Happy New Year and all the best in 2011!

Let dawn of a new year open eyes to debt control

Anticipating a hangover Saturday morning?

Lots of Canadians will be, which really isn't so bad. If you can't let go on New Year's Eve then maybe you're a little too tightly wrapped.

And you know there will be plenty of free advice on how to deal with that deep, throbbing pain behind your eyes and the unnerving sense that your brain is operating on a three-second delay.

The hangover cure story is a media staple around New Year's Day.

But it's being rivalled by another turn-of-the-year hangover obsession. Borrow too much during a low interest rate binge and you'll be feeling a giant pain in your (empty) bank account when the party ends.

Call it the credit hangover.

Mark Carney has. The Bank of Canada governor warned last week that Canadians are having too much fun drinking from the low-interest-rate cup.

The numbers back him up.

At this time last year Canadians had set a new personal debt record, averaging more than $91,000 per household. There were warnings to reduce spending and pay down debt before rates inevitably rose ... probably before the end of the year.

Now the year is almost done and rates have barely ticked up. Prime is sitting at 3%, apparently not high enough to scare the spenders.

Read more: Link

7 Factors That Affect Your Home's Value

There are many factors that can affect the market value of your property, ranging from home improvements to the mood of the seller. All of this is a lot to internalize, but you can make an informed decision while pricing your home if you tackle these issues one at a time.

1. Location 
Your home’s proximity to public transportation, train stations, shopping facilities, schools, etc., plays an import factor in determining your property’s market value. Every area has a high end and a low end. The market value of your property is affected by that reality. People that purchase homes in “lower end” areas expect to pay less than they would if they bought the same home in a “higher end” neighbourhood.

2. Features 
One of the key factors in your home’s value is the features it provides. For example, some house styles are more popular with buyers than others. The age and size of your home compared to other available properties also plays a part in affecting your home’s value.

3. Condition 
Potential buyers will take into account the condition of your home in deciding if they want to buy it and how much they are willing to pay for it. A home in immaculate condition has a much higher potential for a top dollar sale than one that is lacking the most basic routine maintenance.

Experienced buyers look for important conditions like paints, floor coverings, walls, ceilings, floors, doors and windows. Buyers may also pay close attention to the plumbing, electricity work, repairs, bathrooms, kitchen, and so on.

4. Home Improvements 
Most people think that home improvements are a sure way to increase the value of a home. Major home improvements are unquestionably important factors that affect the property value. Improvements like room additions, bedrooms, bathrooms, kitchens and other items like floor tiles, swimming pools, etc., can increase the value of your home. However, it only matters what those improvements are worth to the buyer.

5. Market Conditions 
When the market is flooded with similar properties for sale and real estate buyers are scarce, you can expect to sell your home for less than you would if there was a shortage of supply and lots of eager potential homebuyers.

6. Seller Motivation 
Seller motivation is also a major factor which affects the offer price made by the buyer. For example, if you bought a home in a new area you may be willing to accept a lower price to quickly complete the sale of your current home.

7. Marketing  
The marketing plan that your agent executes on your behalf will determine the amount of interest that is shown in your property. Your agent’s level of skill and expertise in the negotiating process will affect the amount of money you’ll be able to get for your home. Many people put more thought into what they’ll have for dinner tonight than who they will trust to market their most valuable asset. Don’t make the same mistake.

Bank of Canada key interest rate unchanged

The Bank of Canada left its key interest rate unchanged at one per cent Tuesday and warned of a slowing economy, knocking the Canadian dollar and stock markets lower.

The central bank said it now expects the economy to take a year longer to return to full capacity than it had earlier predicted.

The decision to hold the overnight rate steady followed three consecutive quarter-percentage-point increases in the key rate, which influences the commercial banks' prime lending rate and other short-term interest rates. Observers said it appears the bank may now stand pat for some time.

Read more: Link

Low mortgage rates: Time to refinance?

With the interest rates we've been experiencing for the past year or so, it may seem like there is no end in sight to historically low rates. Refinancing can be a great way to save money. It can also be a great way to get yourself into financial trouble.

Your breakeven period is one of the most important considerations in a refinance. To determine your breakeven period, you need to look at the monthly savings you'll create by refinancing and the total cost to refinance your loan. Let's say that by refinancing, you'll save $200 a month, and that the cost to refinance is $4,800. To determine your breakeven period, divide your refinance cost by your monthly savings. In this example, the breakeven period would be 24 months, or two years.

Read more: Link 

Should you be your own mortgage lender?

Wouldn't you like to take your monthly mortgage payment and give it to yourself instead of the bank? Sounds too good to be true? It depends...

Instead of paying principal and interest to a bank, you could pay that principal and interest to your RRSP. In effect, your RRSP becomes “the bank.” That means there must be enough money already in your RRSP that can be lent to you in the form of a mortgage (secured by your house), and you would have to make the repayments to your RRSP over time.

The interest rate you charge yourself must be in line with prevailing market rates. Striving for the highest interest rate possible to generate a better return for your RRSP means you are paying a high rate of interest on your mortgage. Does that make sense?

