Real Estate Bits

Whether you're a first-time homebuyer, or looking to renew or refinance your mortgage, interest rates are one of the major factors that can influence the type of mortgage you choose. The good news is that rates are still at very attractive levels.

But what kind of mortgage is right for your situation? These days it's easy to find a mortgage that reflects your needs - whether you are looking for security, flexibility, or portability.

Here's a primer on some of the main mortgage features, along with the type of situation for which each may be most appropriate.

Closed fixed-rate mortgage: With this type of mortgage, your interest rate is fixed for the duration of the term - usually five years, but it can range up to seven. If you want to renegotiate the interest rate, or pay off the balance prior to the end of the term, you typically have to pay a fee to break the mortgage contract.

Appropriate for: Homebuyers who want to know how much of their payments will be applied to their principal over the term of the mortgage. A closed fixed rate mortgage may also be right for you if you think that interest rates will be heading higher and want to "lock in" at the current rate.

Open mortgage: With an open mortgage, you can pay down or pay off the mortgage at any time without incurring a penalty. They are usually available for short terms only - typically, six months or one year. However, the added flexibility translates into a higher quoted rate than a comparable closed mortgage.

Appropriate for: Those who think that interest rates are headed lower over the next year. An open mortgage may also be right for you if you are thinking of moving in the shorter term, or will be coming into a lump-sum of money that can be used to pay down some of the mortgage.

Variable-rate mortgage: With this type of mortgage, the interest rate you pay fluctuates with the prime lending rate. In many cases, your mortgage payment does not change for the term of the mortgage. You pay a fixed amount, but more of the payment goes to reduce the principal when interest rates fall, and less is directed to the principal when the prime rate rises.

Some variable-rate mortgages are capped, meaning that the variable rate is guaranteed not to rise above a certain rate. Some are also convertible to a fixed-rate mortgage.

Appropriate for: Homeowners who believe interest rates will stay the same or fall. However, if it looks as though rates have bottomed, it may be better to lock in to a fixed rate.

Generally speaking, in today's environment, the shorter the term of a mortgage, the lower the mortgage interest rate; the longer the term, the higher the rate. Many first-time buyers prefer the security of a longer term, which makes it easier to plan and budget. It may also be a good idea to lock in to a longer term if indicators suggest that interest rates have bottomed.

On the other hand, if it appears that rates may fall, going with a shorter term may allow you to realize some cost savings when you renew your mortgage.

The direction of interest rates can be difficult to predict. Your mortgage specialist can help you evaluate the current economic climate and plan for interest-rate fluctuations.

Here are some tips that can help you save money when you renew your mortgage.

Reduce your amortization: Amortization refers to the length of time it would take you to pay off your entire mortgage. Choosing the shortest amortization you can afford will mean higher monthly payments, but could save you thousands in interest costs over the life of the mortgage.

Make a lump-sum payment: When you renew, use whatever cash you have to pay off as much of the mortgage principal as you can.

Switch from monthly to accelerated bi-weekly or weekly payments:You will wind up making one extra monthly payment per year, which is directed to reducing the principal, saving you a bundle on interest costs.

Consider a blended-rate renewal: A blended renewal extends your mortgage beyond your existing term at a rate that averages what you're paying now with current mortgage interest rates. If current rates are lower than your existing rate, the savings could be substantial.

When interest rates are low, many homeowners take a hard look at the financing of their most important asset. Before you decide to renegotiate your mortgage, consider carefully the potential costs involved.

If your mortgage is closed, you may face a penalty when you renegotiate, but it may still be worthwhile to refinance. The key is to determine whether the potential interest-rate savings outweigh the penalty.

The rough guideline is that refinancing makes financial sense if the new interest rate is at least two percentage points below your current rate. Your mortgage specialist can help you crunch the numbers.

Whether you are a prospective first-time buyer, are renewing your mortgage, or are considering refinancing, speak to your mortgage specialist about the features that are right for your situation.

Regards,

Nino.

