Mortgage Insurance: What are your options?

.[caption id="attachment_2043" align="alignright" width="300" caption="Credit to Feathered Tar photostream on flickr"][/caption]Buying a new home is an exciting experience because it represents your hopes and plans for the future. For most Canadians, it also means having a mortgage and making regular mortgage payments. Often the financial institution you have your mortgage with will offer you mortgage insurance. Is it the right thing to do? Does it offer the protection you need?

What is mortgage insurance?

Mortgage insurance pays off the amount left owing on your mortgage if you pass away. Here are some facts you should know before deciding on how best to ensure that your mortgage is paid off in the event of your death:-        The amount covered by mortgage insurance decreases as the amount owing on your mortgage decreases. However, premiums DO NOT decrease, they remain the same.-        The insurance proceeds are paid directly to the financial institution.-        You may not be able to take your insurance with you if you move your mortgage to a new mortgage company. This means having to provide current medical and health evidence to become insured.-        You may not be able to insure both you and your spouse if the mortgage is registered in only one person’s name.

What is the alternative?

Having your own individual life insurance policy offers you the protection of covering your family’s financial needs including your mortgage in the event of your death. You also have the flexibility of naming a beneficiary of your choice. Your family may decide to use the benefit to pay down a low interest mortgage and invest the rest. Or they may need the finds to cover other expenses. The choice is theirs.Also, it’s important to remember that since you have an independent life insurance policy from your mortgage, you can transfer your mortgage from one lender to another without affecting your coverage. You can also choose between temporary insurance and permanent insurance which can be a part of your long term financial plan. You are able to insure both spouse for whatever amount you’d like so that you can cover other debt or financial needs as well.The choice is yours but having a discussion with someone that is well versed in both options is important.

To discuss your best options for Mortgage Insurance, please call me anytime.

Land Titles Transfer Tax:  A financial 'kick in the 'nads'

. [caption id="attachment_1890" align="alignright" width="300" caption="Credit to Robert Galloway photostream on Flickr"][/caption] A few weeks ago, I wrote about Winnipeg Land Titles office, and the reason why there is usually a 3 to 4 week delay between the date-of-possession for a home, and the date-of-receiving money for the sale.  A couple of days ago, I sat down with a nice couple who were writing an offer on a house, and the conversation turned to the 'Closing Costs' of the purchase.  The conversation went something like this:

Mr. Buyer: So aside from the lawyers fees (which we had already discussed), what other costs will I need to budget for? Bo: Well, there will be home insurance.  Good news is that you won't have to pay any property taxes, because we're doing this in January.  But of course you have to budget for the Land Titles Transfer Tax. Mr Buyer:  A tax?  Just for changing the title of the house?  How much is THAT going to cost?

I did a quick mental calculation, and gave him the cost, and then watched as his face went thru the classical 5 stages of grief, from Denial ("This Can't Be Right), to Anger ((F*#@ing Govm't), Bargaining (Isn't there a way around this), Depression (Oh, Man.....that's alot of dough) to finally  Acceptance (Well,  It IS a nice house and there is NO WAY around it, short of leaving our province).  So just how much is the government raking in with this tax?

Land Titles Transfer Tax calculation:

While Manitoba is not the only province to impose this tax, it is by far the most aggressive and onerous.  Thru a set of formulas, we arrive at a figure of $1720 for a $200,000-house or condo.  With Winnipeg's average house price hovering around the $230,000 mark, we can see that our Provincial Government is collecting approx. $2000 in taxes, EVERY TIME the title of a house is transferred.  But wait, you say....  didn't Bo just tell us that it costs $1720 for a $200K home? Yes, but I haven't told you the worst part:  ABOVE the $200K price, this tax adds an additional 2% on EVERY DOLLAR. So, a $300,000 home will cost you $3720   (calculated by adding the $1720 base, plus 2% on the additional $100,000 price = $3720) While the Land Titles Transfer Tax is especially difficult for young, first-time home buyers, even people 'with money' find an added tax of 4 grand or more to be a financial 'hit'.  For that reason, Winnipeg REALTORS® have been lobbying to change this regressive tax.  Let's bring it more in line with other western provinces.  Ideally, inline with Alberta, where a $200K home costs $75 in Land Titles Transfer Tax and a $300K home costs $95.  But heck, let's not even look at those numbers, lets instead compare to my wife's home province of Saska-Bush ....  where it costs just $1200 to transfer the title of a $400,000 home.   Manitoba's fee for transferring the Title of a $400,000 home:  $5,720 For a look at more comparisons and for a more in-depth article on the Land Titles Transfer Tax, go to the Winnipeg REALTORS® website at http://2muchltt.com There is even a link to contact your local MLA...remember, next year's election is only about 10 months away.

Let's do something about this Land Titles Transfer Tax.

Related articles

• How do Winnipeg Property Assessment values compare to actual Market Value? (bokauffmann.com)