Should you to pay off your mortgage?

Interest rates are at an all time low and many homeowners (me included) are looking at these rates and trying to make some plans.  I dream of the day I can pay off the mortgage. Like many homeowners, I am struggling with the question of whether to retire my mortgage early or not. I thought I would review some of the pros and cons with you to help with your decision.

The pros:

* Paying off the home loan could save tens of thousands of dollars in interest during the time you would otherwise be making payments.

* Peace of mind you will have from owning your home free and clear.

* Most experts recommend owning your home free and clear before you retire.

* If you still have a higher interest mortgage, paying down your principle will make refinancing easier.

The cons:

* Sometimes, other financial needs should come first: Max out your RRSP contributions. Pay off credit cards. Create a 6-month emergency cash fund.

* Mortgages are cheap money. When you pay down your mortgage or pay more every month, you are probably hoping for those big dollar savings on interest. But remember these are future dollars and they will be worth less 20 years from now. You may want to keep your higher value dollar today and pay the bank its lower value dollar in the future.

* If you plan to move to another city or trade up or down, it’s not wise to pay off the mortgage. You would tie up your money in a home you might not be able to sell very soon when you want to buy another one.

* Check to see if the investment you could make with the payoff money would earn more interest than what you are presently paying on your home loan.

The conclusion:

If paying off the mortgage would give you great satisfaction and a sense of security, go ahead and do it. But, don’t make yourself “house poor” or risk other parts of your financial health to do it.

 

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Michele R.J. Allinotte is the owner of Allinotte Law Office in Cornwall, Ontario and she helps her clients make the best decisions for themselves, their families and their businesses. Her practice focuses on the areas of business law, estate planning and real estate. Visit www.YourCornwallLawyer.com to get her FREE Peace of Mind Personal Inventory to make sure that your family has all the information they need.

I’m Thinking About Selling My Home, What Do I Need to Do?

There are many things you need to think about when selling your home, but the focus here is on what information you need to gather to help your lawyer (and also your real estate agent) when you are selling your home.

If you are thinking of selling, you should try to get together the following information:

-       A copy of your Deed and Mortgage (or at least some information about your mortgage – a statement or contact person at the bank);

-       Your final tax  bill from the previous year and any bills from the current year and proof of payment;

-       You water bill, if any;

-       Your heating information – is the property heated with oil, gas, or propane? Information on what company you use, and, if you use propane, information on whether the tank rented, and copies of bills are all helpful;

-       Information and copies of bills for any items that are rented (such as hot water tanks);

-       If you are selling any items with the property (dishwasher, garage door opener, et cetera) find the manuals for them so you can leave them with the new owner;

-       Copies of any surveys or plans you might have for the property, or any building permits if you did major work while you owned the property;

-       Information on your insurance company and what they require to cancel the insurance on the property; and,

-       If you have the file/letter from the lawyer when you bought the property, that can be a great source of information.

While not all that information may be needed, getting it all together is helpful so the information is readily available if your lawyer or real estate agent would need it.

How Canadian Citizens Should Own Florida Property

Note from Michele:  This is a guest post by my colleague, Maura S. Curran of The Curran Law Firm, P.A. in Jupiter, Florida (www.TheCurranLawFirm.com), which originally appeared on her blog at: http://thecurranlawfirm.com/blawg/?p=37. This issue is an important one for those of you who own or are thinking of buying a vacation home outside of Canada.

By Maura S. Curran

Are you a Canadian and own real property south of the border?  Far south, say in Florida?

If you are like many Canadians, you own a second home in the US, and in particular, the Sunshine State, Florida.  Why not?  Florida has beautiful winters – no need for parkas and galoshes here, nope, just sunscreen and sunglasses.  But do you understand what happens if you die leaving property in the US?  What about if you become incapacitated?

There are many questions to consider if you become incapacitated or die while owning real property in Florida when you are not an American citizen.  Will there be US federal estate taxes?  Do you have to probate?  Who is allowed to be the personal representative? Does my estate need an attorney?

