Homeowners and buyers are in a rather enviable position these days. Interest rates are at historic lows and the cost of borrowing for a home is about as low as it can get.

That's great news. But it's not the only thing homeowners and purchasers need to think about their mortgage.

There are a number of other features to consider before signing up for a mortgage and what is probably the largest debt that most Canadians will ever take on in their lives.

"When it comes to choosing a mortgage, getting a good rate is just the tip of the iceberg," says Mary Gronkowski, regional sales director with Mortgage Intelligence Inc., a national mortgage brokerage company. "You have to be aware of all the other features that may lie below the surface. All features of a mortgage should fit a homebuyer's personal goals, both now and down the road."

One type of mortgage to consider is an assumable mortgage.

An assumable mortgage means it can be transferred to another borrower. It allows a purchaser to take on your mortgage's terms and payments as part of the sale of your home. With extremely low interest rates today, that could be a big selling feature to a potential buyer in the future.

Given the low rates today, many homeowners are thinking about refinancing their mortgage.

Whether you should refinance your mortgage in a period of low interest rates depends on how much it will cost you to break your existing mortgage compared to how much you will save in interest payments.

If you break an existing mortgage you will have to pay the greater of three month's interest or the interest rate differential (IRD).

An IRD is a penalty for early prepayment of all or part of a mortgage outside of its normal prepayment terms. Usually this is calculated as the difference between the existing rate and the rate for the term remaining, multiplied by the principal outstanding and the balance of the term.

For example, if you had a $100,000 mortgage at nine per cent interest rate with 24 months remaining and wanted to renegotiate your mortgage at 6.5 per cent for 24 months, your IRD would be $5,000 ($100,000 x 2.5% $2,500 x 2 years $5,000).

It may only make sense to refinance your mortgage if the interest rate savings over the remaining life of your mortgage exceed the value of the IRD.

Another strategy is to take a variable rate mortgage. If interest rates go down and you keep your mortgage payments the same, you will be paying off more of your principal with each payment and will pay down your mortgage faster.

Many borrowers are taking advantage of low interest rates by accelerating payments on their mortgages. Many lenders will allow you to double up payments periodically or make lump sum payments of up to 20 per cent of the principal once a year.

You should make sure you understand the size and frequency of payments your lender will allow before you sign up.

Some mortgage lenders will have an option to skip a payment without penalty, which may come in handy in today's economy.

Another option that many mortgages have is portability.

This allows you to transfer your existing mortgage over to a new property, another big advantage if you have a mortgage at current low rates.

Not all portability features are the same, however. Some lenders allow up to 120 days to transfer the mortgage while others allow for only a few days or a week.

"Choosing the right mortgage involves considering where you are now and where you may be three to five years from now," says Gronkowski. "Working with a professional can help you make sense of the many options available to you."

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors. (boggsyourmoneyrogers.com)

Copyright 2009 Talbot Boggs

Closing costs for a home average 3 percent of the purchase price and can reach 6 percent in higher-tax areas. But you can ease the pain.

--Have the seller pay closing costs. Plus, you get a tax break for mortgage points the seller pays (each point is 1 percent of the loan amount). Note that there are limits: Freddie Mac and Fannie Mae allow sellers to pick up closing costs worth 6 percent of the purchase price for loans with 10 percent or more down; the Federal Housing Administration allows up to 6 percent; and the Department of Veterans Affairs allows 4 percent.

--Shop loan terms. The "no-cost" mortgage, which rolled most closing costs into your interest rate, has largely disappeared, and lenders have resurrected fees for everything. Charges vary dramatically, so shop and negotiate all the loan terms.

Call three or four lenders for their best rate (preferably without points) and an estimate of their fees (excluding third-party charges and escrow amounts). Apply with the lender that's offering the best deal to get a good-faith estimate. If you're refinancing, your current lender may discount fees.

--Pay less for PMI. If your stake in a home is less than 20 percent, you must ante up for private mortgage insurance. Monthly premiums typically cost 0.5 percent to 1.5 percent of your loan amount per year, depending on how much equity you have, your credit score and whether you get a fixed or adjustable-rate loan.

You could negotiate with the seller to pay a single premium upfront, or you could roll that premium into your loan. The downside of taking the larger loan is that you'll pay more interest. But you can deduct the extra interest and not worry about the limits on deducting PMI premiums. (PMI cancels when your equity reaches 22 percent of the home's value.)

