Looking to buy your first home in Spruce Grove, Stony Plain, Parkland County or the Edmonton region?  The provocative question in the title of this blog entry is the opening line  of “Strategy for first homes“, an article from the January 28, 2012 edition of the Edmonton Journal (reprinted from the Financial Post).

The Canadian RRSP allows tax-payers to save money for retirement while getting a break on taxes.   Once withdrawn, taxes must be paid, and the amount can never be put back into the RRSP – with one exception.  First-time home buyers needing money for a down payment are allowed to borrow up to $25,000 (tax-free) from their RRSP funds, and they have up to 15 years to repay the amount. 

But!  After reading the article, first-time home buyers might think twice about doing this.  The article explains with specific examples the permanent financial blow this deals to one’s retirement fund and subsequent retirement income.  Because the RRSP contains pre-tax dollars, the potential earning power of this money is greater than funds saved in other ways, and the loss of earning power is therefore greater also.  Loss of growth in one’s savings for retirement might be at least partially off-set by savings occurring from having a smaller mortgage, but prospective home buyers will need sharp pencils to calculate if this works for them. 

Read the full article to see if this strategy is the best choice for you.

I work with mortgage brokers who can help you figure out the best way to get into the house you want.  Call me today at 780-910-9669, email me at btwynam@telusplanet.net, or contact me here.

If you’re shopping for a mortgage in Spruce Grove, Stony Plain, Parkland County, the Edmonton region, or elsewhere, you have no doubt been faced with choosing between a floating, or variable, mortgage rate, or a rate that is fixed for a period of time.  Five-year fixed-rate mortgages are especially popular because they provide mortgage holders the security of knowing exactly how much they will pay over the term of the mortgage.  People choose fixed-rate mortgages despite the fact that variable-rate mortgages have been shown over time to save significant amounts of money.

But a recent article on the CBC News website entitled “5 reasons why a fixed-rate mortgage could be your best bet” could make the variable-rate mortgage crowd rethink their choices.

The article points out several factors that suddenly make fixed-rate mortgages attractive for reasons other than no surprises about the amount of your payments.  Posted mortgage rates are being discounted more than they used to be when a consumer locks in for 5 years.  Secondly, the gap between the higher rate for fixed-rate mortgages and the discounted variable rate is narrowing.  That is, the variable rate is not being discounted as much, and fixed rates have dropped.  What’s more, mortgage brokers may be able to negotiate a fixed rate that is considerably lower than the fixed rate offered by the big banks, a rate that is in fact only slightly higher than the variable rate.  Combine these bargains with a variety of fixed terms, some as short as two years, and all of a sudden the fixed-rate mortgage is a contender!

The article concludes by stating that rates are and will likely remain at historic lows so consumers can’t really go wrong no matter what kind of mortgage they choose.  Please read the full article for all the details. 

I work with several mortgage brokers and would be happy to help you get pre-approved for a mortgage prior to showing you just the right property!  Call me at 780-910-9669, email me at btwynam@telusplanet.net, or contact me here.

So, you’ve been pre-approved for a mortgage, and you’re looking for a home in Spruce Grove, Stony Plain, Parkland County or the Edmonton area.  Your head is swimming with terms like variable vs. fixed rate mortgages, amortization periods, term of the mortgage, interest rates, down payment, lump sum payments, doubling up payments….  Most discussions of this vocabulary end up with your eyes glazing over, and it’s hard to know what choices will cost you the least.  But there’s help.  I found a great little article in the October 1, 2011 Edmonton Journal that may give you a glimmer of what this is all about.  Entitled “Bid your mortgage goodbye”,  it lists a few quick mortgage scenarios along with their specific dollar savings, depending on the course of action you take.  Choosing the right mortgage and the right payment plan can save you thousands of dollars and more than a few headaches!

Ready to use your pre-approval to find the perfect house?  Give me a call at 780-910-9669, email me at btwynam@telusplanet.net, or contact me here.

Technology has changed the way we do almost everything, including home buying, whether in Spruce Grove, Stony Plain, Parkland County, the Edmonton area or elsewhere.  Here are a few smartphone apps home buyers and investors might find useful.  (Many are available free for all types of smartphones; check with your app store.)

SHOPPING FOR HOMES

Google Maps and Google Earth for mobile can show you where homes are located, but you can learn much more about a property, giving you a feel for the neighborhood, the quality of other housing, accessibility, distance from busy streets and more.

Yelp Mobile with its reviews of businesses can give you some idea about what a neighborhood has to offer (shopping, restaurants, gas stations, etc.).

Realtor.ca is the official mobile app of the Canadian Real Estate Association (CREA) with access to about 350,000 Canadian properties for sale on the Realtor.ca website.  Search using your smartphone’s built-in GPS for properties near your location or a specific address; receive listing details, photos and agent contact info.

