Family Formation & Housing

For young couples starting families, buying their first home and/or other real estate. Covers mortgages, credit cards, interest rates, children’s education savings plans, joint accounts for couples and the like.

How to take advantage of rising interest rates

Posted By |

By Bob Lai, Tawcan

Special to the Findependence Hub

Lately, the talk of the town seems to be rising interest rates. In April, the Bank of Canada raised the benchmark interest rate by a whopping 0.5% to 1%, making it the biggest rate hike since 2000. Given the high inflation rate, it is almost a given that these rate hikes will continue throughout 2022 and beyond. [On July 13, 2022, the BOC hiked a further 1%: editor.]

But before you freak out, let’s step back and look at the big picture. At 1%, the benchmark interest rate is still relatively low compared to the past interest rates.

I still remember years ago before the financial crisis, being able to get GIC rates at around 5%. And some people may remember +10% interest rates in the 80s or early 90s. Back then, interest rates were much much higher than measly below 1% rates we’ve been seeing the last decade.

Historical BoC overnight rates
What’s going to happen to the stock market? Well the general rule is that when Bank of Canada or the Federal Reserve cuts interest rates, the stock market goes up. When Bank of Canada or the Federal Reserve raises interest rates, the stock market goes down.

Continue Reading…

A Comprehensive Guide to Buying your First Home

Posted By |

By Mario Pineda

Special to the Findependence Hub

Thinking about buying a home? As of late 2021, there were 646,053 active home listings, according to Rocket Mortgage. More homes are likely to come on the market in spring and summer, which are hot selling seasons. Investing in a home purchase can afford buyers an asset that, ideally, should maintain or, hopefully, increase in value. Some buyers simply want a place to hang their hat and call their own. Whether you’re raising a family, need space for your dogs, or are ready to tackle the responsibilities of maintaining a house, you can rely on this guide to provide you with the essential information you need to know before you buy one.

 Are you ready to buy a House?

Buying a house is a big commitment — living in a specific location, paying a mortgage for decades, and maintaining a property (in order to preserve its value). Many people either aren’t ready to settle down into a home of their own or simply prefer to rent, leaving property maintenance to property owners. You’re likely ready to buy if you:

  • Are annoyed or tired of renting: typically, renting involves loads of rules stipulated by landlords, annual rent increases, and a lack of privacy (mainly if you live in an apartment complex).
  • Want to invest in real estate: investing in real estate is a common reason why people buy houses. Unlike rent, which is gone once you pay it, your mortgage payments are applied to the home’s purchase. In typical cases, you’ll retain that money in the form of your asset or recoup it when you sell the house.
  • Have a family and want more room: if you have a family, you may wish to purchase a home that offers space for each member of your household as well as a backyard that provides outdoor living space. 

Pre-purchase Considerations

Before buying a house, there are various factors to consider before you sign on the dotted line of a purchase contract. A home tends to be a long-term investment. To make the most of it, it’s essential to understand the challenges associated with the buying process and the obligations related to property ownership. By exploring the personal and financial areas of your life, you can arrive at the right decision for you. 

Personal Considerations

Ask yourself if you are ready to commit to living in a specific area. A mortgage is generally a 30-year commitment (unless you choose to sell the property). What are your plans for the future? Do you expect to relocate soon for your job? Do you wish to have children or to expand your family? These considerations may impact your decision to buy as well as the type of home to buy.

Remember, everything regarding the care of the home will rest on you: and your partner if you are purchasing together. Not only is there the monthly mortgage to cover, but there are also the inevitable home maintenance and repair costs that come into the bargain. In short, understand the financial obligation before you as you contemplate your decision.

Financial Considerations

There are other financial factors to reflect upon too. To qualify for a mortgage, you will need a good credit score as well as a down payment. As banks consider your loan request, they will examine your debt. Do you have existing debt, and is it enough to impede your home buying plan? Also, banks will evaluate whether your income is enough to pay the monthly mortgage payment. Look closely at your financial picture because, rest assured, any lender you choose will definitely examine your finances closely.

The Psychology of Buying a Home

You might not realize it, but engaging in the home buying process can be an emotional roller coaster. It’s easy to get your hopes up that a seller will accept your bid. You might fall in love with the perfect house only to realize that the seller accepted another buyer’s bid. You might also find a home with great potential only to find that it has severe flaws like a cracked foundation. It’s important to keep your emotions in check to make a sound investment decision. 

There are other psychological aspects of buying a house that you might not have thought about before. For instance, some people bring cultural superstitions to the process and don’t want to live in a house with specific numbers in the address or are opposed to a particular street name. 

Other people might struggle with the perceived value of a home, believing that interior wall colors will substantially affect its worth. The reality is that cosmetic changes are easy and often inexpensive to fix in cases like this.