--Find cheaper title insurance. Title insurance protects against challenges to your ownership, with coverage for your lender and for you. But as much as 80 percent of the premium goes the agent's commission, so shop for cheaper title insurance. For example, EnTitle Direct (EnTitleDirect.com), which operates in 32 states, charges lower premiums by eliminating the middleman.
 

Sometimes even the rich and famous find themselves kicked to the street. Check out this list of celebrities who've faced eviction and foreclosure due to bankruptcies, unpaid taxes, and missed mortgages

Aretha Franklin
Let Aretha Franklin's story be a cautionary tale to all of you who let your advisors manage your funds (and don't keep a watchful eye on them yourselves). According to the Queen of Soul, she almost lost her Detroit home in 2008 because of a clerical error her attorney made years earlier. It seems the hoopla was brought about over $445 in unpaid taxes and late fees from 2005. By 2007, unpaid taxes had reached a total of $19,192. Aretha had no intention of losing her home, but she did not take PETA up on their offer either. The animal rights group had said they would pay Franklin's tab if she promised to stop wearing fur.

Stephen Baldwin
Stephen Baldwin should be careful when he says, "I'm a Celebrity, Get Me Out of Here." The actor and sometimes-reality TV star recently faced foreclosure on his Nyack, New York, home when he defaulted $824,488.36 on his mortgage. His financial troubles didn't end there. On July 21, 2009, Baldwin and his wife filed for Chapter 11 bankruptcy with an overall debt of an estimated $2.3 million.

Fantasia Barrino
Fantasia Barrino didn't have it easy growing up. But the high school dropout, who became a mother at age 16, fought hard and became the winner of "American Idol" Season Three. Still, success doesn't guarantee an easy path, and somewhere between her 2004 "A.I." win, the release of her debut single, "I Believe," her turn on Broadway in "The Color Purple," and the Grammy-nominated album "Fantasia," Barrino found herself in trouble again. As her best-selling memoir and TV movie warned, "Life Is Not a Fairy Tale." In 2008, the singer was at risk of losing her 6,500-square-foot, $1.3 million home in Charlotte, North Carolina. But Fantasia's fairy godmother must have been looking after her: a settlement was reached, and Barrino's home never went to auction.

Jose Canseco
In 2008, baseball All-Star Jose Canseco admitted that he had foreclosed on his $2.5 million, 7,300-square foot home in Encino, California. According to Jose, "It didn't make financial sense for me to keep paying a mortgage on a home that was basically owned by someone else." Maybe that's why he decided to crash in that "Surreal Life" house for a couple of weeks.

Evander Holyfield
Boxing champ Evander Holyfield almost lost his Fayette County, Georgia, home not once but twice. That's an especially big blow when you live on a street named after you (in this case, that's Evander Holyfield Highway). But, luckily, the Real Deal was able to sidestep foreclosure auctions against his $10 million mortgage and has kept his modest 109-room, 54,000-square-foot home. After all, could any man live without his three kitchens, a bowling alley, and 235-acre spread? Maybe he should try downsizing and avoid going through this whole mess a third time.

Victoria Gotti
Not sure who had the job of telling Victoria Gotti, daughter of mob boss Sam Gotti, that she might lose her Long Island mansion (the backdrop for her former reality series, "Growing Up Gotti") to foreclosure, but we're glad it wasn't us. Still, she couldn't have been caught off-guard. She allegedly hadn't paid her mortgage in more than two years and owed $650,000 on the home. Gotti blames her ex-husband, Carmine Agnello, for getting her into the financial mess.

Jeana Keough From "The Real Housewives of Orange County"
It's hard to feel sorry for someone when you hear they are in foreclosure on one of their FOUR homes. So when news broke that Jeana Keough from "The Real Housewives of Orange County" had a notice of default for roughly $37,000 filed on her Coto de Caza estate, we weren't really all that upset for her. Turns out that she was in the process of getting loan modifications on all four of her homes (three are rental properties) and quickly got things squared away. But the now single mother who lives with her son, Colton, says she's going to sell the $5 million house anyway. As she herself said in a letter to the Orange County Register, "8,500 feet with a guest house on a 1.2 acre lot with six garages is more than Colton and I need." Life can be so hard.

