RBC's comments on Global Economic outlook

Global economy gears down

Evidence of a global economic slowdown continued to accumulate in the past month even as the U.S. economy grew at a much stronger-than-expected pace in the second quarter. Economic reports from the other countries we follow were not so bright, with the U.K. economy stalling and likely moving into the early stages of a recession, while Japan’s economy posted the sharpest decline in seven years and the Eurozone economy contracted after a stronger-than-expected first quarter.

New Zealand’s economy is headed toward recession with its monthly economic data pointing to another negative quarter, and Australia’s economy is eking out only subdued growth. Canada’s economy showed a mild improvement in the second quarter after an unexpected contraction in the first, but growth was still anaemic at 0.3%.

Read more about:

• Interest Rates
• Power of Sale Properties
• Price Trends
• or Search the MLS and more at my website

Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,

Mark

A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.

Providing Full-Time Professional Real Estate Services since 1987
( BUS 905-828-3434
›mark@mississauga4sale.com
8 Website : Mississauga4Sale.com

• Thinking of selling in the next 3 to 6 months? Would you like a Complimentary & Quick Over-The-Net Home Evaluation ?
• On-Line Real Estate Newsletter sign up
• See seasonal housing patterns

Variable rates are increasing!

While fixed rates have dropped over the past few weeks, most lenders have increased their variable rates from prime - 0.60 to between prime -0.50 to -0.35.

Some lenders are still able to offer prime -0.60, but this could change any day now as the choice of lenders still offering this rate is to say the least, 'limited'.

If you feel would be interested in a variable rate, please contact me right away so I can put on on to a lender who can secure you for a rate hold for 120 days.


Remember also that you can still buy with no money down and amortize over 40 years as long as you have a firm purchase and sale agreement and application by 11pm October 13th and the closing date is within 120 days.


Let me know if you have any questions, or if you need mortgage assistance.

Today's lowest variable rate is prime -0.60 and the lowest 5 year fixed is 5.14 (quick close).

Mark

Read more about:

• Interest Rates
• Power of Sale Properties
• Price Trends
• or Search the MLS and more at my website

Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,

Mark

A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.

Providing Full-Time Professional Real Estate Services since 1987
( BUS 905-828-3434
›mark@mississauga4sale.com
8 Website : Mississauga4Sale.com

• Thinking of selling in the next 3 to 6 months? Would you like a Complimentary & Quick Over-The-Net Home Evaluation ?
• On-Line Real Estate Newsletter sign up
• See seasonal housing patterns

Credit history affects ability to borrow

The ongoing credit issues have caused mortgage lenders to review their lending criteria, and they have become stricter allowing fewer approvals on an exception basis. The credit bureau report is a very important tool used by lenders.

Most clients have a strong credit history but there are always a few situations, either due to illness, previous unemployment or marital issues where a responsible borrower experiences a credit score drop below the lender's minimum. Credit scores change daily. A weak score can be improved within a few months (& the opposite is true also....scores can drop 75 points or more within a few months if credit is overuse or abused).

Many factors affect credit scores - I hope you find the information below helpful in understanding the score & how it can change. Also, I've included some tips for those who are starting to establish credit.

If you need a mortgage contact, please let me know.

Thanks

Mark

Credit Bureau – Credit Score

• Often referred to as a beacon score
• Score indicates credit worthiness
• Score is a statistical formula that indicates to lender the statistical probability of delinquency
• range from 300 – 900
  

Scores range from 300 – 900 & is determined by:

• 35% - payment history
• 30% - amount owed
• 15% - length of time on file
• 10% - new credit (how new account is handled)
• 10% - type of credit (bank credit cards, store cc, installment loans)
  

How to improve score?:

• Pay all bills on time – no matter how small the payment
• Keep account balance below 75% of credit limit
• Avoid applying for credit unless needed
• Too many inquiries – lenders will interpret as financial difficulty
• Score can be improved significantly over a few months if these tips are followed.
  

What causes a score to drop?:

• Late payment – can cost 30 – 75 points
• Maxing out on credit cards – can drop score by 50 – 100 points
  

For Mortgages:

• Scores under 580 – Prime lenders not interested – will need to look at alternate (B lenders)….higher interest rates & fees
• Prime lenders prefer scores of 600 + ….will consider between those around 580 & higher but really need to understand cause of low score (may require guarantor/insurance – case by case).
• 680 – considered a strong score – qualify for 100% financing, no income verification etc.
  

