The Joy and Agony of Moving

inside new house, kitchen

So – it’s official! My wife, Melissa and I have moved into our new house – and we’re loving it. To continue on my home-buying theme, I thought it was important to talk about how we prepared ourselves for the move and share tips to alleviate some of the stresses.

I’ll start with a common-sense concept – being organized. Try as hard as you may to be ready, things are going to fall through the cracks. For us, there were a few unexpected hiccups along the way.

A month before our moving date – I contacted truck rental companies to arrange a moving truck. Melissa and I had decided that we could handle one last DIY move. Given the timing of the year (end of June); many rental companies were unable to provide us with the equipment that we needed. Thankfully, there are a number of options in the KW area. Make sure you have this arranged sooner rather than later – best advice: once you know your moving date, call for movers or equipment right away!

At that one month mark – you should also make it a priority to finalize everything with your Mortgage lender. Make sure they have all the confirmations they asked for (paystubs, ID, confirmation of down payment, purchase agreements etc.); and arrange a time to sign your documents. If possible, ask your lender to mail your copies to the new house after closing so they don’t get lost amongst your other boxes and personal effects.

About two weeks prior to our closing date, I followed-up with the lawyer to make sure we were ready to sign our paperwork. Unfortunately for us, the office we intended to use was at capacity and couldn’t help us out. We were in a bit of a panic to find a new law office – but it all worked out. My advice, contact your lawyer about a month before your closing date; do not leave this to the last minute! Your real estate lawyer must go through a series of pre-work items before you sign – the more time you can give them, the better!

The week before our move date, we started packing. This was plenty of time to get our boxes organized, labelled and arranged; it also gave us a little bit of time to purge items we no longer wanted or needed. This is key! Move only what you want to move – the extra set of golf clubs you’ve been holding onto for years are ready to find a new forever home.

If you are employing the moving services of family and friends, it’s best to be in touch with them a few days prior to the moving day. Confirm when and where they should arrive, if you need them to bring anything (ex. dollies, tie-downs, tools, blankets etc.), and give them a rough estimate of the time they are needed for. Despite my best efforts, I had two of my five helpers back out. Knowing this in advance of the actual move date really helped ease the anxiety.

On moving day, make sure you keep your necessities accessible. You’re going to want to have cash, phone chargers, coolers, food, medication, a first aid kit, disposable plates/cups and garbage bags at the ready. Melissa and I made sure that both locations and vehicles had supplies in them. This kept us from having to run out to the corner or grocery store for anything on moving day.

If you have pets – you should consider leaving them with a family member, friend or boarding them for the day. Our dog Ollie wasn’t an exception to the rule – he’s very well-behaved and always tries to be helpful, but his involvement wasn’t necessary. So, he went to stay with Grandma for the day.

dog on bed

Lastly, I would strongly recommend that you focus on keeping things simple. I did not… I had booked an appliance delivery and cable installation on the moving day. In hindsight, it just complicated things – it meant I had to work around the schedules of others more than I wanted to. Yes, it was nice to have the WiFi ready on day 1; but it really wasn’t necessary. The fridge, stove and dishwasher didn’t get hooked up until later in the week, so having them take up room was really no benefit to me. Focus on what’s important, get everything to the new location without damaging it; and keep your moving team (and yourself) comfortable, happy and safe.

Remember, Rome wasn’t built in a day – and no one expects your house to look like it belongs on the cover of a magazine while you are moving in.

 

For more information about moving and the home buying process – check out CMHC’s website: https://www.cmhc-schl.gc.ca/en/co/buho/hostst/index.cfm

 

The low-down on down payments

Buying a house

Recently, we discussed things you need to be aware of when buying a home – I want to talk specifically about the various options to building your savings for the all-important down payment.

Let’s say you’re a young adult, just establishing your savings plan – with the ultimate goal of, one day, owning a home. The minimum requirement for a down payment is 5% (*The minimum down payment requirement for mortgage loan insurance depends on the purchase price of the home. For a purchase price of $500,000 or less, the minimum down payment is 5%. When the purchase price is above $500,000, the minimum down payment is 5% for the first $500,000 and 10% for the remaining portion. Mortgage loan insurance is available only for properties with a purchase price or as-improved/renovated value below $1,000,000), with Canada Mortgage and Housing Corporation (CMHC) insuring your Mortgage.

There are a few ways of going about saving this money – I’d recommend using a Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA). Each have unique costs and benefits.

