Tips On How To Successfully Purchase Your New Home

With interest rates among the lowest in decades, and the availability of many different housing options, purchasing a home in Canada may be cheaper than renting. The current real estate market is very favorable to buyers, and financing options are available to accommodate those who are self-employed or who do not have perfect credit. A mortgage may actually cost less than monthly rent payments, and, unlike rent, is an investment that provides the owner with equity.

Whether you're a first time home buyer or not, purchasing real estate is a big decision. Many things need to be considered, from which neighborhood you wish to buy your new home, to which financing options suit your needs best. However, with an organized house buying plan, your real estate experience need not be as complicated as you might think.

Here are some steps to help you in your real estate purchase.

1. Before looking at houses, you should first get your financing in place and determine how much you can afford to spend. It is important to evaluate your current expenses and debt, and decide how much of your budget you can comfortably spend without leaving you financially over burdened. Getting pre-approved for a mortgage will allow you to know beforehand how much a lender is willing to approve you for. This will allow you to have a clear price range of what you can afford to buy, and save you time.

2. Determine what your requirements are for your new home.. It is important to remember that your new home must not only fit your present needs, but also future ones, i.e. whether you are going to be starting a family or having more children. You also need to choose what area(s) are suitable and also meet your financing. These decisions will help you narrow down your search, and eliminate looking at homes that don’t suit your needs.

3. Decide on whether or not you plan on using a realtor. If you do decide to use a real estate agent, ensure that it is someone who you are comfortable with and who understands your needs. Many realtors have their own websites with current listings, so you can browse the internet to find available properties, as well as researching your agent.

4. Use a scorecard when comparing the homes you have looked at. This will help you to remember each homes features, for later comparison.

5. Familiarize yourself with the home inspection process. By learning about home inspection, you can quickly determine which homes are unacceptable, and thus not waste time looking at unsuitable properties.

Banks and financial lending institutions will most often require some type of mortgage insurance before they approve your mortgage application. While many banks offer creditor insurance, term life insurance is also an option for obtaining coverage. Term life insurance actually has many advantages compared to bank insurance. With term life coverage, you choose the beneficiary of the policy, and are the owner of the policy, instead of the lending institution. This allows your beneficiary to use the proceeds of your policy as best suited, either paying all, part or none of the mortgage. This financial flexibility allows the beneficiary more financial options. Bank mortgage insurance names the bank as the beneficiary, with the proceeds going directly to the lending institution.

Most term life policies can be converted to permanent life insurance once the term has been completed. Renewable and convertible plans can be converted without any further medical questions. A term life policy will usually require a medical questionnaire to be completed by your doctor, prior to approval of your coverage. Your bank may require you to provide additional medical questionnaires in order to re-qualify with new rates.

Bank mortgage insurance only covers the amount of your outstanding loan. As the amount of your mortgage decreases, so does your benefit. Term life coverage remains the same throughout the duration of your term. Most policies will allow you to purchase additional coverage, which provides you with more options as your needs change. It is important to realize that with bank mortgage insurance, your coverage will be terminated when the mortgage is paid off. A term life policy covers you for the entire term, regardless of status of the mortgage.

When applying for a mortgage, research all your insurance options. Consider not only insuring the amount of your mortgage, but all your other life insurance needs. It may be cheaper and easier just to purchase one term life policy, which can later on be converted to a permanent policy, which will provide you with estate planning and taxation options as well.

In the past 50 years, the role of women in Canadian society has greatly changed. As well as continuing to be wives and/or mothers, women are now playing a vital role in the Canadian business sector.  It is now not uncommon for women to play a major role in the earning of the family finances, with either being the sole wage earner, or at least contributing a significant portion of the income.

Life insurance has traditionally focused on the family "breadwinner", to ensure that if something should happen, the family would be adequately provided for. As women are now assuming greater financial responsibility for their families, it is vitally important for them to examine their insurance coverage. Women need to adequately assess their financial role in their family, and insure themselves accordingly.

As either a sole wage earner, or as a contributor to the family finances, women need to assess not only the loss of income that would occur in case of death, but also what financial goals they wish to accomplish. Life insurance coverage should reflect the ever-growing role that women play in the workplace and the financial success of their families.

