22 Oct

FINANCIAL ARMAGEDON OR BUSINESS AS USUAL

General

Posted by: Ron Price

FINANCIAL ARMAGEDON OR BUSINESS AS USUAL? Over 60 per cent of Americans believe their economy will fall into a financial abyss, and get this, “Within the next six months.” This shows that the majority are in ‘panic’ mode caused for the most part by the negative media spin. We know that the U.S. is printing money like ‘there’s no tomorrow’ with public debt spiralling out of control, and we are now told both the U.S. and Canada have depleted all gold bullion reserves. Scary isn’t it? What’s next? Many Canadians share similar concerns, but should we? A recent book well worth reading entitled ‘The Next 100 Years’ by George Friedman thankfully sheds a much different, more positive light about the future. It is a fascinating and refreshing book because of its dismissal of conventional thinking. Conventional wisdom is that the United States will default on its foreign debt and will fail both financially and economically and that China will become the new world superpower. Friedman asserts the opposite because the U.S. has the most powerful military in the world, borders both the Atlantic and Pacific oceans (few other industrialized nations do), controls all oceans with its naval and maritime fleets, have the number one economy as well as more wealth of any nation on earth. As a (relatively) young nation, America is just now just growing up and hence will dominate the globe for the next century. China who holds the most American debt simply cannot afford to call its loans since it is now highly dependent upon trade with the U.S.A. Friedman also points out that the fact that over 99 per cent wealth in China is held by people along its coast, while the vast majority of the population (in the interior) remains impoverished, and most importantly, very restless. Communism will therefore collapse as it did with Russia who by the way will challenge the U.S. again in a new cold war. A war that the U.S. will win because the Russian population will decline rapidly over the new thirty years without immigration will become weak and disintegrate.  Canada will continue reap the rewards of being America’s biggest neighbour and ally. We will continue to be protected from invasion at minimal cost as well, and we will enjoy a resurgence of economic growth along with a rejuvenated U.S.A. in the decades ahead. When a person’s view of the future is fraught with negativism, one generally loses hope and acts negatively, or not at all. We are positive about the future and we hope you will be too when you read this mind altering book of predictions. Allow us the privilege of doing your next mortgage, or refer someone to us that results in a funded mortgage, and we will gladly give you a complimentary copy of ‘THE NEXT 100 YEARS’.

15 Oct

FROM FINANCIAL MESS TO FINANCIAL FREEDOM

General

Posted by: Ron Price

FROM FINANCIAL MESS TO FINANCIAL FREEDOM Dan had by all appearances made it. He had a big income as an executive earning in excess of $120K per year and his wife earns $34K as a bookkeeper. They also had over $200K in RRSP’s. But at the end of the day after paying all his credit cards, lines of credit and his mortgage, Dad had no money. After reading us in the Welly he called to ask for our help. We went to work re-organizing his debt and were able to pay nearly $70K off in high interest debt and eliminate$2,800 in monthly payments. The best part is, even with all the debt gone his new mortgage payment is only $1,200 over $240 less than he was paying before. Now with his finances under control with cash flow and money left over from the refinance, Dan was able to buy a $300,000 duplex in Guelph. He couldn’t come up with the full down payment so we arranged a small 2nd mortgage. Bottom line, he is clearing $700+ a month from the two rental units. A month later when Dan mentioned to us that his RRSP portfolio with the bank was losing money, we suggested he consider moving his RRSP’s into in self directed  RRSP’s so he could invest in another income property or in private mortgages where we can get him a return of 8 – 14%. With our professional advice and guidance Dan is now well on his way to creating the financial wealth and security he has been dreaming of for years.

10 Oct

Bridge over Troubled Waters

General

Posted by: Ron Price

 

 

If you have ever bought and sold a house and closed both on the same day you will understand why it makes a lot of sense to bridge your mortgage.  You are packing up the same day, your buyer is waiting to move in.  Getting a bridge means less stress for sure.

A bridge simply means the lender will forward the down payment or the equity in your property to enable you to close the purchase of your new  property ahead of the closing of the sale of your property.

But it does not come without cost.  Costs to set up a bridge vary from lender to lender and come with a daily rate of interest until your sale closes.  For instance, with a set up fee of $250 and a month delay in closing for a $100K bridge you are looking at about $300. Not bad considering you can take your time to move in, paint or renovate.

You need equity in your home in order to bridge a firm sale.  Most bridges go without a hitch but there are always the exceptions.  With major banks taking collateral mortgages on properties, securing 2nds and visa cards unfortunately problems can arise.

Take for example our latest call for help.  Moving van filled day of closing on their purchase, a local businessman called panicking that his bank didn’t not forward the money for the bridge.  Joseph was mortified.  The bank had told him the bridge was no problem.  We got involved immediately and the problem was pretty evident.  There was no equity in the home they had sold because the bank had secured a line of credit in 2nd position after their 1st mortgage.  Yikes.  No equity…no bridge and the bank did not tell him this and just left him high and dry.  We found a solution rather quickly.  We refinanced their free and clear cottage in order to get the down payment for their new home and the mortgage closed three days later.   In our experience, do not take anything for granted when it comes to bridges.  People believe their homes are free and clear when they are not since the banks often take much more collateral than the amount of the mortgage and even blanket multiple properties.  Far too often the client is not told these things either by the bank and believe it or not the lawyer too. When you deal with The Price Team we ensure you completely understand what is going down. You’ll have far less hassle since we are professionals who take great care in what we do.

As an aside, if you are thinking of getting your next mortgage from a bank, ask them about their Collateral Mortgage product. If you are not satisfied with their answers, then do yourself a favour and come see us.