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Preparing for Moving Day

Whether you just sold your home or are preparing to move into a new abode that you have just recently bought, you want to make your move as seamlessly as possible. There is nothing more frustrating when you need to get your hands on something important and you don’t know which box you put it into.

Getting organized and prepared beforehand can save you a lot of hassle if you simply follow these few simple tips to make moving day run like clockwork and avoid needless aggravation. The last thing you need to do is have a scavenger hunt to find the electric can opener so you can make supper.

Make up a Bunch of Blank Lists

It’s easy to make up a bunch of blank list beforehand before and all you need is your trusty laptop and printer to set them up beforehand. How you set up your labelling is entirely up to you but you can pinpoint what’s going into each box and by room. All you need to do is set up two or more rows and a page full of columns.

Don’t have a computer? No problem, just go out and buy a cheap notebook with a spiral binding where you can easily tear out the pages.

When you get your moving boxes or cartons you will want to tape your list to each box. Of course, you don’t necessarily have to go overboard and get too detailed. If you’re loading up your CD’s in one box then all you have to is use a generic title. The same goes with your general reading material.

However, if you have important home office discs then you want to maybe keep them separate so you can easily access them.

If you want to be able to set-up your new abode efficiently then by listing each item onto the list then you know exactly what’s in each box and where to find to find miscellaneous items to help you get set-up more quickly.

You especially will want to know where you are have packed vital tools such as screwdrivers, baby supplies, pet food, flashlights, bedding because most people don’t manage to simply unpack everything the same day they move.

 More Packing Material is Better

No matter how much packing material that you estimate you need, always buy or ask the moving company for more because it’s better to be slightly over supplied then have to run around at the last minute to get additional supplies.

You will also need proper material such as bubble wrap for some of your valuables and breakable. Although many people still like to use newspapers and flyers, the ink can stain and isn’t as protective. And, don’t forget to buy lots of packing tape to secure those boxes, especially the heavier ones.

If your moving company is supplying the material then you can always get a rebate on any cartons or boxes or other materials you don’t use.

For your clothes, you can also buy or request that the moving company supply you with wardroom boxes. These wardroom boxes are ideal for all your clothes which you can leave hanging and don’t have to worry about them becoming wrinkled. These boxes are going to be heavy enough so don’t cheat and try to cram other things in there because you’ll make them too heavy.

Keep Important Papers and Valuables Separate

You especially want to keep your important valuables and vital personal and financial papers separate especially if you are using a moving company. They should come with you in your own personal vehicle if at all possible because boxes sometimes do go awry when you use a mover. You want to keep tabs of anything valuable and ensure that you have proper insurance on these valuable items.

You may require a separate insurance rider or it might be covered in the homeowner’s policy. Either way – read the policy or contact your insurance broker before the move takes place.

How you helped Canada’s big banks weather the financial crisis- Ask Bruce Coleman, Vancouver Mortgage Broker

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ROB CARRICK– The Globe and Mail

When financial institutions needed revenue and profit, they simply had their clients supply it.
(Fuse/thinkstock)

The little-discussed safety net that helped the big banks through the financial crisis was their complete, masters-of-the-world dominance over the day-to-day financial affairs of almost all Canadians.

When the banks need revenue and profits, they simply have their clients supply it. And so they did in 2007, as the crisis began to take shape, and for years afterward.

Let us recount the ways, starting with the repricing of variable-rate mortgages. Before the crisis, these mortgages were available at your lender’s prime rate minus a discount as large as 0.9 of a percentage point. At the height of the crisis, variable-rate mortgages were being sold with a markup over prime of one to 1.5 of a percentage point. Since then, the discount has gradually returned and is now at roughly 0.4 off prime.

A case can be made that fixed-rate mortgages would also be lower if precrisis pricing was used. Data from Canada Mortgage and Housing Corp. shows that in the 7.5 years prior to the crisis, posted five-year fixed-rate mortgages were priced at 2.44 percentage points on average above the yield on the five-year Government of Canada bond. Today, the gap is around 3.2 points, down a bit from peak levels but still higher than it was.

