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Top tips for finding the best possible mortgage for your money, family and lifestyle.

Mortgage shopping: 10 things to know before you sign



Someone once said that moving is one of life’s most stressful events. And if adjusting to a new home isn’t enough to cope with, you’ve now got to pay for it, and still have enough left over to buy groceries.

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Chartered Accountant Bruce Dimytosh is President of Prism Interim Management Solutions Inc. in Toronto, which provides qualified senior management people to companies during challenging periods. Chartered Accountant Dwayne J. Oberle is Owner/Broker with First Choice Financing in Waterloo, an alternative financer for individuals or businesses in need of short-term private mortgage solutions. Here, they share their top tips for finding the best possible mortgage for your money, family and lifestyle. 1. Know your current lifestyle costs – “Running a home is no different than a business,” Dimytosh says, “and understanding expenses is non-negotiable. So, study your bills and bank statements and figure out what it really costs you to live now, pre-mortgage.” 2. A rainy day fund is sacrosanct - An illness, job loss or any number of troubles can quickly erode your finances. So in today’s slow economy, put aside – and keep – a comfortable six months’ worth of living expenses. 3. Know your float factor - “This,” Dimytosh says, “is the equivalent of executive risk, vis-à-vis real life. That mortgage may be affordable now when you’re floating, but if interest rates or another unforeseen expense take you out of that zone, you’re sunk. Don’t be lulled into a false sense of security.” 4. Consider alternative financing – “When dealing directly with a bank, your solutions are limited,” says Oberle. “But mortgage brokers have access to any number of financing sources and programs. They understand lenders’ criteria, and will offer the best suggestion for your personal circumstances.” 5. Become knowledgeable - A home is most people’s biggest asset and piece of financing. Read, research and talk to as many experts as you can. Learning costs only time, and better-informed decisions can save you a fortune. 6. Understand your creditworthiness – “Not all debt is created equal,” Oberle says. “Neither are all borrowers. Your credit score depends on many factors, and the better it is - the easier (and generally cheaper) the financing. Mortgage carrying-costs are some of the most reasonable debts, so pay down credit cards and other higher-interest obligations first.” 7. Don’t hesitate to double up - The ability to pay extra directly on the principal is a must-have for almost any mortgage. Even a small amount –$50 a week – can mean big savings over time. And, if you must miss a payment, a “double-up” can help you stay on track and avoid other penalties. Talk to your financer. 8. Understand interest rates - Know the difference between fixed- and variable-rate mortgages, and the pros and cons of each. With a fixed-rate mortgage, you’re bound to the terms for the length of the contract. A fixed-with-double-up option is the best of both worlds. 9. Beware of the “extras” - With a down payment of less than 20 per cent, you must insure the mortgage with the Canada Mortgage and Housing Corporation or Genworth Financial Canada. Consider also buying personal term insurance, which sometimes pays the mortgage off if you die, or provides salary replacement if you’re critically ill and unable to work. Other “incentives”, such as lump-sum-cash-back payments, increase your carrying costs and make you further indebted to your financier. 10. Never fall in love with the deal - Both Dimytosh and Oberle agree that house hunting and mortgage shopping must be treated as business transactions. Don’t become enamoured with any one house or financing offer until you’re sure that it’s the best available to you. To paraphrase the infamous Scarlett O’Hara, tomorrow is another day…another house…and another– maybe better– deal. Brought to you by the Institute of Chartered Accountants of Ontario


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Inst. of Chartered Accountants -- Bio and Archives

The Institute of Chartered Accountants of Ontario is the qualifying and regulatory body of Ontario’s 33,000 Chartered Accountants and 5,000 CA students. Since 1879, the Institute has protected the public interest through the CA profession’s high standards of qualification and the enforcement of its rules of professional conduct. The Institute works in partnership with the other provincial Institutes of Chartered Accountants and the Canadian Institute of Chartered Accountants to provide national standards and programs that are used as examples around the world. </em>


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