Weekly Rate Minder

July 31, 2012: This edition of the Weekly Rate Minder has the latest, best rates for Canadian mortgages. At Dominion Lending Centres, we work on your behalf to find the mortgage that suits your needs. Best of all — our service is free.* It's the selected lender that pays us and YOU get the best rate. Please note that rates shown are subject to change without notice. The rates shown are  posted rates and the actual rate you receive may be different, depending upon your personal financial situation. Check with us for full details and to determine what rate will be available for you.*(O.A.C., E.&O.E.) Explore Mortgage Scenarios with Helpful Calculators at http://www.KupinaMortgage.com

Current Mortgage Rates

Term	Bank rates	Our Rates
6 Month	4.00%	3.95%
1 YEAR	3.10%	2.49%
2 YEARS	3.35%	2.59%
3 YEARS	3.85%	2.69%
4 YEARS	4.64%	3.09%
5 YEARS	5.24%	3.04%
7 YEARS	6.35%	3.69%
10 YEARS	6.75%	3.99%

Rates are subject to change without notice. *OAC E&OE Prime Rate is 3.00% Variable rate mortgage from as low as Prime

5 Questions Every Borrower Should Ask

As a mortgage borrower – particularly if this is your first time embarking upon homeownership – there's no doubt you have a load of questions related to the mortgage process. Aside from the most common questions, such as those relating to mortgage rate, the maximum mortgage amount you'll be able to receive, as well as how much money you'll need to provide for a down payment, the following five questions and answers will help you dig a little deeper into the mortgage financing process. 1. Can I make lump-sum or other prepayments on my mortgage without being penalized? Most lenders enable lump-sum payments and increased mortgage payments to a maximum amount per year. But, since each lender and product is different, it's important to check stipulations on prepayments prior to signing your mortgage papers. Most "no frills" mortgage products offering the lowest rates often do not allow for prepayments. 2. What mortgage term is best for me? Terms typically range from six months up to 10 years. The first consideration when comparing various mortgage terms is to understand that a longer term generally means a higher corresponding interest rate and a shorter term generally means a lower corresponding interest rate. While this generalization may lead you to believe that a shorter term is always the preferred option, this isn't always the case. Sometimes there are other factors – either in the financial markets or in your own life – you'll also have to take into consideration. If paying your mortgage each month places you close to the financial edge of your comfort zone, you may want to opt for a longer mortgage term, such as five or 10 years, so that you can ensure that you'll be able to afford your mortgage payments should interest rates increase. 3. Is my mortgage portable? Fixed-rate products usually have a portability option. Lenders often use a "blended" system where your current mortgage rate stays the same on the mortgage amount ported over to the new property and the new balance is calculated using the current rate. With variable-rate mortgages, however, porting is usually not available. This means that when breaking your existing mortgage, you will face a penalty. This charge may or may not be reimbursed with your new mortgage. Some lenders allow you to port your mortgage, but your sale and purchase have to happen on the same day, while others offer extended periods. 4. What amortization will work best for me? The lending industry's benchmark amortization period is 25 years, and this is also the standard used by lenders when discussing mortgage offers, as well as the basis for mortgage calculators and payment tables. Shorter timeframes are also available. The main reason to opt for a shorter amortization period is that you'll become mortgage-free sooner. And since you're agreeing to pay off your mortgage in a shorter period of time, the interest you pay over the life of the mortgage is, therefore, greatly reduced. A shorter amortization also affords the luxury of building up equity in your home sooner. While it pays to opt for a shorter amortization period, other considerations must be made before selecting your amortization. Because you're reducing the actual number of mortgage payments you make to pay off your mortgage, your regular payments will be higher. So if your income is irregular because you're paid commission or if you're buying a home for the first time and will be carrying a large mortgage, a shorter amortization period that increases your regular payment amount and ties up your cash flow may not be your best option. 5. How do I ensure my credit score enables me to qualify for the best possible rate? There are several things you can do to ensure your credit remains in good standing. Following are five steps you can follow: 1) Pay down credit cards. This the #1 way to increase your credit score. 2) Limit the use of credit cards. If there's a balance at the end of the month, this affects your score – credit formulas don't take into account the fact that you may have paid the balance off the next month. 3) Check credit limits. Ensure everything's up to date as old bills that have been paid can come back to haunt you. 4) Keep old cards. Older credit is better credit. Use older cards periodically and then pay them off. 5) Don't let mistakes build up. Always dispute any mistakes or situations that may harm your score by making the credit bureau aware of each situation. As always, if you have any questions about the information above or your mortgage in general, I'm here to help! Mark Kupina | Dominion lending Centres

What if Mortgages were more Expensive and less Accessible?