Discounted mortgages are also more expensive than they might have been, precrisis. They used to be sold at roughly one percentage point above the five-year Canada bond; today, the gap is more like 1.6 points for a well-discounted mortgage.

The home-equity line of credit is one more example of higher costs as a result of the crisis. HELOCs, as they’re called in the banking world, used to be available at prime. Today, the rate for these widely used borrowing tools is prime plus 0.5 to prime plus one. Rates on unsecured credit lines – where you don’t pledge your house as security – have also risen.

Banks made the argument that the crisis forced them to pay higher rates to raise funds for lending to clients, and that this cost had to be reflected in higher borrowing costs. Haven’t things calmed down by now?

To some extent, yes. But mortgage planner David Larock said banks have come under tighter regulations in the past few years that continue to play a role in higher lending costs. Customers have still come out ahead, he argues. “The [interest rate] discount we’ve enjoyed because of the crisis has far outweighed the marginally increased costs that lenders have for the most part passed on to consumers.”

The crisis was a stressful time for the banks, and they took it out on their customers in a variety of ways. One bank had the bright idea, just as a recession was asserting itself, to charge people a $35 inactivity fee if they left their unsecured credit line unused over a 12-month period. The fee was later cancelled after some embarrassing publicity.

Another gift of the crisis was one bank’s decision to bump up its credit card interest rate by five percentage points if a customer missed two consecutive minimum payments.

Even today, the banks continue to get tough with customers about borrowing. Some have started to adjust the interest rates on credit cards and other lending products according to a customer’s credit record. People who pay on time see no change, or a token rate cut. Those struggling with debt get loaded down with higher interest rates.

Not all changes in the banking business have been negative. In an effort to create pools of money they can profitably lend out, the banks have embraced the high-interest savings account. Thanks to competition between banks, interest rates in these accounts are in the low 1-per-cent range. That’s tiny by historical standards, but decent when compared to one-year term deposits and bond yields.

The consulting firm McVay and Associates says that savings deposit rates are 75 per cent higher than they were five years ago, with much of the cash coming out of money market mutual funds. Even after recent fee cuts, money market funds are only producing returns around 0.5 per cent.

Financially, Canada’s banks are in strong shape right now. Profits are rich, shares have been rising in price and dividends are being cranked higher on a regular basis. Take a moment to admire the turnaround. You helped pay for it.

For more personal finance coverage, follow Rob Carrick on Twitter (@rcarrick) and Facebook (robcarrickfinance).

How Your Credit Score Affects Your Vancouver Mortgage – Ask Bruce Coleman, Vancouver Mortgage Broker

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How Your Credit Score Affects Your Vancouver Mortgage  

One of the key factors used by Vancouver mortgage lenders in determining whether you will qualify for a mortgage is your credit score. Your credit score may also impact the terms of your mortgage and your interest rates.

A Vancouver home mortgage is probably without a doubt one of the largest investments the average person will make in their lifetime. A mortgage is also considered a large loan by any lender.

Why is a Credit Score So Important?

A mortgage lender wants to learn as much as possible about your character. They want to know about your credit history because it tells them whether you are a responsible person who pays your debts and how well you pay them.

The lender is assuming a risk for any mortgage they issue so they would naturally want to minimize that risk as much as possible.

Your credit score is a reflection of all the debts that you have assumed and tells the lender about how responsibly you pay back your debts. A low credit score suggests you are irresponsible when it come to paying your debts which makes them very averse to taking you on as a potential client for a mortgage loan.

How your Credit Score Is Determined

The credit rating agencies are supplied information by lenders such as banks, credit unions, credit card agencies, department stores and others which detail the credit you have assumed and how well you re-pay it.

