Archive for July 1st, 2008
Home Equity Loans Canada- Your Questions Answered
Tuesday, July 1st, 2008Crystal Mate
In a November, 2007 report, the Canadian Association of Accredited Mortgage Professionals (CAAMP) stated that in the previous 12 months, 17% of mortgage holders took out home equity loans or increased their mortgage. The average equity loan was $35,400.
What are people doing with all this money? Paying down debts, sending the kids to school, investing in their homes – there are many possible answers to that question. If you’ve ever considered tapping into your home’s equity, the following FAQs can help you decide whether home equity loans are the right strategy for you.
What Are Home Equity Loans?
Home equity is the difference between the market value of your home and what you still owe on the mortgage. So if your house is valued at $300,000 and you still have $260,000 outstanding on your mortgage, your equity would be $40,000.
Home equity loans enable you to borrow against that equity. These loans are also known as second mortgages because they are a second loan (the primary mortgage being the first) that uses your house as collateral.
How Much Can You Borrow?
With most home equity loans you can borrow anywhere up to 85% of the amount of your home equity. For the case above, with $40,000 in equity, the homeowner could borrow $34,000.
Some lenders have more generous options, even offering to lend 100% of the amount of equity in your home.
How is a Home Equity Line of Credit Different?
A home equity line of credit (HELOC) is much the same as a standard line of credit, but it uses your home’s equity for security. With a HELOC you can typically borrow up to 90% of your home’s equity. With $40,000 in equity, you could obtain a HELOC for $36,000.
With a HELOC, you do not necessarily have to use all of the credit at once. You can use it as needed and pay back what you borrow, just like a standard line of credit.
On the other hand, home equity loans are one-time, lump sum loan. If you need more money, you’ll need another loan.
The general guideline is that a HELOC is best for those who need access to varying amounts of money for ongoing expenses, whereas a home equity loan is better suited to those needing a specific amount for one large expense, like a home renovation.
What About Interest Rates?
Home equity loans typically have fixed interest rates, while HELOC rates are variable. The interest rates for both are typically pegged to an institution’s prime rate, and are often significantly lower than those charged for vehicle loans, credit cards and personal loans.
What is Mortgage Refinancing?
With refinancing, you pay off your existing mortgage and obtain a second mortgage for a lower interest rate. With a “cash-out” mortgage or refinance you can borrow more than what you owe on your mortgage. You can then take the extra money and use it for expenses like tuition, home improvements and so on. Refinancing may include costs for mortgage fees and prepayment penalties.
What are the Pros and Cons?
On the plus side, home equity loans provide low-cost credit for important expenses. In extreme cases, the risks are that the home market slows and you end up owing more than the value of your home, or that you overspend and default, which means the loss of your home.
For many people the pros outweigh the cons. To be sure if a HELOC or loan is right for you, it is best to consult with a mortgage professional.
For more information on home equity loans and equity loans in Canada contact CanadianMortgagesInc.ca
Buying Your First Home? No Need For Confusion About Canadian Mortgage Rates
Tuesday, July 1st, 2008Bruce Owens
If you are a Canadian buying your first home, it is hardly surprising if you feel overwhelmed by the bombardment of daily news and advice that seems to impact on your home purchasing decisions. If it is not more dire news coming out of the United States about their ongoing housing crises, it seems to be confusing and conflicting speculation about the state of our housing and real estate markets. Now, add into this daily news mix analyst and industry uncertainty about where mortgage rates are headed and it seems enough to keep any levelheaded first-time homebuyer on the sidelines. But it doesn’t need to.
On June 10th, the head of Canada’s central bank, Bank of Canada Governor, Mark Carney, went against what were widespread predictions by financial analysts that he would drop the Bank of Canada’s main rate from its then (and now) current 3.0% in an effort to stimulate Canada’s economy. Instead, Mr. Carney elected to leave the BofC’s main rate at its current low level out of an abundance of caution that rising energy and commodity prices could herald a surge in consumer inflation. Mr. Carney, the U.S. Federal Reserve Chairman, Ben Bernanke, and other central bankers from the G7 group of the West’s leading economies had been talking for weeks about the portential for renewed inflationary pressure resulting from the surge in oil, natural gas and commodities prices.
In his most recent address, to Calgary’s Haskayne Schol of Business, on June 19th, Mr. Carney made it clear that – like all central bankers, it seems – that monitoring and curbing inflation is his primary focus. “At a fundamental level,” Mr. Carney declared, “the primary goal of monetary policy should be to keep inflation low, stable, and predictable.” Noting that “commodity-price shocks,” like the recent spikes in energy and food prices Canadians have experienced raise what he called “complex issues,” Mr. Carney nevertheless stressed that “a relentless focus on inflation clarifies policy decisions, makes communications easier, and maximizes the likelihood that expectations will remain well anchored.” He touted the benefits of keeping to what he called a “credible inflation target” in order to keep the cost of borrowing down and to allow individuals and firms to make better investment decisions.