"Tricks Of The Trade"

Trading in real estate is right up there amongst the biggest "stress producing" triggers in everyday life. If you're selling your home, you hope for one of the often-hyped "multiple offer scenarios". If you're buying a home you dream of being the only person at the negotiating table. Whatever the reason for your venture into the Toronto real estate market, understand that it can be a daunting experience, even for a seasoned home buyer or seller. Whenever I have a moment or two to jump up on my well worn soap box, I always give my buying or selling clients the same advice on the subject - "establish a plan". The following points may help you to regain some perspective if you've discovered that yours has recently flown out the proverbial open window.

Why are you planning a move?
Can you renovate and get what you want without making a move?
Decide on the timeframe - the spring and fall markets in Toronto tend to be the busiest of the year. Take into consideration the school year, family vacation times, special occasions like a friend's wedding etc. Try to make your move when nothing else is looming large on the horizon and your personal stress metre is close to zero.
Meet with your banker or mortgage broker and map out a financial plan.
Call your real estate agent and arrange a meeting when you have undisturbed time.
Look closely at the data on your street and in your area. What is an accurate price range for your property? Does that figure fit in with the financial projection of what you can and can't do? Do you buy first or sell first? Understand the ramifications of these decisions and be comfortable with the reality of your financial capabilities.
If a move is in the cards then spend time with your real estate agent going from room to room in your home. Make a "To Do List" of projects that will maximize your home's appeal. Listen to your agent. A market ready budget can potentially net you thousands of dollars over what you would receive for your property, if you chose to do nothing to enhance its appearance.
Your home should look its best when it comes through the Toronto MLS system and potential Buyers start to make the trek to your door.
Listen to the feedback your agent gets from following up on the showings at your home. This is what potential Buyers think and it's important to listen to their perspective.
You will either get multiple offers or you won't. If you do - "congratulations".
If you don't, then move forward with your original plan and be patient with the process. If your property is intelligently priced and well exposed to the market - it will sell. If it's not then re-evaluate. Your plan needs an element of flexibility and so do you!

The same goes here. Have a plan in place - but be flexible.
Meet with your banker. What can you realistically afford? You may choose to spend much less than a bank will offer to give you and that's perfectly okay!!!
Meet with your real estate agent and write down your "Wish List" and ideal "Location Borders". Understand what you're doing every step of the way.
Understand the reality of your life? Can you realistically do a gut and reno or is that an idealized notion from a Hollywood movie?
Arrange to go and see properties that fall within your financial, wish list and location criteria. You may ultimately add new areas or tighten up your location borders. The same is true of your wish list and your financial goal.
Understand the importance of an offer and what the clauses and conditions mean. Consult a lawyer if you want additional advice. What about a home inspection, accounting or legal advice?
When you find a home that you want to buy - you may or may not be the only Buyer at the negotiating table. You can't change this fact so just accept it. Do your best and understand your walk-away point. If you don't get this house - there will be another one. Someone just decided to move to a condo in your chosen area? Guess what? That person's home is now going to be "For Sale".
Listen to the well-intentioned advice from family and friends - but make your own decisions. Things really have changed since Uncle Harry bought his North Toronto bungalow in 1978.
If you miss a house in multiple offers - have a little "poor me pity party" and then move on. You may lose 3 or 4 more.
Along about now, you may need a little refresher course on why you want to make a move or buy your first home. That's okay.
Re-visit your original plan and fine tune it if need be.
Always have your sense of humour fully engaged. You aren't the only Buyer going through this process.
Keep your focus on what it's going to feel like when your agent comes back out to the car and says - "You Got It".

Okay, Okay - Here's "The Joke"

Ernie had just finished his first golf lesson and his enthusiasm for his new found sport was boundless. His skill level was another matter. He turned to his instructor Tom and said, "Just watch me - I'm going to make this a hole in two". He selected his driver, teed up and fixed his eye on the ball. Ernie swung his club and sent the ball a whopping twenty feet out onto the fairway. Undaunted, he turned to Tom and said, "Now it's time for a record-breaking putt"!