If you find yourself contending with psychological factors like these, take a step back and think them through. If they’re going to impede your long-time enjoyment of the home, you may want to keep house hunting. If, however, you think you can spend a decade of your life on “Elm Street,” you may be glad that you didn’t allow a horror movie from the 1980s to sabotage the purchase of your dream home.

Searching for a Home

Speaking of needs, you’ll need to consider them closely so that you can confine your search to homes that satisfy them. Before you begin your house hunting adventure, you should consider:

  • House size: how much square footage will suit you/your household?
  • House exterior: what architectural styles appeal to you? Bungalow, cape cod, modern?
  • Bedrooms: what’s the minimum number of bedrooms you need?
  • Bathrooms: how many bathrooms do you prefer your home to have?
  • Heating and cooling systems: how efficient are these systems? Will they need to be replaced soon after you buy the house?
  • Basement: do you want a home with a basement or cellar?
  • Attic: do you want to purchase a home with a finished attic that offers usable living space?
  • Garage: how much space do you want your garage to have?

How to Choose the Right Neighborhood

The neighborhood of your home is also an important consideration. A great home in a community that you don’t find agreeable can make for an unhappy situation. When you choose a neighborhood to shop for a home, you should consider:

  • Safety: investigate the area’s crime rates, affecting property values.
  • Community services: do you require public transportation? Do you want to live near shopping centers, medical facilities, or parks?
  • Public schools: be sure to assess the quality of area schools if you have school-age children. 
  • Amenities: what are some local amenities in the area? Is there a local swimming pool, forest preserves, entertainment venues like theaters? What about restaurants? 

Top Home Buying mistakes

Many buyers have stumbled into pitfalls when shopping for and buying a house. Try to learn from their mistakes. Here are some of the most common home-buying mistakes to watch out for:

  • Partnering with a real estate agent who doesn’t “get” your needs and preferences.
  • Failing to get pre-approved for a mortgage.
  • Making an offer on the first house you visit.
  • Getting only one rate quote from one lender instead of shopping for a more competitive lender.
  • Buying a house that is more than you can afford.
  • Using all of your savings as a down payment.
  • Not investigating the HOA if the area has one. 
  • Failing to look into first-time homebuyer programs.
  • Not researching the community extensively.
  • Waiving a home inspection.

Special terms for New Home buyers

Is this your first time buying a house? In that case, you’ll undoubtedly want to find out about first-time homebuyer programs and special incentives that can alleviate some of the financial stress associated with buying a home. You may also qualify for programs based on your income or veteran status. An experienced real estate agent will be able to inform you about any programs or incentives that you might qualify for. As a first-time homebuyer, some of the special terms you may be eligible for include: Continue Reading…

12 Questions to Ask when Buying a House

Posted By |

What is the one question to ask when buying a house?

To help you be informed when purchasing a home, we asked business owners and finance experts this question to hear their best advice. From inquiring about homeowners’ fees to asking about renovations, there are several questions that may help you when buying property in the future.

Here are 12 questions to ask when buying a house:

  • Are There any Homeowners Association Fees?
  • How Old are Appliances and Major Systems?
  • How Long Has the House Been on the Market?
  • What does the Inspection Reveal?
  • How Much Have Nearby Properties Sold for?
  • Are There Any Risks to One’s Health Or Safety?
  • What Do the Seller’s Disclosures Signify?
  • What Kind of People Live Nearby?
  • Is the Home Prone to Floods Or Other Natural Disasters?
  • What is the Seller’s Reason for Leaving?
  • What’s Included in the Sale?
  • Were any Additions or Major Renovations Made?

Are there any Homeowners Association fees?

When looking for a home, you usually think about the payments that affect your mortgage, like taxes, insurance and upgrades. You may also try to estimate what you will have to pay for your utilities. However, when you find that perfect home, you should also consider if there are any homeowner association (HOA) fees that come with living in a new community. HOA fees are required payments that help ensure the neighborhood and properties are maintained to a certain standard.

HOA fees can cause you to lose your home if you don’t pay them monthly or annually. They are separate from your mortgage, and the fee can range depending on where you live, possibly ranging from $100–$1,000 per month. Because these fees are not included in your mortgage, you have the responsibility to pay them, and you should factor the cost into your budget so that you don’t find yourself in a dire financial situation or risk losing your home. — Annette Harris, Harris Financial Coaching

How old are appliances and major systems?

This is one question that I believe should be asked when purchasing a home, because knowing the expected lifespan of important systems and appliances—such as the air conditioner, furnace, water heater, washer, dryer and stove—can help you budget for major repair or replacement costs. Request a house warranty from the seller to cover the expense of replacing these things if they are nearing their end of life, or if they have already reached it. — Gerrid Smith, Joy Organics

How long has the house been on the market?