If you're a first-time home buyer, odds are that you don't have a 20-per-cent down payment. Without one, you typically need mortgage default insurance to buy a home. The biggest provider of that insurance is government-owned Canada Mortgage and Housing Corp. (CMHC). Since the credit crisis four years ago, its mortgage role has been hotly debated. On the one hand, CMHC makes mortgages cheaper and more accessible. On the other hand, critics say government-supported housing inflates home prices and puts taxpayers at risk if swarms of borrowers default. So that begs a question. What if politicians sided with those critics? What if Ottawa forced higher down payments and drastically scaled back its mortgage guarantees? How would Canadian home buyers fare? Here's a sampling of what you could expect to see: Tumbling home prices Demand would drop off a small cliff since 35 to 50 per cent of purchasers are first-time buyers, depending on the year. The Canadian Association of Accredited Mortgage Professionals (CAAMP) estimates that home purchases would plunge by 100,000 annually if minimum down payments rose by even five percentage points. Then again, falling home values would lower purchase prices. A 15-per-cent price drop means the average home buyer would pay $52,500 less for a house. Other things equal, that's a $250 monthly payment savings versus today. Economic fallout The economic repercussions are virtually unquantifiable. One-fifth of Canada's economic production can be traced back to housing-related spending. Falling prices and levels of home ownership would slow economic activity. That means fewer jobs (almost one in six new jobs are construction-related), lower wages, more mortgage defaults and a meaningful drop in consumer spending. But over time, the economy would adjust. Switzerland, for example, has roughly 65 per cent renters and it's one of the most prosperous countries in the world. Reduced home buying could also encourage healthier savings rates. Higher rents Our ever-growing population needs to live somewhere, whether in a house they own or a rental. In many cities, rental supply is tight with fewer than three out of 100 rental units available for rent. If young Canadians can't buy, they'll add to rental demand and push up rents until supply catches up, assuming it does. Longer wait times It takes roughly four to five years for most Canadians to save up even a 5-per-cent down payment. But without mortgage insurance you need 20 per cent down for good rates, or 15 per cent down for non-prime rates. Saving that much could take a dozen years or more if you had no help. People would be waiting until their mid– to late-thirties to buy, assuming they didn't spend their savings beforehand. While renting, they'd also forgo any price appreciation, but save on home ownership costs like property taxes, condo fees, maintenance and so on. Lower insurance costs Lower prices and 20-per-cent down payments would save most first-time buyers $5,000 to $10,000 in default insurance premiums, plus interest on those premiums over the life of their mortgage. Retirement risk Canadian's single biggest investment is their home. Devaluation and hampered growth of that asset might put hundreds of thousands of seniors in jeopardy, especially if their other assets didn't return enough to fund their cost of living. Higher mortgage rate Government-backed financing gives investors the confidence to provide mortgage capital at extremely favourable rates. Without it, virtually no one would lend to you with only 5 per cent down. What's more, federally regulated lenders are required by law to insure high-ratio mortgages. Non-bank lenders might some day offer low-down-payment uninsured financing, but the rates wouldn't be pretty. Uninsured 90 per cent financing could easily cost up to 2.5 percentage points above today's rates. Picture a 5.5-per-cent five-year fixed rate, compared with today's 3 per cent. Over 20 years, a 2.5-point rate premium would cost $29,000 more in interest on a $250,000 mortgage, not including lender fees. But again, lower purchase prices could offset this difference. Less lender choice Without insured mortgages, fewer investors would provide small lenders with low-cost funding. It would be much harder to compete with major banks whose cheap deposits and superior credit ratings allow for the best possible funding costs. Less competition means fewer mortgage choices and fewer alternatives to things like high mortgage penalties at the banks. Restricted lending areas Most lenders don't like lending in small or rural markets where it's hard to resell a repossessed home. Insured financing from CMHC encourages lenders to take that risk. Without it, more people would have to buy closer to urban areas, harming rural Canada and driving up urban home values. Some will consider all these factors and feel it's worth the economic side effects to pull back government from housing. They want more affordable home prices and lower risk of an insurer bailout, however remote it may be. Others take a "don't fix what's not broken" stance, arguing that federal housing policies have:

• spared Canadian housing from catastrophic weakness during the great recession
• required borrowers with low down payments to have good credit, reasonable amortizations and sensible debt ratios
• made borrowers liable if they default and trigger a mortgage insurance claim
• kept defaults near four-year lows (albeit, this is not a foolproof indicator)
• required mandatory default insurance, which ensures the government can easily influence underwriting policies at all lenders, something it couldn't do in a private market.

