Ironically, many of the products that are offered by banks 'upon signing the mortgage commitment' are not necessarily the most optimal choices for truly serving your financial 'best interests'. Don't believe it? The CBC did a whole in-depth reporting of the concept HERE. Having said this, a safe bet would be to 'shop protected' with the (in our opinion, generally inferior) products - sometimes at no cost for the first 30 days - and consult with a licensed Insurance Professional in order to properly assess your family's financial needs and best have them properly and adequately protected.
It is an interesting exercise when you compare 'apples to apples' (as much as possible) between the 'mortgage protection insurance' and reviewing your true protection needs with an independent Insurance Professional: you will likely end up pleasantly surprised with the outcome that you can find better, more inexpensive coverage to meet your protection needs through shopping the market for a different policy.
Below, you will find a walkthrough of some solid insurance facts and heartfelt advice from one of our trusted colleagues - a licensed Insurance Professional - that can help you navigate the pros and cons of the different types of policies that are available to you as a financial service consumer.
Protect Your Family, Not Just Your Lender
The need to protect your family in case of your death is important. Should your family be unable to continue mortgage payments, your house will be sold by the bank leaving your family to find a home elsewhere, if insurance is not in place.
After fees this can leave less equity, erode savings and decrease value held in the home. The below table shows that personal life insurance provides more comprehensive coverage for less than mortgage insurance offered by the bank.
Key Points to consider when researching insurance options
It is more cost effective to implement one insurance policy which covers multiple needs than numerous smaller policies to cover various needs. Loss is underwritten more efficiently once, rather than obtaining several restrictive specific policies for focused needs.
Life insurance provides longevity and flexibility compared to mortgage insurance. If you pay off your mortgage early, mortgage insurance terminates.
Life insurance provides options such as:
• Ability to increase your coverage amount
• Convert term to permanent insurance without the need for a medical
• Accidental death benefit which usually pays double in the event of accidental death
• Accidental death and dismemberment benefit usually pays double in the event of accidental death or a set amount for the loss of limbs, eyes or other body parts
• Monthly disability income benefit provides a monthly income upon becoming totally disabled
• Waiver of premium, whereby the insurance company makes premium payments in the event you become disabled
Things that you need to know about "how" insurance works:
The younger and healthier you are the less your premiums. As well, you will have access to more coverage options. Obtaining coverage before health deteriorations occur ensures maximal coverage against future uncertainties.
If one is uninsured and experiences health complications and then decides to obtain insurance, three possibilities exist:
• A policy may be issued with higher premiums than if the condition was not present
• Policy could exclude pre-existing conditions stating that if loss occurs due to a condition, no payout is eligible
• In the most severe cases, an individual may be deemed uninsurable
If existing conditions are present, it may still be possible to obtain coverage from other losses to guard aginst new health issues. Early implementation of insurance helps to guard against future complications.
Next Steps:
Contact us for a free consultation to audit your needs.
Mehul Sudra
B.Comm., LL.B.
403-266-5509
_______________
Should you like, we are able to forward you an email copy of this breakdown for your needs - please contact us and we'll be happy to forward this on your way.
To your financial wellbeing,
James C. Tworek and the Trimor team!
www.trimormoney.com
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( 3 / 15 )There are many new changes brewing in the mortgage industry and as always, we’ll strive to keep you in the loop as they unfold from week to week throughout the year. At the core of this all is the intent to give you a quick-grab summary of rates, rate indicators and projections as well as interesting product changes and news tidbits: the motive behind this is to keep you informed and at the top of your game to best serve you and your contacts in order to give you a competitive edge in the ‘new economy’ of 2010 and beyond.
Enjoy!
What’s going on at Trimor this week:
Since the holidays, our team here at Trimor has seen quite a steady flow of preapproval requests with the concern that rates are on their way up. Our realtor and developer colleagues as well as our existing client base has been thorough in referring us new opportunities for helping Canadians with their mortgage needs (thank you!) and the vast majority of ‘action’ that we’re seeing is specifically rate driven. As far as preapprovals go, we’re able to lock in a ‘rate ceiling’ for clients as they shop protected for 120 days from the preapproval submission date in order to help protect against rate fluctuations through the buying experience.