Life Insurance Needs For Older Parents

In the past 25 years, there has been a growing trend to postpone parenthood until later in life. Many Canadians are choosing to focus on career, financial security, and other pursuits, before starting to raise a family.

For those who wait until later in life to start a family, certain financial considerations must be made.  The time a couple may wish to retire may also coincide with major expenses such as higher education, weddings, etc. Careful consideration must be given in order to ensure that not only the needs of the child(ren) are met, but also reflect the parents' retirement plans. It is therefore important to review your life insurance policy with these goals in mind.

Parents who have children later in life also need to consider the fact that health concerns may change as they get older. As well as sufficient health insurance coverage, older parents may wish to purchase disability insurance in order to provide for their family in case of prolonged illness. Disability insurance provides protection against serious illness or accident, and provides a monthly benefit when you are unable to work.

Having children later in life does not necessarily mean putting off retirement. With careful financial planning, both goals can be realized. With permanent life insurance you can achieve your retirement goals via the estate planning and wealth transfer options.
We recommend that you consult with your insurance broker to see if your current life insurance policy reflects your goals, and is adequate to provide for these needs.
 

Universal life insurance is a hybrid policy that combines certain elements of both term and whole life. Universal life coverage offers the consumer the benefits of a more conventional term life policy, and can build up a cash value more quickly than traditional whole life. It also offers a less rigid structure than whole life coverage.  It's cash value can be linked to shorter-term interest rates, or a combination of other investment options. This offers the potential of a greater rate of return than that of a whole life policy, resulting in faster cash value growth.

It is important to remember that the flexibility of a universal life policy varies depending on the plan type and insurance company. However, one common requirement is that all universal plans must have minimum face values (premiums and death benefit).

With a universal life insurance policy, your premiums as well as your death benefit are flexible (within policy limits) and can be adjusted depending on your current situation. Increases in premium amount and/or death benefit may require medical approval. The savings and investments are segregated from your term policy, and accrue on a tax-deferred basis. Any excess after the premium is paid is applied to an investment account, deposited either monthly or annually. Your investment account can be made up of interest bearing savings accounts, mutual fund type accounts, and or index accounts tied to specific stock market indices. You are free to choose a mix that to best suit your needs. If you have a financial advisor, or are considering getting one, then he/she will be able to help you decide on the most beneficial investment mix for you.

Consult with an insurance broker, and carefully weigh your life insurance options to ensure you choose the policy that is right for you.

Income Trusts: Proposed Taxation Changes

Recently, changes have been proposed regarding the current taxation practices regarding income trusts. Current tax laws have made income trusts a lucrative investment option for many Canadians. However, while the immediate reaction may be to look for other investment options, it is important to remember that these are changes are still in the proposal stages, and would not take effect until 2011.

Income trusts are generally defined as an investment trust that holds income producing assets. Its shares, also known as “trust units” are traded on securities exchanges, in the same manner that stocks are traded. The income is passed on to the investors. These distributions typically yield a higher profit than stock dividends, of up to 10% a year. Income trusts have the ability to generate a constant cash flow, which makes it an attractive option for investors.

Income trusts are structured to avoid the corporate taxes on distributions, thereby paying very little, if any, taxes on its earnings. Traditionally, distributions are taxed on both a corporate level and as dividends. With income trusts however, the trust avoids taxes on its earnings due to the fact that most of the income generated is distributed directly to the unitholders. While these trusts are not infallible, and carry their own brand of risk, the taxation laws have made them a popular choice when Canadians are looking at investment options.

The Tax Fairness Plan has introduced new taxation measures regarding income trusts. A Distribution  Tax will be implemented on all distributions from publicly traded income trusts as well as limited partnerships. For new trusts, this tax applies beginning in the 2007 taxation year. For existing trusts, a 4 year transition period has been proposed, with the new taxation being implemented in the 2011 taxation year. These new taxation laws were announced by the Department Of Finance as a means of curbing the growing trend of Canadian companies avoiding corporate taxes.

If you are currently investing, or are considering investing in income trusts, be aware of these new tax laws. By being informed, you can make the wisest choices in how to obtain your financial goals.