The Bank of Canada press release accompanying Governor Carney’s most recent public address noted that, “The best contribution that the Bank of Canada can make to help all Canadians reap the benefits of the current commodities boom is to remain focused on achieving its inflation target.” As core inflation is running at or near the top of the Bank of Canada’s forecast for 2008, it seems reasonable to presume that there will be no further rate cuts when the Bank of Canada reconvenes to assess its main lending rate on July 15th. More likely, given that we are at the peak of the traditional summer “driving season” and, as yet, there appears to be little relief in gas prices, the inflation-conscious Bank of Canada Governor may call for a moderate boost to Canada’s main lending rate, likely a 0.25% increase to 3.25%. Canadian banks and other lending institutions appear to be factoring in the likelihood of such a rate increase into their fixed-term mortgage pricing.
If you are buying your first home, the indications from Canada’s central banker are that mortgage rates have bottomed out for now. In the short term, mortgage rates are likely to rise. Consulting an experienced and well-resourced Canadian mortgage broker who can provide advice for first-time homebuyers on the wealth of mortgage types and features that are currently available should be a first step for tentative first time purchasers. Canadian mortgages still remain at near historically low levels, consulting with a professional who can comparison shop the fixed rate and variable-rate mortgages available for first time home purchasers should help flesh out a mortgage market that is still somewhat in flux as the central bank shifts its emphasis away from providing economic stimulus to the Canadian economy and towards keeping an ever-watchful eye on the potential for rising inflation.
For more information on buying your first home and the benefits of using a mortgage broker contact CanadianMortgagesInc.ca
InBev sticks to Anheuser offer
Tuesday, July 1st, 2008AstraZeneca wins legal round in Teva Seroquel row
Tuesday, July 1st, 2008Personal Finance Basics: Term Life Insurance
Tuesday, July 1st, 2008Mike Trudeau
When it comes to the most fundamental steps of personal finance, term life insurance is one of the essentials. This is especially true for young families who are starting the personal finance evaluation process. Term life insurance is a very valuable tool for those families who need financial protection at a reasonable cost. All other protection options come at a higher rate, which is just not an option for young families, just getting started, making term life insurance is one of the most widely utilized forms of insurance available today.
Term life insurance, as the name implies is insurance that protects an individual’s life for a specific period of time, or term. When compared to its traditional whole life counterpart, term life insurance protection can be purchased for fractions of what it would cost to fund a permanent insurance policy. Whole life insurance, or permanent insurance, is often more expensive than term life insurance because it is not sad for a specific term, and lasts as long as the policy is enforced. Permanent life insurance certainly has its benefits, but when it comes to buying life insurance to protect your family at a substantial discount there is no beating term life insurance.
Depending on your needs, term insurance can be purchased so that it is in force as long as you need it. Term life insurance is commonly purchased for guaranteed periods of 10, 20, or 30 year terms. This provides for much flexibility. You may want to have insurance in place for at least 30 years, ensuring that your kids are grown and out of the house before expiration. You may want to provide income for a surviving spouse, should something happen to you. Term life insurance provides that flexibility, and does so on the cheap.
Term life insurance premiums are determined by a number of things. For obvious reasons, your health and your age are major factors in determining your insurability. The farther you go out in years, also plays a role in the insurance costs. If you’re a relatively healthy 25-year-old, and just need a life insurance for a period of 10 years, term life insurance is very inexpensive. If you’re a 55 years old, and want a policy that will ensure you for another 20 years, the costs will be more expensive, but still reasonable when compared to whole life. Regardless of your specific situation, term life insurance is often the answer, should you need insurance for a specific term.
One of the biggest objections that we hear in the insurance industry is that term insurance premiums are often wasted. The reason being, most individuals feel like they will outlive their 20 or 30 year policies. And many of them will, so they want an alternative. The downside to term life insurance is that when the term is over the insurance policy expires worthless. To answer this objection, the insurance industry has introduced a new product called return of premium life insurance. This product commonly comes in the form of a rider, which insurers that if you don’t die you’ll receive all your premiums back at the end your policy. This win-win situation comes at a cost, however, many return of premium policies can add 60%, to premium costs. For some, the protection of family and premium dollars, if you’re fortunate enough to live are worth the extra cost. Most of the time we recommend a street term life insurance policy, for those looking for the lowest cost.
For young families learning about personal finances, life insurance planning should be at the forefront. It offers the protection you and your family need most, and it does so at a great price. It pays to go with an independent insurance agent or to search online, in order the most attractive term life insurance rates. Since there is no tie to any one specific insurance company, they can compare a number of insurance companies to find you the best rate.
If you’d like more information on term life insurance you can visit the site for a large selection of insurance information. Additionally, all things personal finance are covered, whether it be investing, insurance, or the like.