Ed McMahon
In 2008, it was announced that everyone's favorite sidekick, Ed McMahon, was about to be kicked out of his Beverly Hills home. Ed was in arrears $644,000 on his $4.8 million mortgage. Enter Donald Trump. The real estate mogul offered to buy Ed's home and rent it back to him. Known as a cutthroat businessman, Trump said he wasn't out to make a dollar on this one. He was simply lending a hand to a celeb in need. Turned out that Ed didn't need help after all; he sold the home to an anonymous buyer not long after.

Michael Jackson
Early in 2008, Michael Jackson faced eviction from his former sanctuary, Neverland Ranch. The suit filed against Jackson stated that he owed $24,525,906.61 and that if Neverland went to auction, not only would the house be put on the block but so would all of its contents, including lighting fixtures, furniture, and "all merry go round type devices." Colony Capital investment firm swooped in, and bailed Michael out. But still, we're really amazed that Jermaine Jackson was fighting so hard to make sure his brother was buried at Neverland Ranch -- it doesn't really sound like a very peaceful resting place after all.
 

CHICAGO (Reuters) – Chicago's old main post office, which dates from the 1920s and has been vacant for more than a decade, was sold at auction on Thursday for $40 million.

The minimum bid was just $300,000 and bidders had to have a certified check for $250,000 to express good faith.

The U.S. Postal Service identified the new owner as International Property Developers North America Inc, which did not specify its plans.

In a statement read by a postal service spokesman, the company said it would "re-energize the property as a focal point and destination for the entire city and its visitors for the next century."

"To paraphrase Daniel Burnham, let me assure you that we shall make no small plans," it said.

The building of 2.5 million square feet (232,000 square meters), which straddles an expressway and sits above railroad tracks, was deemed a must-sell because the postal service did not want to keep paying the $2 million annual cost of upkeep, auctioneer Rick Levin & Associates said.

The postal service moved its main office across the street from the old facility in 1997.

The old nine-story building, flanked by two towers, was once the U.S. Postal Service's largest facility. Its soaring marble-floored lobby was featured in a scene in "The Dark Knight," the latest entry in the Batman movie franchise.

Among past failed proposals for the structure, which sits adjacent to the Chicago River and near the downtown Loop, were converting it into condominiums, a hotel, an auto dealership, an indoor parking facility, a casino and water park.

TORONTO (Reuters) - Canadian resale home prices are likely to rise, not fall, and sales will nearly match those of last year, the Canadian Real Estate Association said in a revised forecast on Thursday.

A much stronger showing in the second quarter, and a solid start to the third quarter, prompted CREA to predict a dramatically smaller decline in sales of previously owned homes for 2009, and for prices to edge up.

It said the current resale market was like "night and day" compared with the beginning of the year.

The group said its new forecast for a 1.5 percent rise to C$309,500 ($283,945) for the average home price contrasts with a call for a 5.2 percent drop to C$287,700 in its May outlook.

CREA also revised its forecast for 2009 sales to 432,600 units, a 0.4 percent decline from 2008 when 434,477 units changed hands.

That is a much smaller retreat than the May forecast, when the association expected sales would drop 14.7 percent from 2008 -- itself a revision from a previous prediction of a 16.9 percent drop in sales.

"The recovery in Canadian housing I think was beyond the imagination of even the most strident optimist. It truly is remarkable and I think that revision just reflects it," said Doug Porter, deputy chief economist at BMO Capital Markets.

The Canadian residential property market was hit hard in the final quarter of 2008 as the recession choked off demand, and accounted for more than half of the decline in transactions from 2007, the record high year. Sales tumbled 17.1 percent in 2008 from 2007.

The data from the last six months has increasingly shown that people are venturing back into the market. Low mortgage rates and signs that the worst of the economic slump is over are stimulating demand.

There has also been a turnaround in consumer sentiment, underscored by Thursday's report from the Conference Board of Canada that showed confidence rose in August for the sixth straight month.

British Columbia and Ontario are now expected to see an annual increase in sales activity, while CREA cut its forecast declines for several provinces, including Alberta, Saskatchewan and Quebec.

Nearly all provinces are expected to see a higher average price this year, except Alberta, where the average is seen falling 4.4 percent. British Columbia is expected to be relatively stable with a 0.1 percent dip.

