Edmonton Real Estate Blog

How to identify your best long-term alternative

Have you ever wondered whether it makes more sense to pay off your mortgage or to contribute to a Registered Retirement Savings Plan? Perhaps you’re expecting to receive some extra money from an inheritance or an employment bonus, and you’re not sure which route to take.

The truth is, there is no easy answer. There are many variables that must be taken into account. Concentrating on paying down a mortgage may be the best route for one person, while focusing on an RRSP may benefit another.

Here are some factors to consider:

• Your age. When you’re young, it is wise to make your RRSP a priority. The sooner you get money into a sheltered retirement plan, the longer it will grow on a tax-deferred basis. But don’t overlook the need to build home equity. It can give you a head start on the expenses of moving to a larger home as your family grows.
• Your income. The more you earn, the higher the rate of tax you’ll pay. That means you must earn more in before-tax dollars to make mortgage payments. If you’re a high income earner you may want to quickly reduce this expensive debt.
• Investment returns. Pay attention to the rate of investment returns you could reasonably expect to earn when you contribute to your RRSP. Astute investors could be further ahead by investing their money than paying down the mortgage. The benefits of investing are magnified by an RRSP, with tax-deferred growth within the plan and tax deductions on contributions.
• Your mortgage rate. If your mortgage rate is higher than your expected investment return on your RRSP, then paying down your mortgage may be prudent – especially if you expect borrowing costs to rise in the future. But if your mortgage rate is low, it may make more sense to contribute to an RRSP.
• Are you behind on your RRSP? If you have made less than your maximum annual RRSP contribution in the past, a lump sum could allow you to catch up. You are allowed to make up for unused contribution room that you’ve accumulated from past years – which can also generate a significant tax refund.
• Your pension plan. Those with generous workplace pension plans that provide for a secure retirement may be able to concentrate on a mortgage without giving up financial security in retirement. Of course, you can focus on both your RRSP and mortgage. For example, contribute to your RRSP and then apply the tax refund it generates towards a prepayment on your mortgage.

Sincerely,

Douglas J. Bodtcher                               
Investors Group Financial Services Inc.
780-448-1988 ext. 284

Before you go shopping, it is important to know who much you can spend. One of the most important steps in the home-buying process is being pre-approved for a home loan. The pre-approval will determine your budget as well as secure your rate while house hunting.

For buyers who have been pre-approved, the mortgage associate has already done a credit check along with verification of income. The pre-approval is a commitment to loan the buyer up to a certain predetermined amount. It provides buyers with confidence when putting an offer on a home.

Based on your credit, down payment and income the mortgage associate can determine your pre-approved mortgage amount. It determines your price range and narrows the search parameters. This saves time for not only the buyer, but also your Realtor.

A pre-approval is also a rate hold. This secures your rate for 90-120 days while you are looking for a home. If rates increase, your rate is guaranteed. If rates decrease, you get the lower rate! So, in this regards, there is no negative effect to getting pre-approved.

To get started, the pre-approval process involves completing an application. This can be done in three ways: filling out paper form, verbally over the phone or meeting in person. You decide based on your comfort level and/or schedule. Contact me when you are ready to purchase your next home. And let me know if I can provide any additional information about pre-approval or financing options.

As a homeowner, your lender no doubt offered you insurance protection to ensure your mortgage would be repaid in the event of your premature death and mortgage payments would be made for you in the event of disability. You probably applied for and obtained that lender provided insurance protection. To the survivors of your family, this can bring relief in knowing the mortgage could be paid off. However,

‐ The mortgage lender is the beneficiary, not you or your family.

‐ As you pay down your mortgage, your premiums remain the same – you’re paying more for less.

‐ It is not a 100% guarantee that your mortgage will be paid as the mortgage insurer follows a process called

“Post Claim Underwriting”.

What is the Solution?

‐ Replace your Mortgage Insurance with personally owned Insurance

‐ Life Insurance protection that pays TAX FREE directly to a beneficiary of your choice.

‐ Insurance protection that pays TAX FREE directly to you in the event of disability or critical illness.

‐ Personalized coverage that is specific to you and your family’s needs!

I work with some of Canada’s top insurance companies to create a personal package unique to you and your family’s needs.

If you would like a no obligation review, have any questions or would like more information, please feel free to contact me. I look forward to helping you!

Sincerely,

Douglas J. Bodtcher                               
Investors Group Financial Services Inc.
780-448-1988 ext. 284

The average housing prices quoted by the Board are influenced by two factors. If the prices paid on particular properties are rising then it will push up the average price. But if the actual prices are constant, the average could still increase because of the product mix in the period.

