to cut your costs by spending less on debt.

  • Pay off high-interest debt first, or get a lower interest rate. If you have debt on a high-interest credit card, transfer it to a card with a lower rate. Another solution is to apply for a line of credit or loan at your bank and put all your debts together into one lower interest debt.

  • Think about using your home as backing to get a loan. You’ll get a lower interest rate.

  • Reduce your monthly bank charges. Pick one with low or no account fees. To find the right banking package for you, use the Financial Consumer Agency of Canada’s Cost of Banking Guide.

How can I get out of debt?

It takes time and good planning, but it is possible to get out of debt. Be sure to set clear, yet realistic, goals. Realistic goals will help you to stick with your plan. For example, "I want to get my debt down to less than 20% of my pay," or "I want to pay off my credit cards by the end of the year," are two clear, precise goals.

Here are seven strategies to help you reduce your debt:

  1. Budget a set amount each year.
  2. Get rid of high-interest debt first.
  3. Cash in investments to pay off debt.
  4. Consolidate different debts into one.
  5. Set up an automatic savings plan.
  6. Use cash from a life insurance policy.
  7. Make an extra mortgage payment.

How To Lock Out Crime: Home Security — Common Sense

How to Lock Out Crime: Home Security — Common Sense
If you are like most Canadians, you are concerned about the safety of your home and your community. One particular type of crime that worries Canadians is breaking and entering or burglary. Recent statistics show that burglary accounts for 22 per cent of all property crime.

The How To Lock Out Crime series, jointly prepared by Canada Mortgage and Housing Corporation (CMHC) and the Royal Canadian Mounted Police (RCMP), will make you more aware of burglary and its dynamics and show you how to minimize the likelihood that this crime will happen to you.

The How To Lock Out Crime series promotes a proactive approach to safety and security. By knowing the conditions favourable to burglars and taking steps to eliminate those conditions, you can greatly reduce the chances that your home will be burgled. Being proactive and implementing a well-thought-out plan can:

significantly reduce the opportunity for a crime to be committed; and
minimize the consequences — both personal and property damages — if a crime does occur.
In Home Security 101, you were asked to do a visual assessment of your yard and home. Even if all the required bolts, hinges, latches and alarms have been installed, good home security cannot be achieved without first adopting the commonsense precautions outlined in Home Security — Common Sense.

Before You Move…
If you are considering moving, the time to start thinking about security is before you rent or buy your new home, not after. Survey the neighbourhood to ensure that it offers the level of security you desire. When viewing a home, make note of its surroundings and check for lighting and visibility. Check the quality of doors and windows, including the frames. If the locks are sturdy and in good repair, then security might be improved simply by installing auxiliary locks. If locks are of poor quality or have deteriorated with age, you might have to replace them.

Look for possible signs of forced entry, such as a new pane of glass set among older ones, scratches around locks or hinges, or chipped wood around windows and latches. These could be indications that the home has a history of burglaries. Ask police about the frequency of crime in the neighbourhood.

Neighbourhood/Block Watch
Neighbours working together are their own best defence against residential crime. You can help yourself and others by joining a Neighbourhood Watch or Block Watch program in your area. The program coordinates the efforts of concerned citizens and community police to build a safe neighbourhood. Members watch out for each other’s homes and report suspicious activities to the police and to each other.

Other key elements of the program include improving residential security, giving residences a “lived in” look all year-round, and registering valuable personal possessions through Operation Identification.

Through mutual alertness and cooperation, neighbours reduce the likelihood that burglary and other crimes will occur on their street.

If no program exists in your neighbourhood, you can start one. Your local police can provide advice on getting organized and trained.

Benefits of a Neighbourhood Watch or Block Watch program include:

friendlier neighbours;
greater community spirit;
improved community-police relations; and
in most instances, a significant reduction in crime.

Operation Identification
Operation Identification is a program that gives people the opportunity to mark or identify valuables as a proactive measure against theft. Stolen articles that are marked are difficult for a thief to sell and much easier for police to trace.

Your local police force or your home insurance agent can supply you with an electric engraving pen. Engrave your driver’s licence number on all your portable possessions that could be sold — such as stereo equipment, cameras, computers, appliances, TVs and home electronics.

This makes your property traceable and therefore difficult to sell and less attractive to steal. Engraving will also help police identify any of your stolen property they recover as belonging to you. Operation Identification provides a decal for your window to show that your property is identifiable.

