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'Financing' Category

How Much Do Legal Fees Cost When Buying Or Selling Your Home?

“Plus Legal Fees” Doesn’t Always Prepare Buyers & Sellers For The Actual Costs

This recent newsletter from Wasaga Law here in Wasaga Beach will give all buyers and sellers a better idea of what to expect:

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What Is Happening To The Interest Rate?

The Eternal Question: Fixed Or Variable Rate Mortgage?

Unfortunately no one “really” knows. Pick 2 experts and get different answers or even a different answer from the same expert depending what month it is.

The current economic conditions would suggest that rates are not going to rise in the near future:

• Surprisingly low US job growth. The US economy failed to generate a single job in August this year.
• The Canadian economy is contracting.Flagging US demand severely effects exports.
• The US have pledged to not raise rates till 2013 thereby limiting the Bank Of Canada’s options.

So why go for a fixed rate? It doesn’t make sense if rates do not look as though they are going to go up in the near future does it?

Whatever the economic conditions a fixed rate is for those people who like to know what their outgoings are for the next 3 or 5 years.

Who knows what will happen to rates in 2014 and 2015 and a 5 year fixed rate may save money over the long run.

I don’t know the answer. I do know it’s worth talking with a mortgage broker or lender who you trust or who has come highly recommended to discuss all the options before making a decision.

How Much Are The “Closing Costs” When You Buy A Home?

“Closing Costs”! The Bit People Often Don’t Think About

So you’re concentrating so much on buying the home and how much it is going to cost. With the offer price, the sign back and the acceptance it is so easy to forget the extra expense of the “closing costs.”

When asked for a rough figure I normally say  2% of the purchase price.

What is the actual break down of these costs?

(These costs do vary and there will be tax to pay as always.)

Before the purchase is final there is likely to be a home inspection at about $300 to $350.

Legal costs in the $1,200 range.

There may be a mortgage application fee and or appraisal. The last appraisal I had done cost $375. A mortgage application can run up to $1000 depending on your circumstances. Often the lender will cover the costs involved.

“Title Insurance” is highly recommended and costs $250 or so on a residential home.

Tax Adjustment. Depending on what the Seller has already paid for the year, there will be an adjustment based on the number of days you will own the house in that year.

Homeowners insurance and moving costs obviously vary tremendously depending on each individual case.

And now the one that makes you go “OUCH.” Land Transfer Tax:

“On transfers of residential real property in Ontario, Ontario Land Transfer Tax (LTT) is calculated on the purchase price (less a calculation regarding HST, if the property purchased is a newly built home). The Ontario land transfer tax is payable by the purchaser on the purchase price upon registration of a Transfer/Deed of Land in the Ontario Land Registry Office on closing based on the following upward sliding scale:

0.5% on the first $55,000 of the purchase price, plus

1.0% on the amount exceeding $ 55,000 up to and including $250,000, plus

1.5% on the amount exceeding $250,000 up to and including $400,000, plus

2.0% on the amount over $400,000.

Example:
The Ontario land transfer tax on a property transferred for $200,000 is calculated as $275.00 on the first $ 55,000 (0.5% = $ 275.00), plus $1,450.00 on the next $145,000 (1.0% = $1,450.00), for a total of $1,725.00.”

Oh yes if you are buying a brand new home there may be HST to pay depending on the cost involved but we can look at that another time.

Are You Confused About HST When Buying A Home???

“Absolutely No HST On The Purchase Of A Resale Home”

One of the question I frequently get asked is ” will we have to pay HST on top of the purchase price?” I was asked again only last Sunday at an Open House for 23 66th Street North here in Wasaga Beach.

The Ontario Government have produced a video to help explaing things:

New Mortgage Rules Announced Yesterday. Mike McCarthy Of Scotiabank Collingwood Explains

Finance Minister Jim Flaherty announced new rules for Canadian mortgages that he said will “protect the stability of the economy.”