Right now there is a shortage of attractive, lower priced homes in this market because the low interest rates and increased migration have created a demand for housing for entry level buyers. Existing home owners are also taking advantage of the lower interest rates and the equity gain since 2006 and are buying in more expensive neighbourhoods. With less homes sold at the low end, the average price is pushed up as current owners move up-market to find a home. The relative number of homes sold in the $450 – 650k price range increased from 12.2% to 14.5% year-over-year while the percentage of homes under $300,000 dropped from 40.7% of the market to 38.2%.

It is important that REALTORS® explain this phenomenon to their sellers so that they don’t have unrealistic pricing expectations. The increase in average price may not increase the market value of a particular property. Just because the market is rising, does not mean that buyers will pay more than the market price in a given neighbourhood for a home. The CMA will reveal if prices for comparable homes are rising with the market or are showing a more moderate rate of increase.

Source: Realtors Association of Edmonton

We are heading into a strong spring market. In the last 30 days we have seen an increase in sales. In the last 30 days we have seen 801 single family homes sold in in Edmonton proper.

Currently in Edmonton proper we have 2,164 single family dwellings for sale. which is about average for this time of year.

This now gives us a listings to sales ratio of 2.7:1 which is far below the 4:1 that creates a balance market.

With a ratio that is considerable below the 4:1 need for a balanced market is a strong indicator that their is strong upward pressure on valuations. Expect the cost of homes to be going up.

If you are thinking of buying this year buy now and save yourself potentially thousands of dollars.

If you are ready to buy call us here at Team Leading Edge 780-634-8151 or visit us at www.EdmontonHomesForSale.biz

Source: Realtors Association of Edmonton

Homeowners who haven’t listed their property in recent years may be surprised and somewhat skeptical of the advantages of styling or “staging” a home in order to maximize its resale price. However, it is a fact that detailing is very effective. When a professional designer is enlisted to optimize the appearance of a home, it leaves a positive impression on the potential buyers. its not just about style. A proper consultation can identify means of emphasizing a homes best assets, such as improving sightlines with strategic furnishing, or making a room more welcoming with improved lighting, a carpet, or an attractive piece of art. Whether it’s kitchen hardware replacement, new bathroom decor or a fresh coat of paint, property staging is a worthwhile investment. It may require a bit of work, or may involve renting a few items, but is sure to make a home more attractive to potential buyers.

To View & Search All MLS Listed Houses for Sale Visit Us At:

www.EdmontonHomesforSale.biz

Did you know that, next to heating and air conditioning, your lights consume most of the energy in your home? In fact, you can lower your electricity bill quickly – and substantially – simply by being smarter about lighting.

First, consider replacing your conventional light bulbs with the energy-saving variety. You’ve probably seen these at your local home improvement centre. Compact florescent light bulbs, for example, use up to 75% less energy.

Second, lower the wattage in some outlets. Is it necessary to have a 100 watt bulb in the furnace room? Try a 60 watt bulb.

Finally, think before you turn on the lights. Do you really need them on? Perhaps there’s an alternative, such as opening a window blind to let in more sunlight.

When you see a new home you like on the market, it’s easy to get distracted by all the features you love – the wrap-around backyard deck or the spacious rec room with plenty of space for entertaining. You just need to make sure that in all that excitement you don’t overlook any expensive maintenance issues that could be just around the corner.

Nothing lasts forever. The major components of every home – from the furnace to the roof shingles – need to be replaced eventually. Knowing when such maintenance issues are likely to arise can help you make a smarter decision about the home you’re considering.

How do you do that?

When viewing a property, ask for the age of the major components of the home, such as the roof shingles, furnace, air conditioner, water heater, and appliances. Roof shingles may look merely weathered in spots – and you might think they have years of service left – when, in fact, they’re due to be replaced in a year.

Also pay close attention to the backyard deck, fencing, flooring, and windows. Do any of those components look aged, worn, and in need of repair or replacement sometime soon?

Finally, don’t forget to check the kitchen and bathrooms. Sinks, faucets, bathtubs, showers, and cabinetry have a life-span of about 10-15 years.

Of course, there are things you can’t see, such as wiring, plumbing, venting, and other components of a property that may require maintenance soon. That’s why it’s so important to make any offer to purchase a home conditional on passing an inspection by a qualified home inspector.

Want more ideas on buying the right home for you? Call today 780-634-8151.