Avoid keeping valuables (coin and stamp collections, bonds, jewellery, large amounts of cash) at home. Use a safety deposit box. If you must keep valuables at home, list them on a piece of paper together with a full description of each item. If possible, photograph or videotape each item, as well as each room of your home, from several angles. Keep these photographs or videos in a fireproof safe or safety deposit box1. A few inexpensive but richlooking pieces kept in a jewellery box used as a decoy may deter unnecessary ransacking of your home in search of valuables.

Common sense security means taking proper care of your keys. Never tag your house keys with your name, address, licence plate number or telephone number. If you lose them, they could lead a burglar straight to your home. Tag them only with a War Amps key tag, which identifies your keys with a special code2. Never entrust your house keys to auto mechanics or other service people.

Make only as many copies of your keys as is absolutely necessary, and keep track of all copies. High security keys should have the name of the locksmith and “do not duplicate” stamped on the key.

Never keep keys in your jacket or purse. They can easily be stolen and returned without your knowledge.

Educate all members of your household about good key security. Stress the importance of not giving keys to anyone, even briefly (it takes less than a minute to make an impression of a key; the actual key can then be cut at the burglar’s leisure). If you cannot be sure your children will follow your advice, arrange for them to stay at a neighbour’s home when they return from school, rather than giving them a key.

Do not keep a spare key under the front door mat, above the door, in a flowerpot or anywhere else near your front entrance. These are the first places a burglar will look. If you lose your keys or move into a new residence, you should have all exterior locks re-keyed. It is usually possible to re-key cylinders without actually changing locks.

Locks on most garage doors are inadequate and can be easily pried off. Overhead garage doors (that is, those that swing out and up) should be fitted with a sliding bolt lock. Hinged doors can be secured by a pair of cane bolts at the top and bottom. Horizontal-panelled doors that slide along a track can be fitted with a pin that inserts into a hole drilled in the track to prevent the door from opening, even if the lock is broken.

Be especially careful to secure the garage if it provides access to the house. Put a deadbolt lock on the door leading from the garage into the house. Similarly, any door leading into the house from an attached greenhouse, solarium or addition should be treated as an exterior door and provided with a deadbolt lock.

Avoid wooden garage doors with thin, easy-to-break panels. If your garage door is of this type, you might be able to reinforce the panels with wood or metal braces. If the garage has a side door, make sure it is of solid-core construction, is equipped with a good lock and the hinges and frame are well-fastened and in good repair. Paint over the windows or cover them with a dark curtain or blinds. Keep the area well lit at night.

Never leave the garage door open. Burglars can simply drive in and close the door. Concealed from view they can take their time loading up with your possessions. A well-equipped garage not only contains valuable items, but also tools and ladders that can be used to break into your home.

If your garage has an automatic door opener, be sure it is designed not to respond to stray signals. Disconnect the unit from the power supply if you will be away for a long time.

Everyday Security
Use large, easy-to-read street numbers on your home. Be sure they are illuminated and visible at night. Pedestrians and neighbours who see someone lurking in your yard can’t notify the police if they don’t know your address. Do not display your family’s name outside the home as this allows a burglar to look up your phone number and call to see if you are home.
Ask to see identification before allowing service people (meter readers, inspectors, repair people) into your home. Call the company they claim to represent, but look up the telephone number yourself. If someone comes to your door asking to use the phone to call for assistance, offer to place the call yourself.
Don’t give information about your household to telephone surveys.
If you have an alarm, use it.
Lock all doors and windows when leaving home for the day or evening (or even a short time). Ensure that every family member adopts this habit. Engage the deadbolt locks, not just the key-in-knob locks. Never put a note on the door saying when you will be back. At night, use timers to turn on lights, radios and TVs in a pattern that corresponds to your normal activities.
Be sure the babysitter knows where you can be reached in an emergency and what to do in the event of a fire. Instruct the sitter never to admit anyone unless an adult is present. If a caller persists, the sitter should call police. All phone calls should be answered; an unanswered call may suggest to a potential burglar that the house is unoccupied.
Store lawn mowers, barbecues, bicycles and snowblowers out of sight. Lock exterior basement doors and doors to cabanas, garden sheds and enclosed patios and porches. Keep ladders stored out of reach under lock and key.
Check that windows and doors are secured before retiring for the night. Pay particular attention to basement windows and sliding patio doors. In hot weather, patio doors are used so often that the last person using them will often leave them unlocked.
Avoid advertising when you will be away (either in person, in print, or through a message on your answering machine). An advertisement in the paper that requests respondents to call after 5 p.m. suggests that the house is unoccupied during the day.
Don’t include the address of a deceased person in a newspaper obituary — a burglar would be almost guaranteed of finding the deceased’s house empty during visitation hours and the funeral. The same holds true for newspaper wedding announcements giving addresses, dates and times of unoccupied homes.