A credit report will consist of two parts. The first part of a credit report will outline the following information:

• Your payment history
• The overall amount of credit you currently owe
• How often you use credit or credit usage
• Your credit experience
• Whether you have acquired any new credit
• Types of the credit which you have established

The second part provides what is known as an “R” rating where you are given an overall rating ranging from R1 to R9. An R1 rating is the best possible rating and means that you have been paying all your required payments within 30 days. Naturally, an R9 rating is the worst possible rating that can be attached to your credit report.

The two main credit reporting in agencies are Equifax Canada and TransUnion Canada. Both of these credit reporting agencies will charge a fee for your credit report of roughly around $25.00

What Constitutes a Good Credit Score for a Mortgage?

The minimal credit score required by a mortgage lender varies slightly from lender to lender. The average minimal credit scores required by a mortgage lender generally range from between 620 to 680. Most lenders consider any score above the 700 range as being an excellent risk for a mortgage loan.

A low credit score can result in your application being rejected or having more restrictive terms or higher interest rate being charged. You may be required to get a co-signer or have other conditions applied.

In this day and age of identity theft which has become all too common place it’s a good idea to get hold of your credit report before you apply for a mortgage. Credit rating agencies also do make mistakes so if you find your credit score significantly lowered because of either of these issues you need to take prompt and appropriate steps to correct and rectify the problem before you apply for a mortgage.

Becoming Older and Downsizing your Next Home – Consult with Bruce Coleman, Vancouver Mortgage Broker

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Becoming Older and Downsizing your Next Home

The kids have moved out and you’re closing in on your retirement. You find yourself rattling around in a large home and might be asking yourself if you still need such a large home anymore.

Well, maybe you don’t so perhaps you should be thinking of selling the old homestead and getting yourself something smaller.

It’s difficult because you’ve put a lot of effort in maintaining your home and you’ve got a lot of memories built around the family home. So why should you think about moving and getting something smaller?

Reasons Older People Can Consider for Downsizing

There are several good reasons why it might not be practical to consider a smaller living space but there might be some good financial reasons to consider as well.

1. Don’t need the space anymore

If you raised 2 or 3 children and they’ve now gone off and started their own lives, then you simply don’t need all the empty available space anymore. If you have a four plus bedroom home then it’s just extra areas of the home that need cleaning and expensive heating costs.

If you look around then maybe you can find a smaller home or condo that is more suitable to your current needs.

2. Less Maintenance

Let’s face it – any home needs regular maintenance. The gutters need to be cleaned, and there’s the lawn work, the deck, windows etc. that all have to be looked after. If you’re not getting younger or your health has started to decline then you’re going to have to hire someone to continue to do this maintenance. Do you really need the extra expense?

Maybe, it’s time to use the appreciation and equity you’ve built up in your current home and find yourself a nice roomy condominium that doesn’t require all this detailed maintenance anymore.

3. Save Money

If you move to a smaller abode such as either a smaller home or condo you will very likely save some money in a variety of ways. First, a larger home is more expensive to heat in winter and cool in summer. A smaller home or condo can save you a lot of money if you have a bunch of empty space that needs utilities.

Then, there are also the property taxes to consider. You might find a new locale where the property taxes are a lot lower for a smaller sized property and that can also save you money.

4. Downsizing might be a good investment

If you have already paid off your mortgage, and considering the retail value of your home, you might be able to buy a smaller property and still have plenty to spare for other investments which you can use for your retirement.

This could be especially advantageous if you are able to buy your property outright without having to get another mortgage. You will still have 100% equity in your property and can always access a “Reverse Mortgage” if you get into a minor cash bind.

Surprisingly, almost over 40% of the ageing baby boomers indicate they will be looking for a new home that is as big as or even larger than their current home. This trend certainly doesn’t apply to everyone’s situation, so you might want to sit down and seriously consider whether it’s worth your while to stay in your current home or consider downsizing to a smaller abode.

Home Series: Getting ready to sell? 10 staging tips to wow home shoppers – Ask Bruce Coleman, Vancouver Mortgage Broker

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LUCIE BRAND – Special to The Globe and Mail

The following article is from Canadian Real Estate Wealth Magazine.