Florida law requires anyone dying and owning Florida real property in their own name to file a probate in a Florida Circuit Court so the property can legally transfer to your beneficiary.  The probate process can take several months, cost thousands of dollars in fees and costs, and is public record plus it can create unnecessary stress on everyone involved with an international probate.

But did you know that probate is voluntary?  You can legally avoid the cost and time and public nature associated with probate.  One common way is to have a revocable living trust own your property.  When a trust owns the property you avoid probate and your beneficiaries can avoid the hassle, delays, costs and stress of having not only a probate, but an international probate.

Do not be confused however, a trust alone will not avoid federal US estate taxes.  Depending on the size of your assets, your estate may be subject to federal estate taxes.  Currently there are no federal estate taxes, however, starting in 2011 depending on the size of your estate, your estate could be taxed at 55% !   So if you own property exceeding $1 million you need advanced estate planning in order to minimize, if not avoid, federal estate taxes.

Want yet another reason to have the property held in a trust?  Should you become incapacitated, there is no need to have a Florida probate court approve the guardianship of the owner – another time consuming, stressful court procedure.  Rather, if you are the Trustee, the successor trustee will assume your duties – much quicker and easier process to change a trustee than to get court approval for a guardianship.

If you are a Canadian citizen and own or are considering purchasing property in Florida, call my office and ask to have a consultation regarding your Florida home or visit my online virtual office at www.AbacoaVLO.com – serving all of Florida!

Buying A Home: Why Do I Need A Lawyer And What Does My Lawyer Do?

In Ontario, a lawyer is needed to register any transfer of land, and two separate lawyers are needed to represent the buyer and seller.

First, I speak with clients about title insurance, which is a great product, but isn’t for every home buyer, so I conduct an overview of whether it’s right for your property at the outset.

I also speak with clients about how they will “take” title to their property. Althought most couples take title together as joint tenants, meaning on the death of one the survivor becomes the owner, there may be reasons in your situation why that isn’t a good idea. We can review that together.

When you’re getting a mortgage, I am the lawyer for you and the bank. The bank will send specific instructions on searches they need and how they want the mortgage registered, which we’ll complete before closing.

As the lawyer for both you and the bank, I’ll give an opinion to both of you after closing. I’ll conduct searches relating to the property you’re buying to ensure there’s nothing affecting the property that will cloud your interest.  If an issue comes up, we ask the seller to fix it. If they refuse, I’ll speak with you about the situation, outlining the problem and its impact on you, giving you both the legal and practical sides of the problem so you can decide how to proceed.

The seller must tell us the exact purchase price for the property. Costs such as taxes, water and fuel oil are adjusted on the Statement of Adjustments. You’re also credited for any deposit that you made. So, the amount you have to pay for your home will vary a bit depending on what expenses the seller has pre-paid. We adjust everything on the day of closing.

Once we know the amount you’ll give the seller and what we’re getting from your bank, I’ll let you know how much you’ll need to complete the transaction. This amount is usually what you’d budgeted as your down payment when you obtained your mortgage approval.

On closing day, I exchange documents with the seller, and give them the funds to purchase the property and then register the documents (i.e. the Deed and the Mortgage). Once things are registered, I do the best part of my job – give you the keys to your new home!

Cornwall lawyer Michele R.J. Allinotte, founder of Allinotte Law Office focuses on guiding families and small business owners to make the best legal and financial decisions over their lifetime.  For more information, please visit www.yourcornwalllawyer.com.

This post originally appeared on the Seaway News online: http://www.cornwallseawaynews.com/Business/Personal-finance/2010-05-18/article-1118151/Buying-a-Home:-Why-Do-I-Need-a-Lawyer-and-What-Does-My-Lawyer-Do%3F/1.

Congratulations to the Patio Set Winner!

Mr. & Mrs. J. McNaughton are the winners of this years Cornwall Chamber of Commerce Spring Home  & Leisure show prize for Exit Realty Seaway. The patio set was donated byAllinotte Law Office. In the photo, starting from back left, Luc Poirier, Hilary Beaty, both of Exit Realty Seaway, Michele Allinotte of Allinotte Law Office and Penny Rudderham of Exit Realty Seaway. Enjoy!