Canadas Life Insurance Problem: So Many Choices
The many life insurance options make purchasing a policy unclear and not understandable. Why do we get life insurance at any rate? Protection for our families and loved ones. Right?
Most think that life insurance is for buyers with young families with a big debt load that will not be paid off for many years. They are utilizing life insurance to prepare for the worst.
But what about people who are in a later season in life, when the debt load is lower and the kids start flying the coop? Thinking they are making a financially sound choice, many people stop purchasing life insurance. They have put their families at risk even though they have saved just a little money.
It may not be as costly as you think to get life insurance. Ten years ago, it was much more expensive than it is now. Ten million Canadians in their forties and fifties are able to pay for life insurance policies.
As you get older, buying different policies can be an advantage to you, your family, and your bank account. Term life insurance is going to be smarter, safer, and more affordable in the short term. But a permanent life insurance option will be best for the long term where you can get traditional whole life, universal whole life, and variable whole life insurance.
To help your future, these choices will help you save money and secure your loved ones future.
With traditional whole life, you are given the most guarantees. There are minimum guaranteed cash values and death benefits and the yearly premium is guaranteed as well. Most of the whole life policies can use the surplus they earn to grow cash value or death benefits.
Universal life is for policy holders who prefer premium flexibility especially in the early years of the policy. There are maximum guaranteed premiums and minimum guaranteed cash value and death benefits with universal life. If the buyer would prefer to earn interest at a determined rate every year instead of dividends, universal life is the right choice.
There is also variable life, which is for the more knowledgeable risk taker. It has the mostpotential for cash value increases, but also has the fewest guarantees. There are obligatory guaranteed yearly premiums and guaranteed death benefits.
Buying life insurance can be complicated, but can be beneficial for your loved ones down the road. To get professional advice and great deals on life insurance, go to www.infoprimes.com
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Read More...Properties Buyers In Canada are Getting Mortgage Insurance Should You Care?
For those wanting to acquire a residence, the Canadian housing finance system has made it possible to do so without paying all the down payment. You are able to get a loan with a 5% down payment on your property, but will be able to get a 20% interest rate. How is this possible? The requirement of purchasing loan insurance on the amount borrowed makes it possible for this to happen. While you are able to get a residence without paying the entire down payment, the mortgage company is able to reduce the risk of a default loan.
Who Qualifies?
To get loan insurance, there are requirements to qualify, so some people buyers will not be able to get it. To qualify, the residence, of course, must be in Canada. Furthermore, at least 5% on single-family and two-unit dwellings and 10% on three- or four-unit homes must be paid up front. The money down must come from your own recourses, but a donation from an immediate relative is acceptable. The mortgage principle, interest on the loan, property taxes, heat bill, the annual site lease in case of household tenure, and 50% of applicable condominium fees should make up only 32% of your gross household earnings as another qualifier. An additional qualifier for loan insurance is your liability load should not be more than 40% of your gross household earnings. The amount of closing costs and fees can also determine if you qualify for loan insurance.
How much does it cost?
The lender pays the insurance premium to obtain mortgage insurance. Though the responsibility for paying for the mortgage insurance is technically on the mortgage company, the lender will pass the cost on to you. So, how much is loan insurance? There are different answers to that question. There is a direct connection between the amount borrowed and the cost of mortgage insurance. The less you borrow, the less your insurance will be. This helps buyers who save more for a down payment. There are different options to pay for the insurance. The insurance premiums can be paid monthly as a part of the buyers loan payments or up front in a large lump sum. You are not safe just because you purchased mortgage insurance if your mortgage is defaulted. It just insures the lender on the money you borrowed. On the plus side, it enables you to buy a home you were not otherwise able to acquire. Go to www.infoprimes.com and save on mortgage insurance. Summary: For those who want to purchase a residence but cannot afford the money down have no need to worry. The Canadian housing finance system has come up with a way to enable people to acquire a residence by introducing mortgage insurance.
Canada Offers Mortgage Insurance, Should You Bite?
If you are looking to purchase a property but cannot afford the money down, the Canadian housing finance system has made it possible. You are able to get a mortgage with a 5% down payment on your residence, but will be able to get a 20% interest rate. How is this possible? It is possible to get such a great deal because they require the purchase of loan insurance for the amount borrowed. This reduces risk from the mortgage for the broker and enables you to purchase a residence without having to front the entire down payment.
Are There Requirements?