Mike McCarthy of Scotiabank in Collingwood posted this summary:

“Government statement:

The Harper Government Takes Prudent Action to Support the Long—Term Stability of Canada’s Housing Market

The Honourable Jim Flaherty, Minister of Finance and the Honourable Christian Paradis, Minister of Natural Resources today announced prudent adjustments to the rules for government-backed insured mortgages to support the long-term stability of Canada’s housing market and support hard-working Canadian families to save through home ownership.

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How To Pay Your Mortgage Off Faster In The New Year

3 Easy Ways To Become Mortgage Free

New Years Resolutions! Loose weight. Go to the gym. Drink less. Spend more time with the family. Read more.

All sound familiar?

How about deciding to pay off your mortgage more quickly??

The “fear” in the middle of 2010 was that interest rates were going to shoot up after a period of historically low rates. Combined with the HST factor the early part of the year was extremely busy. As a reaction in last 4 months or so the market in Wasaga Beach has  been quiet.

BUT rates are still low although that means they can only go up. NOW is a ideal time to start paying more off of your mortgage. If you have accepted your mortgage will cost more in the future why not start increasing  your payments on January 1st 2011; a profitable New Years Resolution.

Here are 3 ways to reduce your debt without compromising too much on lifestyle. Taking advantage of todays low rates and the extra cash you may have available will accelerate the rate at which you reduce your mortgage.

1. Round Up the Payments: most mortgages are for an odd amount, say $1,126 per month. Round this up to $1,200 or $1,300.
2. Make Bi-Weekly Payments: paying every 2 weeks equates to 26 payments a year rather than the 24 you would make if you paid twice every calendar month.
3. Make Annual Pre-Payments: nearly every mortgage has the option to pre-pay up to 20% of the mortgage balance in any year. This isn’t easy if you decide to make just one lump payment each year, it is a huge amount of money. Why not divide this 20% or whatever you can afford by 12 and pay off an extra bit each month? It won’t be so painful but still adds up over the year.

REMEMBER every extra Dollar you pay above the minimum payment is a Dollar you won’t pay interest on. This is certainly easier to do with the current low rates.

CICB have actual examples on their web site plus a calculator to try out different figures.

Are you carrying too much extra debt through loans and credit cards to pay more off the mortgage?? READ THIS.

Do You Need Help Choosing Between A Fixed Rate Or A Variable Mortgage?

Unfortunately The “Experts” Can’t Help You

Dwight Trafford of the Mortgage Centre sent me this interesting observation on “Rate Uncertainty” after he had attended a FirstLine Mortgage event to hear CIBC economist Benjamin Tal talk.

Choosing between a fixed or variable mortgage can seem like throwing darts with your eyes closed.

Borrowers today are seeing headlines like this:

Economists want BOC to keep raising interest rates.

They then turn the page and see this:

Could the Bank of Canada be forced to cut interest rates gain?

Even the Bank of Canada’s mark Carney isn’t too sure of the future. On CBC he recently said “Upsides risks are balanced by downside risks….The upside is as likely as the downside.”

Benjamin translated that as ” What Carney is telling us is the Bank of Canada has no clue what is going to happen.”

Don’t you just love Carney’s comments? A true politician.

As they used to say on the TV show “Soap”:

“Confused? ”

The best advice I can give is to talk to your mortgage broker or bank and fully understand the pros and cons of each product. Then choose the one you are most comfortable with. Who knows if it will save you money in the long run but the important fact is you are happy with it and can sleep easier at night.

Do You Need A Mortgage?? Mike McCarthy Of Scotiabank Collingwood Can Help

Meet Mike McCarthy Of Scotiabank Collingwood

Buying a house is exciting and emotional.

Let’s be honest mortgages are dull BUT essential.

In days gone by it was all much simpler. Today there is a veritable smorgasbord of mortgage products available. We need an expert to guide us through the process and more importantly an expert we can trust. With this in mind let Mike McCarthy of Scotiabank in Collingwood introduce himself:

You can call Mike on (705) 441 2416 or email him [email protected]

If you do please let me know what you think.