Figuring out your rate of return on this strategy is not so simple as assuming it is the rate of interest you decide to charge yourself. We've all seen the calculators that show us how, over the life of a mortgage, we can end up shelling out almost as much interest as the original principal, if not more in some cases.

Holding your mortgage inside your RRSP is not for everyone. Being your own bank sounds appealing, but don't forget to perform a bank-like application on yourself - not everyone could be their own best client. Make sure to talk to a qualified adviser about all the advantages and disadvantages.

Read more: Link

www.albertamortgagepros.ca

Mortgage Brokers in Alberta

A mortgage broker is someone who acts as an intermediary and negotiates mortgage loans on behalf of home buyers and businesses seeking to build or purchase commercial real estate. In developed real estate markets like Canada’s, a large percentage of mortgage products are sold by mortgage brokers.

The scope of a mortgage broker’s activity depends on the jurisdiction in which it does business. In Canada, mortgage brokers are regulated under provincial law, but throughout Canada, high ratio loans are insured by Canada Mortgage and Housing Corporation, Genworth Financial or AIG United Guaranty.

One reason lenders work with mortgage brokers is to increase the number of loans they sell. Banks and other institutions increase sales volume by contracting out part of their business to brokers.

Read more: Link

www.albertamortgagepros.ca

The Competition Bureau and Realtors reach a deal that could mean more options and lower costs

In a development that could drastically change the way Canadians buy and sell their homes, the real estate industry has reached a landmark agreement with federal competition authorities.

The legally binding deal will allow for home sellers to pay for only those services they want from their real estate agents. Previously, under the rules established by the Canadian Real Estate Association (CREA), consumers had to opt for an entire slate of services, a practice the Competition Bureau deemed anticompetitive.

Read more: Link 

www.albertamortgagepros.ca

A commission-free real estate network launches in Canada

A new commission-free real estate network that claims to be the largest in Canada launched on Tuesday.

Bytheowner.com, which combines five commission-free real estate companies, went online with a listing of more than 12,000 properties for sale across Canada.

The five companies part of the network include ComFree in Alberta, Skhomes4sale.com in Saskatchewan, ComFree in Manitoba and PrivateRealEstate in Ontario (which is under the ownership of ByTheOwner.com/Duproprio.com in Quebec).

Read more: Link


Alberta Mortgage Professionals

Using professionals or experts in fields you have little or no experience will help make the process simpler, easier and ultimately save you money.

For people buying their first home, there are vast amounts of information to sift through and many decisions to make, and hiring a realtor is one of the most important decisions you will make during the entire process.


If you decide to hire a realtor, it would be well worth your while to do research before you make your decision. You should know just what a realtor does for you, so your expectations are realistic. You need to understand the process as much as possible.


A realtor will be your experienced intermediary who provides advice and information and acts in your best interests. Remember, buying a home is the largest purchase you'll make, so it pays, literally, to do take the time to find the right realtor.

Read more: Link

www.albertamortgagepros.ca

The Hidden Value in Rental Properties When Rates Are Low

by Dave Larock


In today’s interest-rate environment, using a rental property’s Free Cash Flow to determine its value will significantly understate its potential return as an investment. For those who don’t know, Free Cash Flow is basically the money you are left with once mortgage payments, property taxes and maintenance/upkeep expenses are paid. Some rental investors take the amount they are left with (the Free Cash Flow) each year and divide it by the amount of their investment to calculate their return. For example, if you make a down payment of $150,000 on a rental property and at the end of the first year you have $1,500 of rental income left over after paying all expenses including your mortgage payments, your investment return using Free Cash Flow would be 1% ($1,500/$150,000). It should come as no surprise then that investors who value income properties this way are not lining up to buy right now. But there is a big piece of the investment return missing, and it is a by-product of our current low interest rate environment.


Read more: Link 

Buyers gain the edge in Edmonton resale housing market as inventory levels increase

Expect a buyer's market for Edmonton-area resale homes in the remainder of 2010 with more balanced conditions next year, says a new report released Tuesday by Canada Mortgage Housing Corp.

The average resale home price in the Edmonton census metropolitan area will still increase by 3.9 per cent this year compared with last year, but total MLS sales will fall by 11.2 per cent, said the report.

Edmonton, like Alberta's other major centres except Wood Buffalo, are now buyer's markets as recent price growth attracted more listings while demand slowed, CMHC regional economist Lai Sing Louie said.

Read more: Link

Bank of Canada increases lending rate by 0.25%

The Bank of Canada (BoC) incre ased its benchmark rate by 0.25% to 1% today. It&a mp;r squo;s the third consecutive increase for this year and would be the first time prime has seen 3% since February 2009. The prime rate is used in determine variable mortgage rates. With the BoC decision, retail banks are therefore expected to raise their prime rates to 3%.

For those clients in a variable rate mortgage with a 25 year amortization, they can expect to see an approximate $13 increase in their monthly mortgage payment (per $100K owing).

