What a Piggy Bank Just Won’t Do

General Greg Weaver 26 Aug

You’ve reached a point in life where your job is going well, and you find yourself not only out of debt but with some room for savings. You might start wondering, where should I put this money that will not only be safe for the future but also grow? That’s when you’ll probably start hearing about TFSAs (Tax-Free Savings Account) and RRSPs (Registered Retirement Savings Plan).

A Tax-Free Savings Account (TFSA) is an investment account that allows you to make gains free of tax. You can open multiple TFSAs but the amount that can be contributed is limited each year. A TFSA can be used for any savings goal and withdrawals are free of tax.

An RRSP is a retirement savings plan that you establish and register with the Canadian government, to which you or your spouse or common-law partner contribute. Deductible RRSP contributions can be used to reduce your tax. Any income you earn in the RRSP is usually exempt from tax as long as the funds remain in the plan; you generally have to pay tax when you receive payments from the plan.

Now you know what they are, you might be asking, which one is better? It all depends on your situation. The chart below might help answer that question.

reasons to save in a TFSA

YOU ARE YOUNG AND YOUR INCOME IS LOW

If you are in a low tax bracket, you get less benefit from the tax-saving aspect of an RRSP contribution. TFSAs are a good place to put money away during your time as a student or early years of working.

YOU‘RE LOOKING FOR AN EASY WAY TO SAVE

You can put money aside in eligible investment vehicles (such as a high-interest savings account or guaranteed investment certificate) and watch those savings grow tax-free throughout your lifetime!

YOU HOPE TO GROW YOUR SAVINGS TAX-FREE

Good news for you…the initial amount deposited in a TFSA, and any interest income generated is not taxable, even when you withdraw from it.

YOU WANT TO BE ABLE TO WITHDRAW YOUR SAVINGS ANYTIME

If you have an emergency come up and need funds right away, you can use these savings without paying taxes. It can also be used for things like buying a car or renovations.

YOU’RE AMBITIOUS AND WANT TO INVEST IN BOTH A TFSA AND A RRSP

The amount you can save in a TFSA during a year, no matter how much it is, has no impact on the amount that you can contribute to an RRSP.

reasons to save in an RRSP

YOU WANT A STEADY STREAM OF INCOME FROM YOUR SAVINGS IN RETIREMENT

Think of an RRSP as a self-funded pension plan because that’s basically what it is intended for. It gives you the chance to save more and build a nice nest egg for your future.

YOU WANT TO REDUCE YOUR TAXABLE INCOME

An RRSP contribution gives you the potential of pushing you into a lower tax bracket because any contribution to your RRSP comes directly off your taxable income, with the potential to push you into a lower tax bracket.

YOU DON’T TRUST YOURSELF WITH MONEY AND NEED TO PUT YOUR MONEY SOMEWHERE YOU CAN’T GET AT IT EASILY

It’s extremely painful to withdraw money from an RRSP. You can be charged a withholding tax that can reach as high as 30%.

YOU’RE CONSIDERING CONTINUING YOUR EDUCATION

If you or your spouse is considering going back to school, you can take out up to $20,000 to pay education costs under the Lifelong Learning Plan (LLP). You won’t pay taxes on the withdrawals but you have to pay it back within a certain amount of time.

YOU’RE CONSIDERING BUYING A HOME IN THE FUTURE

You can borrow money up to $35,000 from your RRSP to buy your first house under the Home Buyers’ Plan (HBP). The amount is non-taxable, but you have to pay the money back within 15 years or pay tax.

If you are looking to purchase your first home, contact Greg Weaver today for expert advice! It is our job to help find the best mortgage product for YOU.

 

 

Article Published by DLC Marketing Team

The Mortgage Financing Process

General Greg Weaver 20 Aug

The number one question for any potential home buyer or someone new to the mortgage process is “what does this process entail?”. The following is a simple outline to give you an idea of the process and help you understand what to expect as you embark on your home buying journey!

STEP 1 – BE PREPARED

Having the following information on hand before meeting with your mortgage professional will help them determine what you qualify for and help them determine the best mortgage product for you:

  • Contact information for your employer and your employment history
  • Proof of address and your address history
  • Government-issued photo ID with your current address
  • Proof of income for your mortgage application
  • Down payment proof (amount and source)
  • Savings and investments proof
  • Details of current debts and other financial obligations

STEP 2 – GET PRE-APPROVED

One of the best things any potential homeowner can do when starting the home buying process is to get pre-approved. Mortgage pre-approval requires submission and verification of your financial history and can help you determine your price range, understand the monthly mortgage payment associated with that price range and provide the mortgage rate for your first term.

