Strategies for knocking years off your mortgage

Most of us can accept the idea that we must borrow money to purchase a home. We look for the best mortgage, and then just keep doling out the money for as long as it takes to pay it off. Most Canadians choose to amortize their mortgage over 25 years. That’s a long financial commitment, and it could more than double the cost of your home. But with good planning – and a few smart tactics – you should be able to enjoy your mortgage-burning party much earlier. Here are a few strategies for fast-tracking your mortgage:

1. Increase your monthly payments. Rather than choosing your amortization period first, ask yourself how much you can afford each month. For example, you may feel that you can afford $1,000 per month. You’re delighted when your $125,000 mortgage only demands an $800/month payment (at a 6% interest). But make a monthly payment of $1,000 instead, and you’ll shave 8.75 years and almost $46,000 off your total interest cost.

2. Take advantage of lower rates. In addition to reducing the overall interest component of your mortgage, you can take the opportunity to pay down more principal faster – simply by maintaining your original payment. You should even increase your payment if you can, to reap the benefits of some of the cheapest mortgage money in memory. Again, you could take years – and thousands of dollars off your mortgage.

3. Tie mortgage payments to your pay schedule. Many Canadians are paid on a bi-weekly schedule. If you accelerate your payments to bi-weekly instead of monthly, you could improve your own cash flow and fit in an extra payment each year. That means that you’re paying off principal faster – leaving you with less interest to pay overall. It doesn’t seem like much but – like putting your coffee budget to work – the bi-weekly strategy can have you mortgage free four years sooner, with almost $22,000 in savings.

4. Use any bonuses, tax refunds or “found money” to pay down principal. This is especially valuable in the early years of your mortgage. If you receive an annual bonus or other lump-sum compensation, see if you can put it against the principal. An extra $1,000 per year is a great way to fast-track to mortgage-free!

5. Consolidate your loans into a new mortgage and use the savings to boost your payments. If you’re a homeowner with some equity, you can use your mortgage to consolidate your other loans: student loans, car loans, etc. Add the money you’ve been spending on loan payments to your mortgage payments, and you could see big savings in overall interest.

With mortgage rates still low, you should take the opportunity to get an expert mortgage analysis from an independent mortgage broker with access to mortgages from a wide spectrum of lenders. You’ve got a great opportunity to put some fast-track tactics in place. You’ll remember what a good decision you made at your mortgage-burning party

There are two main forms of debt consolidation available to consumers. The first involves qualifying for and taking out a loan for the amount necessary to pay off all your credit card or other consumer debt balances in full. After applying for and being approved for a debt consolidation loan, the newly borrowed funds go directly to pay off all your debt. In many cases, your credit accounts that were in good standing are allowed to remain open, which can help your credit score considerably by showing that you have much available credit. The benefits are the simplification of multiple credit card bills into one, manageable monthly payment. The even greater benefit of debt consolidation loans is the reduction of the interest rate you will pay. For example, if you are currently paying 13% to 23% on several accounts, and a new debt consolidation loan gives you a 9% interest rate, you will save money and pay your debts off more quickly.

The second type of debt consolidation refers to using a credit counselor, or intermediary to negotiate with your creditors on your behalf. In this scenario, you debt is not necessarily consolidated (though it can be), but your total amounts are settled with the creditors. In this case, you may satisfy a debt in full by only paying a portion of it, but you may pay for it with your credit score if the account is closed.

Who Qualifies for Debt Consolidation Loans?

In order to qualify for a debt consolidation loan in Canada, you must meet several requirements. You will have to go through an application process that will determine whether you meet these qualifications. The requirements may vary some from financial institution to financial institution, but some general qualifications remain the same across the board.

Budget

The lending institution you select will review your monthly income and expenses. They will go over your monthly budget thoroughly in order to assess whether you will be able to meet the debt consolidation loan payments.

Income

Qualifying for a debt consolidation loan is like qualifying for any other loan – you must be able to afford the payments. You must be able to show that you have a stable job or other source of income. Generally banks will require that you submit paycheck stubs or copies of your most recent tax return, so it’s a good idea to have these on hand when applying for the loan.