Today’s Rates – where do they sit?
On an interesting note, we’ve been receiving some rate-drop notices and time-sensitive quick-close rate updates from two of our lenders this afternoon. We’ve seen the following NEW rates hit the Calgary market today:
- 5-year fixed rate mortgage: 3.89% (eligible for preapprovals)
- 5-year fixed rate mortgage (*quick close promotion, no preapprovals*): 3.75%
- *NEW* 1-year variable rate mortgage: P-0.20%
- *NEW* 3-year variable rate mortgage: P-0.30%
- 5-year variable rate mortgage: P-0.25% (eligible for preapprovals)
- 5-year variable rate mortgage (*quick close promotion, no preapprovals*): P-0.30%
****Please contact us about the specifics of the quick-close promotion and I’ll be happy to walk you through the guidelines and requirements****
Rate barometer – where can we expect rates to float in the short-term?
In previous Trimor Mortgage Minutes, we have included an interesting fixed-rate forecast graph. This week, instead of a graphical representation of where we can expect rates to float, we’ve dug up a thorough walkthrough of what we will likely see as a ‘true’ rate environment in the coming months. There is a lot of sense in the author, David Rosenberg’s sifting through data and government double-speak to whittle the facts down to the core. Please read on and I encourage your feedback if you would like to share it. Looks like we’re in for a stable low-rate environment for the months to come: this should help spur home sales and keep property values stable and increasing moderately.
Enjoy!
An interest rate hike this summer?
Don't count on it. For the Bank of Canada to raise rates before the middle part of 2011 would be totally inconsistent with its current forecast
David Rosenberg Published on Wednesday, Jan. 27, 2010
David Rosenberg is chief strategist for Gluskin Sheff + Associates Inc. and a guest columnist for Report on Business
Canadian market watchers will get some good news this week. The predictions for a "blowout" reading on fourth-quarter GDP are already out there and it is likely to be an abnormally strong number. But for anyone who thinks a big number is likely to help lock in a rate hike this summer, I would suggest that is not going to happen. In fact, my view is that the Bank of Canada will not be raising rates until mid-2011 - at the earliest.
This is critical to the outlook for Canadian money market and bond yields since futures have priced in nearly 100 per cent odds of a 25 basis point rate hike this June, and another 25 basis points by September. (A basis point is 1/100th of a percentage point.) The central bank has already told us that its base case is for 2.9 per cent real GDP growth this year and 3.5 per cent next year, with the starting point on the "output gap" being 3.7 per cent ("output gap" is the gap between the actual level of real GDP and where real GDP would be if the economy were at full capacity). Remember that an output gap that big in any given quarter classifies as a 1-in-20 event. Moreover, baselining these expected growth rates against the latest estimates of potential growth puts the output gap at a smaller level of 1.55 per cent this year, narrowing further to 0.25 per cent in 2011.
The history of the Bank of Canada is such that - outside of when it had to defend the Canadian dollar - it typically does not embark on its tightening phase until the output gap is close to closing. Even during the aggressive John Crow era, the bank's modus operandi was to time the first rate hike just as spare capacity was being eliminated, and not much before. On average, the first central bank rate hike following a recession takes place one quarter before the output gap closes (there is still a gap, but it is small at 20 basis points). If such a strategy is replicated this time around - and the cause for being on pause longer in the context of a historic deleveraging cycle is certainly quite strong - then the very earliest the bank will move is the second quarter of 2011.
Under this scenario, based on some back-of-the envelope calculations I just did, the unemployment rate at no time declines below 7.5 per cent through to the end of 2011. The peak in the jobless rate was 8.7 per cent in August, 2009. Going back to prior recessions, the central bank does not begin to tighten rates until the jobless rate is down an average of 150 basis points with a range of 130 basis points to 170 basis points.
