Go Variable or Fixed rate?

Your choice of a mortgage can save you, or cost you, a mint. Problem is that in deciding you're also gambling.

Would you pay $100,000 to sleep a little easier at night? You can crunch the numbers different ways, but that's the kind of real money at stake when you choose your mortgage.

If you select one with a variable rate - that's a mortgage when the interest rate can go up or down, in tandem with base lending rates - you could save thousands of dollars in interest over the life of your mortage.
That's because these rates tend to be the lowest on the market. But you could also lose sleep at night if rates go up and your amortization increases.

If you choose the fixed rate, you can be certain the interest rate won't change over the term of your mortgage, but you will pay more if rates are reasonably stable or go down.

There is a third option - mortgage products that blend variable and fixed rates - though consumers need to be aware of the pros and cons.

Consumers also need to be aware they can bargain, playing off banks and brokers against each other, asking for below published rates. A mortgage is a big-ticket item where sellers have leeway to discount and competition among them gives consumers leverae. By bargaining, you might be able to get a fixed rate mortgage for pretty close to a varaible rate deal.


The Toronto Star B, Madhavi Acharya-Tom Yew.

What To Do Before Buying A Home

When you're buying, there is no substitute for driving and walking through neighbourhoods you're interested in. Do it at different periods of the week. For example, early Monday morning will tell you how many shcool buses are in the area and the makeup of the children on the street. How long does it take you to get to work at 7:30am? Don't be afraid to knock on doors and talk to people to get a sense of how open and friendly they are. Most people prefer talking to people in person, rather than on the phone, and people are often proud of the area they live in. If you find the people living in the area are not very friendly, ask yourself whether this is really the neighbourhood you want to move into.

Check the condition of the front landscaping on the street. If the neighbours care about their front lawns, you'll know they take pride in their homes and in the neighbourhood.

As you walk through the neighbourhood, be aware of noises and smells. Can you hear passing cars on a nearby highway? Are there odours from a nearby factory? Sellers may be less than candid about neighbourhood conditions.

You may also want to visit the local planning department at city hall to ask whether there are any plans for new developments in the area. "Developments" can include a brand new shopping mall or a large condominium tower and can have both a positive and negative effect on the neighbourhood. The developments may increase the overall market value of the properties in the area, but the increased traffic could disrupt the peaceful nature of the area.

Consider the possibility of your neighbour's home being demolished and replaced with a much larger home that changes your view and blocks sunlight. In Canada, your view, also called the "right to light" is not guaranteed in planning legislation. Keep this in mind when you're looking for a new home.

Research the schools in the area. Is there a waiting list to get in? Do they offer extracurricular activities your children are interetsed in? Do they publish the test scores of the school? If yes, how do the scores compare to the provincial average?

Does the neighbourhood have sidewalks so your children can ride their bicycles safely? Are the streets well lit at night? If front porches are closer to the sidewalk, it also makes the area safer as there are more eyes watching the street at any given time.

Are you close to churches, synagogues, doctors' offices, and libraries? Are there parks, golf courses, or skating rinks?

Salespeople can also help you understand governmental programs for buyers; the government will assist with your purchase if you qualify. For example, you may be able to borrow money from your RRSP to make the down pyament, or you may be able to use a mortgage program if you don't have a lot of money available for a down payment. There are also land transfer tax programs and federal income tax credits for first time home buyers.

Here's another simple technique: list the top three things you like about your current location. This could include your proximity to shcools, parks, and public transit. Then list the top three things that would be on your wish list, perhaps a large backyard for your children, a home office, or four bedrooms instead of three. Show your lists to the real estate salesperson you decided to work with. These lists will help you focus on what is really important to you; it will keep you from getting carried away by the in-ground pool that may turn out to be more bother to maintain than it's worth. Try not to focus too much on the "features" of a particular home, such as granite countertops and fancy doors. Think about the space you need, both inside the home and in the yard. When you have features and no space, you may need to move again. And don't buy into a home just because you can fit all your existing furniture into it. It is better to buy the house that fits your budget, and get rid of the furniture.

What to do before buying a home....
1. Check the internet to find demographic information about the area.
2. Look at the websites of local real estate salespoeple for infomration about the neighbourhood.
3. Walk the neighbourhood you're interested in.
4. Talk to the people who live there
5. Go at different times of day and different days of the week.
6. Check for nosie and smells.
7. Check the landscaping on the front lawns.
8. Ask at city hall about any planned new developments.
9. If you see a house you like, try to envision it after the neighbours replace their exiting home with a larger new home.
10. List what you like best about your current location; write a wish list for your new location.
11. Don't focus on your existing furniture or on the features of a house you might buy; make sure your new home is the right size for your needs.


Source: "Put the Pen Down" Mark Weisleder, ECW Press 2009.

12 Questions To Ask Before Selling Or Buying A Home

Sellers think the home they are selling is special. Buyers want to fall in love with a home before they buy. Yet remember, when you are looking at the real value of a home, it is still going to be about supply and deamnd. Here are some questions to help buyers and sellers determine whether the area they're looking at will be in demand.

1. Is your area's average income increasing faster than the provincial average?
2. Is your area's population growing faster than the provincial average?
3. Is your area creating jobs faster than the provincial average?
4. Does your area have more than one major employer? Real estate values in entire towns and cities can devaule overnight because a major automobile plant closes.
5. Are real estate values rising faster in regions far away from you?
6. Have the local political leaders created an environment that is assisting growth? Look at the land transfer tax policy change in the City of Toronto, introduced on January 1, 2008; it had a negative effect on real estate values all over the city.
7. Are you expecting a new major development?
8. Is your area considering a major transportation improvement? Better roads make it easier for people to commute to and from your area.
9. Is the area attractive for baby boomers as well as young families?
10. Is your town experiencing short term layoffs?
11. What are the demographics in your area?
12. What is the crime rate, and how does it compare to the provincial average.

You can find answers to many of these questions by searching the internet and by reading the statistics published by your municipality and local police departments. Good real estate salespeople who market in your area may include a lot of this information on their own website. The more information you have at your fingertips about a neighbourhood you are interested in, the less likely you'll have an unpleasant surprise after you purchase your property.

Source: "Put the Pen Down!" by Mark Weisleder, ECW Press 2009.