Chapter 4: A Home of My Own (Part 4)
Posted by Gail | Filed under Money Rules
“Wow! So easy,” said Jason.
“Yes, it is,” I said as I handed him Rule #203: Accelerate Your Mortgage Repayment.
“I always wondered how people came up with the extra money to make a principal payment on their mortgage.”
“That’s one way,” I said. “And the prepayment doesn’t have to be huge to have a big impact,” I said, handing him Rule #260: You Don’t Need a Ton of Cash to Make a Principal Prepayment against Your Mortgage.
“Does the same apply to paying back the RRSP Home Buyer’s Plan… do it as fast as you can?”
“Absolutely not,” I said, handing him Rule #119: Don’t Accelerate your HBP Repayment.
Two bouncy children came barreling out to the house and threw themselves at Jason yelling, “Daddy!” He gathered them into his arms.
“Hey monkeys,” he said smiling broadly. “Do you remember Gail?”
“Hi there munchkins,” I laughed as Tyler hid his face in his dad’s neck. Brittany came over, all grown up, to shake my hand. “I haven’t seen you in a while and I can’t believe how much you’ve grown,” I said as I took her small hand into mine.
“I’m five now,” she said proudly. “Tyler is almost three.”
“You’re both growing up so quickly. How’s mummy?”
“She’s okay,” said Brittany looking over at her dad.
“She’s away this week travelling for business,” said Jason. “She’ll be back by when?” he looked at Brittany.
She answered quickly, “Friday night, but late so we’ll see her Saturday.”
Jason got up still holding Tyler tucked under one arm. “Time for some breakie?” he asked as he shepherded the kids into the kitchen.
“Can I have yogurt and berries,” sang out Brittany, “and then pancakes?”
“Me too,” Tyler piped up.
“I’ll make the pancakes,” I said to Jason. “You get the berries and yogurt and settle the kids at the table. Do you want them with chocolate chips?” I asked.
“Yes,” all three chorused back at me as I went to the fridge for milk and eggs.
After breakfast was gobbled, Jason took two sticky kids into the bathroom to clean up while I sat looking over his mortgage approval. When he cam back into the living room I asked, “Do you know this mortgage you’re being offered is a collateral mortgage?”
“As opposed to…”
“A conventional mortgage. Do you know the difference?”
“Not a clue,” said Jason, gathering up the plates off the table to ferry to the kitchen sink.
“I’ll do that,” I said, “while you read this.” I handed him Rule #218: Collateral Mortgages are a Trap.
When he finished reading the rule he said, “Why would anyone take one of these? It sounds like a really bad idea.”
“Banks have been switching from conventional to collateral mortgages to stop people from moving their mortgages around.”
“I thought they wanted to help people make good decisions.”
“Really? You bought that, ‘we’re here for you b.s.?’” I scoffed. Sweetheart, I hate to disillusion you, but Gail Rule #7 is Your Banker is NOT Your Friend.
“But surely they wouldn’t actually work against what’s good for you?”
“Were you offered mortgage life insurance when you were talking about getting the mortgage?”
“Did you think it was a good idea?”
“It’s not. Rule #59 is Never Buy Mortgage Life Insurance.” Why would you pay more than you need to, for a product that may not evens pay out?
“Damn!” said Jason vehemently. “I had no idea.”
“I hear that a lot,” I said smiling.