The above analysis is far from exhaustive but it's safe to say there are risks whether we keep or rebuild our current system. As an individual, such changes could make you better or worse off depending on your discipline, personal goals, net worth and how tied your fortunes are to housing. For the time being, mandatory 20-per-cent down payments are merely an academic discussion. Our government wouldn't risk such a bold change. That said, the trend of transferring more housing risk to the private sector may continue. Other countries deem us lucky to have a proven and reliable housing finance system. Rather than dismantle it, it's likely safer to spot the risk areas and carve out those malignancies with a scalpel. That would minimize collateral economic damage, incentivize proper risk taking, and further reduce the odds of government-funded mortgage rescues. It would also preserve housing options for qualified Canadians who have lesser payments but can afford to own. Robert McLister Special to The Globe and Mail Published Monday, Oct. 01 2012, 8:32 AM EDT Last updated Monday, Oct. 01 2012, 10:56 AM EDT http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/what-if-mortgages-were-more-expensive-and-less-accessible/article4573255/

How the Middle Class can Avoid Financial Blunders

As we head into the autumn of a contentious U.S. election year, it's a great time to reflect upon what worked and what didn't in the wake of some of the most tumultuous upheavals in North American economic history. You could easily blame Wall Street for the 2008 meltdown, but it's also clear that average families weren't prepared and made mistakes too. A new study from the Consumer Federation of America found that 67% of middle class Americans think they made at least one "really bad financial decision," and 47% said they had made more than one. The cost? The median was $5,000, but the average cost was $23,000. Further, the study, entitled "The Financial Status and Decision-making of the American Middle Class," also found that outside of retirement funds and checking/savings accounts, families had few other financial assets. Only 15% surveyed held stocks and from 13 to 14% held either savings bonds or certificates of deposits. How could you avoid the same fate? Here are some key ways to avoid the same financial blunders:   1. Failing to gauge portfolio risk I don't know about you, but I wasn't surprised when the market tanked as much as it did in 2008-2009. I thought it would be worse. Yet I sure was blindsided as to how much it nailed my retirement portfolio, which fell about 40%. After all, I was diversified. Wasn't that supposed to be a form of protection? I didn't know that commodities, stocks and real estate investment trusts would decline in lockstep. They usually don't, but they were highly correlated during the global downturn. There was an easy way to avoid this kind of hit: Add more bonds, which I did. They now comprise more than half of our portfolio. 2. Getting swamped by debt-to-income ratios Of course, you've heard tales of homebuyers who got mortgages they shouldn't have qualified for just because they had a pulse in the pre-2007 bubble years. The enduring truth is that too much debt can always be toxic. What's a dangerous level? It's pretty simple: If your short-term debt exceeds your ability to pay it off every month, it's too much. Whenever you get beyond 40% of debt-to-income, you're getting into deep trouble. Most middle-class families carried 20 cents in debt payments to every $1 they earned in 2010, the Consumer Federation found. That's not unreasonable, but this is an average discerned by looking at Federal Reserve data; millions of households are in trouble because they owe more than what their homes are worth, which was not explored in this study. A worthy goal for reining in short-term debt is simply to pay off bills each month – but that means keeping spending within your income range and saving up for big ticket items. Also, watch your credit rating and try to improve it to obtain the lowest-possible financing rates. 3. Not having a big enough safety net The typical American middle-class family has about $27,000 in financial assets (excluding pensions), the Consumer Federation found. Is that enough to cover emergencies, long unemployment stretches or unreimbursed medical bills? Probably not. The rule of thumb is to hold six months' worth of salary in emergency cash in money-market or savings accounts. It's a good place to start, but more of a cushion is needed because of bad financial decisions. And even more for those facing long-term unemployment. How do you stash away more when times are tough? There's no magic answer other than making it a top priority and making some hard decisions about spending. 4. Not carrying enough insurance There's a basic trade-off with all insurance policies: The more you're willing to pay on a claim out of pocket, the lower the premium. For example, if you get a catastrophic health plan with a high deductible, your monthly premium will be lower. To figure out what you can afford, look at your monthly cash flow. If you need to reduce insurance premiums, you will need to boost savings to cover the deductibles. You can also save money on auto insurance by dropping coverage for comprehensive coverage if the car is old. 5. Failing to invest Saving is putting money in a protected place for rainy days. Investing is putting money at risk in exchange for long-term returns. You need to do both to survive the ravages of inflation and financial events beyond your control. Surprisingly, only 21 percent of those middle-class Americans surveyed by the Consumer Federation said they would invest in stocks, bonds and mutual funds – even if they had $1 million to invest. While I certainly don't admonish anyone for steering clear of market risk after 2008, you can find some balance through the "bucket" method of risk management. Your "safe" yellow bucket should hold money you need in the next few years for emergencies, college, out-of-pocket medical expenses or taxes. A "red" bucket is for money you can risk over decades for retirement and future goals. You adjust the amount of money for each bucket according to your needs, time of life and risk tolerance. Perhaps the greatest blunder that everyone is guilty of is inaction. We wait for the market to become overheated instead of taking advantage of dips to get better prices. We don't sell our losers and move on. We think we can time the bottom of the real estate and stock markets. I know I waited too long to add bonds to my portfolio and reduce my stock and commodity market exposure, although it's since bounced back. One essential truth remains: In a society that thrives on spending and consumption, increased saving can help avert financial disaster in the future. © Thomson Reuters 2011