Assurance

If you lending institution has even the remotest doubt about your creditworthiness, they will want to see some assurance that their funds will be repaid. Most commonly, assets that serve as collateral are listed or a co-signor is sought.

The 0.5% increase in retail sales reported Thursday by the Commerce Department was smaller than expected. Economists surveyed by Dow Jones Newswires forecast a 0.6% increase.

Several categories of retailers tumbled last month. The increases tended to be among sellers of essential items, such as food and clothes.

Filling station sales rose 3.6%. Excluding gasoline sales, other retailers’ sales increased 0.2%. Gas prices have gone up about 28% in the past six weeks, driving station receipts.

Overall retail sales in April were revised higher, decreasing 0.2% instead of 0.4% as previously reported. March sales fell 1.2% instead of 1.3%.

Ford reports a 24% decline in U.S. sales for May, but the auto maker still posts its highest monthly sales since last June. Ford plans to take advantage of the competitors’ woes, announcing a 10,000-vehicle increase in 2Q production.

US STOCKS FLAT ON HOUSING DATA

U.S. stocks trade flat, seesawing between gains and losses, after a report
shows pending sales of existing homes in April posted their largest monthly
increase in eight years. Financial stocks trail the broader market as blue-chip firms announced plans to raise fresh capital. Treasury prices stabilize.

US PENDING HOME SALES CLIMB 6.7% IN APRIL

Index of pending sales of previously owned homes increases for a third month
in a row, the National Association of Realtors says, rising 6.7% in April to
90.3, as buyers seized on foreclosure-cheapened property, low interest rates
and a tax credit.

AMERICAN EXPRESS, JPMORGAN PRICE STOCK DEALS

JPMorgan sells 142 million shares at $35.25 a share, raising $5 billion.
American Express sells a 19.8 million-share deal, priced at $25.25 a share,
raising $500 million. Deals done in preparation to exit the federal bailout
program. JPMorgan shares fall 4%; American Express is down 6%.

GM SELLING HUMMER TO PRIVATELY OWNED CHINA CO

GM reaches a preliminary agreement to sell its Hummer brand to Sichuan
Tengzhong Heavy Industrial Machinery, the New York Times reports, citing a
person familiar with the Chinese government’s approval process.

BOFA TO ‘COMFORTABLY’ TOP CAPITAL-RAISE TARGET

Bank of America says it will “comfortably” exceed the government’s $33.9
billion capital-raising mandate, with the company putting its current total at
$33 billion. Shares rise 1%.

TEMASEK, RICHARD LI JOIN BID FOR AIG INVESTMENTS

Singapore’s Temasek Holdings and Richard Li’s Pacific Century Group are among
the financial backers considering entering exclusive negotiations to buy
American International Group’s asset-management business, which could go for
$500 million.

BRAZILIAN AIR FORCE FINDS PLANE DEBRIS

Brazilian air force aircraft searching for a missing Air France flight that
had been carrying 228 people have found debris from a plane. The “small
remains” were located 400 miles northeast of Brazil’s Fernando do Noronha
island.

COLLECTIONS FIRMS TO END DECEPTIVE PRACTICES

Creditors Interchange Receivable Management LLC, Capital Management Services
LP and Tri-Financial LLC agree to change their business practices after a probe
by NY Attorney General Andrew Cuomo’s office.

MOODY’S: OUTLOOK STILL NEGATIVE FOR US BANKS

Moody’s Investors Services says its outlook for credit ratings on the U.S.
banking sector remains negative as the recession is expected to lead to $470
billion in loan and investment losses and write-downs this year and next.

CHRYSLER SALE APPEAL TO BE HEARD BY 2ND CIRCUIT

Bankruptcy judge Arthur Gonzalez in Manhattan certifies the sale of the bulk
of Chrysler’s assets to a group led by Fiat, paving the way for a challenge of
the sale order to be heard by the U.S. Second Circuit Court of Appeals,
skipping the usual review by a U.S. district judge.