Planning a vacation? Here are a few do’s and don’ts:

All family members, including children, should avoid advertising your vacation plans in advance. Load your car or trailer in the garage rather than in the driveway. The fewer people who know you will be away, the better.

Arrange for a trusted neighbour to collect your mail, mow and water the lawn, or shovel the walk, and do anything else that helps give the home the appearance of being occupied; alternatively, hire someone to perform these services. If you have a burglar alarm that does not shut off automatically, you will have to entrust someone with a key and instructions on how to turn the alarm off. This person should also know your itinerary and where you can be reached in an emergency.
As an inexpensive security measure, use timers that will turn lights on and off in several rooms in a pattern that corresponds with your normal activities. Exterior lights should be wired to a photoelectric switch that will turn them on at dusk and off at dawn.
If your drapes are normally open when you are home, leave them that way. If you have a second car, leave it parked in the driveway.
Leave a radio playing to indicate that someone is home.
If you will be away for several months, consider getting a house sitter.

Advice for Victims of Burglary
If you return to your home and find signs of forced entry, do not go inside. Call police from a neighbour’s phone.

If you encounter burglars in your home, stay calm. Do not attempt heroic measures. Let the intruders know you will not try to stop them and that they can take what they want. Try to observe and remember their height, dress and other identifying features. Call the police as soon as they leave.

Do not touch anything or clean up until police have investigated. You may, however, make a list of missing items.

If you cannot see how the burglars got in, consider the possibility that they may have obtained a duplicate key. Re-key your locks. If the locks are inadequate, use the opportunity to install better ones.

Once you have completed your security analysis and have made improvements to weak areas, take another look at the checklist in Home Security 101. Go back through the list and re-evaluate your residence.

Home security is a matter of being alert, aware of your surroundings, and proactive. It is not necessary to build a bunker to protect your home, but it is necessary to use common sense and take precautions. Remember that no system is 100 per cent effective, but you can take steps to considerably reduce your chances of being a target.

We hope that the ideas and alternatives presented in this publication will assist you in developing an effective security program. True security is a partnership between you, your family, your community and public agencies. It is only by working together that we can make our communities safer places to live.

Thursday, May 5, 2011


Hi Victor,

First of all I want to thank you for all your help in the mortgage renewal, thank you for taking the time to explain in detail all the process and for getting us the best deal possible.

Because of your professionalism and friendly approach we found the process of renewing our mortgage and consolidating our debts very easy.

We are looking forward to keep working with you in our future plans.

Thanks again.

Specialist Advisory Services
Grant Thornton Limited

A Primer on Trim

You've just moved and your new décor lacks that finishing touch that makes it feel like home. Or you're selling your property and want to lend its interior some of that "wow" factor that snaps buyers to attention. Whatever your reasons, adding trim to your décor is a great way to give it a facelift.
Relatively inexpensive and easily installed, trim encompasses all those decorative elements that adorn walls and ceilings, from baseboard to panel molding. Available in a seemingly limitless number of different profiles, trim adds elegance and visual interest to any room, and trim can be used to draw attention to choice features. But lest you think trim merely serves aesthetic purposes, here are brief descriptions of the most popular types used in homes, as well as their functions:

Baseboard molding. Probably the most commonly used type of trim, rooms just don't look complete without baseboard molding, which provides a finished look to that area where floors and walls meet. It serves to protect the bottom of your walls from damage done by things like vacuuming and moving furniture, and to conceal any gaps between the floor and wall.

Casing. This term refers to the trim found around doorways, archways and windows. As casing tends to be the most noticeable type of trim in a room, its impact on your décor can be significant, particularly if you choose something more ornate. Like baseboard molding, casing serves a practical purpose in that it hides gaps between the jamb and adjacent wall.

Chair-rail molding. Originally intended to protect walls from damage done by chair backs, this type of molding is installed horizontally around a room's perimeter, three feet or so from the floor. More often serving as decoration now, chair-rail molding unifies a room's architectural elements and is often used as a dividing line, between painted and wallpapered sections of walls, for instance.

Crown molding. Applied where walls meet ceilings, crown molding has traditionally been used to soften the transition from one to the other. In today's interiors, they're increasingly being used for decorative purposes, such as capping features like cabinetry, shelving, and fireplaces; creating "tray" (recessed) ceilings; and defining different "zones" in an openconcept floor plan.

Panel molding. As decorative as trim gets, panel molding is used to create frames on walls and ceilings. Such frames can be used to dress the walls above and/ or below a chair-rail divider (a look evocative of Colonial homes) or to emphasize accessories like large works of art or mirrors. On ceilings, panel molding is often used as a border around light fixtures.