Zoocasa [iPhone; free].  Similar to Realtor.ca.  Search for properties based on your current location and receive full descriptions of properties.  This app also allows users to email listings from within the app.

Home Tracker [iPhone; $3.99].  Keep track of all the details of the homes you visit with your REALTOR®.  “HomeTracker allows you to document each property in detail as you visit it. Properties are grouped into a Tour, which is a set of homes you visited with your real estate agent, or homes in a specific area. In addition to storing property information, HomeTracker can easily take Photos, Map a property, E-mail property information, and perform a Google search!”

MORTGAGE APPS

There are plenty of mortgage calculator apps out there but most are not Canadian.  One with some limited application to Canadian situations is Canadian Mortgage Calculator.

CIBC Home Advisor app provides mobile access to mortgage tools, advice, neighborhood information.

“The CIBC Home Advisor App for iPhone and BlackBerry lets home buyers:

* Track and compare properties visited by taking and storing photos and completing a home buyer’s checklist for each home

* View neighborhood maps and get immediate access to average property valuations and trends

* Request detailed neighborhood reports for properties of specific interest

* Post, tweet, text or email details of the properties and neighborhoods you are considering to share them with family and friends in real-time

* Access four different built-in calculators to help determine what the customer can afford, if they should rent vs. buy, the equity in their home, or mortgage payment options

* Request a CIBC pre-approved mortgage certificate for financing to lock in an interest rate

* Contact the nearest CIBC Mortgage Advisor and arrange to meet to get advice on mortgage options.”

RECalc – Real Estate Mortgage Loan Calculator [iPhone; free]  “RECalc is a Real Estate Mortgage Loan Calculator that is also a traditional Mathematical Calculator.  You can use RECalc to calculate the Monthly Payment, Term, Interest Rate or Loan Amount for a loan, as well as standard mathematical calculations as you would in any other calculator. Once you modify any of the Calculation variables you can re-calculate any of the other values. You can also figure in Annual Property Tax, Homeowner’s Insurance and Mortgage Insurance, as well as a Down Payment amount/percentage.  RECalc supports semi-annual compounding (Canadian Amortization) in addition to normal monthly compounding.”

MISCELLANEOUS

Flashlight [iPhone; 99¢].  Turn your iPhone into a flashlight!   This app allows you to choose from a variety of styles and colors.  For even more features, try Flashlight+ [also 99¢]

Evernote [free; available for all smartphones and computers].  This handy app allows you to create and save all kinds of documents:  text notes, web pages, video clips, your digital photo scrapbook, and much more.  Text-recognition software makes for easy searching.

Awesome Note (+ToDo) [iPhone; $3.99].  Get organized with this versatile and customizable app that allows you to create regular notes, notes with photo attachments, To Do notes, Post-It style Quick Memo for quick jotting, daily diary, travel diary checklists, shopping lists, schedules, and more.  You can send notes as email and even synchronize your notes with Google Docs and Evernote.

Do you know of a great app that should be added to this list?  I’d love to hear from you.  Call me at 780-910-9669, email me at btwynam@telusplanet.net, or contact me here.

Ever heard of Interest Rate Differentials, or IRDs?  If you haven’t, and your mortgage contract contains a clause referring to it, you could end up with much, much less from the sale of your home in Spruce Grove, Stony Plain, Parkland County or the Edmonton area than you had anticipated. 

I just re-read an email from Frank DeAngelis, a Spruce Grove lawyer (contact information below) who often handles the legal side of home sales and purchases for my clients.  Although the email was written a year ago, its content and advice are just as relevant in today’s real estate market: 

“In the last few months the Real Estate Department at Main Street Law Offices has dealt with some very surprised and upset Vendors relating to the amount of their mortgage pay-outs. 

“Most Vendors seem to be expecting a three month interest penalty if they pay their mortgage out early.  However, MOST mortgages call for a three month interest penalty or an interest rate differential (“IRD”), whichever is HIGHER.  This higher cost effectively reduces the equity that Vendors have in their existing properties, making their next purchase difficult to complete as they were expecting more equity from the sale of the old house. 

“IRDs can be substantial and are a current concern due to the large decreases in interest rates over the past year.  For example, take a $300,000.00 five year mortgage taken out in 2007 at 6.5%.  With current rates at 4% or less, the pay-out penalty today with three years remaining on the term is $300,000.00 X 2.5% X 3 = $22,500.00

“We strongly recommend that you insist on your clients getting an estimated pay-out statement from their banker, including the IRD pay-out, in any circumstances where reliance is being based on an estimate of equity in the sale property.  This will help avoid closing surprises and assist us greatly in achieving ON TIME ^TM closings for your referrals. 

“Sometimes the bankers can help resolve the issue by “porting” the mortgage.  Each lender has different policies, so each case has to be addressed on its own merits.  We suggest you involve the bankers early to see what they can do to make this issue less of an impact on closing.” 

Frank C. DeAngelis, Barrister & Solicitor