Renovated clean kitchen, ready for house sale.
(Photos.com)

Preparing any property for sale can be a daunting and often overwhelming task, even for a seasoned investor. Whether you are living in your current investment property or if it has been tenanted for years there are some key staging strategies that can help get your property open house read.

1. Start with a change of mind
Too often investors/home owners become either too emotionally attached or not attached at all. I have worked with investors who were renovating a property and blew their budget on some obscenely expensive tile they “had to have” and had nothing left for furnishing the place. On the other hand I’ve worked with landlords who did not see the value in painting a place that had gone through 3 tenants! Looking at a property from a buyer’s perspective is key.

Take a tour with a realtor or a staging professional and get some outside opinions on what areas you should focus your dollars on and what’s needed to get the maximum offers.

2. Maximize curb appeal
The outside should draw people inside. Neatly trimmed bushes, mulched beds, weeded lawns all help make that crucial “first impression”. Freshly painted front doors with new mailboxes and house numbers are easy ways to create maximum impact without breaking the bank. Adding seasonal urns by the front door for some colour are another way to brighten up concrete steps or boring brick.

3. Choose neutral colour palette
Bold colours are great for living, but not for selling. Light and Bright should be your motto! Stick with a warm, neutral palette like tans, taupes and greys. Avoid dark colours, especially in small spaces (like powder rooms). Keep the ceilings white to keep walls looking tall. Rule of thumb, if the walls haven’t been painted in over 2 years, now is the Time!

Return on investment: 109 per cent*

4. Let there be light
Lighting plays a vital role and is often overlooked when getting a property ready for sale. Dark hallways, rooms with little natural light, basements and bathrooms should be addressed. A minimum of a 2-bulb overhead fixture with maximum watt bulbs can transform a dingy area. There should be NO overhead receptacles without a light fixture! Consider adding pendant fixtures in dining rooms and eating areas. Big box stores offer affordable options in brushed nickel or silver fittings.

Adding ambient lighting is essential especially in areas where there is no overhead outlets. Adding table lamps and floor lamps will help brighten up any room and help your property appear as “light-filled” as possible.

Return on investment: 303 per cent*

5. Flooring
This is the other main area that always increases the value of a home. It will ALWAYS cost you less to replace worn carpet or add new flooring then to leave it to the new home owners.

Most purchasers are looking for reasons to discount their offers. Flooring is one of the first things buyers see when they walk in. If their first thought is “I will need to replace these floors”, I guarantee they are discounting their offers $5000-$10000 for condos and $7000 – $15000 for houses. Doing the work yourself will cost you a fraction of that amount.

Return on investment: 107 per cent*

6. It’s all in the details
Replace all burnt out bulbs, touch up any nicks and dents in high traffic areas, replace torn screens and fix leaking faucets. Once the fix ups are done it’s time to focus on the pretty stuff. Fresh linens in the bathrooms, a bowl of fresh green apples on a kitchen island, fresh flowers on a dining table or in the entrance way.

Adding live or silk greenery to bathrooms and adding a new crisp bedding set to the Master all help create the impression of a well-cared for home.

7. Clean, clean, clean
This may seem like common sense, but unfortunately it’s still the one area owners tend to try and shortcut. This is the time to hire a professional cleaning company. Special attention should be placed on appliances, inside and outside of cupboards, baseboards and windows. Bathrooms should be scoured and if necessary use grout cleaner to get the tiles looking spotless!

8. Highlight best use of the space
Tenants may have liked to use the dining room as an office, but it should be shown with it’s intended purpose. Giving a room more than one function (i.e. guest room and office) is a great way to effectively show the space. In condos this becomes essential when space is at a premium.

Using small glass desks with a stool you can tuck in can creatively introduce a “work space” where one wouldn’t think possible. Adding a daybed to a den/office creates extra sleeping space. Determine what adds the most value to potential buyers in your neighbourhood and showcase the space accordingly.

