Mortgage FAQ For First-Time Homebuyers

When you venture out into the world of the first-time homebuyer, it stands to reason that you’ll have a lot of questions during the process. Most first-time homebuyers don’t know much, if anything, about the process, the terms or how to get the best deal for themselves.

Everyone knows that buying a home is a big financial obligation, so here’s a quick mortgage FAQ for those of you doing it for the first time.

Where Should I Go?

This is often the first questions a first-time homebuyer has about mortgages. With only a little searching you can find countless options and they all look tempting. So, what do you do? Don’t rush, that is the first thing, then decide if you think bank, credit union, private lender or trust company would be the best choice. Sometimes, seeing a mortgage broker will point you in the right direction.

What Is Mortgage Pre-Approval?

A mortgage pre-approval is a process where your lender approves you mortgage at a specific amount ahead of time. This approval is based on several factors and it helps homebuyers know where to look, because they have a general idea of what they’ll be able to afford and what they won’t.

What Is a Down Payment?

Even the most novice of homebuyers has heard the term “down payment” before. Just as it seems, a down payment refers to making a lump sum payment upfront, that will come off the total price of the home. A conventional mortgage requires a 20 percent down payment, while a high-ratio mortgage needs 5 percent.

How Much Can I Afford?

Your pre-approval amount can often give you an indication of how much you can afford, but not always. Sometimes, the lifestyle you want isn’t really possible if you assume a mortgage for that much. Some lenders or brokers have calculators that will help, but it’s really about working out the money in vs. money out and see what number works best for you and your family.

What is a Fixed Mortgage Rate?

A fixed mortgage rate comes with a static interest rate for a specific amount of time, or term. The most common term is five years, and this means you don’t have to worry about the interest fluctuating during that time.

What is a Variable Mortgage Rate?

On the other side, a variable mortgage rate is a mortgage that does not have a rate guarantee. The rate you pay fluctuates according to the lenders Prime rate. Sometimes this is good and sometimes it isn’t, based on which direction that Prime rate moves.

What are Closing Costs?

Closing costs are part of every home purchase, and they are payable after the purchase is finalized. Some of the most common include:

• Legal fees and disbursements
• Title insurance
• Land transfer tax
• Property survey
• Property tax adjustment

Home inspection, moving costs and other miscellaneous expenses like tools and appliances will also be part of the process. 

What Do Amortization & Term Mean?

Amortization is the period of time in years that it will take you to pay off your mortgage in full. Term is the length of time your interest rate type (fixed or variable) will last. When the term is over, you pay the balance of the mortgage or renegotiate a new term under the current market conditions.

Author Bio:
The author of the article is Jeremy Benson. He has been writing about finance, mortgage and Canadian law since 7 years. Blogging is one among his greatest passions. Follow him on Twitter@jeremybenson19.

5 Unique Ways to Make Extra Cash

Times aren’t like they used to be. The economy and job market are constantly changing. Many people are struggling to find employment and make a decent living. For some, this task seems almost impossible and nearly everyone is strapped for cash in these days after the deflated credit bubble. Getting a part-time job or babysitting are common ways to make money, but if you're short on time, try these unique ways to make extra cash.

1. Clean out your garage on Craigslist. The yard sale is being rendered obsolete in favor of selling unwanted items on Craigslist. The advantages are that you do not have to sit for hours in front of your house waiting for people to drop by. Instead, list your items on Craigslist, including a description of the item and a picture. You can have people contact you by phone, text or email. Before you list, take a look at what other people are selling similar items for to get an idea of a price.

2. Recycle scrap metal. Scrap metal makes a surprising amount of money at a salvage yard and nearly anything made of metal is eligible. Take a look at unused pipes, broken auto parts, garden tools, old weight sets, playground equipment and even something as large as an old camper. As long as it's metal, you can probably sell it for scrap. If you have auto parts that are in good shape, sometimes auto shops or auto maintenance stores will buy them from you, otherwise you are better off taking them to a junk yard.

3. Make stuff. It's easy to sell homemade items on the Internet these days, whether it's via Craigslist or a shop like Etsy, anything you can make that is unique and quality could rake in some extra cash. Sewn or knitted craft products such as quilts, pillows, stuffed animals or hats and scarves sell well. Another possibility is handmade soaps, body sprays, oils and perfumes. Craft jewelry such as beads and the like are also popular. If your expertise lies more in the tool realm, you can make barbecues, outdoor fireplaces or smokers.

4. Online crowdsourcing. Crowdsourcing has grown hugely in the last few years and there are now a myriad of sites available to perform a variety of small tasks such as surveys, research, translation and more. Sign up for one of these sites and make a habit of spending an hour or so every day getting some extra cash.

5. Sell your old video games. Ever think about selling your old video games? Did you know you can sell your old video games online? For example, you can sell Xbox 360 games online. You can also sell other games from Nintendo, PlayStation or other various counsels. Selling your old games can make you some extra cash. Some games for obsolete systems might even be considered rare and classic and can make you some extra money.

You can do most of this list in your spare time, days off or on weekends to easily supplement your cash flow. These are also odd jobs that your family can help you with or teach to your children to help bring in extra money for your family. They may not sound fun, but it is better to be bringing in some money rather than no money. There are also many other options out there as well. Just make sure you do what is best for you and your family, and what you are the most talented to do and you will be bringing in extra money in no time.

