Guide 2 the Grind

Continuing with the “Secrets of Wealthy Homeowners” series, today we’re talking about Secret #4, the purchase, plus improvement mortgage.  

With this little gem of a financing option, it’s totally possible for you to increase the value of your home right from the get go. Of course there’s some stipulations and strategies needed to make it work, and that’s exactly what we’re talking about on today’s episode of the “Investment Property Income” podcast.  

Jonathan

www.guidetothegrind.com

One of the most misunderstood structures for mortgage payments, is the bi-weekly, accelerated, mortgage. 

Sure it’s super common for people to set up bi-weekly payments. However, a lot of people think they’re paying more down on their mortgage this way, when in fact, all they’ve done is set up a bi-weekly payment. 

Here’s the difference...

A simple bi-weekly payment takes the amount you would owe for the twelve months of the year, and instead of making monthly payments, it’s divided into a bi-weekly amount. This doesn’t pay down any more of the principal than the monthly payments, it just makes the payments a little smaller, and quite often is aligned with a person’s pay schedule. 

This is the most common set up for a bi-weekly mortgage, and where I recommend most people start. Especially first time home buyers. There’s all sorts of expenses that come with home ownership versus renting, and until you’re used to the new expenses, it’s easiest to set things up this way. 

The “accelerated” mortgage is only slightly different. With this structure you’re still setting up the mortgage with bi-weekly payments, but you’re making one month’s extra payment every year. 

What’s great about this is the amount of time and money it saves you in the long run. You see, when you pay more against the principal in the first year, it means you don’t have to pay interest on that money over the term of a mortgage. This can save thousands of dollars, and take years off the time it takes to pay off a home. 

Start with a standard bi-weekly payment, and later talk to the bank at any time to bump it up to an accelerated payment.

We’re talking about this, and a few other ways to keep more of your money, on today’s episode of the “Investment Property Income” podcast. 

www.guidetothegrind.com

If you’ve been listening to the podcast for a while, you’ll know I’m not a big fan of the RRSP. However, when used correctly, it can actually be a powerful tool to increase your bottom line.  

Of course there’s a lot of drawbacks to RRSPs, not the least of which being that your money is locked into an account until you’re 65, but today on the “Investment Property Income” podcast, we’re talking about strategies to increase your return, put your money to work for you, and generating a tax return when it really matters. 

It’s almost like free money!  

www.guidetothegrind.com

One of the most common misconceptions among first time home buyers is the belief that it’s better to have a down payment larger than 5%. 

Most consider paying the mortgage insurance premium too expensive, and they want to save where they can. 

Perfectly rational thinking… until you do the math. 

  There’s a few different ways you can think about it, but at the end of the day, the numbers truly tell the story. If you add up the appreciation a home can make over a couple of years, you’re losing money by not being in the market. 

  And it’s not just a little bit. 

  Let’s take a look at just one of the factors, how much you’re earning on your money while it’s sitting in a savings account. At the absolute best, you may be getting 2% in a “high interest” savings account. Meanwhile the inflation rate is nearly 3% a year.... you're guaranteed to lose money. 

  If you take that same money, say $25k, and buy a home with 5% down, that would be enough down payment for a $500,000 home. We can reasonably expect the home to appreciate by at least 3% a year. That means your $25k investment will return $15,000.

  That’s a 60% return... in one year!!

  And that’s just one of the factors affecting the numbers. 

  Today on the “Investment Property Income” podcast, we’re breaking down all of the numbers, and explaining exactly why waiting to save more, actually loses a ton of money. 

www.guidetothegrind.com

We’re lucky enough to have expert realtor, and CGA, Trif Chaitas joining us one more time to discuss the proposed changes in the current bidding system for home purchases.  

Recently there’s been a call for reform in the transparency of the “blind bidding” system in Canada. Though some see this as an answer to help cool the market, Trif offers a different opinion.  

It’s his belief that the current system offers the only fair solution in home purchase transactions, and he makes some great points.  

He certainly gave me some things to think about on today’s episode of the “Investment Property Income” podcast.  

www.guidetothegrind.com

We’re super excited to have Trifon Chaitas joining us once again on the “Investment Property Income” podcast. 

Today we’re talking about savings accounts that have tax strategies attached to them… that’s right, RSPs and TFSAs. 

I get it, it doesn’t seem like the most enthralling topic, at least not at first. But as you start to dive into the different ways you can use these accounts to your advantage, it becomes more real, and enticing. 

The improper use of these accounts can cost you thousands of dollars. Learn to use the correctly however, and they can save you a fortune over your lifetime. 

www.guidetothegrind.com

Today of the “Investment Property Income” podcast, we are super excited to be celebrating our 50th episode. To celebrate, we’ve brought back our first ever guest, Realtor, and Certified General Accountant, Trifon Chaitas. 

Trif is talking about the business of investing.

It’s not easy to know the future of your investing ventures, but some thought, and time, right from the beginning, can save you massive amounts of money on taxes down the road. 

Learn from the expert all about starting your investing business the right way, from the beginning. 

www.guidetothegrind.com

You know, one of the things that I come across all the time that still bothers me, even after all these years in the mortgage business, is people not knowing, or understanding what their mortgage actually costs them. 

Sure, everybody knows what they pay monthly, and most know what their rate is, but how many folks actually know what their total cost for borrowing money really is?

The answer... not many. 

See, here’s the thing, there’s all kinds of costs associated with borrowing your mortgage, and a lot of those costs don’t get factored into the bottom line. Sometimes it’s as simple as the cost of a lawyer to close the deal, or how much it costs for an appraisal, and sometimes it’s far more consequential. 

So many focus on what annual rate they’re getting, but miss costs like mortgage breakage fees, or outrageous broker and lender fees.

Of course every borrower, and every situation is going to be different. No two are ever the same. There are however some general rules to follow when figuring out the total cost of borrowing. 

That’s exactly what we’re talking about today on the “Investment Property Income” podcast. The rules can change slightly depending on the type of lender you’re using, and we discuss all of that in this episode. 

www.guidetothegrind.com

Have you heard of anyone you know using the First Time Home Buyer Incentive program?

As a mortgage broker, I can say that it’s pretty rare. 

Today on the “Investment Property Income” podcast, we talk about the recent report on the First Time Home Buyer Incentive, and what could be done to make it better. 

www.guidetothegrind.com

The number one thing that keeps deals from closing is “borrower documents”. 

No matter how hard everyone is working on the deal, if the necessary documents aren’t gathered, and passed on to the mortgage broker, nothing can happen. Lenders want what they want, when they want it, and they need to be submitted before the lender will make a decision to fund... or not fund the project. 

So how do we make sure this process is as painless as possible?

First, getting a pre-approval from your mortgage professional is key!

A lot of realtors, especially the best and most experienced, won’t work with a buyer until they’ve gotten a pre-approval. Nobody wants to do a bunch of work, just to have the deal fall apart because of financing. We all want to get paid for our work. 

The pre-approval is a pretty simple and basic process. Once you’re pre-approved though, you know how much you’re actually going to be able to borrow. I’ve even seen cases where having a pre-approval letter from a lender has helped a deal close because it was one less condition that needed to be satisfied. 

Typically, after the pre-approval, there’s more documentation that’s needed to complete the final financing. That’s exactly what we’re talking about on today’s episode of the “Investment Property Income” podcast. 

www.guidetothegrind.com