Uncategorized Archives

February 15, 2023 Mortgage, Uncategorized

How To Know If You’re Ready To Buy A House

Are you considering buying a house? This is a substantial financial step, and it’s vital to ensure you’re ready for it! These are some things you can do to make sure that you have the resources necessary to pay for a house:

Secure stable employment.
Improve your credit score.
Save up a down payment.
Have a solid emergency fund.
Take a look at your debt-to-income ratio.
Research the housing market.
Think long-term, not short-term!
Obtain professional advice.

Secure Stable Employment

Having a stable job with a consistent income is crucial for obtaining a mortgage and being able to make monthly mortgage payments. If you can’t prove you can afford the payments, no bank or credit union will approve you for a mortgage!

Improve Your Credit Score

Your credit score will play a significant role in determining the interest rate you receive on your mortgage. According to Remax Canada, the higher your score, the lower the interest rate you will be eligible for. A percentage or two makes a big difference when looking at a mortgage for hundreds of thousands of dollars!

Save Up A Down Payment

It can take quite a while to save up a down payment, so start on this as early as possible. You can take a loan from your RRSP or use the newly proposed tax-free First Home Savings Account to save up for your house. Most lenders require a down payment of at least 20% of the purchase price, and if you don’t have a down payment that high, you’ll have to get mortgage insurance.

Have A Solid Emergency Fund

Owning a home comes with unexpected expenses, so it’s essential to have an emergency fund in place to cover any unexpected costs. You don’t want to lose your house because you can’t pay for vital repairs!

Take A Look At Your Debt-To-Income Ratio

Your debt-to-income ratio determines your ability to take on a mortgage. Lenders typically look for a 44% or lower ratio, so paying down debt and lowering your ratio can improve your chances of getting approved for a mortgage.

Research The Housing Market

Take the time to research the housing market in your area to determine what type of home you can afford. Remember that housing prices vary significantly depending on location, so finding a home that fits your budget is crucial.

Think Long-Term, Not Short-Term

Buying a home is a big commitment, so it’s important to consider whether you’re ready for the long-term financial and personal responsibilities that come with homeownership.

Obtain Professional Advice

Consulting both a financial advisor and a real estate professional can provide valuable insights and guidance to help you make the best decision for your financial situation. Be sure to get pre-approved for a mortgage, and be clear with your real estate agent about how much you can afford to pay for a house.

How Did You Know You Were Ready To Buy A House?

Or if you haven’t bought one yet, how will you know when you’re ready? Let me know in the comments!

December 15, 2021 Lessons Learned, Uncategorized

What’s your biggest money mistake?

I know it’s not the most fun topic to think about. But just about everyone has made a money mistake.

Today, I’ll talk about:

What qualifies as a money mistake?
What I consider my biggest money mistake.
How to move on from a money mistake.

What qualifies as a money mistake?

A money mistake isn’t something small like dropping five bucks on the ground and not noticing until later! Instead, it’s something big, like forgetting to pay a bill for months. Here are some examples of money mistakes:

Transferring a balance to a zero-interest credit card but not paying off the balance before the interest rate increases.
Letting a bill go to collections when you had the resources to pay it off.
Not knowing how much interest you owe on a debt.
Jumping into a “hot” investment opportunity without really checking it out.
Buying more house than you can afford!

These are just a few examples of money mistakes.

What do I consider my biggest money mistake?

I’d say my biggest money mistakes are as follows:

Spending little bits of money on impulse shopping here and there. I always feel like I NEVER spend money except on things I truly need, but my credit card statements at the end of the month tell another story.
Sticking with a stock too long. I was lucky enough to work at a company during the tech boom and bought stock when it went public. But I got greedy and hung onto the stock, thinking it’d keep going up and up. So while I did make a profit, I could have made more if I’d cashed out earlier.
Sticking with a financial planner for years. He did very little for me and talked down to me. Much happier now that I just do online investing.

How do I move on from a money mistake?

That’s a great question that there’s no easy answer to. It depends on the mistake and, of course, how severe the damage is! Sometimes, it’s just forgiving yourself for making a mistake and moving on. In other cases, you need to consider selling a bad investment or paying off a bill and fixing your credit record.

There’s no one-size-fits-all solution, but your best bet is to determine what went wrong, what your course of action should be, and then get moving!

Let me know about your biggest money mistake.

As the saying goes, misery loves company! It’s always nice to know you’re not alone when making a money mistake. Tell me about your biggest money mistake in the comments.

February 15, 2021 Saving money, Uncategorized

What are the benefits to an RESP?

Image by free stock photos from www.picjumbo.com from Pixabay

In my last two posts, I talked about how to use RRSPs and TFSAs to save for your future. Today I’m going to talk about RESPs or Registered Education Savings Plans.

What is an RESP?

A Registered Education Savings Plan is a great way to help a special child in your life save for their education. Whether it’s your child, grandchild, nephew, niece or another child you want to help – you can save them a lot of stress and expense down the line by contributing to an RESP for them. RESPs came along too late for my parents to take advantage of them – but they did help me pay for school, which was fantastic and enabled me to graduate without debt.

What are the benefits of an RESP?

There are several benefits to using an RESP to save for a child’s education:

There’s no yearly maximum or minimum – so you can make contributions when and how it works for you.
Any growth in them is tax-sheltered.
The beneficiary of the RESP can use them for a variety of post-secondary costs including housing and tuition.
Government matching – They’ll match 20% of your RESP contributions up to $2,500 each year – with a lifetime maximum of $7,200.

What happens if the child the RESP is for doesn’t want to attend any post-secondary schooling?

Depending on the type of plan and who opened the RESP, you can:

Transfer the funds to another child.
Transfer the funds to your RRSP.
Close the RESP.
Transfer the funds to an RDSP, if the child qualifies for one. I’ll talk more about RSDPs (Registered Disability Savings Plans) in my next post.

How can I get started?

Before you open an RESP, you’ll need a Social Insurance Number (SIN) for the child. It may be tempting to open an RESP individually for a child if you want to make contributions – but it’s likely better just to have one RESP open, instead of several. So if you aren’t the child’s parent or grandparent, talk to them about making RESP contributions through them if they’ve already opened one.

You’re Ready To Get Started

Now you know all about the benefits of helping a child pay for their education via an RESP. Even if you can only contribute a little bit each year, it will add up – especially with the matching government grant. Have you contributed to an RESP for someone? Tell me in the comments!