Six Alternatives to Filing for Bankruptcy

Filing for bankruptcy is a drastic measure, one which could have an impact on your financial future for decades. For most people, bankruptcy is only used as a final option. Despite this, bankruptcy should not be considered a financial death sentence—on the contrary, declaring bankruptcy often offers a second chance to those who would not otherwise have received one. If you’re considering filing for bankruptcy, it’s possible that there are some other options to pursue before you go forward with a drastic action. Below are six different alternatives you may want to consider before filing for bankruptcy.

1. Use a Credit Counseling Agency

Before declaring bankruptcy, most people try to manage their debt. There are many credit counseling agencies that are, in fact, nonprofit organizations that just want to help. Such an agency can help you negotiate with your creditors and improve your financial situation. It’s always a good idea to seek professional advice for something as important as personal finance, so consider visiting a counselor before deciding on a repayment strategy.

2. Negotiate with Creditors on Your Own

In some cases, you don’t necessarily have to go through a third party to renegotiate your debt. If it looks like you may have no other way to pay off your bills, certain creditors may be willing to alter your payment schedules to give you more leeway. This can be difficult, however, and seeking professional assistance for negotiations is typically the best way to go about approaching creditors.

3. Sell Some of Your Property

If you file for bankruptcy, you may end up losing many of your assets. With this in mind, it may be better for you to sell your property on your own terms. For example, if you have a boat you have not used in many years, selling it to make a large payment on your significant credit card debt may be a good idea. Holding a yard sale and selling off many of the unused items lying around the house is a great way to put some extra money towards your debt payments and get rid of some clutter. 

4. Borrow from People Other than Creditors

While borrowing more money to pay off debt may seem illogical, it may be a good idea in certain cases. For example, you could borrow some money from family or friends. They are likely to be far more lenient than creditors. Just make sure to eventually pay them back to avoid strained relationships.

5. Slash Your Living Expenses

If a lot of your income is going to things other than debt, you can probably make some sacrifices to redirect some of those funds towards paying your debt down. Get rid of all unneeded expenses. It may be tough to only pay for the bare necessities for a while, but it will be worth it in the long run. Some of the most overlooked expenses are recurring automatic payments—cancelling your subscriptions to paid services that withdraw regularly from your bank account can save you hundreds of dollars every year. 

6. Consolidate Your Debt

Debt consolidation means restructuring all your debts into a new payment program. Debt consolidation can make paying bills less stressful and far easier to repay. It will also likely be cheaper than paying all of them off individually.

Though there are some good alternatives to declaring bankruptcy, for some it is the only way to manage their debt. A Mississauga credit counselor from Paddon & Yorke Inc advises those considering bankruptcy to first seek counseling to assess the options available to them. Being deep in debt is a difficult situation, but keep in mind that there are avenues available to help you recover your financial standing.

Six Ways You Can Save Money By Building Your Own Home

If you have a dream home in mind, why not take the project into your own hands? Not only is this option ideal for overly meticulous homeowners, but it can also a money-saving solution. Building your own home from the ground up can save tremendous amounts of cash that can later be used to purchase other necessities for the new abode like furniture and appliances. 

Avoiding Overhead Costs

An apparent way you save money from building your own home is you remove a third-party contractor. A typical rate charged by contractors range from 18 to 20 percent of the total expenses of construction and land. Furthermore, realtor fees can add 5 to 7 percent on your bill, depending on the total price of the house. By building your own home, you can easily cut the expenses by 30 percent. 

Exactly How You Want It

The only person who knows what you want is you. Sometimes, contractors are simply unable to make your home the way you want it to look inside out. When this happens, remodeling is usually necessary to alter the details. This leads to more costs for additional materials and labor work. Instead of a general contractor, you can hire professionals who specialize in certain areas that will work to make your home exactly the way you envisioned. 

Choice of Materials

Some contractors tend to use unnecessarily expensive brands for paint, wood, concrete, etc. Even worse, they can skimp on quality material to save a few bucks, meaning more repairs and replacements for you down the road. For example, for roofing, choose a company that offers quality material so you won't have leaks or problems in the future. Professionals can take care of the hard work for you, making it cost-effective for years to come.

Learn New Skills

If you stumble on something you don't know, you will likely learn the skill and eventually master it. This can save you money later on when similar problems occur, such as a leaking pipeline or replacing a filter. You can also save a ton of money when you complete do-it-yourself projects around the home, instead of hiring a professional to take care of the task each time. Who knows, you can even sell your newly found skills to neighbors who need help with their home's inner workings.

Energy Efficient

Being the contractor of your own housing project gives you the power to choose what appliances you'll be integrating into the structure. You can get long-term savings by using appliances with the Energy Star seal, which is a symbol of high energy efficiency standards. From windows and doors to kitchen appliances and energy-efficient washers or dryers, there many ways you can save money. Having these things will greatly reduce or utility bills. Aside from saving you money, you get to do your part in saving the environment as well. 

At Your Own Pace

If you have lots of time but are riding on a tight budget, you can choose to gradually build your home as you make the money for it. You can avoid steep interest rates on mortgages while seeing your hard earned investment slowly turn into your dream house. Things like the basement are a great place to remodel or finish at a later time. You can also add on rooms or bathrooms in the future when you find more need for them.

While building your own home has it's own unique costs, in the end, it can be a cheaper option for many. With these tips in mind, you can have the home of your dreams without putting a huge dent in your wallet.

Informational credit to Century Roofing Ltd.