9. Kitchens and bathrooms are the place to invest
If you have dated cabinetry, cracked and worn laminate counters, chipped or broken tiles, consider investing in repairing and upgrading these rooms.

If your budget is limited, changing cabinetry hardware to brushed nickel or silver knobs and handles will give it an immediate appeal. Consider painting cabinetry instead of replacing them.

Depending on the price point of your property it is often worthwhile to install stone counters. This immediately adds value and is very durable for long term use. If stone is not in the budget, consider a “stone– like” laminate counter. Recaulking around sinks and bathtubs is a simple improvement that can greatly improve the look of a bathroom.

Return on investment: 172 per cent*

10. Vacant properties sit, staged properties sell
Staged homes sell 2 – 3 times faster and up to 6 per cent more than unstaged ones**. People perceive staged units that are well decorated as worth more. Professional stagers know how to highlight the features of the unit and distract from any “not so desirable” features.

If your budget is limited consider focusing on the main living areas and at least one bedroom. If you can’t borrow furniture and artwork, rental companies carry everything from furniture to linens. Just keep in mind that the goal is to show people how to use the space effectively.

Return on investment: 299 per cent*

Remember that 79 per cent of buyers have already viewed your property on the MLS, make sure that your property stands out among the competition! Staging is your key to getting noticed and getting SOLD.

*Homegain Survey 2011

** Joy Valentine Coldwell Banker Survey of 2772 homes

From Canadian Real Estate Wealth Magazine, a monthly publication focused on building value through property investment, covering topics such as values and trends, mortgages, investment strategies, surveys of regional markets and general tips for buyers and sellers.

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As rates rise, brace for mortgage renewal time – Consult with Bruce Coleman, Vancouver Mortgage Broker

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ROB CARRICK– The Globe and Mail

In some cases, homeowners can actually save money by breaking a mortgage with a year left on the contract.
(Gloria Nieto/The Globe and Mail)

The era of pleasant surprises for people renewing their mortgages is over.

After five years of trending lower, mortgage rates have reversed course and started to rise. Aspiring first-time home buyers are being priced out of the market by these increases, but at least they’ve avoided a costly mortgage entanglement. Existing homeowners may simply have to pay more.

Current fixed rates are still lower than they were five years ago, but it’s a different story with the once-popular variable rate mortgage. Veteran mortgage broker Vince Gaetano ofMonsterMortgage.ca says he has clients coming in with maturing variable-rate mortgages at 2.1 or 2.2 per cent, an all-time great deal. “They know their cash flow is going to get crunched,” he said.

A variable-rate mortgage goes for 2.6 per cent with a good discount these days, while a fully discounted five-year fixed rate mortgage rate has risen to 3.49 per cent from 2.89 per cent a few months back. Over the decades you own a house, you’ll win some at mortgage renewal time and you’ll lose some. We’ve had quite the winning streak in recent years for people renewing at lower rates, but now it’s coming to an end.

In the years ahead, the biggest financial mistake you make just might be failing to think well in advance about a mortgage coming up for renewal. You have options: Your lender may let you renew early (within 90 days) into a new five-year term, or you may be able to do a “blend and extend.” That’s where you convert the remains of your existing fixed-rate mortgage into a new loan with a blended interest rate. We’ll look at a more aggressive strategy suggested by Mr. Gaetano in a minute.

But first, there’s the question of how people will afford higher mortgage payments. We’ve been assured by people in the mortgage industry that homeowners can absorb higher mortgage payments. A 2011 report from the Canadian Association of Accredited Mortgage Professionals said there is “very substantial room” for households to pay higher mortgage rates. Will Dunning, CAAMP’s chief economist, said Monday that he stands by that view.

But the issue is not whether you can afford higher mortgage payments. Rather, it’s what you’ll have to sacrifice to make them. Mr. Dunning’s take: “Discretionary spending disappears. A lot of that is in the service sector – people going to coffee shops and restaurants.”

