Wednesday, January 30, 2013

Cut Years Off Your Mortgage

With today's lower interest rates, deciding to buy a home is one of the best decisions anyone can make. Financing such a big purchase, however, often means combining savings with money borrowed through a financial arrangement commonly referred to as a mortgage.

Mortgages allow you to pay back the principal - or the amount to be borrowed - plus interest in regular installments. The taxes on your home can also be added to the mortgage payments (this is known as PIT for Principal, Interest and Taxes). Most mortgages are amortized over 25-30 years -  the length of time it takes for you to pay the debt off in full.

For most home buyers, paying off the mortgage is a long-term commitment. That's why it is important to begin looking at options before buying or before renegotiating your existing mortgage. When home buying, your REALTOR® can help you calculate how much mortgage you can afford and provide advice on the many options available.

But even if you find yourself locked into a long-term mortgage you can afford there still may be ways to pay it down and be mortgage-free sooner.

Pre-payment options
Most financial institutions now offer generous pre-payment options. Although many limit how often you can use an option it is well worth checking into them and comparing what one lender offers over another.

Many lenders now permit an annual lump sum payment on your mortgage with the amount going directly to reducing your principal. A lump sum payment of $2,000 a year on an $80,000 mortgage, for example, can cut years off your mortgage.

Other pre-payment privileges include doubling up payments whenever you have extra cash. Some lenders allow additional payments against the mortgage balance up to the equivalent of a full monthly payment on every payment date or several times throughout the year. Accelerating payments by paying every two weeks instead of monthly, for example, can also result in substantial savings over the life of a mortgage.

While taking advantage of pre-payment privileges can save you thousands of dollars in interest costs over the life of your mortgage, it also pays to consider all your options. You may be reducing the principal but you are not reducing your existing payment obligations. You still must make your regular payments.

Pre-payment critics say that if your interest rate is reasonably low you may be able to put the extra money to better use. For example, when you pre-pay $2,000 a year, you reduce your principal but get no tax benefit. Put the same amount of money into a Registered Retirement Savings Plan and you get a tax break. If you invest this amount in a mutual fund at 10 per cent and your mortgage rate is seven per cent, you are making three per cent more on your investment.

Lower your amortization period
The average mortgage must be paid off in 25 years. By selecting a shorter amortization period you can cut years off your mortgage. The shorter the period, the larger the payments, but the more you save on interest and the long-term cost of the loan. Shortening the amortization period is a great idea when interest rates are low and you can afford the larger monthly payments.

Re-finance your mortgage
This is only a good idea if you have a fixed, long-term mortgage and rates have fallen more than two per cent. But the cost of refinancing a loan to get a better rate can be very high. To have your closed mortgage discharged, you will usually have to pay either a three-month interest penalty or an "interest differential", which can cost considerably more.

You can reduce the penalty, which is based on the outstanding principal, by exercising a prepayment privilege and reducing the principal first. This can be done using your own money or by arranging with another lender to borrow enough to discharge your mortgage and pay the discharge penalty. Whatever you decide to do, seek expert advice before re-financing or you may end up paying more than if you had stayed the course.

I am the GUY that will make a difference!

I specialize in selling homes in the in the Okanagan Valley including Westbank, West Kelowna, Peachland with a focus on Rose Valley, Lakeview Heights, West Kelowna Estates and Shannon Lake.

Karen Guy, REALTOR® Coldwell Banker Horizon Realty
C 250.878.3605 O 250.768.8001

Wednesday, January 23, 2013

Planning is the Key to a Smooth Move!

After successfully buying or selling a home, the next hurdle most people face is moving. Packing everything you own, taking it to another place and then unpacking it can be frustrating and chaotic. If you want to make your move as pleasant and stress-free as possible, you need to plan well in advance.

Begin by deciding if you will use a moving company and what you want the mover to do - pack, move, unpack or just move what you've already packed. Cost will be a big factor in your decision. That's why it pays to shop around. Get at least three estimates. Be specific about what you will want the mover to do and ask for references. Your contract with the mover should set out the date and time of the move, the number of people and type of truck that will be used, the hourly rate and special materials and services to be provided such as boxes and packing.

Also check with your insurance company that your possessions are still insured while in transit. Buy additional insurance if necessary. If you are moving into or out of an apartment building or condominium, check with the landlord or superintendent what hours are available for moving - and book the elevator.