It is important to note that pre-approval does not mean that a lender has fully reviewed your documentation and you may still need the approval of a mortgage insurer. However, it does have a lot of benefits that can give you a “leg-up” in your search!

BENEFITS OF PRE-APPROVAL

Getting pre-approved not only makes the search easier by helping to determine your price range and budget, but pre-approval also guarantees the interest rate for 90-120 days while you search for that perfect home. Plus, the rate will automatically be adjusted down with any market reductions. Another benefit to pre-approval is that, when it comes time to purchase, pre-approval lets the seller know that securing financing should not be an issue. This is extremely beneficial in competitive markets where lots of offers may be coming in.

Quick Tip: Being entirely candid with your home-buying team throughout the process will be vital! Hidden debt or buying a big-ticket item during your 90-120 day pre-approval can change the amount you are able to borrow. It is best to refrain from any major purchases (such as a new car) or life changes (such as changing jobs) until after closing and you have the keys to your new home!

STEP 3 – HIRE A REALTOR

In today’s competitive real estate market, it can be very difficult to acquire property WITHOUT the help of a realtor. One of the reasons realtors are integral to the home buying process is that they can provide access to properties that never even make it to the MLS website. Realtors also gain access to information about homes that may come onto the market before a listing is even signed.

Most importantly though, a realtor understands the ins and outs of the home buying process and can tell you how to be successful in your endeavors to purchase a home by guiding you through the process from the first viewing to having your bid accepted.

STEP 4 – SHOP THE MARKET & MAKE AN OFFER

Once you have found the property that meets your needs, you’ll put in an offer that’ll be accepted or countered. This may go back and forth until you reach an acceptable price with the vendor. To start home shopping today, check out the listings on Rew.ca!

STEP 5 – OFFER IS ACCEPTED

Once your offer is accepted with the condition of financing, you will need to do a few things to finalize the sale:

  • Ask for a realtor intro between your mortgage professional and realtor.
  • An appraisal may be required, which will be determined and arranged by your mortgage professional.
  • Send in any remaining documents required for financing (income confirmation, down payment confirmation, etc).
  • Arrange a home inspection.
  • Receive the lender’s approval on the property and final approval letter.

STEP 6 – REMOVE CONDITIONS

At this point, your financing is in place and you’re ready to proceed with the purchase of the property.

STEP 7 – LAWYER’S OFFICE

You’ll be asked to provide any money that’s to be used as your down payment, which is not already on deposit with your realtor. Typically, you’ll go in 1-2 days prior to the completion date.

Before you start on your home buying journey, be sure to take advantage of the expert advice from Mortgage Professionals. As experts in mortgages, agents can help walk you through the process and find you the best mortgage product to suit your unique needs! The best part? It won’t cost you a penny! Mortgage professionals are paid out by the lender when they register a new contract. Therefore, all that matters is finding YOU, the client, the best possible mortgage. Please feel free to reach out to Greg Weaver if you have any questions.

 

 

 

Article is Courtesy of the DLC Marketing Team

Choosing Your Mortgage Agent

General Greg Weaver 18 Aug

There is little doubt that the biggest purchase of your life will be your home. When embarking on your homeownership journey, having the right support and information will make all the difference. Fortunately, a mortgage agent can help!

With access to more than 50 lending institutions including big banks, credit unions, and trust companies, mortgage brokers are experts in mortgages. These connections allow them familiarity with a vast array of available mortgage products, and also ensures that the advice they offer is unbiased. Unlike banks focused on signing you for profit reasons, a mortgage agent is a third-party service that gets paid no matter which bank they sign you with. This means they can provide the best rate AND unbiased advice because they are focused on helping you achieve your dream.

It is estimated there are nearly 20,000 mortgage professionals in Canada. With so many choices, it is important to find a mortgage broker who works best FOR you.

With so much information at your fingertips on any given broker, it is easier to help narrow down the search. Especially with tools like my exclusive My Mortgage Toolbox app. Available on Google Play and the iStore, My Mortgage Toolbox makes it easy for homeowners to find a mortgage agent nearest them!

“The idea behind My Mortgage Toolbox was to make it simple for Canadians to manage the mortgage process by putting all the information they need into the palm of their hand,” noted Gary Mauris, Founder, and CEO of Dominion Lending Centres.

Some features available through this application include a variety of calculators to help clients determine:

  1. What they can afford
  2. The minimum down payment required
  3. Closing cost estimates
  4. Total monthly ownership costs

Click here to download the app today!