US LAWMAKERS WANT TO SHINE MORE LIGHT ON FED

The Federal Reserve’s longtime penchant for opacity is coming under fire from
lawmakers demanding to know more about the central bank’s role in the U.S.
government’s response to the financial crisis.

MORGAN STANLEY TO RAISE $2.2B IN BID TO EXIT TARP

Morgan Stanley plans a $2.2 billion stock offering, a deal that is expected
to include China Investment and Mitsubishi UFJ Financial Group, as it prepares
to repay taxpayer money it received under the government’s Troubled Asset
Relief Program. Shares fall 4%.

SEC HEAD VOWS TO IMPROVE AGENCY OPERATIONS

SEC Chairman Mary Schapiro tells U.S. lawmakers she’s “disappointed” to learn
of short-comings in the agency’s internal operations and she plans to hire a
chief operating officer and improve records management.

PIMCO FILES FOR SIX MORE ETFS

In another sign it hopes to make a big mark on the ETF business, Pimco files
to launch six new ETFs. Move comes the same day Pimco’s first ETF, a short-term
Treasury fund, begins trading among investors on NYSE Arca.

GEITHNER PLAYS UP CONSENSUS BETWEEN CHINA, US

U.S. Treasury Secretary Timothy Geithner says he believes Chinese leaders
understand U.S. measures to tackle the financial crisis and are confident in
the U.S. economy, while he in turn praises China’s own stimulus measures.

TOBACCO REGULATION BILL ADVANCES IN SENATE

The U.S. Senate takes a step forward toward debate of a bill that would give
the Food and Drug Administration authority to regulate tobacco, as senators
show strong support for the measure in a procedural vote.

HURRICANE SEASON TO BE SLIGHTLY BELOW AVERAGE

Colorado State University forecasters are trimming their forecast for what
they expect to be a “slightly below average” 2009 Atlantic hurricane season.
They predict 11 named storms, with five hurricanes, two of which will be
intense.

CFTC ASKS LAWMAKERS FOR BIGGER BUDGET

The head of the U.S. Commodity Futures Trading Commission tells federal
lawmakers that President Barack Obama’s recent request to increase the CFTC’s
budget by $14.6 million may still not be enough to meet the agency’s needs.

COURT OKS US CANCELLATION OF FIGHTER JET DEAL

Federal appeals court rules the government was justified in canceling a
contract with a Boeing unit and General Dynamics to build a new Navy stealth
fighter. Then-Secretary of Defense Dick Cheney terminated the contract in 1991.

MINNESOTA GOVERNOR WON’T SEEK 3RD TERM, REPORT SAYS

Minnesota Gov. Tim Pawlenty, a Republican, will not run for a third term in
the 2010 election, Twin Cities television station WCCO reports, citing sources.
Pawlenty is expected to make the announcement Tuesday afternoon.

======= DOW JONES NEWSWIRES ANALYSIS AND COMMENTARIES =======

AL’S EMPORIUM
Let Fingers Do The Walking Into Bankruptcy

Al Lewis takes a look at the Chapter 11 bankruptcy of Yellow Pages publisher
R. H. Donnelley and considers how much was due to economic factors,
acquisitions and the leadership of CEO Dave Swanson.

MARK TO MARKET
Playing Footsie With Uncle Sam Has Its Price

Polonius warned his son Laertes in Shakespeare’s “Hamlet”: “Neither a
borrower nor a lender be.” Why not, you ask? A borrower gives the lender power
over him; the lender gives the borrower power over him.

============ U.S. MARKETS ACTION ===========
DJIA up 20.69 points to 8742.13
NASDAQ up 7.01 points to 1835.69
S&P 500 up 1.89 points to 944.76
10-year T-note 95 10/32 at 3.690 yield dn .024
NYMEX Crude up $0.05 at $ 68.63/bbl
Euro/Dollar up 0.0148 at 1.4308

“GM Argentina is a legally distinct entity, and is economically and
financially solvent thanks to our healthy balance in the region,” GM Argentina said in a statement posted online.

GM’s Latin American operations, including its business in Brazil, appear to be one of the few bright spots for the U.S. automobile maker.