With the need for future sacrifices in mind, let’s look at a strategy suggested by Mr. Gaetano for lessening the impact of renewing a big mortgage at a higher rate. The plan: Break your existing mortgage a few months before the renewal date and refinance at current rates so you avoid higher costs in the future.

Let’s say your mortgage is coming up for renewal in six months, which leaves plenty of time for more rate increases. Start by getting a commitment from your lender to hold today’s best discounted five-year fixed mortgage rate for 120 days. Then, wait until two to three months before renewal to break the mortgage.

Yes, there will be penalties. But by waiting until just a few months before the renewal date, you’ll minimize them. It’s also important to understand that rising rates may actually reduce your penalty.

Penalties on fixed-rate mortgages are usually equivalent to the higher of three months’ worth of interest (Mr. Gaetano said two months’ interest would be charged if you had only two months to go) or a calculation called the interest rate differential, or IRD. Among the factors that go into the IRD are the rate on your existing mortgage and the rate the lender can get today. If rates are rising, then your IRD should decline.

Mr. Gaetano said an additional $1,000 or so in legal fees would apply if you broke your mortgage and took it to another lender. Even so, he thinks borrowers will end up saving money if the balance on their mortgage is more than $200,000 to $250,000 and the difference between the rate on hold for them and market rates is roughly 0.4 of a percentage point or more.

In some cases, it can pay to break a mortgage with even a year to go. Mr. Gaetano said he has clients who owed $980,000 on a mortgage maturing next June 1, with an interest rate of 3.79 per cent. Earlier this summer, he secured a 120-day hold on a 2.89 per cent mortgage. With five-year fixed rates now at 3.49 per cent, the strategy plays out as: Total costs of $8,428 or so in penalties and legal fees versus interest cost savings of $27,766. Net benefit to the clients: Savings of more than $19,300.

For more personal finance coverage, follow Rob Carrick on Twitter (@rcarrick) and Facebook (robcarrickfinance).

Vancouver Home Mortgage Closing Costs – Consult with Bruce Coleman, Vancouver Mortgage Broker

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Vancouver Home Mortgage Closing Costs

Many first time home buyers in Vancouver might not be fully aware about what is involved in closing costs. Although you might have factored in your down payment and what you will be paying for the mortgage, there are also some relatively expensive closing costs that you need to have included in you budget.

The closing costs that you need to consider are not included in just a single payment but include a host of different entities that are involved in the purchase of a new home.

How Expensive Are Closing Costs?

This is some variance in how expensive closing costs can range but most mortgage experts suggest that you budget anywhere from 1 % to as high as 2.5 % of the purchase value of the home you are buying.

This means that if you are buying a home worth $500,000 you might have to budget yourself for an additional $5,000 to as much as $12,500 to have on hand to cover all your closing costs.

These closing costs will not occur all at once, and will be spread out through the mortgage application, approval and closing process.

What do Vancouver Closing Costs Include?

Here are the most common items that comprise closing costs and extra expenses that you will incur.

·         Appraisal Fee

This is the fee the bank charges to have the new home appraised. The bank will initially absorb the cost but ultimately they will bill you for it in their closing cost statement.

·         Your Credit Report

When you apply for a mortgage, the lender will always perform a credit check on you and you will be charged for obtaining this report.

·         Fees for Mortgage Application and Processing

You will be charged a fee by the lender for processing the mortgage application.

·         Cost of a Property Survey

Any home being purchased will require a property survey to be performed so that it includes any improvements which have been added since the last survey and which will affect the amount of property taxes levied by the municipality.

·         Home Mortgage Insurance and PST/GST

 If your down payment is less than 20% of the purchase value of the home then you will be required by the lender to incur the additional expense of mortgage insurance. This will be an expense above and beyond the amount you will be paying for your mortgage and will be added onto your mortgage balance.

·         Property Title Insurance

Most lenders will also require that you obtain property title insurance should you incur any legal claims against your title of property ownership.

·         Disbursements and Legal Expenses

When a property is purchased you will require using the services of either a notary public or a real estate lawyer to represent your interests when buying a property.