Jimmy and Johnny were out bear hunting. They rounded a corner and spotted a bear about fifty feet away. Jimmy fired a shot at the animal but the bullet whistled past the bear's ear. This made the bear angry and he growled and started to lumber towards the two men. Johnny sat down on a rock and took out his running shoes. The bear started to run in their direction. Jimmy said, "Are you crazy we have to get out of here." He started to run in his heavy hiking boots. Johnny soon sailed past him in his running shoes and said, "You see Jimmy my friend - I don't have to outrun the bear - I just have to outrun you".

Guest Columnist

Ms. Stephanie Jackson - Consultant

"Alleen's Window Coverings"

WebSite: www.alleen.com

E-Mail: info@alleen.com

Bus: (416) 977-2551 Fax: (416) 977-9610

74 St. Clair Avenue West - Toronto

Does Your Living Room Need a Face Lift? How About Starting With Your Window Treatments?

Alleen's Window and Wallcoverings has been servicing the window covering industry since 1980. Our goal is to always be on the cutting edge and to offer our customers the latest and most innovative products on the market. We offer everything from the "Higher" end custom product to the"Standard" one inch Venetian.

Window coverings are the perfect way to compliment your space and to add finishing touches to your look. Quality, pricing and service are guarenteed at Alleen's.

Astroweave Sunscreens
Silhouettes
Cellular Blinds
Wood/Metal Venetians
Sohji-screens/Panel tracks
Luminettes
Alouettes/Vignettes
Shutters
Woven Woods
Roman Shades
We also make custom Drapery-Sheers and Valances

Ask An Expert?

These are just some of the professionals who can help you with your home ownership concerns. If you subsequently choose to establish a business relationship with any person/company then you should be sure to define the specific details of the relationship or business contract before you proceed.

The above article(s) provide information that is of a general nature only and is never intended to be a substitute for advice specific to your particular concern. No one should act upon such information without appropriate advice and/or consultation.

Client & Networking referrals are the foundation of a successful real estate agent’s career. Over many years in this industry I have enjoyed the confidence & repeat business of my clients. I appreciate your on-going support and want you to know that I will always look after friends & colleagues you refer to me with professionalism, care and respect.

Please Call Me With Any Real Estate Questions.
I'm Always Here To Help!

Rosemary Wright

Sales Representative - Sutton Group-Bayview Realty Inc.

Bus: (416) 483-8000 Fax: (416) 463-0159

Web-Site: www.rosemarywright.com

E-mail: mail@rosemarywright.com

Direct Page: (416) 582-1216

This newsletter is never sent unsolicited. If you wish to be removed, please reply to this e-mail with the words: "Remove from Newsletter" in the subject line or call me at (416) 483-8000 to request removal.

The intent of the newsletters - "Real Estate Bits " & "Real Estate Bits -2" is to provide information to you regarding real estate. Personal details such as your name, contact information and address are never revealed to anyone without your consent. In accordance with the new Privacy Act, your consent must be given (either implicitly or explicitly) to receive these newsletters. If you do not want to receive my newsletters - please notify me. My newsletters are not intended to solicit Buyers or Sellers who are currently under contract with any Broker.

The information and opinions contained, statistics and articles are courtesy of TREB, CMHC or other individuals or companies and are believed to be reliable, but their accuracy is not guaranteed. Sutton Group-Bayview Realty Inc. and Rosemary Wright accept no responsibility whatsoever for any loss arising from any use or reliance on the accuracy and timeliness of the information contained herein. Every endeavour is made to ensure accuracy. These newsletters do not render financial, legal, accounting, home inspection or professional advice. They are for general educational purposes only. They do not offer do-it-yourself advice. We encourage you to always contact the appropriate professionals or specialists to address your individual needs.

"Real Estate Bits - 2"

May 2005

Money Matters...

"Tricks Of The Trade"

Okay, Okay - Here's "The Joke"

Guest Columnist

Ask An Expert?