Quoted from mrniceguy

I've lost total interest in this thread !

AH! AH! AH!

Good one....

tartagliag

[quote=1181]

You are buying insurance against the future economic situation. Is is stupid to buy house insurance? Mortgage insurance? The answer is always no. Should you always buy these things? no.


Sorry but I can't agree it would have been very stupid for me to have mortgage insurance when I bought my first place, I was single, made sure that EI would be enough to make my mortgage payments why would I insure the actual mortgage ? to pass money on to others ?? Now one of the best friends had a wife and 2 young kids when they got their first place and yes he did insure the mortgage which in the end turned out to be the smart thing because he passed on just after his 31st Birthday leaving his wife and a 1 and 3 year old but at least the house was paid for... all I trying to say is very few things are absolutes ... it depends entirely on your current  place in life and your responsibilities.

Quoted from SquidVicious

[quote=1181]

You are buying insurance against the future economic situation. Is is stupid to buy house insurance? Mortgage insurance? The answer is always no. Should you always buy these things? no.


Sorry but I can't agree it would have been very stupid for me to have mortgage insurance when I bought my first place, I was single, made sure that EI would be enough to make my mortgage payments why would I insure the actual mortgage ? to pass money on to others ?? Now one of the best friends had a wife and 2 young kids when they got their first place and yes he did insure the mortgage which in the end turned out to be the smart thing because he passed on just after his 31st Birthday leaving his wife and a 1 and 3 year old but at least the house was paid for... all I trying to say is very few things are absolutes ... it depends entirely on your current  place in life and your responsibilities.

Guessing you put a downpayment of 35% or more? Cause it's CMHC mandated that insurance be purchased otherwise. If you didn't put down 35% or more, you paid insurance...whether you like it or not.

I have a variable rate mortgage, Prime -0.5%. I'll never go with a fixed rate mortgage, doesn't make sense to me. Unless I am paying my house off inside of 10 years, I'm almost certain to pay more.

Fixed rates are ALWAYS higher off the hop, I'd rather take the risk of my mortgage climbing up a little. I've been sitting on a 2% rate for over a year now.
Besides, terms are 5 years...I get antsy, I change my mind then. If I am in an "Oh no!" situation...I've bought more house than I can afford, and that would make me a dumbass. That has nothing to do with interest rates...

Quoted from SquidVicious

[quote=1181]

You are buying insurance against the future economic situation. Is is stupid to buy house insurance? Mortgage insurance? The answer is always no. Should you always buy these things? no.


Sorry but I can't agree it would have been very stupid for me to have mortgage insurance when I bought my first place, I was single, made sure that EI would be enough to make my mortgage payments why would I insure the actual mortgage ? to pass money on to others ?? Now one of the best friends had a wife and 2 young kids when they got their first place and yes he did insure the mortgage which in the end turned out to be the smart thing because he passed on just after his 31st Birthday leaving his wife and a 1 and 3 year old but at least the house was paid for... all I trying to say is very few things are absolutes ... it depends entirely on your current  place in life and your responsibilities.

It appears you do not understan my statement. I said buying mortgage insurance is never bad. I also said there are times you should not buy it. (Should you always buy these things? No) In otherwords financial instruments are sometimes good and sometimes bad. My comment was intended to point out that for those that think locking in is stupid that this is not always the case. If mortgage rates are at 8% in two years many are going to learn a hard lesson.

Quoted from Jester

It appears you do not understan my statement. I said buying mortgage insurance is never bad. I also said there are times you should not buy it. (Should you always buy these things? No) In otherwords financial instruments are sometimes good and sometimes bad. My comment was intended to point out that for those that think locking in is stupid that this is not always the case. If mortgage rates are at 8% in two years many are going to learn a hard lesson.

Agreed maybe I'm missing something but for single guy with no dependents I do see mortgage insurance as a waste of money (better to put that payment on the principal) so I would call that 'bad' but perhaps I'm being too literal

Quoted from ken_cinder

Guessing you put a downpayment of 35% or more? Cause it's CMHC mandated that insurance be purchased otherwise. If you didn't put down 35% or more, you paid insurance...whether you like it or not.

I have a variable rate mortgage, Prime -0.5%. I'll never go with a fixed rate mortgage, doesn't make sense to me. Unless I am paying my house off inside of 10 years, I'm almost certain to pay more.

Fixed rates are ALWAYS higher off the hop, I'd rather take the risk of my mortgage climbing up a little. I've been sitting on a 2% rate for over a year now.
Besides, terms are 5 years...I get antsy, I change my mind then. If I am in an "Oh no!" situation...I've bought more house than I can afford, and that would make me a dumbass. That has nothing to do with interest rates...

I bought my first place more than 15 years ago ... I believe the rules are different now but then I paid 0 CHMC insurance, I had a fixed mortgage and had I stayed in the place I was on pace to pay it off in around 10 years ... but then I got married moved to a bigger place .. yada yada

Hate to drag this thread on but mortgage rates are not set by BOC interest rates, they are set by the bond market. They are certainly influenced by the BOC rate, however bonds rule the day.
With government debt around the world going crazy, there are very real worries to rapidly changing economies.