Clickbank – The Affiliate Marketer’s Marketplace Dream Come True
Tuesday, July 1st, 2008Ann Moss
Many affiliate marketers utilize Clickbank for their promotions. Since Clickbank is the largest provider of digital products on the internet, this only makes sense. But how many of these affiliate marketers actually take the time to do research on what are going to be the best products to promote. Do they look beyond what is the most popular or what has the highest gravity score? How many new affiliate marketer know that there is much more to picking a product?
How many affiliate marketers actually take a look to see if the product they are promoting with Clickbank is actually friendly to the affiliate marketer? Most new affiliate marketers only know to look at the popularity and gravity scores and then just start promoting the product. They do not realize that professional affiliate marketers will create their own landing page if they don’t like the pitch page or if it is not affiliate marketer friendly.
An affiliate marketer friendly pitch page has a professional look, properly utilizes keyword density and has only ONE “out” off of the page. The “out” is what many new affiliate marketers miss when reviewing their product. They will just start promoting a product because it has high popularity or gravity scores, not realizing that they are just promoting for the publisher and not for themselves. When they don’t make any sales, many will get discouraged and quit. So, the next time you review a pitch page, check to see if it has only any one of these “outs” included in the page.
Free newsletter opt-in box
o This is where the publisher offers a newsletter to anyone that signs up. It has been proven that it sometimes takes up to 6-7 emails or newsletters before someone will make a purchase. By getting the visitor to sign up for a newsletter, the publisher has the opportunity to get the 6-7 emails out to increase their odds of a conversion.
Free report opt-in box
o This is where the publisher offers a free report in exchange for an email address. Again, the advantage here is that the publisher can now send out several email promotions/communications that will increase their odds of making a conversion.
Free e-course opt-in box
o These have become very popular. A person signs up for a 3-5 part course from the publisher. Included in these e-courses are promotions, again increasing the odds of a conversion.
If any of these are on the page, it is human nature to sign up for the free stuff before making the commitment to purchase. Each of these allows the visitor an “out” which benefits the product owner (publisher) and not the affiliate marketer.
When reviewing a pitch page, the only “out” you want on the page is the one that takes the visitor to the purchase page. Now there can be several of these call to action “outs”, but they should all lead to the same page – the one that actually takes the order.
So next time you are reviewing a Clickbank product for promotion, make sure it is affiliate marketer friendly. Remember – it’s all about getting the conversion that benefits both the publisher AND the affiliate marketer.
Ann Moss is a professional Clickbank coach for Mastermind Pros Success School, a leader in online training.
2nd Mortgages Refinance: When And Why To Do It
Tuesday, July 1st, 2008Crystal Mate
There are many viable options for tapping into a home’s equity, including 2nd mortgages and refinancing. Both provide a way to help manage existing debt or get a low-cost loan for other expenses.
“I will likely use my home equity to help finance other investments”. This statement was included in a 2007 consumer survey by the Canadian Mortgage and Housing Corporation (CMHC). Forty-one percent of respondents strongly agreed with it. The response to this survey question shows that Canadians are becoming increasingly comfortable taking advantage of the equity they have built in their homes.
Getting a Handle on Debt
Home mortgage refinance products and 2nd mortgages are helping many Canadians get control over high interest debts from credit cards and personal loans. Instead of continuing to pay these high rates, a refinance strategy is often employed to reduce interest charges. Here are two possible scenarios:
• A 2nd mortgage is essentially a low-interest loan that uses your home equity as collateral. Let’s say you have $50,000 of equity in your home, and interest rates are low. You could take out a 2nd mortgage to borrow that $50,000 at a low rate, and pay off your high-interest debts. Your interest charges would drop substantially, saving you money every month.
• Cash-out refinance options enable you to pay off your first mortgage and take out a new one at a lower rate. You can borrow more than you owe on your mortgage and use the extra cash for debt consolidation.
Access the Funds Needed for Major Life Expenses
Home mortgage refinance tools give homeowners access to the money they need for major projects or expenses.
A home renovation is a typical example. Renovations, especially in the kitchen and bathroom, can increase the value of a house by a substantial margin. By seeing renovations as an investment that pays off with a better selling price, many homeowners feel that borrowing against their home’s equity is a sound financial strategy.
College or university tuition is another expense that many homeowners manage with a second mortgage or home refinance plan. Because they are investing in their children, most homeowners see tuition as a wise use of their resources and are completely comfortable with the idea of borrowing against the value of their homes for this purpose.
Still others will use the proceeds from a cash-out refinance or 2nd mortgage to help with unplanned expenses that may emerge as a result of an accident or emergency. Access to ready cash can be of great assistance during difficult times.
In cases where people have developed very serious problems with debt, perhaps because of an accident or emergency, home equity can offer real security. Even with a 2nd mortgage, refinance options may be available to assist with managing expenses and debt.
Speak to the Experts
No matter what your financial requirements are, it is always wise to speak to a financial or mortgage expert to plan a strategy that meets your needs and that suits your risk tolerance and lifestyle.
For more information on 2nd mortgages and home mortgage refinancing, contact CanadianMortgagesInc.ca