Want to Buy U.S. Real Estate?

Many of my customers have asked me how to buy U.S. real estate. It's easy to assume the laws and regulations will be similar in the U.S. and underestimate the costs involved. U.S. real estate is a money-making opportunity right now but there are several expenses to pay. What follows is a partial list of the costs to be prepared for: 1) Property Tax: All property buyers need to pay property taxes. This tax is levied by the government where the property is located. Property tax regulations vary from state to state, so it's possible that your property in the U.S. is subject to pay taxes to the national government, the state and/or the local municipality. Beware: some states charge higher property taxes for non-residents. 2) Home Owners Association (HOA) transfer fees: Homeowner's association or HOA (condo) transfer fees are paid in accordance to property jurisdiction. These fees vary from state to state as each association has discretionary authority for fees on the transfer of the property. 3) Accounting Fees: The U.S. Internal Revenue Service (IRS) describes real estate as 'a capital asset'. In the U.S., property must be accounted according to the rules provided by the IRS. To save yourself from the headache of trying to follow the IRS procedures and discover creative ways to save money, it is smart to simply budget for accounting fees. 4) Closing Costs: These are Legal and Title Insurance fees that the buyer needs to pay for the services rendered when acquiring U.S. property. Legal and Title Insurance fees will vary based on time and effort required, value of the property, difficulty of transaction, etc. 5) Property Management: Property management might be part of your operating budget (i.e. it comes out of your monthly rental income). Managing the property involves maintenance, screening of prospective tenants, lease contracting and solving issues as needed. 6) Exchange Rates: Be aware of the cost of transferring your currency and the impact of currency exchange on your money. Canadian currency is strong right now so transfers to U.S. cash will be beneficial. Remember to use a foreign exchange service provider to actually have your money converted. There are other fees, so consulting a professional with experience is strongly recommended. Christopher Bisson The Mortgage Centre bisson.c@mortgagecentre.com 1-866-838-4366 x1003

Job Numbers Surprise!

The new jobs numbers are out, and they are more positive than expected. This will likely send mortgages rates up in the near-term. One thing to keep in mind is that the actual unemployment rate showed higher than last month. This is because more people are looking for work than in the summer, and are now being included in the unemployment rate. Wait for one bit of bad economic news and the rates will drop down. If you are wondering if you should buy a home or not I would look at what the total employment numbers are for your city or region. If they are going up then you can make a pretty good bet that the real estate prices there will go up too. For information about rates and our services please give me a call! Warm regards, Chris -- Christopher Bisson The Mortgage Centre 519-763-3900 x1003 www.mortgageconcierge.ca

The Rate Isn’t the Only Thing

Two years ago I helped a couple who wanted to buy their second home. They were moving up from their first, smaller home, and wanted to get a great rate in order to keep their payments down. After reviewing their information with them, and considering their options, they decided to go with a 5-year fixed rate mortgage. They had a mortgage at bank already that they had to break in order to take advantage of the rates at the time. The bank’s rate was competitive with other lenders but didn’t offer the best package. You see, there’s more to a mortgage than the rate you pay. One policy within the mortgage is what the penalty would be in the future for breaking the mortgage before the end of the term. For a 0.1 per cent difference between the bank’s rate and the rate of another lender I had recommended, the difference in the way the bank calculated the penalty should they leave the bank came back to haunt them. Two years later the clients found out about an interesting way to make your mortgage interest tax deductible. They did the research and figured that it would be worth it for them to pay a penalty to break their mortgage with the bank in order to get the type of mortgage needed to make their interest tax deductible. The only thing was that they never really checked out what their penalty would be, and the day before everything was supposed to swap over they found that the bank was charging $10,000 more than they had estimated. So for 0.10% difference in their interest rate which saved them about $250 in interest cost per year they had a penalty that was $10,000 higher. Hardly worth it in my books, and the main reason why they decided to stay status quo until the renewal. I will leave you with one more tidbit of information: The average borrower make some type of change in their mortgage 38 months after they buy their house. Doesn’t it make sense to get a full-featured mortgage instead of just focusing on the rate as a result? Chris -- Christopher Bisson President and Mortgage Broker The Mortgage Centre 519-763-3900 x1003 www.guelphmortgagecentre.com