·         Land Registry Tax

When the title if a property is transferred you will also have to pay the tax which is levied by the province for this transference.

·         Home Inspection

You will most likely use the services of a licensed home inspector before you take possession of the home to ensure there are not any major structural or other problems. This expense may cost from between $300.00 to as much as $450.00.

·         Adjustment on your Interest

Should you obtain your mortgage before month’s end, you may also be responsible to incur the interest cost for the remaining portion of that particular month.

·         Life and Home Insurance

Most lenders require that you have sufficient life insurance on your mortgage so that it will be covered if you die unexpectedly. Also, you will be required to get a home insurance property to cover the home should it be damaged or destroyed as a result of a loss. You will also want to include your personal possessions in an insurance package.

Additional Closing Costs

Most of the closing costs listed above are fairly standard for any home purchase but there may be additional cost which you will be responsible for the following:

·         Expenses for Levies

If you are moving into a new subdivision an additional levy may also be charged by the municipality.

·         Warranty for New Homes

Most new homes which are constructed require that you also buy a warranty to ensure that the builder has built the home in accordance to provincial regulations.

Home shoppers, don’t rush to buy just to lock in a cheap mortgage – Consult with Bruce Coleman, Vancouver Mortgage Broker

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ROBERT MCLISTER– Special to The Globe and Mail

House for sale in a Toronto neighbourhood, August 27, 2013.
(Gloria Nieto/The Globe and Mail)

The idea that low mortgage rates are gone forever sent Canadian home shoppers into a panic this summer. Thousands rushed to use their rock-bottom pre-approved mortgage rates and buy a home, contributing to a20 to 50 per cent spike in sales last month in Canada’s biggest housing markets.

But how logical is rushing to buy a house simply because mortgage rates have risen?

Rates today

For the past few months, consumers have been bombarded with comments like this:

“I think this is the real thing. This is the end of extremely low interest rates.” – Benjamin Tal, deputy chief economist at CIBC World Markets

Not surprisingly, many folks who read such comments head immediately to their bank or broker and lock in a rate for 90 or 120 days. Those 90-120 days fly by, which adds to their perceived urgency to buy.

But the reality is that by all historical measures, mortgage rates are still extraordinary and could remain so for a while. Take for example the most popular term, the five-year fixed, for example. Data from RateHub.ca shows that since 2006, the average discounted five-year mortgage has been 4.11 per cent. (See this attached chart for more details.) Since 1991 (the modern era of monetary policy), the average has been north of 6 per cent, reaching a high of more than 10 per cent in 1991.

Yet, even after this summer’s big bump in rates, it’s still possible to snare a five-year rate at 3.39 per cent or less. That’s just a short stroll from the historically low 2.99 per cent rates that garnered headlines for months.

And while the uptrend in rates may continue, there’s nothing to say they won’t reverse lower. We’ve seen three major fake outs in rates over the past five years and we remain in a low-inflation modest-growth environment. Until it’s clear that the Bank of Canada will start lifting its key lending rate, fixed mortgage rates will gyrate to the ups and downsof the bond markets and North American economy.

Pay less interest. Pay more for a home?

“Buying the same house will be more expensive this fall than this spring,” National Bank Financial’s Peter Routledge told the Globe and Mail last month. But analysts point to a range of factors that could moderate home prices in the next six months, including higher interest rates, growing supply, modest income growth and stricter mortgage regulations. Canada’s banking regulator is weighing new mortgage rulesas we speak.

Rates are the biggest wild card and the No. 1 factor that could put the brakes on home prices. Higher mortgage rates immediately make it harder for budget-strapped buyers to qualify for a mortgage. That’s why – other things being equal – as rates increase, prices usually decrease.

So if home prices potentially face headwinds, does it really make sense to run out, compete with a stampede of other buyers and purchase a home?

