::ErrorOK

After a lot of stressful days, I am finally over the hump of getting the SM off the ground.  I am a little surprised at the level of difficulty involved in just getting a readvanceable mortgage.  However, I understand that the banks are taking extra risk so they have to be extra careful during the application process.

In my case I have a pretty stellar credit rating, so that helps me get around a lot of the uncertainty.  Most of the stress involved in this mortgage was just due to shortened time lines.  I basically had 7 days (minus 2 for the weekend) to do EVERYTHING.  And by everything, i mean liquidating assets, HBP withdrawal, insurance, lawyer, appraisal, inspection, and probably a few more that i have now forgotten.  It was troubling, we’ll say it was a very tight time line with little room left to sit back and relax.

I was fortunate enough to have my request to extend the dates (most notably the condition date) extended a little to remove any doubt that I would be prepared in time for the deadline.  Now I find myself on the cusp of owning a house, with very few tasks still remaining.  It is a nice warm feeling to realize that not only have I moved on from the renting stage of life, but skipped past the condo and townhouse phase all the way to the detached home phase.  Some fortunate timing has allowed me to do this, and although 4 years earlier would have been even better timing, I was simply not in a position to buy anything at that stage.

Enough of these personal reflections, I do want to cover what has happened, what is happening, and what is going to happen (each list in order of occurance).

Happened (Past)

• acquired mortgage pre-approval (note that this did not help much as the pre-approval doesn’t help with a readvanceable mortgage, other than giving you an idea of how much you can borrow)
• put an offer on a house
• received a counter offer (+10k)
• re-countered with a new offer (counter – 5k, this was an obvious choice)
• offer was accepted (yay)
• start gathering paper work (brutal, proof of everything financial, and then some)
• inspect the house (about $460 for a thorough job, nothing was terribly wrong, so keep moving forward)
• appraise the house (required by the lender, house appraises slightly higher than my purchase price, yay)
• receive lender approval (the funds are available, now onto the closing stages)

Happening (Now)

• I have a copy of the mortgage contract, I am about to read through it and then sign it all
• I also have been working on several excel spreadsheets that will help plan and forecast budgets and finances (more on this in a future post)

Going to Happen (Future)

• I have to come up with a market strategy, I have a rough idea of the geographic, sector, and type distributions that i want to follow (and have created a nice spreadsheet to keep that in line)
• Make use of the tax credits available this year (no sense wasting them, and investing in the market right now just isn’t profitable)
• Need to set up automated transfers so that the mortgage process is a painless as possible

One last thing, since I am buying a new house and starting the SM, that means i will very likely not have enough personal finances to fund the LOC off the bat (which is the case in my situation).  Simply put, this type of mortgage requires 20% down payment; for a relatively young guy who is buying his first property (solo I might add), I simply don’t have the money to make 20% plus load up the LOC.  I had to liquidate assets just to make the 20% in the first place.  That means that I will be splitting the mortgage at 100%/0% (mortgage/LOC).  this basically means that my LOC will start out empty, and I will have to make payments (or pre-payments) before any credit will be available to borrow.  I will describe the details of my SM mortgage in a future post as well, so stay tuned for many posts filled with useful information.

No Comments Yet...

Taxes

I recently found an article on some tax software called StudioTax.  It appears that StudioTax is a more or less free version (for personal use only) that would be competing against Quicken’s tax software.  StudioTax will be netfile certified for the coming tax season.  I will likely give it a test, but not necessarily use it to file my taxes.  If it works well with the Smith Manoeuvre, then I may use it to file my taxes this year.

• StudioTax Homepage
• StudioTax Article (thanks to canadiancapitalist.com)

Global Economy

I found a really great article that describes (in great detail) all the people who were really responsible for the crumbling global economy.  Most of the culprits hail from the US (surprise), but some hail from other major financial countries.  Included in the list are also a few who saw this whole thing coming, bet against everyone else and made a pretty penny.  Some of their stories are actually a little amusing (Andrew Lahde being my favorite).  

Read up on the Wealthiest Idiots in the World.

Alberta Economy

I don’t have much to write about the Alberta economy (other than I suspect it will do the best out of the Canadian provinces).  Just that Chris Davies has been compiling a rather large list of historical economic data for Alberta.  Perhaps one day soon (when I am not at maximum stress levels) I will do something with that data.  I will also be posting my giant list of data in the coming days for people to gaze upon (there is a lot).

Edmonton Economy

I have come across a very positive look on the coming Edmonton economy (thanks to Alberta Real Estate Watch)  This is good news, but I still take it with a grain of salt.  I think that some of these views are a bit too optimistic, but I really do think that Edmonton will fair quite well through these tough economic times.   Since I have jumped into the real estate market here in Edmonton, I have high hopes for the coming years (stay tuned for a future post on my Edmonton real estate forecast).

The S&P Dividend Aristocrats Lists

I read about this wonderful list the other day when reading an article on the Dividend Growth Investor Blog.  S&P have a couple of dynamic lists that are filled with some of their best Dividend paying stocks.  If you are interested in executing a Smith Manoeuvre then I would suggest taking a look at some of these lists.

1 Comment

The search for a house is narrowing in, I have a short list of five MLS listings that I hope to visit in the coming days.  I have been using a combination of realtor.ca and findmyedmontonhome.com to search for homes.  Given an estimated offer of 95% of the list price, and that leaves me with about $345,000 and under, which turns into about $327,000 down to about $299,000.  In my opinion, and in this market, these are good prices for a 3 bedroom freehold properties with fenced yards and double garages.  Idealy, I am looking for maximum resale value, so that means that I have to take advantage of the situation of the buyers market that we have (and are going to have for another month or two at least).  Providing that I pick up a property on the continuing downswing of prices, this gives me the leverage of comfortably offering a far lower offer than I normally would be able to, this is effectively to take advantage of the seller’s impatience.   Some sellers have had their properties on the market for quite some time, with the inventory of houses growing and growing, this can only motivate a seller to accept a lower offer when they have nothing else on the table.

As for mortgages, I narrowed things down to a set of three.  FirstLine Matrix, BMO ReadiLine, and National Bank All-in-one.  BMO is highly regarded, but it (as well as the All-in-one) lacks a key feature, portability.  Portability lets me sell my house and buy a new one, all without having to renegotiate a new mortgage.  This is especially useful when implementing a Smith Manoeuvre because a renegotiation involves liquidating the investments that are secured against the LOC portion of the mortgage.  These investments would then need to be repurchased with the new mortgage.  This could cause complications with capital gains or capital losses.  Since I have every intention of selling the house before i convert the mortgage, this is a very important feature.  FirstLine also has a very good online portal for managing the accounts (and hopefully automating transfers).  Paired with my PC Financial account, I can only hope that I will be able to completely automate the transfer of funds to the point where my routine tasks become very straight forward.  News and details on the FirstLine Matrix mortgage once I hear back from my broker.

No Comments Yet...