For 2010, the average price nationally is expected to rise 2.1 percent to C$315,900, while sales activity is seen gaining 5.3 percent to 455,400 units

Denis Hancock's family is your typical Canadian clan. The program manager and his wife Sophie live in a spacious three-bedroom house in Toronto's trendy High Park neighbourhood with their 15-month-old daughter. He works, she stays at home, preferring afternoons playing with her child in their backyard than slaving away at an office. There's only one difference between Hancock's brood and his neighbours: they rent their 1600 sq/ft house.

Hancock's decision to rent, rather than own, their house wasn't taken lightly. He and his wife talked about buying, but with Toronto's high home prices — the average price tag is $322,059 for a standard house — and a desire to live in the city rather than the suburbs, they turned to renting.

"Renting is great, especially the flexibility," says the 32-year-old Hancock. "Like a lot of relatively young people, we haven't fully made all the decisions of exactly where we want to live, so until you really hammer out decisions, this option works."

The debate over renting versus owning has been raging for decades, with home ownership mostly winning out. But as the economy suffers, and with residential home sales largely declining since Q1 2008 (sales did reach pre-recession levels in May, according to the Canadian Real Estate Association [CREA]), renting is still a viable alternative to the expensive housing market.

"There is an undisputable fact that renting, in the short term, is cheaper than owning," says Doug Macdonald, a registered financial planner with Vancouver-based Macdonald, Shymko and Co. "In my city, especially with the high cost of real estate, people are asking themselves whether they should own or rent."

Bob Dugan, chief economist with the Canada Mortgage and Housing Corporation, says that owning is becoming increasingly more pricy compared to renting. In 2008, he explains, the average mortgage was about $1,600, while the average rent was $800, making the difference $800. That's an increase of $640 from 2001.

Dugan points out that he's not comparing apples to apples — the mortgage payment is for a house; the rent is for a two-bedroom apartment — but, "nevertheless, renting costs less than owning."

While there are many financial advantages to renting besides the cheaper monthly payments — no renovation costs, to name one — the biggest drawback is that it's not a forced savings vehicle like owning can be. For renting to work as an investment, figuring out what it would cost to buy a home, and then socking the difference away in an RRSP or TFSA, is a must.

However, most people aren't disciplined enough to do that. "While renting does allow people to do other things with their money, most people don't have the self-control to take those extra costs and invest," says Frank Wiginton, a certified financial planner with TriDelta Financial Partners.

Fortunately for Hancock, he learned to save at a young age, so he is putting away the extra money into an account. He pays $1,800 a month in rent, but he estimates that if he owned a house he'd spend roughly $800 a month in taxes and repairs. Therefore, he calculates, he's really only coughing up $1000 in rent. 
 
A mortgage, he estimates, would cost him about $2,500, so he puts the difference — $1,500 — into an RRSP. He then deposits those tax savings into a TFSA.

"Saving is the hardest part," he admits. "But for whatever reason I've always been good at it."

Still, owning a home can pay off big time in the long term. While the housing market has stumbled the last few months, according to CREA, residential home prices broke their monthly record in May, with the average Canadian property costing $319,757.

With housing prices increasing, Dugan says that owning your abode is an ideal way to build equity. Homeowners also tend to have a higher net worth than renters. "A big piece of that is that they have this asset for which they have a lot of equity," he says.

"That asset is of tremendous value later," adds Wiginton. "Because if you don’t have enough money saved for retirement or if your RRSP went down 30%, this is an asset you can leverage. You can borrow against it and still keep the property." A home's financial growth is also tax-free, unlike that of a portfolio.

If someone buys a house for $100,000 and sells it for $120,000, they've clearly made a nice chunk of cash with relative ease, says Macdonald. To get a $20,000 return on a non-real estate investment you'd have to earn $30,000 before tax , assuming the person is in a 33% tax bracket.

"There's a very significant financial planning aspect of this," says Macdonald. "The most wealth you do accumulate is after-tax dollars. When, ultimately at the end, you come out with a tax-free gain, that's very significant."

Clearly, there are advantages and disadvantages to both, but, Dugan cautions, one option isn't better than the other. "While generally home ownership will cost more than it costs to rent, that gap increases or decreases depending on how quickly rents rise," he says. "They're just different forms of obtaining shelter and a lot is determined by someone's own needs."