Some parting words on selecting trim:
Choose a style consistent with your home's style. For example, if your décor is contemporary, opt for trim that's simple and streamlined in design, rather than ornate. When it comes to trim size, scale is key — big rooms call for proportionately big moldings, while smaller rooms are complemented by smaller trim.

Is Homeownership Right For You?

So, you’ve finally decided to fulfill a lifelong dream and buy your own home… how exciting! You are ready to fulfill your dream of having a place to call your own.
Buying a home is one of the biggest emotional and financial decisions you'll ever make. Prepare by learning about the process of homebuying and the responsibilities of homeownership. The differences between renting and buying a home are vast, and there's a long list of pros and cons for both options. And, remember — there is no one best decision for everyone. Before moving forward, though, here are some questions to consider.
  • Do you have the necessary financial management skills?
  • How financially stable are you?
  • Are you ready to take on the responsibility of all the costs involved in homeownership, including mortgage payments, repairs, and maintenance?
  • Are you able to devote the time required for home maintenance?
There are pros and cons for both renting and buying. Everyone must make his or her own best decision. Buying a home is not for everyone. Take a moment to think through the advantages and disadvantages of both owning and renting. Use this worksheet to guide you.
Read over your completed worksheet and then think carefully. Are the advantages of owning your home really bigger than the advantages of renting? Are the disadvantages of owning your own home really smaller than the disadvantages of renting?
If homeownership is for you, you must be both financially and emotionally ready. Buying a home isn't only about money. You should listen to your heart… and take an honest look at your lifestyle.

Tuesday, May 3, 2011

Nine Signs That You Can't Afford a Mortgage

Here are nine signs that indicate you are heading for trouble and may be unable to pay your mortgage in upcoming months:
1. Late Fees
If you missed a payment or let your bill go past due because you didn't have the money to pay your mortgage or another bill on time, you need to reevaluate your budget. Not only does this indicate an imbalance between your income and expenditures, but it will also ruin your credit score, potentially causing your creditors to increase your interest rate.
2. You Can't Pay All of Your Bills
Every month, you are forced to decide which bills to pay and which bills to ignore. A lot of people opt to pay their credit card bill to stop harassment from the credit card company and to make sure they have available credit. But it is far more important to pay the bills that protect your home first. Always pay your mortgage first so that you will have a place to live. Next, pay for your car so that you can get to work and keep your job.
3. Making Minimum Payments on Credit Cards
In your mind, paying the minimum due on each bill may mean you are keeping up with your financial commitments, but financial experts know that minimum-only payments are a key indicator of financial distress. While this may mean that you carry too much debt, this also means that all your income is barely covering your spending. Take a careful look at your mortgage payment, other debts and your income to get back on track. Paying only the minimum on credit cards will extend your debt for years and amass expensive interest payments.
4. No Emergency Savings
While amassing six to 12 months of funds to cover you expenses, as many financial planners now recommend, may be a monumental task, every homeowner should have at least one month's worth of expenses in the bank. At the very least, you need to have enough money in a savings account or a money market fund to pay your mortgage for one month if your income drops or disappears. If you cannot save that much money you need to seriously evaluate your overall household budget.
5. You Can't Afford Maintenance
Your home needs to be painted and your dishwasher broke two months ago. If you are ignoring basic maintenance because you cannot afford to buy paint or call a repairman, this is a significant indication that you are in financial trouble. Not only does this show that you don't have any emergency savings or a home maintenance budget, but this will also reduce the value of your home.
6. Reduced Income
Money is already tight and now your work hours have been reduced or you have been laid off. If meeting your monthly budget depends on every dime you earn, then even a small reduction in income can be a disaster. Search for a new job or a second job and, at the same time, start slashing your budget as much as you can.
7. Using Credit or Cash Advances to Pay Bills
You are using your credit cards or, even worse, cash advances on credit cards to pay other bills such as a utility bill or to buy groceries or just to have cash in your pocket. This is a strong indication that your spending is outpacing your income and it is extremely expensive. You need to put yourself on a debt management program or perhaps meet with a credit counselor to straighten out your finances.
8. Using Your Retirement Fund
You have borrowed money from your retirement account for your mortgage payment or other debt. This could seriously jeopardize your future financial security.
9. You're Maxed Out
One or more of your credit card balances has reached or, worse, gone over the limit. If you are transferring your balances to new accounts in order to avoid paying the debt, this is a sign of a financial imbalance. If you are applying for new credit cards because your other cards have reached their limit, you are in serious danger of a financial meltdown. While you may be making your mortgage payments just fine, if you cannot control your use of credit cards it can be an indication that housing payments are too high.
While these financial woes can mean that you cannot afford your home, they may also be a sign that your spending is out of control. For most people, the mortgage payment is the largest monthly bill, so they often assume that the size of their mortgage is the problem. If your housing payment fits into that budget but you are having difficulty making your payment, then the issue may be that you have taken on too much other debt. Whether the problem is your mortgage or your other debt, you need to find a way to reduce your spending and/or boost your income before the situation gets worse.
The Bottom Line
Handling financial problems is never easy, but the first step is always to know what you owe. Solutions can only become clear once you have every bill written down with the amount owed, the monthly payment and the interest rate you are being charged. Pencil and paper work just fine, or you can create a spreadsheet or invest in some personal finance software. The important thing is to know where you stand so you can create a plan that will get your money under control.

