Posts Tagged closing costs
Why you Should avoid Missed Mortgage Payments and Mortgage NSFs
Posted by Top Home Loans in General Banking, Mortgage Advice on July 15, 2010
The worse thing you can do, when you have a mortgage, is to miss your payments. By accident or intentionally, missing your mortgage payments can have a long lasting impact on many things that will make it much more difficult to cope in society. Why does missing your mortgage payments hurt your life?
Tammy had just got her first mortgage, and she was struggling with her month to month expenses. She didn’t have any savings because she used all her savings to go towards the down payment on her property. The rest of her money she used to go towards closing costs on the property. She didn’t leave room for any unexpected expenses. She also didn’t leave money available for purchasing home furniture for her new home. Instead of waiting till she had enough money, Tammy borrowed the money on her line of credit.
It wasn’t long before Tammy had higher payments then her monthly income could afford. She became scared that she wouldn’t be able to make her payments on her mortgage. She decided that she would have to stop paying her mortgage for a short period of time while she got caught up on her other bills. Within a week of missing her payment, the mortgage collections department started calling to ask her to bring her payment up to date. She was scared of the mortgage collections department, and she decided to pay her mortgage right away. Tammy went and got the money to make the mortgage payment.
Tammy was over her head. Tammy needed help with her mortgage and she decided to give the bank a call to see if she could get some help. The bank was more than happy to help Tammy with her financial difficulties, so they presented the option of refinancing her mortgage to pay off her outstanding debt. Tammy thought that this was a good idea and was excited to have this option setup. Tammy was forwarded to a mortgage professional to have her financial situation reviewed.
The mortgage specialist began to complete an application which included questions like name, date of birth, address, and other pieces of information. When that was complete, then the mortgage professional went to review Tammy’s existing mortgage. Upon review, the Mortgage Professional saw that Tammy had the NSFs, and concluded that they could not proceed with the application.
Tammy asked the mortgage professional why they couldn’t proceed. She was informed that because she had missed her mortgage payments and had NSFs on her mortgage, this was the reason they could not proceed. Tammy ended up taking a second job to help her to pay her bills. Tammy could have avoided this if she kept her mortgage paid up to date.
Tammy’s story is an example of how someones life can be greatly impacted by not paying her mortgage. Other reasons to pay your mortgage includes bank relationship, credit score, preventing mortgage collection calls, the ability to refinance your mortgage, protection from losing your house.
If you must miss a payment, then call the bank before you miss your payment. This will allow the bank to present options before you proceed with missing a payment. They may have an option available for you to miss a payment while keeping your credit in good standing.
Have you missed a mortgage payment? What do you do to avoid missing mortgage payments? Leave your response in the comments below.
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Your Mortgage will Never be Paid; How much Mortgage Interest are you Paying?
Posted by Top Home Loans in General Banking, Mortgage Advice, Mortgage News on June 26, 2010
Believe it or not, you could be paying up to 368% the price of the property you purchased. This means that you are paying almost 4 times the purchase price for your house.
Paying off mortgage interest is one of the biggest expenses of your life. Even though the rates on a mortgage can appear to be quite low, the amount of interest that you pay over the course of your mortgage is quite substantial. Even if you have the best mortgage rate, you still could be paying several times more interest than principle against your mortgage.
For example, let’s say you buy a car, and instead of paying it over the usual five years, you decide to pay it over 35 years. In this case, you would end up paying $27,481 in interest on a $20,000 vehicle. That means that you would have to pay more than double to purchase the car. A car that retails for $20,000, you would be paying $47,481. That is almost 150% higher than the cars actual cost. With cars and other material goods, this is absurd; however, in home ownership, the market allows for these absurd prices.
Let’s look at an average $400,000 property in Toronto.
Here are the details of your mortgage:
- Purchase Price: $400,000
- Down Payment: $20,000 (5% down payment)
- CMHC Fees: $11,970
- Land Transfer Taxes: $8,200
- Closing Costs: $8,000
Mortgage Terms:
- Total Mortgage Amount: $392,000
- Amortization: 35 Years
- Payments: $2,216/month
- Interest paid per month: $1,936
- Principle paid per month: $280
Interest and Expense Details:
- Interest Paid after 35 years: $538,631
- Total Payments: $930,631
- Total Payments including initial expenses: $966,631
- Total Payments including initial expenses and property taxes: $1,176,631
The property costs almost 300% the initial purchase price, and this is not even taking into account mortgage refinances. The average home owner will refinance their property once every three to four years to pay off debt and renovations. When a home owner does this, they usually add on a few years to their amortization.
Let’s assume that the average home owner refinances 5 times over the course of their mortgage term. Each time they refinance, they add on an additional 3 years to their mortgage term. This means that they will be adding on approximately another 15 years to their mortgage term.
With refinancing, the home owner can expect to pay as much as $833,321 over the course of their mortgage term, and as much as $1,225,321 in total payments. This means that the home owner as much as $1,471,321 for a $400,000 property.
Do you want to pay 368% the listing price of the property you are looking to purchase?
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2009 Canadian Federal Budget; What it means to Homeowners and Future Homeowners
Posted by Top Home Loans in Economy, Mortgage Advice, Mortgage News, Real Estate on January 29, 2009
With the 2009 Canadian budget fresh off the press, a lot of new and interesting proposals have been presented to the existing and new homeowner. These proposals are designed to help to grow the economy while dealing with one of the worst recessions that Canada has seen in many years. The Conservative party had presented this list of new available programs:
New Homeowner Policies for 2009
- A $750 tax credit to help the first-time home buyers to cover closing costs. The closing costs can include land transfer taxes, legal fees, disbursements, property taxes, and other closing costs.
- An added $300 million in grants to the ecoENERGY Retrofit program.
- An added $50 billion dollars to be added to the mortgage buyback program. This will help to allow the banks to lend more money.
- A 15% tax credit, up to $1350, on eligible home renovations that are began before February `1, 2009.
- An increase to the RRSP Home Buyers Plan. Now first-time home buyers can withdraw up to $25,000 from their RRSPs to be used as a down payment. This is an interest free and tax free withdrawal.
- A increased amount of disclosures added to help consumers better understand what mortgage insurance is, and how it applies to the transaction. New government protections will help the consumer from being overcharged on insurance.
With all these added new policies, the Conservative minority hope to help the Canadian economy stay afloat during recessional times. The deficit that will result because of the budget in 2009 and 2010 will be much larger than in years previous. With these new additions to the real estate industry, hopefully it will be able to stir more activity in the real estate industry.