Economists like Toronto-Dominion Bank’s Craig Alexander projectanother half-point rate jump in five-year fixed rates next year. Based on CREA’s average Canadian home price and a 5 per cent down payment, that half-point would cost home buyers $8,900 more interest over five years versus today’s rates, assuming an equally priced home.

What are the chances that rushing to buy now will cost you at least $8,900 more and/or cause you to settle for a less than ideal property?

The right strategy

Knee-jerk decisions tend to be costly when it comes to personal finance, be it with investing, buying insurance, or getting a mortgage. If you’re in the market for a new home, get one or more 120-day pre-approvals to protect yourself from rate increases and reset them every few months as necessary.

Then take your time, block out the rate chatter, and wait for a property that’s the perfect long-term fit… and good value. Canadians live in their homes an average of five to 10 years. That’s a long time to live with a rushed decision.

On Thursday at noon (ET), Robert McLister will take your questions in a live online chat. To join the discussion, click here.

Robert McLister is the editor of CanadianMortgageTrends.com and a mortgage planner at VERICO intelliMortgage, a mortgage brokerage. You can also follow him on twitter at @CdnMortgageNews.

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Life Insurance and your Mortgage

A life insurance policy to cover your mortgage is often required by a lender when you apply for a mortgage. This policy is often offered by a lender so you don’t have to take that extra step in obtaining a policy.

 But, even though the lender is offering this convenient service, it has a number of different disadvantages, so you might want to consider an alternative.

The alternative presented can be more advantageous and will most likely save you some money.

Mortgage Life Insurance Explained

Any mortgage insurance policy which is offered by the mortgage lender is generally not one of their products but is a policy which is proffered by an insurance company. Many people simply go along with this service because of its convenience.

These policies are generally easy to obtain and usually does not require a medical exam. These policies are often referred to as no-exam insurance policies. You have no doubt seen commercials or advertisements which offer this convenient to obtain life insurance policy.

Reasons Why Lender Mortgage Life Insurance is Not the Best Purchase

Although these policies are simple to get there are several reasons why they are not the best purchase you can make when it comes to mortgage life insurance. These reasons include:

• Type of Policy has Drawbacks

The mortgage life insurance is generally of a type known as a “decreasing term life insurance”.  What happens with this policy is that as you pay your premiums the amount of death benefits decreases. There is really little benefit to your or your family other than the mortgage coverage.

• You are Not the Beneficiary

On most life insurance policies you can name your beneficiary. On this type of lender sponsored mortgage life insurance policy, the lender is the sole beneficiary. You are paying for a policy out of your pocket where only the lender benefits.

A No-Medical Exam Mortgage Life Insurance is More Expensive

Any life insurance policy, whether privately bought or through a lender which does not require a medical exam is always more expensive than a policy which does require a medical exam. This is because the insurance company assumes more risk because they know less about your state of health.

These types of policies can cost as much as one third more than a standard term policy which requires an exam.

A $500,000 30 year term life insurance policy with a medical exam may cost a 25 year old male about $360.00 per year. The same policy without a medical exam may run around cost as much as $475.00 per year. Over 30 years, you could up paying as much as $3,750 more out of your pocket simply because you bought a more convenient policy.

Consider an Alternative

Instead, if you bought a level term policy worth $500,000 through an insurance broker and took the medical exam, you would have a policy that would benefit you and your family for your entire life and still satisfy the lender’s requirements.

Additionally, you will be empowered to name your own beneficiary. The death benefits proceeds would go directly to your beneficiary in a lump sum tax-deferred payment. If, 20 years down the road and you died unexpectedly, and have paid your mortgage down to say $175,000, your family could not only pay off the mortgage but would have an additional $375,000 in extra benefits as a financial cushion.

You would also save a fair chunk change on the amount you pay out in premiums over the years. You will need life insurance anyway, and you might as well buy it when you are young because it gets more expensive to buy as you age.

Bottom Line

You have to have mortgage life insurance, so take the time to shop around and use an independent agent to compare rates and get some advice before you jump on the lender’s band wagon. Mortgage life insurance sold by a lender may not be such a good deal.