The purchaser must qualify for mortgage insurance, so not everyone will be able to participate. The residence must be in Canada to meet the first requirement. The purchaser must make a down payment of at least 5% on single-family and two-unit dwellings and 10% on three- or four-unit residences. The money down needs to come from your own resources, but it is acceptable for an immediate relative to contribution you the money. Another qualifier is that 32% of your gross household earnings is comprised of your principle, interest, property taxes, heat bill, the annual site lease in case of household tenure, and 50% of applicable condominium fees. An additional qualifier for mortgage insurance is your debt load should not be more than 40% of your gross household income. Other factors that can determine if you qualify for mortgage insurance or not are closing costs and fees.
Will this cost much?
To obtain mortgage insurance, the mortgage company pays an insurance premium. Yes, the mortgage company is the one who pays the premium, but believe me; they will pass the cost on to you. So, how much is loan insurance? There are different answers to that question. There is a direct connection between the amount borrowed and the price of mortgage insurance. Your insurance gets higher the more money you borrow. This helps those who save more for a down payment. Buyers can even pay the insurance premium in different ways. The premium can be paid in a lump sum or can be added into your loan expenses and be paid monthly. You are not safe just because you purchased mortgage insurance if your mortgage is defaulted. It just insures the broker on the amount you borrowed. On the bright side, you got to acquire a home with little money down and a good interest rate. Visit www.infoprimes.com to see how you can save on mortgage insurance rates.
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Read More...Mortgage Protection Success
Mortgage protection leads are important to any insurance agent who wants to do well in the business and who wants to offer good service to their clients.
Not every lead is good however, and the agent may sometimes expend more effort to close a sale than he first imagined. This is because people can change their minds about decisions depending on their current circumstances.
Most agents know that the insurance business is a hard sell and that prospects have the concept that they can get this vital piece of resource at a later date.
Only when caught in situations like losing a job, becoming disabled, or dying do people realize how important protection is.
If an agent does not work with mortgage protection leads, then the agent has to do a lot of cold calling. When appointments are set, the agent has to use a personal vehicle to tread the long miles to the prospects home and there are instances where the prospect forgets the appointment and is not home.
If the client is home then the agent can educate and instruct him, yet that does not guarantee closing as a prospect must be ready to accept and decide to be protected.
Other Factors Come Into Play
Current circumstances of the prospect are another factor. The agent can actually use that situation to help the prospect to see the real need for insurance. In the current economy, people have a tendency to draw back and be more conservative with their decisions.
The agent has the task of using that situation to let the prospect see how important it would be to have insurance and what would happen if they did not have that type of insurance.
Having mortgage protection leads affords the agent more flexibility and confidence in handling a prospect. An individual would likely have enough information to realize the importance of insurance.
Instruct Your Prospects
An agent can make the decision to provide information to the prospect without any sales aggression or coercion. When a prospect is reluctant initially, it does not mean you must give up on closing a sale. The prospect may need some time to think things over. There may be a spouse involved so the agent needs to make sure that the spouse will be home when the appointment is set. Both parties have to mutually agree before the agent can complete the sale.
The mortgage protection leads allow the agent to deal with prospects that are more willing to work with and are also willing to trust the expertise of the agent. If the agent seems to have the best interest of the prospect at heart, the prospect will give the agent the opportunity to prove that.
People prefer an insurance agent who is a straightforward individual. An agent who provides both the advantages and disadvantages of owning insurance reassures his prospect who then increases his confidence in in deciding correctly.
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Read More...How Much Home Can You Afford?
One of the most important items to determine BEFORE you go looking for a new home is how much you can afford to pay for it. Many hopeful home buyers fail to do this and spend countless hours looking at homes that are way out of their price range.
Understanding how the process of how a lender knows what you can afford to pay for a house will make it easier on you. Total expenses will be examined by the bank to make sure you will be able to pay down the mortgage they are granting you.
Most banks will have a ratio that factors income, current debt and financial obligations, interest rate and closing costs to estimate how much a borrower can afford.
It is possible to calculate these costs on a worksheet, or you can contact a mortgage broker who will be happy to make the calculations for you.
In most cases, having a sufficient deposit is the hardest part of home ownership. We are simply not in a savings oriented society and many have a hard time saving that elusive next egg. We can forget about no down payment loans now that the credit crunch in the real estate market has forced lenders to be stricter about their terms.
Assume at least a 10% down payment to buy a house. This means that for a median priced house of $200,000, you will have to save the minimum amount of $20,000 for the deposit, and the extra funds for closing costs. A bank can readily give you an estimate of closing costs.
So let us suppose that you need $25,000 to start shopping for a house. Now you have to be concerned about what you can afford for a monthly mortgage. You can look at many sites on the internet that will help you estimate what you can afford for a monthly home loan, or you can call a mortgage broker.