Unless the bank wants to be pre-emptive - highly unlikely when it acknowledges in its economic outlook last week that "the recovery continues to depend on exceptional monetary and fiscal stimulus" and that "the overall risks to its inflation projection are tilted slightly to the downside" - then to raise rates before the middle part of 2011 would be totally inconsistent with its current forecast. More to the point, while bored Bay Street economists analyze every word to see if the bank is more or less "hawkish" than in its previous outlook, what is important for investors is to assess the bank forecast and decide what it means for the degree of excess capacity in the economy and what that implies for the future inflation rate.
The bottom line is that even with the fragile recovery, the bank sees more downside than upside risk to its inflation projection, and, to reiterate, for it to start tightening policy until the jobless rate falls below 7.5 per cent would be a break from past post-recession actions.
And whatever future "policy tightening" is needed could also come via the overextended loonie, limiting any need for an interest rate adjustment in the time horizon that the markets have discounted. This is a source of debate on Bay Street, but the bank is still sensitive to the growth-dampening impact of an exchange rate too firm for its own good. To wit: "The persistent strength of the Canadian dollar and the low absolute level of U.S. demand continue to act as significant drags on economic activity in Canada," the bank says.
In a nutshell, the Canadian market is already braced for 50 basis points of tightening from the Bank of Canada by September. With that in mind, it is difficult to believe that there is any significant rate risk here; if anything, the surprise will be that the bank is on hold for longer. If that proves to be true, then there is actually more downside than upside potential to Canadian bond yields, particularly at the front end of the coupon curve.
The reason the markets think the bank may pull the trigger is because of this one sentence that shows up in every press statement: "Conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target."
So the central bank has really only given a pledge to keep rates where they are until mid-year. But June is only five months away and so one would have to think that at one of the next three meetings, the Bank is going to have to update this particular sentence or cut it entirely and leave the market without a de facto time commitment. Either way, the moment the bank changes this sentence is the moment the market will put on hold its expectations of a new rate-hiking cycle coming our way.
Until then, homeowners opting for variable rate mortgage financing will likely not have to face the interest rate music.
Have a great day!
Other interesting mortgage news ‘tidbits’ from major Canadian news sources this week:
Calgary home ownership becoming more affordable: Calgary Herald
More consumers are choosing brokers: Canadian Real Estate Magazine
Interpreting “location location location”: REMonline.com
I am happy to roll out some small changes to last year’s Trimor Mortgage Minutes and will continue to organically grow the newsletter to best suit your needs: If there is something else that you feel is missing or that you would like to see added in these weekly updates, please do not hesitate to let me know.
2010 is already shaping up to be a great year in terms of planning and recalibrating for the ‘new economy’! As always, I am happy to help consult with you and your clients face-to-face, by phone or via email. For more frequent news updates, please feel free to follow our team’s blog at www.trimormoney.com/blog and on twitter (@trimormoney) as well!
To your growth and prosperity,
James C. Tworek and the Trimor team!
info@trimormoney.com
www.trimormoney.com
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( 2.9 / 14 )For all interested parties, the RECA 2009 Annual Report is now available for public viewing HERE.
Many changes in the market (needless to say)!
Helping you lean more about our local Real Estate economy,
James C. Tworek and the Trimor team!
www.trimormoney.com
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( 5 / 1 )Hello and Good morning!
It goes without saying that the Canadian Real Estate market has gone through some significant changes in recent times. We've seen the markets tumble and start to regain; Mortgage lending programs vaporize along with some lenders as well; Rent-to-Own and Agreement for Sale contracts get dusted off by lawyers across Alberta as Investors and purchasers find a way to 'make things work' (These were most popular back in the '80s, the last time we hit a major shock similar to the one that we're working through now); mortgage interest rate jumps and drops as the economy works its way out... just to name a few!
Another looming shift that will make a significant change to the way that our Realtor colleagues do business and interact with the Canadian Public. Our colleague in Edmonton, Gerard Yoofi Hagan speaks out here about how the CREA and the Canadian Competition Bureau are 'negotiating' some significant changes to the Canadian Real Estate landscape.
