Mortgage Rates: Should You Rent Or Buy?

It’s no news that the big banks, headed by RBC but swiftly followed by Scotia, BMO and TD, have slashed their fixed five-year mortgage rates earlier this year, on the heels of fallen funding rates. 

Now the word on the street is the growing concern about the upshot anticipated higher rates will have on home buyers who have signed up for bloated mortgages on unusually low lending rates. 

Does this mean Canadians without deep pockets, that is mostly everyone, will soon be better off renting than buying?

How close are we to this boiling point?

As of now Bank of Canada forecasts mortgage rates going up, but only slightly in the short-term. 

More specifically, one-year interest rates are expected to hover at 3.24% in the first quarter of 2015 and then edge up to 3.60% in the fourth quarter. 

Five-year mortgage rates are seen inching up to 5.14% in the first quarter from present 4.99%, and increase to 5.65% in the fourth quarter. 

In other words, the low interest rate epoch may soon be closing in on us. 

The accepted truism in our society is that we should buy real estate which, for most of us, means taking out a mortgage, in lieu of renting because it’s a meaningful investment over the long run. 

But despite the historically low interest rates, the skyrocketing prices and maintenance fees – coupled with the anticipated rise in interest rates – are forcing many potential home buyers to postpone or rethink buying a home. 

And don’t forget that mortgage experts generally agree you should spend no more than about 30% of your household income on housing outlays. 

Bearing all this in mind, many potential home buyers might be better off renting for a while and putting their saved money into another investment that could earn more in the long run. 

You might be one of them. 

“I wish I’d known!” - 4 Tips for a Mortgage for First-Time Home Buyers

It would be nice if life came with an instruction manual… But it doesn’t. So when you’re looking to buy your first home, it can be easy to become overwhelmed with questions over this confusing process. Here are 4 tips for getting a mortgage for first-time home buyers. These are the “I wish I’d known” instructions that previous homeowners have found out… the hard way! Learn from their mistakes!

Tip #1: Be credit-rating savvy

Great mortgage rates are largely influenced by your credit rating. The better your credit, the better mortgage rates you may get on your mortgage. Therefore, if you are a first-time home buyer who is thinking of getting a mortgage, even if it’s a few years down the road, start working on your credit today. The effort you invest now could save you a lot of money in the future.

Tip #2: Get pre-approved

Too many “newbies” start by looking for their dream home and then when they go to get their mortgage, they discover that it’s out of their price range. Start by getting pre-approved and that will help you know exactly how much you can afford.

Tip #3: Don’t just focus on the interest rate

A great mortgage for first-time home buyers is not just one with a low interest rate. There are many components to a mortgage that you need to consider. Interest rate is one, of course, but so it your term (how long you’ll be paying your mortgage off) and the frequency payments are also a factor.

Tip #4: Remember closing costs!

This can be the most shocking mistake of them all because a mortgage for first-time home buyers is only the first step. There are additional costs – not associated with the mortgage – that are required for closing. These including home inspections, lawyers fees, moving costs, and more. Be prepared to pay for these costs as well!

First time home buyer? Congratulations! Make sure you follow these 4 tips to help you navigate the complex world of mortgages more easily.

New Discovery! Canadian Mortgage Calculator: Vancouver

If you live in the Vancouver area and are thinking about buying a home, you’re probably conducting research to find the right mortgage for you - you’re thinking about rates and terms. The problem is, a lot of mortgage information is specific to other locations, such as the US. Even if you do find a mortgage calculator that brings in Canadian rates and terms, it may not address the unique characteristics of those who are getting a mortgage in Vancouver BC. However, we’ve just discovered some online mortgage calculators in Vancouver that you might find really useful.

Online mortgage calculators (in Vancouver and elsewhere) are easy-to-use web-based “apps” that you can use to enter information about a mortgage to answer commonly asked questions you have about your mortgage. For example, by entering basic mortgage information such as your down payment and the rate of the mortgage, you can find out key pieces of information like how much your payments will be and how much interest you will pay overall.

Smart home buyers know that this information will help them make a great mortgage decision and, ultimately, an affordable home purchase.

And you can use these online mortgage calculators in Vancouver to help you zoom in on a mortgage payment that works for you. For example, if you enter one amount for your down payment but find the monthly mortgage payments are too high, you can always adjust the down payment to lower your monthly payments. That’s the bonus value of a mortgage calculator – it’s a quick way for you to understand your own mortgage obligations before you take action.

So check out these online mortgage calculators in Vancouver to take ownership of your mortgage and to ensure that you are getting the right mortgage for yourself.

Should You Consolidate Your Debt?

Borrowing yourself out of a bad debt situation may sound like something out of a comedy sketch, yet debt consolidation is a way out of a nerve-racking problem for many people.

With debt levels continuously on the rise and a wobbly job market showing no signs of rebound, it comes as no surprise that many debt-laden folks are consolidating their debt in an effort to get out of debt sooner and easier.

Lets face it, rolling all your liabilities into one has its advantages, including the possibility of securing a lower interest rate or a fixed interest rate. 

If you are struggling to pay off your student loans and have racked up credit card debt that is proving difficult to get rid of, debt consolidation may be your ticket out - but don’t sign anything until you realize everything this type of refinancing entails. 

Your first job is to shop around for a debt consolidation counselor and have a list of queries for them on you when you meet them.

Make sure that the one you have decided to go with has university credentials, is fully certified with a reputable financial services provider, and that his or her company offers debt counseling, debt negotiation and debt management.

Don’t forget to ask if a monthly service fee will be embedded in your new loan and if there are any other hidden charges you should know about.

Then, tell your lending company if you plan to work with a credit counselor or intend to use services of a debt consolidation agency.

This may impel them to offer you settlement.

Consider going with a debt consolidation company that is not-for-profit because the profit-based one may not have your best interests in mind.

If you go with a not-for-profit organisation, remember that its services also come with a price tag; and it is your job to verify that the organisation you choose really is nonprofit and not just a loan shark.