What Is Mortgage Insurance? And Why Do I Need It?

What Is Mortgage Insurance? And Why Do I Need It?

Mortgage insurance is one of those things that most first-time home buyers run into when buying a home. Unless you’re lucky enough to save up a 20% down payment you probably need to get mortgage insurance on your home.

So, what is mortgage insurance exactly? And why do you need it?

Mortgage insurance is a requirement for all homes with under 20% down payment (Some banks even require it for down payments of 20%+. But in those cases it’s the bank making that decision, it’s not actually mandatory).

Mortgage insurance helps protect the lender in case you default on your mortgage. It’s a way to provide stability to the housing market. The largest provider of mortgage insurance is the CMHC, a federally backed agency. This means that the federal government is essentially backing the Canadian housing market, and this adds a lot of stability for buyers, sellers and lenders.

How Do I Make Mortgage Payments?

How Do I Make Mortgage Payments?

Getting a mortgage for the first time can lead to all kinds of questions… one of those questions might be “how to do repay my mortgage?” or maybe you’re wondering “how do I make mortgage payments?”.

As a first-time home buyer you probably have no experience with mortgage payments, and you probably have a few questions. Sure, maybe you overheard your parents talk about their mortgage, or maybe you have a few friends with mortgage payments already, but if you’ve never had a mortgage yourself, you’re probably wondering how you make payments.

By comparison paying rent seems easy. When you’re a renter you sign a lease, hand over some checks, and the money comes out of your bank account each month. Pretty simple right?

But there is something about a mortgage that makes the whole thing seem a bit more daunting.

Things get even more confusing when you realize there are different types of payments. You have regular mortgage payments, top-up payments, and lump sum payments. You can also choose the frequency of payments, monthly, semi-monthly, bi-weekly etc.

Often these are things you’ll need to consider before signing your mortgage contract.

In this post, we’ll cover some of the different types of payments, fees you may face if you break your mortgage and some tips for changing payment dates and payment frequency.

This is good information to know before you sign your mortgage contract.

How Mortgages Work When You’re A First Time Home Buyer

How Mortgages Work When You’re A First Time Home Buyer

Buying a home is a HUGE decision. Not only is it a lot of money, but there are multiple contracts to sign, and multiple people/parties involved. It’s a lot of responsibility. Plus, it’s a decision many of us will make before our 30th birthday.

One of the contracts you’ll need to sign as a first-time home buyer is a mortgage contract.

Signing a piece of paper and getting $100,000’s in return can be a surreal experience. Often, you’ll only put up a small fraction of the purchase price yourself and the rest will come from the bank. You put up $20,000 and they give you an additional $380,000 to go buy a house. Crazy!

As a first-time home buyer, it can be a nerve-wracking to take on all that debt.

Before signing a mortgage contract it’s a good idea to understand the basics of how a mortgage works. How much your payments will be. When your payments will occur. And probably most important, how much of your payment goes towards your loan.

How Much House Can You Afford?

How Much House Can You Afford?

Before thinking about buying a home you need to decide how much house you can afford. Housing represents 35%+ of a typical household budget but buying the right amount of house will depend on your other financial goals.

Buying a house is one of the biggest financial decisions you’ll ever make. Amazingly, about half of us will make this decision before our 30th birthday.

According to Statistics Canada 50.2% of Canadians have purchased a home by age 30. Not surprisingly this is down from previous generations where 55.5% had already purchased their first home by age 30.

Making one of the biggest financial decisions of your life can come with a lot of questions, especially when you’re making this decision at such a young age.

One of those questions might be “how much house can I afford”?

Like many big questions, there isn’t just one answer. If anything, this question just causes more questions.

To figure out how much house can you can afford, you really need to ask yourself a few more questions before coming to the right answer.

Our $1M Goal: How We’re Using Our TFSA For Retirement

Our $1M Goal: How We’re Using Our TFSA For Retirement

Goals are important. Financial goals are especially important.

Having a goal gives you something to focus on, it gives you direction. Goals provide motivation, they get you moving.

We’ve had big financial goals in the past. Years ago my wife and I set a goal to pay off our mortgage early. That was our first BIG financial goal. Once we achieved that goal we were hooked.

We find financial goals to be very motivating. They give us a reason to stick to our budget. They give us a reason to control our spending and look for new ways to save. They help us avoid purchases that don’t align with our goals (especially impulse purchases).

We currently have one HUGE financial goal. Our goal is to have $1 MILLION in our TFSAs by the time we turn 55.

Retirement Planning for Young People

Retirement Planning for Young People

Even though it’s a long way off, many young people think about retirement planning.

Twenty-five percent of young people list retirement as one of their top two financial concerns. Top two! They’re more concerned with retirement than debt, expenses, unexpected emergencies or losing their job.

When young people think about retirement their biggest concern is “running out of money.”

To be honest, I’m not surprised.

Saving for retirement is something we’ve been told to worry about again, and again, and again.

The good news is that starting early makes a HUGE difference. Starting early is basically retirement savings on “easy mode.”

The best way to ease your retirement concerns is to make a plan and start saving today (even if it’s just a small amount).

In this post we’ll go over a ‘quick and dirty’ way to create a retirement plan. This “retirement plan” is perfect for a young person. It isn’t a replacement for a full financial plan, but it’s a good way to put yourself on the right path and start saving.

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