From Yoofi's BLOG at www.BestEdmontonRealEstate.com:
I’m going to just put it out there, CREA is (messing) with me as a REALTOR®. To sum it up in just a few words, CREA is negotiating the use of the MLS® with the Canadian Competition Bureau and doing a (crap) job at it. How ironic since as REALTORS® our job is to negotiate.
I’m all for transparency but CREA, come on, stand up for what’s right and not to mention what me as a REALTORS® pay for. I’m writing this post because a highly respected REALTORS® here in Edmonton by the name of Klaus Hoffmeier has been educating REALTORS® as to what has been going on with CREA, the Competition Bureau and the MLS®. This is the most recent email which I received from Klaus Hoffmeier:
“Keeping my fellow REALTORS® informed;
After the December 21/2009 issue of REM published their conversation with CREA President Dale Ripplinger, concerning ongoing negotiations between the Competition Bureau and CREA, it got me to thinking...
In the beginning was the wild Wild West, or east. Then came real estate speculating, and the screwors and the srewees followed. Next came organized real estate. Finally there came REALTOR® followed by MLS®, both created and developed to contribute to the prosperity of individuals seeking to carry out real estate transactions (with confidence) by protecting and promoting buyer and seller interests and enabling informed consumer decision making. The Competition Bureau is an independent law enforcement agency that contributes to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice.
REALTOR® was created and developed to contribute to the prosperity of individuals seeking to carry out real estate transactions (with confidence) by protecting and promoting buyer and seller interests and enabling informed consumer decision making. This process is aided by the fact that REALTORS® are required to follow strict guidelines, and rules, and regulations of practice as well as requiring to adhere to an even stricter code of ethics… all for the sake of contributing to the prosperity of individuals seeking to carry out real estate transactions (with confidence). The Competition Bureau sees REALTORS® as having a monopoly over the real estate industry because we developed and maintain MLS®, albeit for the use of contributing to the prosperity of individuals seeking to carry out real estate transactions with even more confidence and success.
In Canada, the caretaker of REALTOR® and MLS® is the Canadian Real Estate Association (CREA). I am one of approximately 100,000 members who pay lots of money for CREA’s valuable staffing and upkeep in order that the prosperity of individuals seeking to carry out real estate transactions (with confidence) may continue by protecting and promoting buyer and seller interests thus enabling informed consumer decision making.
Contrary to what the Competition Bureau may believe CREA has no monopoly over the real estate industry, because to suggest so would mean that CREA controls price and supply; kind of like the big oil companies with gasoline prices, and banks with their service charges and interest rates. CREA hasn’t the power or the ability to control the real estate market. We are a service industry at the mercy of our clientele. Our clientele are our driving force.
They, through informed consumer decision making, determine and drive the market. We, as REALTORS® contribute to the prosperity of individuals seeking to carry out real estate transactions (with confidence) by protecting and promoting buyer and seller interests and enabling informed consumer decision making within a safe and legislatively controlled environment. For any consumer who doesn’t want the valuable services a REALTOR® offers, they are free to go elsewhere to conduct their real estate affairs, as they always have been. Working with a REALTOR® is a valuable modern convenience, not much different than switching on a furnace instead of stoking a wood or coal stove. I would rather hire a Lawyer than to handle legal affairs on my own too. It’s a consumer’s right to choose.
Here are the two seller options:
1. Using a REALTOR®
* a. Licensed to trade in real estate by legislation.
* b. Regulated by multi-levels of Government.
* c. Must follow specific rules and regulations.
* d. Professional code of ethics and conduct.
* e. Required by legislation to represent the best interests of the client at all times.
* f. Knows the market
* g. Client is protected by an assurance fund.
* h. Little or no risk.
2. Selling on their own (includes renting signs from companies that claim to help in the sale)
* a. No professional representation
* b. No market place rules
* c. No protection from unscrupulous buyers
* d. Does not know the market
Here are the two buyer options:
1. Using a REALTOR®
* a. Licensed to trade in real estate by legislation.