 

RRSP Savings and the Home Buyers Plan – If you are currently, or have considered contributing to an RRSP, there is a program designed to allow you to withdraw up to $25,000 from the plan (without penalty) to put towards a down payment. The plan requires that you repay the amount back to the plan, just as if you borrowed it. If you don’t make repayments over the allowed 15 year period, you would claim 1/15th of the withdrawal as income in the given tax year.

What I like best about this strategy is, you take advantage of your smart investment moves and open an opportunity for another investment. This plays very well into long-term building of your net worth and, if your employer is making matching contributions to your RRSP, you can quickly build up your savings balance.

Running short on your RRSP contributions? It might be worth considering an RRSP investment loan to catch up on unused contribution room. The increased contributions can drastically reduce your taxable income and yield a larger tax refund.

A really smart move would be to contribute that tax refund to your loan – or, contribute the refund to your RRSP’s.

More information on the Home Buyers Plan can be found on the Canada Revenue Agency website: http://www.cra-arc.gc.ca/hbp/

 

Tax-Free Savings – Similarly to RRSP’s the interest earned on any deposits in your TFSA are exempt from taxation – meaning, your hard earned dollars will receive interest and you will not need to claim the returns as income. Withdrawals from the plan are very simple – there are no penalties, and the funds can move freely from the plan to your down payment without filling out any extra paperwork.

You cannot, however re-contribute the money taken from the TFSA until the following calendar year. And, there is no additional tax benefit for contributing money to your TFSA.

While the TFSA is a great investment vehicle for short or long-term investing; I am of the firm belief that, when it comes to down payments for first time buyers – it’s best to take advantage of the Home Buyers Plan mentioned above.

red piggy bank

So, you may be asking yourself, what if I don’t have an RRSP or a TFSA and I’m not very good about saving money – what else could I do?

Well, some Mortgage companies, Banks and Credit Unions will offer a personal loan for your down payment – but I’d caution against this. In addition to making payments for the Mortgage, Property taxes, heat/utilities, insurance – you’re also going to have to make an additional loan payment. If your budget can sustain this – by all means, it’s worth looking into further.

Alternatively, you could also venture in the direction of having a gifted down payment from a family member or really good friend (and trust me, they’d be a very good friend if they are willing to give you money to buy a house). This is becoming more of a norm in the home buying market. With house prices rapidly increasing in the region, you may feel like you’ll be playing a game of cat and mouse – your savings grows, but the price of housing grows too. So, sometimes having Mom and Dad or a grandparent help out, is a great hand up.

 

Here are some great links to CMHC’s website for more information and tools:

CMHC – Homebuying Step by Step: http://www.cmhc.ca/en/co/buho/hostst/index.cfm

CMHC – Ready, Set, Home App: http://www.cmhc.ca/en/co/buho/buho_018.cfm

** Ready Set Home is a tool to help homebuyers, especially first-time homebuyers, make informed choices when buying a home. Ready Set Home offers tools to guide you to figure out how much you can comfortably afford to spend as well as keep track of all the details during your home buying process.

Buying a Home: 6 things you need to do before closing the deal [Infographic]

6 important items on your home buying checklist!

Let’s face it, while buying a new home is exciting, it can also be extremely stressful. This infographic breaks down 6 important items you’ll need to check off your list before closing day.

Mortgageinfographic1

MortgageInfographic2

Matt Lukas shares how he is building a ‘green’ home!

house under construction

I would consider myself to be environmentally conscious – I recycle, use the green bin and try to keep as much garbage out of our landfills as possible. But owning a home and being green goes beyond just what you put out at the curb every week.

When working with our builder, we talked a lot about resource consumption (water, electricity and natural gas), so we’ve elected for a high efficiency gas furnace, heat recovery ventilator, on-demand hot water heater, energy efficient windows & doors, spray foam insulation. During my research I found some great resources and incentives that are worthwhile looking into further.

First, Canada Mortgage and Housing Corporation takes energy efficient homes seriously – so much so, that they offer a 10% refund on your CMHC premiums if your home qualifies under the Energy Star guidelines. Not only will you save money on your utility bills – but, take that refund and apply it back to your mortgage as a principal payment – over 25 years you will save hundreds in interest costs and pay your Mortgage off sooner, it’s a win-win situation!

Let’s say you aren’t building a brand new home, have you ever considered having an energy audit done on your current home?

