Archive for March, 2009

It Was The Best Of Times, It Was The Worst Of Times

Monday, March 23rd, 2009

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness – Charles Dickens

The opening line from the Dickens classic, A Tale of Two Cities is an appropriate summation of the current Canadian economy. The media reports daily on the doom & gloom of the Canadian economy. Contraction of 3.4 percent in the fourth quarter of 2008, January job losses totaling 129,000, exports down, financial markets down, a global financial crisis. The expectation that things will get worse, before they get better. So why is this “the best of times”?

Low interest rates. At 48 years of age these are the lowest rates I am likely to see in my life time. What a tremendous opportunity to take advantage of affordable money. It’s no surprise that the Canadian real estate market has cooled, since consumer confidence is at an astounding low. The resulting decrease in mortgage interest rates has brought on an onslaught of refinance applications. The refinancing trend started in October and has become more popular in 2009. With lower interest rates estimated to stay through the end of this year, financial institutions hope the rush to refinance continues. Of course business is brisk, just look at the numbers.

A typical $150,000 mortgage @ 5.5% with a 25 year amortization results in a monthly mortgage payment of approximately $915 per month. Compare this to a $170,000 mortgage at 4.25% with a 25 year amortization. The monthly mortgage payment? Approximately $915 per month. The number one way to gain some advantage from today’s economy is to refinance your home. It could be the quickest $20,000 of tax free money you will make in your life time. Use your windfall to pay down high interest credit card debt, take a vacation, invest it in an investment that pays a higher return than your new mortgage rate, or just save it for a rainy day. The choice is yours.

One might consider becoming a mortgage holder on a neighbour’s home, someone who can’t qualify for the superior rates due to bruised credit, or an unforeseen setback, such as job loss. These mortgages can be held within a self directed RRSP and as they are secured by the actual real estate, the associated risks, compared to investing in the stock market, are considerably less.

The surge in home refinancing is expected to have a positive impact on the Canadian economy. When you refinance your home, you’re contributing to making things better. Some mortgage lending companies have been able to stop or slow down layoffs and some have even begun hiring again in order to handle the torrent of applications. We would be happy to assist the cause and help you with your own “personal stimulus package”.

Call or email today for a no cost, no obligation, consultation. Make the worst of times, the best of times.

We welcome your comments

Posted in Mortgages, Real Estate | No Comments »

Obama “Oh Momma”

Sunday, March 22nd, 2009

One of the benefits of my own blog is the forum for the occasional rant. The current public outrage over troubled insurance giant AIG paying out $165 million in executive bonuses after receiving billions in bailout funds from the Obama stimulus package provides some inspiration.

Our ailing Canadian economy is a direct result of the financial credit crisis in the United States, so we can’t help but shake our heads when stories of this type emerge. The average Canadian businessperson, watching the evening news and seeing all this bailout money going to the big players has to wonder who will be lining up in Ottawa or Washington next for a similar deal. “Where is my bailout?” they ask.

When the average businessperson is working longer hours to make less, laying off employees, borrowing money from family and friends because the bank won’t return his calls, re-mortgaging the house when the banks do call, filing the separation papers because the spouse has had enough, and missing yet another kids soccer game because mommy or daddy has to work, you have to ask yourself, “What will it take to let the big players feel the same pain as the little guy?”

Don’t worry, I have a plan. First, I will fly my private jet to Ottawa to speak directly to members of parliament and ask for some money. Woops, I just realized that I don’t own a private jet. Perhaps go first class on a commercial flight? Maybe the train? I could walk, but since I would have no prayer of receiving anything regardless, it might be a better use of time to pray that somebody actually gets fired—or better still, shot—for the mismanagement of companies like General Motors, AIG, and Citigroup. Not that I am promoting death for these executives, but a little pain please. Yes, just enough pain to have them whimpering for their “mommas” like the spineless weasels they are.

With great power comes great responsibility. If you fool with the masses, then you should feel the pain, as a result of your actions.

We welcome your comments

Posted in Rant | 7 Comments »