I believe this is an important topic to ask before making an offer on a house, since a seller will be more willing to negotiate a lower price if their house is on the market for a longer period of time. As a result, you may be able to haggle on the price, conditions, terms and credits associated with the replacement of worn-out carpet or other obvious difficulties. 

If a home is overpriced from the start, it may sit on the market for a long period before finally selling after several price reductions. For some purchasers, an overly long time on the market and frequent price decreases suggest that something is amiss with the property. As a result, you have a fantastic opportunity to work out a bargain. — Edward Mellett, Wikijob

What does the inspection reveal?

You can never ask too many questions when buying a house. It’s a major investment and one that a lot of people spend a lifetime saving up for, and it’s important to have all the information before making your purchase. Generally speaking, the important questions will be answered during the inspection and appraisal processes, which you should ensure always happen if you can help it. Continue Reading…

5 things Ex-Pats need to know before buying Property in Singapore

Posted By |
Singapore

By Emily Roberts

For the Financial Independence Hub

If you are thinking about buying property in Singapore, you should consider a few things first. Diving headfirst is not always the best solution, as difficulties can arise along the way. Carefully planning your transition to a new place will make moving much sweeter. Owning a property is an immense achievement because not everybody can afford it.

Let’s look at the five things you need to know before buying a property in Singapore.

What types of Property you can buy

You need to understand your eligibility status before looking to buy property in Singapore. There are three types of property: public housing (HDB flats), hybrid or public-private housing, and private property such as condominiums.

The eligibility criteria consist of your age and whether you are buying the house alone or with somebody, among other things. It is also salient to know that a Singapore Permanent Resident (SPR) is considered a foreigner, and restrictions or limitations apply when buying property. Only people over 21 years old can purchase property in this country.

An SPR can buy properties like private condos but you cannot buy a resale HDB flat alone, and you can only buy resale ECs that reached a minimum of a 5-year occupation period (MOP).

Another major restriction, if you are not a Singaporean citizen, is that you cannot purchase new HDBs such as Build-to-Order (BTO) and Sale-of-Balance flats (SBF). Non-Singapore PRs can buy private condos, private ECs, and landed properties.

How to find a Property

There are a few ways to find properties in Singapore, but as an ex-pat, it’s easier to hire an agent. Choosing a local agent you can trust can make your search easier and hassle-free. A local agent can refine your search by guiding you towards the properties you can afford and the ones you are allowed.

As an ex-pat, you have some restrictions when purchasing property and land. Having an experienced agent with you means you will only look at the eligible properties. This way, you are also safer from scammers and overpriced property.

As the agent will be local, this person can help you negotiate better deals with the seller. While it does cost to hire an agent, it will make searching for a property way easier than alone. Even if you choose not to go with an agent, there will still be an agency fee of 1% of the purchasing price. It is to pay the agent selling the house.

Another way to look for properties in Singapore is to search online. There are a few good websites where you can get the feel of the housing market in this country. As a rule of thumb, when you search online, consider houses close to public transport and nearby amenities.

Plan your budget

Buying a property is a massive financial investment and a long-term commitment. To purchase any property in Singapore, you will most likely get a 30-year bank loan like most Singaporeans. It means 360 monthly installment plans throughout your life. Continue Reading…

Top 3 benefits of investing in Real Estate

Posted By |
Image by unspash/Blake Wheeler

 

Special to the Financial Independence Hub

Learning how to invest your money at an early age can set you up for success in the future. One of the most popular ways to invest is through real estate. This will allow you to earn a cash flow outside of your regular 9–5. However, many take this up as a full–time gig if they find it more appealing or successful than their typical job.

The benefits of real estate investing are almost countless, but there are a few that stand out from the rest. Let’s take a closer look at the top three benefits of real estate investing:

Buying is Cheaper than Building

If you plan to start your investment route in real estate, you’ll find that buying a home is typically much cheaper than building. Start by figuring out how much house you can afford and then apply for the proper mortgage. The process is relatively simple, especially with the help of a real estate agent.

The waiting game starts here, but compared to the length of time a home build is, this process is much shorter. Once your offer on the home has been accepted, you can then decide what you plan to do with the house; whether it’s to earn passive income, live in it, or both. Either way, your home’s equity will begin to grow. The only difference between the two is making money on the home on a consistent basis or collecting the equity of your home once you sell.

Earning Passive Income

In recent years, finding new ways to earn passive income has been a very popular side hustle. Especially for young adults, this is a great way to earn money while also working a full–time job. Check out our top 3 ways to start real estate investing to help you choose which route you want to take. Whether you choose to rent the home out monthly or are considering the flip and sell method, you can earn a significant amount of passive income. Continue Reading…