At our last house, we did. What an eye opening experience that was!

green house infographic

https://www.energystar.gov/

The audit revealed where the house excelled from resource consumption and where there were areas for opportunity. We had some windows and a sliding glass door that were identified as potential leak areas, and we needed to replace a mid-efficiency furnace – these were more major expenses, however, we also noticed some inexpensive fixes: silicone replacement, receptacle insulation, programmable thermostat, energy star light bulbs, low flush toilets, flashing repairs and door seals.

We did a number of high return repairs and improved our initial score from adequately efficient to most energy efficient. The investment we made in our home went beyond the obvious electricity and natural gas savings – it helped us market our home to interested buyers, and reduced our greenhouse gas emissions by 0.6 tonnes per year.

 

If you have been considering ways to go green here are some great resources for more information:

Home Energy Efficiency – Natural Resources Canada: http://www.nrcan.gc.ca/energy/efficiency/housing

Green Housing – CMHC: http://www.cmhc.ca/en/co/grho/index.cfm

CMHC Green Home Rebate: http://www.cmhc.ca/en/co/moloin/moloin_008.cfm

Energy Audit Information – Barrier Sciences Group: http://www.barriersciences.com/services

Building a House – Matt Lukas shares his experience

sectional couch

Subscribe to our blog to keep up with Matt’s monthly updates focusing on his house building experience.

As my wife and I do our progress inspections of the new build, we find ourselves getting into discussions about the new furniture and fixtures that will complement the house’s new style. We’ve visited a few different retailers to discuss our options – and we’ve done some research to figure out when is the right time to buy.

I’ve been a little taken back by sticker shock on some items – we want to get a new sectional sofa for our main living space, but I can’t justify spending over $5,000 for a couch, no matter how comfortable it is. The sales associate was on-the-ball noticing my look of dismay, and quickly chimed in that in-store financing was available. Not a bad idea, but not for me. couple with their dog

In my last blog I talked about budgeting, making sure my cash flow matched the needs and wants I had at the time. So while I could forego a little bit of savings to have a really nice couch – it doesn’t make long-term financial sense for me to spend the money now on furniture, and potentially forego years of retirement savings or dip deeper into my emergency savings if something bad happens.

This experience brought forward a few financial tips you may find useful.

Number one: Applying for in-store financing

Credit is important, using credit is important – but using your excellent credit to temporarily finance household goods is detrimental to your credit. Equifax Canada says that up to 15% of your credit score is comprised of the length you have established credit. New credit can hurt your score over the short run. They also note that 10% of your credit score is comprised of the type of credit you own – Mortgages, loans and lines of credit are good; credit cards are okay, in-store financing or prime lending is not so good and can hurt your score over the long-run. So, let’s go back to my situation in the furniture store.

Here I am, sitting on an expensive couch that my wife and I like, we’re feeling the pressure of buying from the salesperson and we need to make a snap decision about money. My best piece of advice, take your time and walk away if necessary. So, that’s what we did.

Number two: Do your research

It turns out, that awesome, expensive couch we were sitting on is manufactured and shipped from the States. As of right now, the Canadian dollar trades at roughly $0.75 USD – so from my perspective, the item is overpriced by 25% just based on the disparity of the currency. If I was buying last summer, this item should have cost much less.

My outlook has changed slightly, now when shopping for furniture, I’m going to ask about Canadian-made items – the pricing is much more competitive, the shipping and manufacturing time is less, and the quality is truly comparable.

Number three, my last point: Compound interest

I mentioned earlier that this type of purchase could significantly impact years of retirement income, and you may have scoffed and thought, “Really Matt, over $50 or $100 a month?”

The truth is, I’m not retiring tomorrow, and my investment time frame will be another 25 to 30 years (depending on the financial decisions I make today). The more I contribute to my savings now, the more opportunity that money has to earn interest; and, that interest earning interest, and so on. A wise man once said, “The greatest tool an investor has in their tool belt is time”, don’t squander the time you have now to plan for your future.

Tools I recommend:                                                                         

YNCU Retirement Planning Tools: https://www.yncu.com/Personal/ToolsAndCalculators/Calculators/RetirementPlanner/

Consumer Reports:

http://www.consumerreports.org/cro/index.htm

Equifax Canada: http://www.consumer.equifax.ca/home/en_ca

Follow me on Twitter @matt_at_YNCU for updates and more ways to be financially fit.

 

house under construction

Are you buying or building a house? Share your comments and questions with us!