Monday, May 2, 2011

Making an Offer to Purchase a Home

Once you have found a home you want to buy, you will need to present the vendor with an Offer to Purchase or an Agreement of Purchase and Sale.
An Offer or Agreement Usually Includes:
-your legal name, the name of the seller and the legal civic address of the home;
-the price you are offering to buy the home at;
-the items — other than the home — that will be included in the price (e.g.: window coverings,
-appliances or a satellite dish);
-the amount of the deposit;
-the date you want to take possession of the home;
-a request for a current land survey of the property;
-the date when the offer is no longer valid; and
-any other conditions that go with the offer, including property inspection and approval of mortgage financing.

Conditions in the Offer to Purchase May Include:

Home Inspection
It is always a good idea to have the home you are buying inspected by a knowledgeable and professional home inspector. If the home inspection report identifies any repairs that are needed, you and your real estate agent will have to discuss whether the condition of the home warrants withdrawing your offer to purchase or how these repairs may affect the price you are offering to buy the house for.

For Condominium or Strata Units
To buy a resale condominium or strata unit, you will have to get a satisfactory Estoppel Certificate or Certificate Status (does not apply in Quebec). This should be included as a condition in the Offer to Purchase.

New Home Warranty Programs
Warranties vary from one province to another, but usually they cover labour and materials for eligible items in your new home for at least one year after the construction has been completed. Before you sign a contract for a new home, contact your New Home Warranty Program office for a list of registered builders in your area.

Mortgage Approval
Even if you have a pre-approved mortgage certificate from your mortgage broker, you must still meet with  him/her during the conditional offer period to get a final mortgage approval.

Start thinking ahead and making plans:
-If you are currently renting, give notice to your landlord.
-Should you hire a mover or do it yourself?
-Send change of address notices to family, friends, and all the companies that you do business with.
-Arrange for property insurance.

Go back to your new home before closing to:
-Measure for window coverings.
-Measure for special-sized furnishings.
-Bring in a tradesperson for a renovation or remodeling estimate.

Family Debts Soars

Family Debt Soars

The debt carried by the average Canadian household has hit $100,000, up about 78% from two decades ago, according to an annual report by the Vanier Institute of the Family.
The debt-to-income ratio stands at a record 150%, meaning that for every $1,000 in after-tax income, Canadian families owe an average of $1,500. As the debt ratio has climbed, the savings rate has fallen. In 1990, Canadian families managed to put away an average of $8,000 each, a savings rate of 13.0%. In 2010, that savings rate was down to 4.2%, averaging only $2,500 per household.
"Even though standard economic indicators tell us the recession is technically over, the confidence Canadian families have in their economic and financial situation is shaky,” said Katherine Scott, the institute's director of programs. “As governments at all levels craft their budgets for the coming year and look at cutting programs to reduce their deficits, they need to be mindful that the state of Canadian family finances continues to be fragile in many households."
Canada’s policymakers have been urging consumers to cut household debt amid concern that many will run into financial difficulties once interest rates, which are still close to record lows, return to more normal levels. The central bank has warned that high household debt poses a significant risk to the economy.
The institute said the number of households which have fallen behind three months or more in their mortgage payments rose to 17,400 in the fall of 2010, up nearly 50% since the recession began.
Credit card delinquency and bankruptcy rates also remained higher than pre-recessionary levels.
The institute also warned that official job figures, showing Canada has recouped all of the positions it lost during the recession, may not be giving the full picture.
Roger Suave, author of the report, said those who lost their jobs are often not the ones who are landing the new positions. While those who do find employment may be paid less than they were in their prior job.
The types of jobs being created have also changed, with most new positions in the service sector and the manufacturing industry still struggling and not yet in a position to hire.
In particular, families with younger members preparing to enter the workforce face tremendous pressure. Only 5% of the new jobs created since mid 2009 went to the 15-24 age group.