Many people choose to pack household items themselves and leave the furniture pieces and boxes for the movers to handle. If that's how you are planning your move, get packing well in advance. It can take almost a week for one individual - working at it full time - to pack an average three-bedroom home. Here are more tips:

Smart packing
  • Pack first those items you won't be using right away so they'll be on the bottom of your boxes
  • Pack one room at a time; don't mix things from different rooms in one box
  • Make sure boxes are clean and sturdy; reinforce them with packing tape
  • Mark each box with a summary of contents and its destination in your new home
  • Never pack medication, money, jewelry or important papers - transport these yourself
  • Don't pack anything you don't need or have not used in a few years.  Moving is a great opportunity to get rid of things - have a garage sale or give unwanted items to charity
  • If you want carpets cleaned and furniture re-upholstered, do it before your move and have these items sent directly to your new home
  • If you have kids, involve them as much as possible.  Get them to pack and mark their own things - this will help them think about the new environment that awaits them
  • Transfer all your utility accounts in advance: call your gas, water, electricity, telephone and cable companies.  If you are moving out of the area, close all the accounts and open new ones with the companies that service your new home
Computer equipment
  • Before packing your computer, be sure to back-up all the files on the hard drive
  • If possible, move the computer yourself; check your owner's manual about packing your computer for a move
  • Remove light bulbs before packing any lamps
  • Pack the lamp shades in separate containers;
  • Remove and pack any ceiling or wall lights you plan to take with you
  • All plants are delicate - some plants might not survive even a short trip in a moving van if the weather is too hot or too cold
  • Move any plants in your car, if possible, or give them away to neighbours
  • Some movers will prepare plants for a move; check to see what services are offered
  • Appliances with special connectors, such as air conditioners, stoves, dishwashers, washers and dryers, should be disconnected and prepared for moving by qualified service people
  • Refrigerators and freezers must be defrosted, emptied and completely dry before moving
Moving day
If everything has been packed and labeled properly, things should go smoothly on moving day. Be sure to be around to supervise the loading and unloading of the moving van. The mover will note the condition of your belongings on an inventory list. Make sure that what's written down is accurate. Also, be sure the mover puts down mats and padding on banisters and doorways to protect both your old home and your new home from dirt and damage.

I am the GUY that will make a difference!

I specialize in selling homes in the in the Okanagan Valley including Westbank, West Kelowna, Peachland with a focus on Rose Valley, Lakeview Heights, West Kelowna Estates and Shannon Lake.

Karen Guy, REALTOR®
Coldwell Banker Horizon Realty
C 250.878.3605 O 250.768.8001

Wednesday, January 16, 2013

Choosing the Right Neighbourhood

When buying a home, the neighbourhood you select will not only play a pivotal role in your family's life but will also affect the resale value of the property.

One person's ideal neighbourhood, however, may differ greatly from another's. Regardless, there are some needs and wants that generally do not change. The distance from your new home to schools, churches and shopping, for example, will not only affect how you and your family settle into your new home it will also draw or turn off a future prospective Buyer.

A good first step is to enlist the services of a REALTOR® who works in the area you are thinking of moving to. REALTORS® are familiar with the communities in which they work and can answer many of the questions that you will develop during your search.

Check the lifestyle
A home is part of a larger community and, frankly, some communities are more desirable than others. Some communities are geared more to young families, while others cater to older adults and still others to singles or to an eclectic mix of residents.

Never buy in an unfamiliar community or neighbourhood unless you have spent some time there both during the week and on a weekend, day and night. Drive and walk around. Talk to store owners and people you meet on the street. Ask what they think of the neighbourhood.

If there are vacant tracts of land where you plan to buy, check with local authorities to see what the proposed land use might be. The last thing most home owners want is the development of a mall or high-rise office building across the road from their newly-purchased, residential property.

Don't let particular features in a home that appeals to you override its location and potential subsequent resale value. When analyzing a potential property, ask yourself if you can imagine living  not just in this home  but in this neighbourhood for the long term.

Remember that someday you may have to sell your home to someone else and things that may not be important to you - such as distance to schools, shopping, doctors and work - may be important to other Buyers.

Location, location, location
In addition to finding the right neighbourhood, consider the other homes immediately around the particular property you are interested in. Are they well-maintained and worth the same as, or more than the home, you are considering?

Is the location a quiet area or a major traffic thoroughfare? What kind of privacy does the backyard provide? Does the yard get morning or afternoon sun? If there is no house behind the prospective property, who owns that property and how will it be developed?  Check zoning and proposed development applications with the local municipal or regional authority.

Homes located further away from the centre of an urban area are generally less expensive. Are you prepared to invest the time and money it takes to commute and how long of a commute are you prepared to commit to? Is there public transit and good access to major roads nearby?