Without getting too technical, there is a very real chance that we could see very high inflation (& interest rates) in the next 2-3 years.
Governments around the world must pay their debt, and they can only do this through raising taxes, and cutting services.
This transfers the burden to the taxpayer, and we have less and less money each month.
Then we must get more money through increased costs of our goods and services, which causes inflation.
To keep a lid on inflation governments must increase the interest rate to slow business down, as things are already weak, they can't really do this to a great degree, so inflation and interest rates may go unchecked.

Now you are the US or CAD government and you have to pay for your debt through a treasury bond. Basically it is an IOU with a set interest rate.
You must sell that debt around the world, but you must compete with other countries selling their debt, so you must offer a reasonable rate of return compared to how solid your economy is versus the next country or other investments available. If you have to increase the rate of return on your debt based bonds, then mortgage backed bonds (and other bonds) must also increase their rate of return to entice investors to purchase. (its a simple explanation and not really accurate but you get the idea)
You also have the option of simply printing more money, but this devalues the currency and increases inflation because your dollars have less buying power and things cost more.
So the bond market is going to heat up and competition for investors money will increase. This will drive up long term mortgage rates, irregardless of what the BOC does.

Now, in Canada, we have unsustainable housing. In 2007 we had a significant decreasing housing market as prices were simply unaffordable.
Then the USA started the recession, and interest/mortgage rates plummeted.
Housing again became affordable and the housing boom continued.
Now we are going to see the CMHC tighten the rules making it more difficult to purchase, i.e. homes are less affordable.
We are going to have the HST coming which will increase housing costs but not through value, just taxes.
This will reduce the net house price 5-7%.
We have mortgage rates that could increase 1-2% by years end and boom, your bubble has burst.
Homes are just not as affordable anymore.
I believe because of the aforementioned reasons, and others, house prices will decrease 20-30% in Canada, over the next 3-5 years.
Housing will simply be too expensive for too many people.
Mortgage rates will increase.
Taxes will increase.
Interest rates will increase.
inflation will increase.
Everything will cost more and you will have less money to spend.

So the odds we may have a USA style housing bubble where prices reduce dramatically are very very real. This would also throw us in a USA style recession.
Be proactive and pay that home equity loan back sooner than later.
Play it anyway you like, but don't say you didn't know.

When we had a Mortgage I turned it into a Line of Credit, Simple interest, not compounded, also you get an Interest only minimum and no restrictions on how much you can pay at any given time. Hit the Lotto a bit and throw $25,000 (or whatever) with no headache etc. Just transfer the money to your line of credit. Oh, and Interest was Prime. It worked out great for us and I keep the line of credit for whatever I want to buy, Need a vehicle, Interest is Prime (actually Prime + 1%, they raised it just... because   ) Payment is whatever you want above Interest only minimum. Vehicle is $24000, interest is 3%ish + $720/year interest or $60/month minimum. Interest rates change, beware.  Warning, it is easy to get hooked into the Interest only thing and never get anywhere.

On the subject of Mortgage insurance... When you take insurance through the bank, they pay the balance of the mortgage when you or your Spouse pass, if you both have it. Cost is X dollars, I can't recall a number now ($50- $100/month, but this number is set for the balance of the mortgage. Sounds great, but the mortgage goes down over the life of it heading towards $0.00! (Yaay!) the insurance premium remains the same as you approach $0 Booo!, The amount you will receive if you pass near the end of your mortgage is very low (You only owe $3000 or $4000 on your house) so that is all they pay.  It seems to me they are Betting you die old and you are betting you die young!! I want to bet I die old! Thank you very much!  Now, Anyone can go and get Term Life insurance, the cost is similar, but the payout is set regardless of when you die, so if you pass 20 years in or 2 months in, the policy pays the set amount, usually the initial mortgage. Also you can usually switch that policy to more of a permanent Life Insurance without qualifying again, your age will set the premium though.

Please note, these things are all based on a number of years ago and how I understood them, so look into it yourself if these things sound good, or to clarify them.

Dave  (Happily Mortgage Free!)

http://www.reuters.com/article/idUSTRE63L39720100422

Not saying the sky is falling or anything, but just wanted to throw this out there for all the believers that a low interest rate is some sort of magic or god-given right that can't be touched.  As I mentioned before, we'd all like low rates, but there's no evidence to say rates will stay low.  There is, however, evidence to say they will rise - in the form of the institution that sets those rates telling us they'll rise.

Quoted from McMean

http://www.reuters.com/article/idUSTRE63L39720100422

Not saying the sky is falling or anything, but just wanted to throw this out there for all the believers that a low interest rate is some sort of magic or god-given right that can't be touched.  As I mentioned before, we'd all like low rates, but there's no evidence to say rates will stay low.  There is, however, evidence to say they will rise - in the form of the institution that sets those rates telling us they'll rise.

That was actually announced yesterday .. I was a bit surprised it didn't affect the C$ one way or another but as you mentioned .. BOC has taken the gloves off ..doesn't mean that things will go crazy but the safety net has been slackened .

Well, turns out we definitely bought at the right time..  we just found out the value of our home is up by $60k, and it's not even built yet!  

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