As a rule, lenders do not want to see the entire cost of the home (mortgage, taxes and insurance) more than 25% of your income. Lenders will examine this closely, more so if you have high credit card debt. If you are spending 25% of your income on your home, the rest is (in a perfect world) supposed to be spent on utilities, food, entertainment, education and savings. Spending too much to service your credit card debt will leave less disposable income to pay your home loan.
If you net $6,000 per month, you can afford a mortgage payment of about $1,500 (25%), barring any other large, standing expenses. This is the best way to shop for a home, once you really know how much you can afford.
Deciding Upon a Lock in Period for Your Home Loan
When you apply for a mortgage, you will be quoted a rate, but that rate is for that day only. Unless you also close on that day, which is unlikely, you will have a risk on the interest rate being higher when you do close.
In reaction to this problem, many banks offer to lock in a rate for a certain length of time. They realize that it may take some time before your house is found and actually closed on. They also realize that borrowers don?t want to take a risk on mortgage rates increasing during the period they are looking for their loan. Most buyers find it better to have a lock in period so they can figure their monthly mortgage payment calculation. You should be able to lock in either or both points and rates.
As a rule, lenders will offer this option at any stage: application, during processing, or at approval.
Perhaps you have a chance to lock in 5.5% interest with one point for 30 days. Even if you close in a month, and interest rates have increased, you will still receive the 5.5% rate on the loan. This is a normal lock in period, and a lot of lenders offer it to attract borrowers, and are willing to take the risk for this short period of time. Longer periods can also be obtained, but usually are priced more, since banks are not willing to risk rates moving against them for a longer period without some compensation for the risk.
This can go both ways, because if rates go down, you may want to cancel it, but the agreement must permit it. You have make sure you negotiate such a feature ahead of time.
If your loan is not settled during the lock in period, it will expire and your new mortgage or new lock in period will be at the higher rate. If rates have not changed, a bank might consider issuing a new guarantee at the existing rate.
There are also a great many combinations you can have.
Locked in Interest Rate with Locked in Points. Both interest rate and number of points are guaranteed.
Locked Interest Rate with Floating Points. Here, the rate may be locked, but the lender gives itself some leeway by maintaining the privelege to change the points paid. In order to keep the original rate, you may have to have extra points.
If interest rates are moving a lot, it is probably a good idea to ask your banker about lock in periods.
WhatAre ARMs All About?
In addition to all of the other decisions you have to make when you are choosing a mortgage, such as whether to go fixed or floating rate, how much down payment to make and how many points to pay, lenders have further complicated matters by offering a wide range of choice of indexes for ARMs (adjustable rate mortgages).
When we speak of the “index”, we are talking about of the base financial instrument that the changing rates will be based on. Today, banks use various indices, such as the rate on government debt, or the Fed Fund interest or the London Interbank Offer Rate(LIBOR).
The basic idea of an ARM is that the interest on the loan is adjusted up or down, periodically, based on a chosen signal interest rate that is indicative of interest rates in general. If your index is CDs, and CDs go up, your mortgage rate goes up. An additional feature of an ARM is that there is an adjustment cap, which prevents the interest from moving up or down too frequently, even if the index does; sometimes this can be an advantage if you just adjusted and then rates move upwards. Of course, the opposite can happen, and if your rate has recently been readjusted at a high rate, and then the index moves down, you will not be able to take advantage of that until your next readjustment period.
ARMs can be tied to any number underlying instruments, such as the 90 day U.S. Treasury Bill. The Fed Fund rate is what banks pay to the Federal Reserve Bank to borrow money. Many of the international banks will use the LIBOR as the index rate for mortgages.
How you decide upon the correct index is dependent upon your particular circumstances and how you believe interest rates will move. CD ARMs adjust every six months, for example, and therefore react more readily to interest rate changes. ARMs that have the Tbill interest as the index do not move as frequently as the CD index. LIBOR is the index that moves the most often and the most quickly, so if you want to take frequent advantage of the downward level of decreasing rates, this is the one for you.
But in addition to these standards, new products are always been introduced on the market; an example would be the option ARM, that will let a homeowner decide how much mortgage he is going to pay each month! There is a minimum payment that covers the interest (so the bank gets its money) and then the other options will pay off some portion of equity. There is a real danger in option mortgages that the mortgage will end up with negative amortization, which means the mortgage balance goes up instead of decreasing as it normally would.
With this dizzying choice in interest rate options for your mortgage, the best option is to meet with a mortgage consultant who can explain all of them to you and advise you best on your needs.
