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Know Your Real Life Debt Ratio

Before you apply for a mortgage it is a good idea to know your Real Life Debt Ratio.   Download the Real Life Ratio interactive spreadsheet here. It’s designed to show how well you’ll be able to handle the basic monthly costs of home ownership, plus real life expenses such as cars, daycare and long-term home maintenance. Prospective home buyers should try it, and so should existing homeowners who want to see how well they’re handling their finances. The Real Life Ratio is an expansion of a simple affordability measure I introduced last year called the Total Debt Service and Savings Ratio, or TDSS. The idea of creating something more comprehensive came to me after a Globe and Mail series on daycare was published last fall. We heard from many people about how hard it was to manage the cost of a mortgage in today’s expensive housing market, on top of daycare and other costs. Use the Real Life Ratio and you’ll know what you’re getting into before you buy a house. You may decide you need to save a bigger down payment, buy a smaller house, live in a cheaper location or not buy at all. Here are a few important things to know about the ratio: 1. Household take-home pay is used here: Other ratios use gross income, which is less relevant for practical financial planning. 2. This is not a budget: Only fixed costs are included here; food, clothing and other costs aren’t discretionary, but you decide how much to spend. 3. Costs for home maintenance and improvement are included: You won’t face these costs every year, but on a...

Critical Step # 1 When Buying A Home

Critical Steps to Buy Your First Home Critical Step #1 Your Credit Score! When buying your first home and applying for a mortgage your credit score is the single biggest factor that lenders use in determining your interest rate and whether you will get approved! The shocking truth is most people don’t even know what a credit score is, let alone whether they have a high score or a low one. If your credit score is low, you could end up paying thousands of dollars in extra interest over the life of your mortgage. It’s time you learn the shocking truth about how your credit score is calculated and more importantly how to improve it almost overnight. I’ve prepared a special Credit Repair Guide entitled “12 Simple No Cost Methods to Repair Your Credit”. Visit my website – http:/www.timshwed.com www.facebook.com/howtobuyyourfirsthome CIBC Mortgage Advisor Tim Shwed 866-247-1378 tim.shwed@cibc.com...

CMHC Increases Mortgage Insurance Premiums

OTTAWA, February 28, 2014 — Following the annual review of its insurance products and capital requirements, CMHC will increase its mortgage loan insurance premiums for homeowner and 1 – 4 unit rental properties effective May 1, 2014.  Click the image below to read the entire...

10 Ways To Save A Down Payment

If you are considering buying a home or investment property, saving for a down payment can be a challenge. Here is how to get started: Tip#1 – Set a goal. Tip#2 – Determine the down payment required. Tip#3 – Open a separate savings account for your downpayment. Tip#4 – Keep a budget..make sure it includes monthly contributions to your down payment account for your home purchase. Tip#5 – Live below your means while saving for a down payment. Tip#6 – Consider a part-time job and deposit the additional income in your down payment house account. Tip#7 – Direct all your extra income such as raises, bonuses, tax refunds, into your down payment account. Tip#8 – Pay off your debt as quickly as possible so you can save in unnecessary interest costs. Take your savings and allocate toward your down payment house account. Tip#9 – Consider using your RRSP to help with your down payment. Speak to a financial advisor to guide you along the way Tip#10 – If saving is taking too long consider a lower value home. Once you are in the market and building equity, you can always move...