While online tools and apps can give you a pretty good insight into a potential broker, there are a few other things you might also want to consider to help make that decision a little easier.

While it is never a bad idea to go with an established professional with an abundance of clients and years of experience, you should also be open to considering newer, hungrier brokers who are striving to make their mark in the mortgage space. At a busy firm, it is easy for you to feel like a small fish in a big pond, especially with a smaller portfolio, whereas a smaller brokerage can likely provide you more attention.

While agents spend a lot of their time neck-deep in mortgages and tend to use industry jargon, a professional agent will understand if you are a first-time homebuyer and will do their best to explain the terms and the process to you. Understanding is vital in your homeownership journey so make sure to seek out a broker who is going to keep it simple for you and be honest, allowing you to understand exactly what you’re getting in your mortgage.

Ultimately, it comes down to the mortgage product but don’t be blinded by interest rates. It is important that your agent explains everything to you from term conditions to penalties, as well as why you qualified for the rate you need. It is also important to use caution if a broker is selling you on a rate and making promises to pay for a fee; this is a red flag. If they say they’re going to pay for everything, they’re desperate for anything.

Of course, the rate matters, but the characteristics of your mortgage matter more and could end up costing you in the long run. You want a broker who’s going to listen to you and ask you about your needs and future goals. What are your plans five or ten years from now? Why are they so important to you as an individual? When looking at any mortgage product, consider that nearly 70 percent of mortgages are broken within three years. Even if you’re sure of today, life happens and tomorrow could be different. Therefore, you must consider the penalties for ducking out of your mortgage earlier and you should know if it is portable.

The best mortgage agents in the business will make sure all of your bases are covered, and you’re fully aware of what you’re signing onto. The right agent will make the process easier for you, whether it’s buying your first home, shopping for a better rate, or even jumping into investment properties. No matter what stage of life you are in, we’ve got a mortgage product – and a broker – for that!

 

Article Published by DLC Marketing Team

Are You Ready for Home Ownership?

General Greg Weaver 6 Aug

While most people know the main things they need to buy a home, such as stable employment and enough money for a down payment, there are a few other factors that may help you realize you’re ready – perhaps even earlier than you thought! In fact, there are four main things that can help you determine if you are ready for homeownership:

YOU CAN AFFORD YOUR DOWN PAYMENT AND ONGOING COSTS

It is easy for potential homeowners to get wrapped up in focusing on having enough money for the down payment and then forget about it afterwards. It is important that you are not only financially able to afford the down payment but that you can manage the monthly mortgage payments and ongoing maintenance as well. My Mortgage Toolbox app from Dominion Lending Centres has some great calculators to help you determine what you can afford on a monthly basis before you get in too deep. If you have enough funds in the bank for a down payment and are able to manage the monthly costs associated with the size and price range of home you would need, then you may be ready to start house-hunting!

YOU HAVE GOOD CREDIT

As most people know, a credit score plays a major role in qualifying for financing to purchase a home. If you have a good credit score, which should now be at least 680 to qualify, then you have nothing to worry about! However, if your credit score is below this, it is more likely that you will be paying higher interest rates (and therefore have higher payments), or that you could be denied altogether. Before you begin your home buying journey, it is vital to have your credit score in order to ensure you can get the best mortgage product and rates. Working with a mortgage professional can help you get on the right track in the shortest time possible. Sometimes all that’s needed are a few subtle changes, or debt consolidation, to improve your credit score within a couple of months.

NO OTHER LARGE, UPCOMING EXPENSES

Do you plan on buying two new vehicles in the next two years? Are you thinking of starting a family? Are you considering going back to school? Although you may think you can afford to purchase a home right now, it is vital, to be honest about your future plans. What does your life look like in 1 year? 5 years? 10 years? If you know that you aren’t planning on incurring big expenses that you need to factor into your budget anytime soon, then that’s something that may help you decide to buy a home.

ARE YOU DISCIPLINED

One of the most important factors for purchasing a home is budgeting. You have to know what you can afford – and stick with it! It is easy to be tempted by a gorgeous 6 bedroom home or a backyard pool or private community, but at what cost? If going all-in is going to leave you scrambling each paycheck or derail any plans of future financial stability, it is worth rethinking. Understanding what you NEED in a new home, versus what you WANT is a good step towards determining what you’re looking for and planning a budget that suits your needs so that you can continue to live comfortably.

These are just four signs that you may be ready to purchase a home. If you’re seriously considering buying or selling, reach out to Greg Weaver, he can help ensure you have the best experience when it comes to buying a home!

 

Article Published by DLC Marketing Team