If you have children in school, what kinds of schools and services are available? Special needs and French immersion programs may not be as easy to access in some neighbourhoods. Will your children have to be bussed to their school? If a school is close by, will they have to cross any major intersections?

Being too close to a school, on the other hand, may have some drawbacks - few owners want the noise and disturbance of being located right next door.

Finding malls, grocery and specialty stores in urban, residential areas is rarely a problem. But, in neighbourhoods further away from urban areas, you may need to drive to the nearest convenience store. And getting to the local grocery store, pharmacy and other support services may require an even longer trek.

It's great to be located near parks and recreational facilities, but few homeowners appreciate the tennis court lights beaming into their backyards. If the home you are considering backs onto such a property, drive around the area and see how often the baseball diamonds, soccer fields, swimming pools and skating rinks are being used and when.

More serious concerns may involve having such things as gas stations, an airport, railway tracks, commercial developments, major arteries and cemeteries very close by. Before making a decision, think of your lifestyle and how a particular location would enhance or detract from it.

I am the GUY that will make a difference!

I specialize in selling homes in the in the Okanagan Valley including Westbank, West Kelowna, Peachland with a focus on Rose Valley, Lakeview Heights, West Kelowna Estates and Shannon Lake.

Karen Guy, REALTOR®
Coldwell Banker Horizon Realty
C 250.878.3605 O 250.768.8001

Wednesday, January 9, 2013

Add Curb Appeal to Your Home

Some people call it "window dressing" but adding visual appeal to the exterior of a home can work wonders for both Buyers and Sellers.

When selling a home, often it's how well it shows on the outside that determines whether the inside ever gets seen. The outside of a home tells a potential Buyer a lot about what they might find inside. If the driveway is cracked, shutters are broken, the paint is chipping, grass and flowerbeds are overgrown, few Buyers will be attracted. How well a home shows will also influence the final sale price.

A fresh coat of paint, minor repairs, sparkling windows, a wreath at the door or a bright border of flowers may be all that is needed to create some quick curb appeal. Investing just a few hundred dollars on simple fix-ups can increase the value of a home by several times that amount.

Making a home look more attractive doesn't always require major improvements. Sellers shouldn't go overboard in major repairs, landscaping and decorating, as most prospective Buyers will take major faults like an old roof or windows that need replacing into account when they submit their offer.

Imagination, not money, is the key to simple fix-ups. Certainly a new railing or new front porch might add a lot of curb appeal but so will a couple of wicker chairs and potted flowers by the front door - at a much lower cost.

Repair any minor damage yourself
Things like replacing a few roof shingles, repairing loose hinges on windows and doors, fixing storm doors and window screens, caulking window exteriors, cleaning and repairing siding and other structural flaws are all easy to do. Home improvement centres are a good place to go for advice.

Clean up the yard
Mow the lawn, trim the hedges, weed the flower beds, get rid of dead trees and shrubs and broken lawn furniture. Shovel the walk and driveway in winter and always rake the yard before winter sets in.

Get rid of clutter
If you have yard construction debris piled up along the side of the house or elsewhere, get rid of it. The exterior should be as uncluttered in appearance as the interior. This includes cleaning out the garage - a major breeder of clutter. Be ruthless. If you haven't used something in a year, give it to charity or recycle it.

Spruce up siding
Before rushing to paint siding, try washing it. For painted wood siding and aluminum siding, use a solution of one cup strong detergent to one quart chlorine bleach in three gallons of water. Be sure to wear rubber gloves, goggles and other protective gear. Work from the bottom up and rinse thoroughly. To clean vinyl siding, hose it down, sponge it with a mild liquid detergent then rinse.

Brighten up with paint
A simple paint job can do wonders for the exterior of a home. To make a low house look more graceful and tall from the curb, emphasize it's vertical features by painting elements such as doors, shutters and corner trim in a colour that contrasts with the siding material A tall house can look more compact by using a contrasting paint colour on windowsills and facia boards or by painting it a dark colour - provided the roof is also dark.

Flower power
Well-placed flowers, trees and shrubs can really make the outside of a home look inviting. Attractive landscaping can also increase the value of a home by as much as 10 per cent. Even without major landscaping, flowers can make a yard look colourful and pleasant. Plant flowers in garden beds, hang them from railings and porch ceilings or add flower boxes to windowsills.

I am the GUY that will make a difference!