If you have any friends or family needing a mortgage please share by clicking on the buttons below.

HST Does NOT Apply To The Price Of A Resale Home

Let Me Say That Again “HST Does NOT Apply To The Price Of A Resale Home”

56% Of Adults In Ontario Think It Does

This is a press release from the Ontario Real Estate Association explaining the situation:

Most Ontarians confused about HST and resale homes

56% mistakenly believe HST applies to purchase price
Toronto, Ontario, October 27, 2010

An Ipsos Reid survey commissioned by the Ontario Real Estate Association (OREA) and released today reveals that fully 56 percent of Ontarians mistakenly believe that the new Harmonized Sales Tax (HST) applies to the full purchase price of a resale home. In fact the HST is only levied on the various transaction fees associated with the purchase of a home that has been previously occupied (i.e. not a newly-built home).
Currently, the average price of an Ontario resale home is around $330,000. Therefore, this confusion leaves the majority of Ontarians wrongly believing that the HST will add more than $40,000 to the transaction cost. There is growing concern among real estate professionals that this misperception about the HST is dampening the Ontario housing market.

“We see it on the front lines every day. Clearly, Ontarians still don’t know what the HST covers and what is exempt,” noted Dorothy Mason, President of OREA. “This is not helping the housing market, and it’s not helping the Ontario economy. This confusion means that many buyers think the cost of a resale home is tens of thousands of dollars higher than it actually is.”
The results of the survey conducted earlier this month were consistent across all age groups. However, there were some differences across other demographic categories. For instance, of those surveyed half of the university graduates, 71 percent of northern Ontarians, 59 percent of those living in eastern and southwestern Ontario, and 54 percent of GTA residents all mistakenly believe the HST applies to the full purchase price of resale homes.

“We’re doing our part to inform our clients, but we shouldn’t have to do it alone. We’re calling on the Ontario government to launch an immediate public awareness campaign to educate taxpayers and end the HST confusion,” concluded Dorothy Mason. “For average homebuyers, learning that the HST does not apply to the full purchase price means a $40,000 saving they weren’t expecting.”
Ipsos Reid conducted the survey among 830 Ontarians from Ipsos’s online panel, between October 4th and 11th, on behalf of the Ontario Real Estate Association. The estimated margin of error is +/-3.8 percentage points, 19 times out of 20.

The Ontario Real Estate Association represents 49,000 brokers and salespeople who are members of the 42 real estate boards throughout the province. OREA serves its REALTOR® members through a wide variety of professional publications, educational programs, advocacy, and other services.
For more information, contact:
Bob McLean Director of Communication Ontario Real Estate Association (416) 442-3407 [email protected]

Is Now The Time For You To Refinance & Be Debt Free Sooner?

5 Year Fixed Rates Are Still At Historically Low Levels

Last week I wrote about 9 simple ways to be mortgage free in 10 years . You would think talking about refinancing would be a contradiction especially as interest rates are going up. Not so. If the only debt you carry is a mortgage then refinancing could lower the interest payment and allow you to put the savings towards the principal thus paying down the mortgage sooner.

The critical factor in this case is how much it will cost to break the current mortgage.

Now most of us have other debts; loans, credit cards etc. This is where the savings can really kick in especially if you look at variable rates rather than fixed. As well as the cost of breaking your current mortgage you have to honestly factor in all your other debt costs.

I was wracking my brains to find a clear simple way of explaining this. Then whilst researching the post I came across the video below which does a much better job than I ever could.

The main issue not addressed in this video is what happens if the variable rate increases significantly? There is no concrete answer and each individual has a different approach to risk. Studies show that variable rates have cost less over the long run. One approach may be to start with a variable rate and save cash quickly with a plan to switch to a fixed rate later on. The fixed rate may not be as low as it is now but this is compensated by the current savings.

Hey If you have friends or family that may be interested in saving money, then please share by clicking on the buttons below.