TIPS for New Borrowers – late teens/young adults should establish credit:

• Apply for credit card – major bank
• Pay on-time monthly
• Apply for an installment loan – shows ability to repay fixed amount on monthly basis. Make it small loan – can be secured by a GIC – keep it outstanding for full term (ie: 12 months)
• Avoid numerous credit cards – ie: retail stores.
  

Your rights with the Credit Bureau:

• View your bureau report (on-line or by post)
• Advise them of incorrect information (will be investigated)
• In event of identity theft or lost/stolen wallet they will add line to bureau to alert credit grantors to be extra cautious of verifying identity.
  

RBC comments on Canadian and US interest rates

Interest rate forecasts for Canada and U.S. lowered slightly

We have rebenchmarked our interest rate forecasts for the remainder of 2008 while maintaining our calls that the Bank of Canada and the Fed will hold policy rates steady for the remainder of the year. We now see the yield on the two-year Canadian government bond ending the quarter at 3.10% and the 10-year yield at 3.75%, lower than our previous call for these yields to end the quarter at 3.50% and 3.90% respectively. The spate of weakerthan- expected data, which pushed yields well below July’s levels, made our earlier forecasts unlikely to be reached.

Similarly, we have reduced our forecasts for end of September two-year U.S .Treasuries to 2.55% (from 2.90%) and the 10-year Treasury yield to 4.05% from 4.30%.

Our year-end forecasts for Canadian two-year and 10-year bonds stand at 3.3% and 4%, respectively, with the two-year U.S. Treasury bond yield expected to finish the year at 2.65% and the 10-year at 4.40%.

Read more about:

• Interest Rates
• Power of Sale Properties
• Price Trends
• or Search the MLS and more at my website

Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,

Mark

A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.

Providing Full-Time Professional Real Estate Services since 1987
( BUS 905-828-3434
›mark@mississauga4sale.com
8 Website : Mississauga4Sale.com

• Thinking of selling in the next 3 to 6 months? Would you like a Complimentary & Quick Over-The-Net Home Evaluation ?
• On-Line Real Estate Newsletter sign up
• See seasonal housing patterns

Interesting Perspective on the Canadian Markets

Good morning,

A good friend of mine forwarded this article to me yesterday and I found that it was extremely enlighten, very honest and straightforward analysis of our markets.

It also gives you an alternative to the markets and real-estate, not sure if it's a good method, but at least you can have another alternative!

I hope you like it too!

Mark

In light of the recent events in the financial world and those which will unfold in the coming months I thought you might be interested in hearing about what I believe to be the larger risk.

Recovery Risk

In one of the most memorable movie scenes of all time Butch Cassidy and the Sundance Kid find themselves trapped on top of a very high cliff overlooking a raging river. With the posse closing in, their only possible escape is to jump off the cliff into the river. The Kid is visibly reluctant and when Butch asks him what his problem is, the Kid replies “I don’t know how to swim!”...Butch starts to laugh uproariously and exclaims “Kid, it’s the fall that’s gonna kill ya!”

Sometimes our immediate fears cause us to overlook the larger risk and that is the case for many with respect to the recent turmoil in the financial markets. While the losses are of concern, the larger risk can be in how long it takes to recover. So, in this case it’s not the fall but the length of time it stays down that is the larger risk.

This “Recovery Risk” is highly sensitive to just how close an investor is to retirement.

Retired: Significant to Catastrophic Risk – for those drawing income the depletion of their capital is critical and a lengthy recovery seriously increases the chance they will run out of money. The risk is highest in the early retirement years and decreases somewhat for older retirees – a function of the total income needed for the balance of their lifetimes.

Within 15 Years of Retirement: Significant Risk – for those counting on investment growth for future retirement income, a lengthy recovery may result in a later retirement than planned and/or continued work of some sort during retirement. Those closer to retirement are at greater risk as they will start to draw income sooner.

More than 15 Years from Retirement: Possible Risk – historically, most recoveries take less than 15 years so the younger an investor is the lower the risk. Those in their 20’s and 30’s benefit from a long term investment period while the risk increases progressively starting at age 40.