I specialize in selling homes in the in the Okanagan Valley including Westbank, West Kelowna, Peachland with a focus on Rose Valley, Lakeview Heights, West Kelowna Estates and Shannon Lake.

Karen Guy, REALTOR®
Coldwell Banker Horizon Realty
C 250.878.3605 O 250.768.8001

Wednesday, January 2, 2013

Match Your First Home to the Size of Your Pocketbook

So you've decided to take the big leap and purchase your first home. Congratulations.
Most of us have a "dream home" tucked away at the back of our minds - something with four bedrooms, two fireplaces and a panoramic view. How about a little reality check before you go looking for that dream?

What if all the money you had went into the purchase and mortgage payments for that wonderful home, so there was nothing left over for little repairs, a night out, vacations, new furniture or any of the little things that go wrong from time to time? When that happens, your dream suddenly becomes a nightmare; being over-extended financially is the quickest way to destroy the excitement of home ownership and add stress to your life.

Smart home-buying means knowing what you can afford and being practical about it. Most first-time buyers lack the funds needed to buy a home without assistance from a bank or financial institution. Buying a home means combining savings with money borrowed through a special arrangement called a mortgage.

To keep mortgage payments within their means, most first-time buyers purchase what is commonly called a "starter home". It is just what it says - a way of getting started in long-term real estate investment.

To match the home you buy to your pocketbook you have to realistically assess your needs, determine what you can afford and - usually - lower your expectations. Begin by enlisting the services of a REALTOR. This knowledgeable individual will help you target your home ownership dreams and provide valuable information on mortgage options, interest rates and incentives such as government programs for the first-time buyer.

In the meantime, here are some ways to help you determine how much you can afford.

Set a maximum price range
To determine your "affordability" price range, you must calculate two amounts: the amount of cash you can afford to put toward the purchase (the down payment) and the maximum amount of loan (mortgage) you can comfortably carry. Typically, household expenses should not exceed 35 percent of your gross income.

Put down as much as you can
The key to getting started for most first-time buyers is the initial down payment. This is the part of the purchase price you have to put down as cash. You may be able to buy a home for as little as five percent down, but remember that the larger the down payment, the easier it will be to manage the other expenses such as mortgage payments, utilities and taxes.

An ideal down payment is 25 percent of the purchase price. Keep some cash in reserve though for unexpected expenses related to a home purchase and typical expenses such as land transfer tax, legal fees and moving expenses.

Know how much to borrow
To establish the maximum mortgage limit for you, a financial institution will determine the monthly payment you can afford by calculating your debt-service ratio. List all your loans (car, personal loans, monthly credit card balances). The sum of these and your mortgage payment (including principal, interest and taxes) should not exceed about 40 percent of your gross income. The mortgage payment and taxes should not exceed about 30 percent of your gross income.

Understand interest rates
The size of the mortgage you can arrange, based on payments you can afford, depends on interest rates. The lower the rates, the larger the possible mortgage and the more affordable home-buying will be.

However, there are other variables to consider. How open is the mortgage? Is it portable? Would prepayment be allowed? Discuss your mortgage options with your REALTOR, banker or financial advisor. Decide what's best for you, establish a limit and stick to it.

Look at other sources of funds
If you have been contributing regularly to a Registered Retirement Savings Plan (RRSP) you may have to look no further for your down payment. The federal government's RRSP Home Buyers' Plan allows eligible taxpayers to withdraw up to $20,000 per person ($40,000 per couple) tax free from their plan to buy a qualifying home. However, you have to pay back every year at least 1/15th of the amount taken out until it's all paid back, or there will be a tax penalty.

The Canada Mortgage and Housing Corporation's (CMHC) five percent down mortgage program is available to both first-time buyers and those who have already owned a home. This benefits buyers who can afford the monthly payments but would have trouble saving for a larger down payment. Under the program, CMHC may insure the mortgage on your home (against default in payments) for up to 95 percent of the lending value. An insurance premium of about 2.75 percent of the mortgage loan is charged. This amount can be added to the mortgage or paid on a monthly basis.

Other sources of funds you can tap into for a down payment include savings and investments and loans or gifts from your family or relatives.

I am the GUY that will make a difference!

I specialize in selling homes in the in the Okanagan Valley including Westbank, West Kelowna, Peachland with a focus on Rose Valley, Lakeview Heights, West Kelowna Estates and Shannon Lake.

Karen Guy, REALTOR®
Coldwell Banker Horizon Realty
C 250.878.3605 O 250.768.8001

Kelowna Real Estate Agent West Kelowna Karen Guy Realtor