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.

What is Mortgage Insurance?

Posted By |
mortgage-insurance-cartoon
Cartoon courtesy of LSM Insurance

By Chantal Marr, LSM Insurance

Special to the Financial Independence Hub

Sounds great just lying there on paper, doesn’t it?

Really solid.

The underlying concept of mortgage insurance is that if you die or are incapacitated mortgage insurance will pay off the rest of your mortgage. But be careful: Mortgage Insurance is the most dangerous financial product out there.

Mortgage insurance is the one financial product that declines in value as you continue to pay. Therefore each year you are getting less and less value for your premium.

Why Math is Important

Renting vs. Owning

Let’s start with your house. When you take a mortgage out on your house, it’s a very bad deal to start with. You are just paying interest on the value of the house and in most cases the interest far exceeds the cost of renting the same property.

Here’s an example based on a $500,000 20-year mortgage at 6% on a $600,000 house. We’ll assume rent inflation of 4%/year:

Year 2010: Mortgage payment $3,560/month. Rent: $2,500.

You are leaving over $1,000 in your pocket per month in ready money. That’s a lot of restaurants and vacations twelve months a year.

But let’s take it ten years later: Continue Reading…

Review: How NOT to Move Back in with Your Parents

Posted By |

51UopHxeZ+L._SX331_BO1,204,203,200_You’re a millennial. You’ve recently graduated from university and are beginning your career. You aren’t making quite as much as you’d hoped for, and as it turns out, rent is crushingly expensive.

Okay, you’ll just put off moving out for six months, save some money, live at home. Everyone’s doing it these days. You’re sure that before you know it you’ll be on track to success, living it up in homeowner-ville, sitting pretty. You’re not quite sure exactly how you’ll get to homeowner-ville, but it can’t be that hard, right?

If any of this sounds plausible, I would seriously consider reading this wonderful book called How Not to Move Back in With Your Parents – The Young Person’s Guide to Financial Empowerment by Globe and Mail personal finance columnist Rob Carrick. I don’t want to be dramatic and say it will be your new finance bible, but it’s definitely a book you’re going to be referencing time and time again throughout those first few post-graduate years.

Something I really love about this book is that it’s broken down into great detail. Not only that, but it’s organized according to when in life you should be needing the advice.

Covering all the financial bases

Continue Reading…

How to win a real estate bidding war

Posted By |

Auction and bidding selling antiques vector illustrationBy Sheila O’Hearn, Zoocasa

Special to the Financial Independence Hub

The real estate industry has a popular saying: “All’s fair in love, war and real estate.”

Nothing could be applied more significantly when it comes to today’s bidding wars on the home of your dreams. Like it or lump it, bidding wars show no signs of waning anytime soon.

Toronto real estate and Vancouver real estate exemplify two of the world’s most sizzling markets that are leading in bidding war trends. Statistics show that sales of existing homes rose by 8% in February, compared to the previous February, and the national average home-price climbed by 17 per cent.

In Toronto, the average price of a detached house capped $1.2-million in February 2016, and house prices rose 15.7 per cent in May 2016, compared to May of last year. In Vancouver, the average selling price of a single-detached home rose to $1.8-million in January, a 40 per cent increase from prices in 2015.

It’s a seller’s ideal market!  As a potential buyer, arm yourself with these three pearls of wisdom:

Continue Reading…

Young, saving, and hopefully one day buying a house

Posted By |

IMG_7264By Helen Chevreau

Hub Staff

The cover story of this month’s Toronto Life magazine caught my eye straight away. “Young, Rich, and Totally Not Buying a House” it boldly claims.

As a young, not-yet-rich millennial who has no immediate plans to get into the housing market, I was intrigued. The article is written by 31-year-old Tony; a pharmacist who lives with his parents and eschews the traditional rites of passage of his peers, like home ownership.

Before I actually read the article, I was sure I wouldn’t like Tony, wouldn’t relate to him. Growing up in Toronto I’ve seen his type countless times. Money is no object, and he’s not shy to show it. A common defence from this kind of person is that ‘normal’ or ‘rational’ people who are judging him are jealous or boring (or both).

What I found interesting about this piece is that Tony seems very self-aware about his spending and lifestyle choices. He’s accepting of his friends who do choose to be “shackled to a monstrous mortgage for the next 30 years,” and he understands that sometimes it just isn’t possible to have it all.

Though much of what Tony talks about in this article is out of reach for most normal millennials (last minute trips to Asia, $200 bottles of wine), I appreciate the sentiment. Continue Reading…

How to switch a mortgage to another bank

Posted By |

Large luxury brick home in suburban settingBy Albert Krav

Special to the Financial Independence Hub

If you’re not satisfied with your current mortgage lender, it may be in your best interest to switch to a different bank. In order to accomplish this, you’re going to need to refinance your mortgage, as banking institutions (in the United States) won’t simply take over your existing mortgage. The key difference here is that you already own the house and may have an established payment history.

Is Refinancing worth the effort?

While going through the mortgage process a second time may seem like a hassle, the reality is that seeking out a better rate is often a prudent financial strategy that can be well worth the time spent. After all, even a slight improvement is going to make a significant difference when you consider the long term. Fortunately, according to US News & World Report, the mortgage process is far easier and more straightforward these days than it was before the recession. Here’s a quick rundown on how to set the wheels in motion.

1.) Look into early termination fees

If you refinance your mortgage, the new bank is going to pay off your existing mortgage so you can start with a clean slate. Before you proceed, Continue Reading…