For some perspective let’s take a look at the Dow Jones Industrial Average:

First, note that the Great Depression starting in 1929 saw the Dow fall by more than 85%, a magnitude of loss not seen since. But it’s the fact that the Dow did not recover for 25 years that was the bigger issue.
As you can see on the chart there have been other lengthy recovery periods including the one we are presently in, which began in October 1999.
So, what are the alternatives? Putting money into a Money Market Fund, Savings Account or GIC just locks in the loss of purchasing power over time:
Investment Amount $100,000
Interest Earned 4.0% $4,000
Income Tax 33.0% -$1,320
Inflation (July 2008) 3.4% -$3,400
Net Earnings -0.7% -$720
This may be viable for some retirees but is questionable for those under age 75.
Real Estate is another possibility although after 13 consecutive years of rising values we may be looking at a downturn soon. Prices in the GTA rose by less than 1% in the past year and sales are down more than 22%. It took more than 12 years for the real estate market to recover after the peak in 1989.
For those who have retired there is a way to guarantee retirement income of 5% for life while remaining invested such that future market gains may be realized. In fact, it is possible to have both the initial guarantee and to improve upon the guarantee value through resets over time.
For those within 15 years of retirement there is a way to guarantee 5% annual increases in future retirement income while remaining invested such that future market gains may be realized. In fact, it is possible to have both the initial guarantee and to improve upon the guarantee value through resets over time.
The Income Plus program was introduced in Canada less than 2 years ago and in my opinion is the best way in which to minimize risk for those who are building or drawing retirement income.
If you, or someone you know, is within 15 years of retirement or, has been retired for 15 years or less, you should learn more about Income Plus. In this period of uncertainty, it offers both a guaranteed minimum amount of income and the potential to benefit from future market gains – a unique combination in my experience and one which may not be available with the same features in the future.
In my view this is the best protection available today with respect to many risks but especially for Recovery Risk.
*Income Plus offers a unique benefit for new clients:
For those not taking an income in 2008, a 5% income bonus is paid on the initial deposit. This means that if you open an account before the end of the year you will receive a 5% increase in your Guaranteed Withdrawal Balance even though you may only have been a client for a few weeks or months.

New clients over age 65 may take a 5% income withdrawal in 2008 without reducing the amount of their guaranteed annual income for life.

In order to realize these benefits I recommend you act quickly as it often takes several weeks or longer to transfer funds and this benefit only applies to those funds received prior to December 31st.

REMAX says it's best to invest in home improvement to improve your selling price when in a soft market

Investment in home improvement, key in competitive housing market, says RE/MAX

Mississauga, ON (September 17, 2008) - An increasingly competitive housing environment is prompting a significant number of Ontario homeowners to invest in renovation before listing their homes for sale, according to a recent survey by RE/MAX Ontario-Atlantic Canada.

The RE/MAX Survey of Home Buying and Selling Trends in Ontario, conducted by COMPAS Research, in the first half of 2008 found 79 per cent of sellers said they made improvements to their homes two years prior to listing and more than one third (39 per cent) of them did so with selling in mind. Further indicative of how sophisticated sellers and buyers are becoming, 37 per cent of sellers made upgrades to their home after listing their property for sale. Home sellers are typically spending $21,000 on average in renovations; the most popular of which are updating kitchens, hardwood flooring, and new windows.

"Investing in renovation for the purpose of selling a home continues to grow in 2008," says Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. 'Changing market conditions are largely responsible for the upward momentum in residential investment which is up four per cent to $6.9 billion in Ontario for the first half of this year, compared to last year at the same time. We are seeing two clear trends emerging with some homeowners looking to boost resale value by renovating and others choosing to bring their home up to today's standards by upgrading areas that are dated. In either case, the end result is a product that will more likely yield top dollar when it is time to sell."

Read more about:

• Interest Rates
• Power of Sale Properties
• Price Trends
• or Search the MLS and more at my website

Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,

Mark

A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.

Providing Full-Time Professional Real Estate Services since 1987
( BUS 905-828-3434
›mark@mississauga4sale.com
8 Website : Mississauga4Sale.com

• Thinking of selling in the next 3 to 6 months? Would you like a Complimentary & Quick Over-The-Net Home Evaluation ?
• On-Line Real Estate Newsletter sign up
• See seasonal housing patterns

How to calculate if a rental property will carry or not

I had a question on one of my listings, a townhouse listed at $289,900 and let's say the final sale price is $285,000, the question was:

What are the condo fees, taxes and insurance and with 20% down can we make positive cash flow on this property? Thanks W .

My answer is:

Condo fees are $100 per month,

taxes say $200 per month,

with 20% downpayment your payments based upon a $285000 purchase price,

thus say 57000 downpayment, gives you a 228,000 mortgage at 1199 at 4.00% variable rate

your total monthly payments 1199+200+100 equals 1500 per month,

the property would likely rent for 1450 to 1550 per month, so it's right on the line.

Conclusion, this property is perfect for a 20% downpayment as an investment property.

This is the property:

Large Townhome at Eglinton and Creditview, must be sold $289,900!

So there you have it, simple calculations.