Bank of Canada governor Mark Carney suggested that the Canadian recovery would be ‘slightly more gradual’ than previous expected. The Canadian economy grew at approximately 2% short of the 3% the Bank of Canada predicted. This does not necessarily mean a rate pause at the next meeting, some economist consider 3.5% - 4.0% the ideal position the BoC would like to see the benchmark rate.

The next decision on the bank’s lending rate is October 19^th. 

Switch After 12 Months?

One year ago, people were paying prime rate for new variable-rate mortgages.

Today, the market is down to prime – 0.70%, or thereabouts.

For those who got their mortgage 12 months ago, many wouldn’t even consider refinancing as an option. But, it should be an option to consider. 

Read more: Link

www.albertamortgagepros.ca

10 easy ways to build a credit history

by Gail Vaz-Oxlade, for Yahoo! Canada Finance

I am constantly astounded at the number of people I meet who are in a bind because they have no credit history and can’t borrow money. This is something we used to associate with older, widowed women who have been cared for by loving, controlling spouses. But that’s just part of the story. Not having a credit history isn’t the domain on slightly out-of-touch women; there are men out there who haven’t got a clue because their wives do EVERYTHING. And it isn’t the exclusive territory of our elders; there are young, professionals who haven’t bothered to establish their own credit identities.

Everyone needs to have the ability to borrow money. That’s true whether you’ve just found yourself in the new role of single parent without an emergency fund or you’re a young adult starting out.

      1.      Get a Secured Credit Card. The fastest, cheapest and easiest way to establish a credit history is with a secured credit card. Since there’s no risk to the lender because you’ve put up the cash to cover your balance, secured cards are great for new borrowers or people trying to re-establish credit after a bankruptcy.

Lenders usually want twice the credit card limit. So if you want a $500 credit limit, you’ll have to ante up $1,000. Once you’ve established your ability to manage the card – anywhere from six months to a year – you can ask for the security requirement to be dropped and your deposit returned.

2. Get a gas or department store card. Gas or department store credit cards are often easier to get and can be good ways to establish credit. You must pay your bills in full and on time because the interest rates on these cards are often astronomical. But as long as you don’t miss a payment – which you never will, right? – it makes no difference what the interest rate is. Use these cards wisely and they can be a great toe-hold.

3. Borrow for an RRSP. Borrowing money to contribute to an RRSP is a great way to establish a credit history. While the RRSP cannot officially be used as collateral for the loan, lenders know where to find their money so approvals come more easily and the interest rate won’t be horrendous. Make sure you only borrow as much as you can afford to repay in six months. How much you borrow doesn’t mean much; repaying the loan quickly without a misstep does. Don’t let anyone talk you into more. Once the six months are up, use the amount you were using to repay the loan as your month retirement savings contribution. Now you’re building up your assets, which will be good for your credit history too. 


      4. Get a co-signer. While I’m not a big proponent of signing on for other people’s debt, if you can find someone who loves you enough to put their credit history at risk for you, do it. Make sure the loan history is being reported in your name and not the co-signer’s.

5. Put up collateral. If you have someone a lender can sell to get back his money, you’re more likely to get credit. Collateral comes in all sorts of forms: from the car you’re buying to those GICs you’ve got stashed away, if you have something a lender values, you’re in the money.

Of course, getting credit is only the first step to building a credit history. How you use that credit will be the real test.

1. Pay all your bills on time. Yes, including your cell phone bill, since some cell providers report to the credit bureau. Setting up pre-authorized payments is a great way to ensure payments are made on time.

2. Avoid applying for credit too often. Since repeated requests for credit may be interpreted as a sign that you’re in trouble and need a way to cover your butt, this will adversely affect your credit score.

3. Charge regularly and pay off in full.  Responsible on-going use of credit will produce a good credit rating. Just having your card sit in your wallet does nothing to add positively to your record.

4. Don’t over-expose yourself. Having multiple forms of credit with small balances can add up quickly and become unmanageable.

5. Don’t use credit to pay off credit. Taking cash advances on one card to make payments on another means you’re in over your head. Cut back on your spending, pay off your debt and get back to the business of using credit to keep your record active and healthy, not to spend money you haven’t yet earned.

 Article: Link

New to Canada Mortgages

For those who have or are considering moving to Canada for job or familial reasons, it’s good to know there are new to Canada mortgage financing options available. By planning ahead and connecting with a qualified and licensed mortgage professional, it is possible to realize the dream of owning a home in Canada.

One of the main reasons new to Canada buyers should contact a mortgage advisor in advance of a move, is to find out what important paperwork will be needed to begin the process.

Read More: Link

Quick Close Special!!

The major banks dropped fixed mortgage rates again, and therefore we have the following quick close special: 3.69% on a 5 year fixed. This rate can change and end at anytime.

Banks lower fixed Mortgage rates again!

Five of Canada’s major banks have reduced their mortgage rates by one tenth of a percentage point. This is big news because it is the second time since major banks have cut their mortgage rates since the beginning of August. More importantly, the rate cuts are come after a report seen yesterday that Canadian home sales were down 6.8% in July from a month earlier.


Read more: Bank Nerd Article

www.albertamortgagepros.ca