Profits and Pitfalls: Buying an off-campus Property

 The spring before their oldest daughter started her second year of studies at Wilfrid Laurier University, Joe and Ileen Capone decided to buy a four-bedroom townhouse in Waterloo, the southwestern Ontario town where the university is located. Their plan? Instead of paying for off-campus residence, the Capones intended to have their daughter live in the townhouse and rent the remaining bedrooms to other students.

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Open Yourself to Homeownership

Purchasing a home can be one of the biggest investments you make – both financially and emotionally. It's also one of the most important decisions of your life. So before you make an offer, make sure you know what questions to ask – and how to get the answers you need. From choosing the right neighbourhood to closing the sale, Canada Mortgage and Housing Corporation (CMHC) is a great resource to help you realize your dream of homeownership faster, easier and for less than you thought, so you can begin the next step in the rest of your life. Visit www.cmhc.ca today and download the following guides and fact sheets absolutely free! Home-Buying Step by Step Guide This easy-to-use guide takes you step by step through the home-buying journey – from determining what kind of home you want and how much you can afford, to preparing an offer and closing the sale. Condominium Buyers' Guide Condominium living is a popular option for many Canadians. This guide will help you become an informed condominium buyer, and help you make the best choice when making your final decision. Hiring a Home Inspector One of the best ways to understand your home's condition, livability and safety is by hiring a home inspector. With this fact sheet, you'll find out what questions to ask, what to expect and what key things to look for when choosing an inspector for your home. Selecting a New Home Builder Have you decided to buy a new home? This comprehensive fact sheet provides all the information you need to choose the building company that offers the best overall value and quality. Your Next Move: Choosing a Neighbourhood with Sustainable Features This fact sheet will help you identify the neighbourhood features that are important to you, like close access to shopping, work, parks and schools. Financing Your Home Purchase CMHC Mortgage Loan Insurance offers you housing finance solutions that can help you buy a home with a minimum down payment of 5%, at interest rates comparable to what you would get with a larger down payment. After Your Purchase Now that you've bought a home, be sure to protect your investment. CMHC's free monthly e-newsletter is full of practical tips and helpful advice on a wide variety of homeownership topics ranging from home renovation to cost saving maintenance and energy-efficiency tips. Subscribe today: www.cmhc.ca/enewsletters.

Selecting Your Best Mortgage Term

Choosing the mortgage term that's right for you can be a challenging proposition for even the savviest of homebuyers, as terms typically range from six months up to 10 years. By understanding mortgage terms and what they mean in dollars and sense, you can save the most money and choose the term that is best suited to your specific needs. The first consideration when comparing various mortgage terms is to understand that a longer term generally means a higher corresponding interest rate. And, a shorter term generally means a lower corresponding interest rate. While this generalization may lead you to believe that a shorter term is always the preferred option, this isn't always the case. Sometimes there are other factors – either in the financial markets or in your own life – that you'll also have to take into consideration when selecting the length of your mortgage term. If paying your mortgage each month places you close to the financial edge of your comfort zone, you may want to opt for a longer mortgage term, such as five or 10 years, so that you can ensure that you'll be able to afford your mortgage payments should interest rates increase. By the end of a five- or 10-year mortgage term, most buyers are in a better financial situation, have a lower outstanding principal balance and, should interest rates have risen throughout the course of your term, you will be able to afford higher mortgage payments. If you're shopping for a mortgage for an investment property, you'll likely want to consider choosing a longer mortgage term – depending, of course, on your overall plan. This will allow you to know that the mortgage payments on the property will be steady for a long time and enable you to more accurately project your future income from the property. As well, if you know you will not be staying in the same home for the next five or 10 years, opting for a shorter term can save you significant fees when it comes to early payout penalties. Choosing the right mortgage term is a unique decision for each individual. By understanding your personal financial situation and your tolerance for risk, I can assist you in choosing the mortgage term that will work best for your situation. As always, if you have any questions about mortgage terms or your mortgage in general, I'm here to help!