Q: Over the years, we refinanced our home a few times to pay off our credit cards and other debts, but we never actually got ahead. Now we’re faced with selling our home as we’re having a hard time keep up with our first and second mortgage payments. With the market the way it is, we’re not sure if we’ll break even. What can we do?
A: Deciding whether or not to sell a home is never an easy decision, especially if you’re not sure if it’s the right solution over the long term.
Q: We bought our first home about 5 years ago. Our money was tight initially, but we’ve been careful and now feel good about managing all of our expenses, as well as planning for our future. Part of our plans include some home improvement and renovation projects; a new shed, closing in the carport, new flooring on the main floor, furniture for the family room and changing the landscaping. The possibilities are endless, but our money isn’t. Can you offer some suggestions to help us stay on track with our goals?
by Julie Jaggernath
With today’s announcement that certain mortgage rules for government-backed insured mortgages will tighten on July 9, the government tried to take another proactive step to protect Canadians from themselves. But, depending on who you talk to, opinions are mixed on whether or not these changes will result in the intended outcomes.
Worrying about debt is stressful. Worrying about how to avoid foreclosure is one of the most stressful situations someone can find themselves in. If you’re struggling to make your mortgage payments or if you can’t pay your mortgage at all right now, there are things you can do that will help you to avoid foreclosure and manage your situation better.
Q: Our neighbours came home with a unique holiday souvenir last week; a vacant lot close to where they had rented a cabin for the week. On top of all their regular household spending, they now plan to build a cabin on their lot. Our lifestyle is similar to theirs and we can’t help but feel that we’d like to buy vacation property too. Is this a good financial choice?
Q. My husband and I are planning to do some renovations to our home, even though family members are telling us not to. Looking at paint samples and decorating guides is the fun part, but what can we do so that we end up living to tell about it and enjoying our renovated home together
Q: Mortgage rates are still low and house prices keep going up. Is now the time to buy? And is it better to buy as big as you can?
Is it better to rent or buy a home? Many people ask this question, but often only hear one answer. People in North America generally think that it is much better to buy a home rather than rent one—and they have good reason for thinking this. In most markets, home prices generally rise around 4% each year. So if you buy a home for $250,000 and put 5% down, you will invest $12,500 of your own money. If your home then goes up in value by 4% in one year, your home will have increased in value by $10,000. That’s a return on your investment of 80% in one year! Who wouldn’t want to do that?
For almost 30 years, interest rates have been declining in Canada. This has enabled more people than ever to buy homes, but it has also fueled a lot of spending. Record low interest rates have enabled homeowners to buy more expensive homes than they could previously afford. Vancouver is possibly the best example of this right now where last month, the average price of a house almost hit one million dollars.
With Financial Institutions announcing increases in mortgage rates this week, more Canadians will find it challenging—if not impossible—to balance their household budget.
If you are already committed to housing payments that might feel too high, don't panic and make a bad decision. Make some choices about prioritizing first, and get ready to consider making changes with your housing payments later.