Browsing Tag

mortgage

Debt

Should I Go For a Fixed Rate Mortgage?

If you are are in an open variable rate mortgage like we are right now, you may want to consider if it’s better to move into a fixed rate mortgage before the prime rate goes up. The Bank of Canada will likely be raising interest rates soon and although prime is at an all time low right now, it won’t stay there forever. Some major banks have already raised their fixed mortgage rates, so if you are thinking of switching, now is the time to do it before the rates go up even higher.

For my husband and I it makes the most sense for us to stay where we are as we are likely going to be selling our home within the next year or so. For those of you who are not planning on selling your home anytime soon, you may find it more affordable within your budget to take advantage of a fixed rate.

April 24, 2010

Debt

When It Makes Sense To Pay Off Your Mortgage Faster

If you come by some extra cash or you are frugal in your budgeting, you can pay off your mortgage faster than the lender requires and as a result you can save money in interest charges.

Focusing on paying down your mortgage debt can be beneficial, however, you need to keep a few things in mind before paying off your mortgage:

1. First of all, if you have higher interest debt such as vehicle loans and credit cards, it makes far more sense to work towards paying down that debt first. Generally mortgage interest rates are lower than other forms of debt, so once you have paid off more expensive debt, you can work towards paying down your mortgage.

2. Secondly, you want to make sure that you have enough money kept liquid and accessible in the form of an emergency fund and once you have enough saved, then you can start focusing on paying off your mortgage.

3. Third, if you are an entrepreneur at heart, you won’t want to be putting all of your excess money into your mortgage because you will probably have other plans for your money such as for funding your latest business project.

March 7, 2010

Money Saving Tips

How To Save Money On Your Mortgage

For most people, purchasing a home is one of the biggest investments they will ever make. Buying a house or apartment usually involves a lot of money, especially if it is mortgaged. The key to saving money on your mortgage lies in getting the best available one for yourself. Although that may sound like an obvious solution, essentially it is about utilizing available avenues that will help you save quite a lot of money, especially if you make your monthly payments on time. While everyone wants to pay off their mortgage as soon as possible, it requires considerable amount of planning to transform wishes into reality.

There are several methods to help you save money on your mortgage:

Seller financing: This allows you to pay the amount directly to the seller over a period of time, rather than borrowing money and paying all of it at once. It enables you to negotiate a better rate of interest, and avoid the numerous administrative fees charged by lending institutions. Moreover, it saves you from the frightful mortgage insurance. It also provides you with a secure source of income and returns, without having to pay capital gains tax. The seller holds the house as a collateral that can be taken back, if the buyer defaults.

Debt Consolidation: When you reimburse your mortgage, you often pay off a number of unsecured debts such as credit cards, charge cards, personal loans and the like. The rates of interest on home loans are relatively lower than those on unsecured debts. Therefore, debt consolidation would help you to bring down your monthly payments. In other words, you would be paying an interest rate that applies to home loans on all your unsecured debts.

January 14, 2010

Banking

Current Mortgage Rates and How They Affect You

To some, the interest rate is a rather meaningless number that seems to change on an almost daily basis. However, if you are applying for a credit card, buying a new car or applying for a mortgage, this number can significantly affect how much you are paying every month and over the term, or length of your loan. At the time of writing, mortgage rates are low and it is a good time to buy a home, or refinance an existing mortgage at a lower rate.

The interest rate is defined as the amount of money it will cost you to borrow a certain amount of money from a bank or lender. It is virtually impossible to accurately predict mortgage interest rates; one of the biggest factors that influence them is simple supply and demand. If more people are buying houses, more money is being borrowed, which means that lenders can charge higher rates to borrow the money. In a slow economy, less people are borrowing money, rates are generally lower to attract customers, and there is more money to lend.

The mortgage interest rate affects you both in the short term and the long term. A rate that is lower means that your monthly payments are lower; it also means that over the term of the mortgage, you are paying less. Whereas the traditional mortgage is taken out for a period of 30 years, a lower rate means that you may perhaps be able to take out a shorter term mortgage, of 20 or even 15 years. Also, it means that you will own your home outright, sooner rather than later – a big advantage.

September 16, 2009

Budgeting

What You Should Know About Mortgage Pre Approvals

It is a good idea to get a mortgage pre approval by a financial institution prior to doing some serious house shopping. It is free and usually offers a 60 day interest rate guarantee from the date of the pre approval. However, it is important to understand that the dollar figure they present to you is not necessarily the amount you can truly afford. You don’t want to end up being “house poor” so I would recommend taking a serious look at your current financial situation and goals before deciding on how much to spend on your home. You want to take into account not only the mortgage payments, but also the utility costs, taxes, and so on. Make sure these expenses can fit into your budget.

As an example, when my husband and I went to a lender to get a mortgage pre approval, we were presented with a dollar figure that seemed quite high considering our current financial situation. During that time, if we had actually purchased a home for the amount we were pre approved for, we would have gotten into financial trouble. Instead, our goal was to spend at least $30,000.00 less and that is exactly what we did.

So, if you are considering buying a house, make sure to buy one that is within your budget so that you don’t become overwhelmed with financial stress. It’s just not worth it, and rather than regretting your home purchase, you can enjoy it, knowing that you made a financially sound decision. It is definitely wise to get pre approved, just be sure to take the figure with a grain of salt.

May 15, 2009

Older Posts

Newer Posts