Thank you,

Mark

Current Mortgage Interest Rates

Below are the current posted and obtainable mortgage rates in the GTA

Mortgage Prime - 2.25%

Prime Rate = 4.75% Variable = 2.50%

Terms	Posted Rates	Obtainable Rates
6 MONTHS	6.20%	6.20%
1 YEAR	6.95%	5.10%
2 YEARS	7.00%	5.50%
3 YEARS	7.00%	5.50%
4 YEARS	6.99%	5.65%
5 YEARS	7.15%	5.24%
7 YEARS	7.60%	6.20%
10 YEARS	7.95%	6.25%

*Rates subject to change

Please let me know if you need help with mortgage financing and I will put you in touch with good mortgage people.

Read more about:

• Interest Rates
• Power of Sale Properties
• Price Trends
• or Search the MLS and more at my website

Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,

Mark

A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.

Providing Full-Time Professional Real Estate Services since 1987
( BUS 905-828-3434
›mark@mississauga4sale.com
8 Website : Mississauga4Sale.com

• Thinking of selling in the next 3 to 6 months? Would you like a Complimentary & Quick Over-The-Net Home Evaluation ?
• On-Line Real Estate Newsletter sign up
• See seasonal housing patterns

Plan to build a home or cottage?

I hope you enjoyed your Long Weekend!

The unofficial end to summer is here

Did you know................ I know people who can arrange construction financing for people like you who plan to build a home or cottage?

• Progress or Draw Mortgaging is the best way to finance a residential building project
• Unlike a standard mortgage, a Progress Mortgage is advanced in stages to fund the construction as it proceeds. Since the money is advanced as required, interest is only paid on the amount outstanding.
• Some great features:

- No set up, appraisal or inspection fees (most other lenders charge these fees);
- Client can use own solicitor;
- Free Mortgage Life Insurance during construction;
- Interest only payments during construction - interest at Prime plus 2%;
- Guaranteed mortgage rate offered at time construction financing is approved.

Please let me know if you have any questions regarding construction financing and I can put you in touch with lenders who specialize in this type of financing.

FYI: The next Bank of Canada rate announcement is scheduled for Wednesday Sept 3rd.

Mark

Television shows Flipping or Fixing Houses for Profit as being so easy!

"As seen on TV"

I'm sure that you've seem and learned many ideas about flipping houses from the shows on TV. These TV shows don't really get into the specific nuances of flipping. There is a science to successfully flipping houses. Many successful real estate investors can make $5,000 to $10,000 or more per home by flipping houses.

This article will cover some of the aspects of flipping houses, as seen on TV

What you ideally want to do as an investor is buy a home from a distressed seller and resell it quickly for a profit.

You can opt to join my Power of Sales Newsletter, no charge of course

http://www.mississauga4sale.com/Power-Sales-Bank-Sales-Alert-Request.htm

You may be asking yourself, why do I want to inherit someone else's problem house? That's not necessarily the case. Just because a seller has serious problems like a pending foreclosure or divorce doesn't mean the house is a fixer-upper. Many distressed sellers offer prime houses in perfect condition discounted for a quick sale.

Distressed sellers jump at the chance to get out from under their overwhelming problems with an offer to close in ten days. To purchase a home quickly, you need to be prepared to offer cash or a
have secure loan in place with a reliable mortgage lender.

This investment plan assumes that you have the knowledge and skills, time to work on your fixer, and that you sell the house as soon as its finished to a qualified buyer.

Other real estate investors prefer to buy fixers from distressed sellers. Distressed fixers tender the best bargains to make the highest return on your money. For instance, if you put 5% down on a $200,000 home, spend $5,000 fixing the house up, and another $3,000 in payments, your cash investment totals $18,000. If you sell the home for a $70,000 profit like many rehabbers, you can see that your return on your investment of $18,000 for two months exceeds most other types of investments.

Home improvement centers help you with how-to classes, brochures, and advice. You need to give up your free time--TV, parties, leisure activities and work on your fixer. You could hire workers, but contractors and laborers work slowly and eat up your profits.

The last part of the equation, selling your house quickly to a qualified buyer means you need to do your homework. The most important issue, how you fix up your house, ensures that you quickly attract a buyer willing to pay top dollar for your transformed property. Then you can list your house with me and you will make a profit!

Whether you want to make money investing in real estate by flipping or fixing houses, you need to understand your market. To get started in your real estate business, go house shopping. You'll soon learn how to pick up a flip or a fixer and be on your way to making a high return on your money.

My Power of Sale Newsletter is an easy and convenient way to stay ahead of your competitors. A membership to the newsletter gets you information on potential money-generating properties!

http://www.mississauga4sale.com/Power-Sales-Bank-Sales-Alert-Request.htm

All the Best!

Mark