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Posted 1 Comment on When opportunity knocks…open the door. Interest rates

When opportunity knocks…open the door.

It’s March, 2012.   How will you look back at this month in 5 years time?    There are certain dates in history that stand out for all of us.   Some are more personal than others, like the birth of my son, the day I met my wife, my first trip overseas, NHL pro hockey camp, etc.

And then there are dates where I look back at missed opportunities.

-October 1984, I had a chance to buy a waterfront lot on Balsam Lake in Ontario’s cottage country, for $22,000…. now selling for $400,000.   There was a new condo in east Toronto for $82,000 in September 1987…. now selling for $392,000….(and yes, I think I was 5 years old…Lol!)..

-Or how about that semi-detached house at Danforth Ave and Woodbine, in Toronto, for $175,000 in 1990….now selling for $500,000.    More recently, I could have bought a house for $320,000 in 2005, near the water in Burlington, Ontario…..that same house sold for $800,000 last year.

The point it, I think we will look back at March 2012 as the month when the Banks declared mortgage war against each other…  Only in this war, there is a winner… YOU, the consumer, YOU the borrower, YOU the investor.   We are seeing record low mortgage rates.   And they won’t last forever.  In fact, this mortgage war is probably going to accelerate interest rate hikes…  almost like starting a campfire with gasoline soaked wood… It’s burning red hot but it won’t last for long.

With interest rates are record lows, isn’t this the time to borrow?    A $300,000 mortgage will carry for $1196/mth.. and that’s with a 5 year fixed rate term.  Bond yields are climbing… 5 yr bond yields are up to 1.71%.. that’s up 30bps in less than a month… 5 year fixed rates follow bond movement… i think it’s safe to say, we should expect rates to climb in the near future… and the reason they haven’t moved yet is because of the Mortgage wars…

We are hearing the cries by the govt and some bankers, telling us not to borrow too much.  Personal Debt level concerns are plastered all over the internet and media.   But we aren’t seeing many articles telling us how to borrow and invest wisely…. borrow when rates are low instead of borrowing when rates are high… borrow when you qualify instead of borrowing when you don’t… borrow when you don’t need the money…   Isn’t that when Banks want to lend you the money?

We have just seen a draft guideline, Bill B-20,  entered in for review with a May 1st decision date.   These new regulations are aimed at tightening lending rules even further.. and this time it’s targeting Home Equity Lines of Credit..   That’s right, they want to make it even harder to qualify for these products and possibly make the repayment terms more strict…

Opportunity is knocking… answer the door..

Posted 5 Comments on RRSP, RESP, TSFA or Mortgage prepayment? Which has the best returns? Money saving tips

RRSP, RESP, TSFA or Mortgage prepayment? Which has the best returns?

HOW TO GET THE MOST OUT OF YOUR MONEY

Trying to decide what’s the best move can be difficult…. and I must admit, this is not an easy subject to tackle.   There are so many opinions…. But it’s important enough that I’m going to put my 2 cents in.  My final recommendations are listed at the bottom if you want to fast forward…

First, let’s come to an understanding that we are all different and have different needs…. you must ask for professional opinions and make up your own mind. Having said that, I think that for me, this is actually a very easy decision. Continue reading “RRSP, RESP, TSFA or Mortgage prepayment? Which has the best returns?”

Posted Real Estate news

Zoocasa announces Zoopraisal, a FREE property valuation service.

Ever wonder what your home is worth today?  Or that house down the street?   How about a friend or neighbor’s house?   Finding out would normally involve contacting a realtor for their professional opinion or hiring a professional appraisal.

Well now you can find out on your own.  The release of Zoopraisal, by Zoocasa.com, may have caused some controversy with appraisers but the service is here and it’s getting a lot of attention.

Zoocasa has entered into an agreement with Centract Settlement Services, an appraisal service company that has administered millions of appraisals across Canada.  Here’s a direct quote from Zoocasa.com website “Zoopraisal™ is Zoocasa’s estimated market value, computed using a proprietary formula, powered by Centract. It’s a starting point in determining a home’s price.”  (Clearly, Zoopraisal is not guaranteeing the value.  It’s just an estimate…the service provides a range of value.)

Zoocasa.com is an online service that provides access to homes that are listed for sale, online.   The goal of the site is to provide a place where buyers can start their search using the internet.   In my opinion, Zoopraisal will only enhance this service.   This can’t replace a good realtor that’s out there looking to match your needs when buying a house.  I think there are still too many intangibles that come into play.  Local knowledge is invaluable and is something that can’t be uploaded online.

But if we look to the U.S., we’ll find similar sites such as Zillow.com.   This powerful site tells you everything from the selling price to whether it’s being foreclosed, to the Zillow’s estimated value, the price per sq foot, etc.   They also offer mortgage quotes, realtor referrals, etc.   These info sites make their money by charging those that want to advertise or participate on their site.

There is a question as to whether all this information should be made public and whether this infringes on one’s right to privacy.  The debate will continue… One thing is for sure, with pressure from the Competition Bureau on the Canadian Real Estate Association to make it easier to access the MLS, we are definitely headed in a new direction.    There is more access to data.   This is not a bad thing.   More data is better.  It helps to make an informed decision.   Professionals like Realtors, Appraisers and Mortgage Brokers should not be worried.  Their expertise will always be needed.

Watch for more of these sites to pop-up soon in Canada.