* b. Regulated by multi-levels of Government.
* c. Must follow specific rules and regulations.
* d. Professional code of ethics and conduct.
* e. Required by legislation to represent the best interests of the client at all times.
* f. Knows the market
* g. Client is protected by an assurance fund.
* h. Little or no risk.
2. Buying on their own
* a. No professional representation
* b. No market place rules
* c. No protection from unscrupulous sellers
* d. Does not know the market
… So, CREA is negotiating a settlement with the Competition Bureau, eh? Well, I’m what you might call a “grass-roots” REALTOR®. I began my career in the real estate business over 23 years ago. I work hard, and I’m very proud of the fact that I do my utmost to represent the best interests of my clients at every turn. It costs me a lot of money in dues, licensing, fees, franchising, education, administration, and who cares what else, to maintain the privilege of holding a real estate license in the Province of Alberta, and of using the valuable trademarks known as REALTOR® and MLS®. They are very necessary, very valuable, and they allow me to carry on in my chosen craft. Do you know what’s being negotiated, or why a settlement must be reached? If you don’t know, has anybody told you, or do you know anybody who knows? Do you care? Settlement means compromise, and compromise means that you give something up in exchange for something else. It seems that the Competition Bureau wants REALTORS® to give up rightful exclusive use of MLS®.
The compromise is that we get to give free access to our MLS® to anyone who wants to use it, while we continue to pay for it and maintain it, and support it, etc. Doesn’t that make you feel warm and fuzzy all over? Kind of like having your shoes taken away, and still requiring to polish them and fix the heels for the person who took them away from you, while you walk barefoot, isn’t it? I can only speculate that the parties the Competition Bureau wants to access MLS® must be non CREA members, who do not support CREA methods, rules, regulations, bylaws, values and the REALTOR® code of ethics. They covet what we’ve created and don’t care how many taxpayers’ dollars the Competition Bureau has spent and will continue to spend in legal fees trying to get what’s not theirs’.
I have the solution. GIVE THEM ACCESS, but on their own dime, not mine. You see, as my tax dollars pay for them to take my MLS® away from me, I also have to spend my own money contributing to CREA to keep the MLS® that’s already mine. I pay twice. So, let’s welcome them all with a smile. Every sign rental company, and everybody with a pulse, should have access to the MLS® if they wish. All they need do is to complete their local real estate board and jurisdictional licensing requirements.”
What are your thoughts on this topic? As a Real Estate Professional? As a consumer? As a member of the general public?
Please feel free to post your comments below or by contacting Yoofi directly at info@bestedmontonrealestate.com
Keeping you informed of the changes that affect the way that you buy, sell and interact with Real Estate Professionals in Canada,
James C. Tworek
Partner, Director of Corporate Development
Trimor Home Finance
james@trimormoney.com
www.trimormoney.com
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( 3 / 15 )*re-post of article from Canadian Real Estate Magazine
January 26, 2010 - A growing number of Canadians are opting to use mortgage brokers instead of going to the bank branch, a recent study said.
According to Maritz Research, which conducted the study on behalf of CAAMP, the mortgage broker channel handled 23 per cent of all mortgage activity in 2008. This number was higher in Western Canada, (34 per cent in Alberta and 27 per cent in British Columbia), as well as amongst females (26 per cent), who were more likely than men (20 per cent) to deal with brokers.
"In the past, the first or only place a person would go when looking for a mortgage was to their local bank, however more and more Canadians are now seeking out the services of Mortgage Brokers to help them navigate the biggest purchase of their lives," said study author Rob Daniel, managing director, Maritz Research Canada, to the Financial Post.
Another strong demographic for mortgage brokers was with young Canadians. In the 18 to 34 demographic brokers represented a 28 per cent share. With 53 to 54 year olds this decreased to 24 per cent, and with the 55 and older crowd it was even lower, at just 17 per cent.
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