Have you been thinking now is the time to buy that new home in Spruce Grove, Stony Plain, Parkland County or the Edmonton area?  Make sure you read about the new rules for government-backed insured mortgages going into effect July 9, 2012. 

1)  Maximum amortization reduced to 25 years.  Until recently, amortization periods could be as long as 35 years.  That dropped to 30 years in 2011 but will now max out at 25 years.  The government points out that this allows Canadians to pay off their mortgages faster, meaning a faster build-up of equity and the payment of much less interest, but the bad news is many Canadians may no longer qualify for a mortgage.

2)   Maximum amount Canadians can withdraw in refinancing their mortgages decreased to 80% from 85% of the value of their homes.

3)   Maximum gross debt service ratio set at 39% and the maximum total debt service ratio at 44%.

4)   Government-backed insured mortgages only available to homes with a purchase price of less than $1 million.  Homes costing less than $1 million can still be purchased with 5% down but those above $1 million will require a down payment of 20%. 

Read the official Government of Canada announcement.

Wondering how to finance your home purchase?  I can help you find a lender.  Call or text me at 780-910-9669, email me at barry@barryt.ca, or contact me here.

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   Once withdrawn, taxes must be paid, and the amount can never be put back into the RRSP – with one exception.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 barry@barryt.ca, or contact me here.

Do you have too much stuff?  In our consumer-oriented society, whether we live in the city of Spruce Grove, a smaller community like Stony Plain, or on an acreage or country estate in the County of Parkland, it’s easy to accumulate “stuff”.  We might not even notice just how much stuff we’ve accumulated until it’s time to sell our homes.  But what if we could train ourselves to be more mindful of everything we bring into our homes so that moving to a new house is not such a chore?

An article in the Grove Examiner, published August 12, 2011, suggests some questions to ask ourselves before we commit to buying anything.  Paying attention to what we buy will save us money, save the environment, and maybe even do away with the need to move to a bigger house!  Thanks to Craig and Layla Baird, “The Green Couple”, for allowing their article to be posted here in its entirety.

Things to consider prior to your next consumer purchase

Craig and Layla Baird, The Green Couple

Every time you go out to buy something, what you buy has an impact on the environment.

That purchase has an impact by the waste it produces when it is manufactured, and the waste that is produced when you use it and when you are done with it.  In addition, the environmental impact of the production, transportation and consumption of the product has an effect on our planet.

This is why it is important to ask yourself the “Purchase Questions”.  These questions are:

1.     Does the cost of the item warrant the benefit we may receive from it?

This means that if the benefit is just an immediate gratification (such as a new pair of shoes that we really don’t need), then it is not worth the long-term cost.

2.     How much will this product be used after its initial ‘neatness’ wears off?

Buying one of those dancing electric animals is a perfect example of this.  It may seem neat now, but it will end up in the closet soon enough and likely long before you recoup the expense in enjoyment.

3.     Can it be recycled or given away later?

If it can, it makes buying it easier because someone else can get use out of it after we no longer use it.

4.     Where could this money be better spent?

If it could go to bills, mortgage, charity or anything else instead of the product, maybe it should be directed that way. 

5.     Why are we buying this product?

If the only reason is because we just saw it, then it is not a good buy.  Impulse buys are not something we want to do.  As well, if we buy it because we saw it on television, then perhaps again it is not a good buy.

Asking yourself those questions can not only save you money, but they can help you save the environment as well.

Need help finding homes for extra stuff?  See my blog article “Getting Rid of Stuff”. 

I’m happy to help with all your real estate needs.  Call me at 780-910-9669, email me at barry@barryt.ca, or contact me here. 

My clients in Spruce Grove, Stony Plain, Parkland County and the Edmonton area have lots of questions, and I’m happy to answer them!  This article is Part 2 of a series that addresses the most common questions I get from buyers. 

How much of a deposit do I have to give when I make an offer?

This depends on the type of property you are purchasing and how you are purchasing it.  For instance, if you are purchasing a property between $200,000 and $300,000, I recommend a deposit of $3000 to $5000.  The larger the purchase price of the property, the more the deposit should be.  For purchases over $400,000, I would recommend a minimum deposit of $5000.  The deposit may also be an item that the seller wants to negotiate.  The seller may expect a larger deposit to ensure your commitment to the purchase.

When is the deposit payable?

The deposit is submitted with any offer and payable immediately after your offer is accepted by both parties.  The deposit is given to the real estate company that has listed the property and is placed in a trust account until you take possession.  The deposit forms part of your total down payment.

Can I lose my deposit?

Generally speaking, the only time you can lose your deposit is if you remove conditions on your offer and do not take possession of the property as agreed in your contract.  BUT:  you should discuss this with your REALTOR®.  If you cannot fulfill the conditions in the contract (for example, you are not approved for financing), your deposit will be returned to you, provided your financial institution will supply upon request a letter to the sellers and their REALTOR®, stating you are not approved for financing.

When is my down payment due?

Your total down payment (usually by certified cheque or bank draft) is not due until you see the lawyer to sign all of the paperwork.  This typically happens a week or two before possession day.  The only money that is payable when you write the offer is the deposit.  This deposit becomes part of the total down payment.  Your lawyer will advise you of the total amount to bring with you when you sign the papers; this amount usually includes lawyer fees and disbursements.

How much money will I need for other costs besides my down payment if I purchase a property?

At minimum, I recommend that you budget $3000 to $5000 for basic items such as:

• lawyer fees and disbursements which will cost between $1000 to $1500. (Disbursements are recoverable expenses the lawyer pays on your behalf.)
• property tax adjustments (cost will be a proportion of the annual taxes, depending on when in the year you take possession)
• home inspection (about $400-$500)
• title insurance (about $250), if required.

There could be other costs associated with your purchase depending on your situation.  The costs listed above are general expenses that most buyers will incur.

If you don’t see your question here, it might be answered in the Buyers Guide section of my website.  Or, feel free to contact me any time by email at barry@barryt.ca or by phone 780-910-9669.