GM Argentina President Edgar Lourencon told local media Monday that the company’s operations in Argentina and Brazil accounted for 60% of the $1.3 billion in profit generated by the company’s Latin American units last year.

“GM Argentina maintains its commitment to invest in the country, developing a new compact regional model in our Rosario industrial plant whose production will begin towards the end of 2009,” the company said.

In 2007, then GM Chief Executive Rick Wagoner announced plans to invest $500 million in Latin America. The plan called for investing $400 million to develop the new product line, which would be sold in Latin America and exported to other emerging market countries.

The investment was to be divided between GM’s Rosario plant in Argentina and the Sao Caetano do Sul plant in Brazil, with each plant receiving about $200 million to modify and expand production lines for the new vehicle.

Lourencon said Monday that GM will receive fresh funds from the Argentine government to help carry out the originally announced plan for the Rosario plant.

Argentine President Cristina Fernandez is expected to announce that the government will provide around $55 million in funding to help GM develop a new small vehicle.

Multiple media outlets have reported that Italy’s Fiat SpA (FIATY) has
offered to take over GM operations both here and in Brazil. A pokesperson for GM Argentina declined to comment about such an offer and Fiat Argentina couldn’t be reached for comment.

Despite GM Argentina’s strength relative to its parent, the company has suffered from Argentina’s economic slowdown and a sharp decline in demand for new cars.

Argentina’s auto sales fell 29.17% in April compared with the same month a year ago, according to the car dealership association Acara. April’s decline was more than triple the annual decline seen in March, when sales fell 8.7%.

Meanwhile, Argentina produced 37,262 cars in April, down 31.8% on the year, according to the automotive manufacturers association, or Adefa.

The 100-member parliament approved the budget amendments in the first reading with 68 votes for and 10 votes against, and the proposal will now face a second reading June 17.

The preliminary approval by lawmakers comes amid increasing speculation that the recession-hit Baltic nation will need to break free from its currency peg to the euro and devalue the lat as debt soars. The economy is forecast to contract by 18% this year, the fastest rate in the European Union.

International lenders agreed to an International Monetary Fund-led EUR7.5 billion rescue package in December, conditional on limiting public-sector expenditure to 5% of GDP.

Prime Minister Valdis Dombrovskis said that adoption of the budget amendments in the first reading was only the first step, and the government would keep working in the proposals for further reduction of expenditures, BNS reported.

Earlier Thursday, a spokeswoman from the IMF said Latvia’s government is making progress in addressing its escalating budget deficit, but more steps must be taken.

“The government’s budget is a first step, and there is more work to be done,” said Caroline Atkinson, the IMF’s director of external relations.

The IMF and EU have missions in the country reviewing the economic program, and Dombrovskis has said the country needs the second portion of the loan by early next week.

Latvia’s central bank has said it will maintain the stability of the national currency until it can adopt the euro.

Higher stocks encourage position taking out of the dollar, a major funding currency. The Dow Jones Industrial Average was recently up about 28 points on the day.

The euro had already recovered earlier from a one-week low against the U.S. unit, $1.4070, after the market got past the day’s key economic events.

It was sold off on a broad rebound in the buck from a 2009 low, as traders took profits on the recent rally in riskier assets and with a return of some caution. A sharp dip also came on rumors, since denied, that U.K. Prime Minister Gordon Brown would resign.

However, overall, currencies are trading inside a very narrow range ahead of the much awaited May U.S. payrolls report to be released Friday.

Thursday afternoon in New York, the euro was at $1.4174 from $1.4145 late Wednesday. The dollar was at Y96.48 from Y95.97, according to EBS. The euro was at Y136.75 from Y135.73, and the U.K. pound was at $1.6136 from $1.6283. The dollar was at CHF1.0692 from CHF1.0715 Wednesday.

Mixed signals in remarks by European Central Bank President Jean Claude Trichet, after the bank left interest rates unchanged at 1.0%, had little impact on the common currency.

Trichet stressed that euro zone policy makers are already thinking about exit strategies from easing mode. He also said that the ECB isn’t considering expanding its EUR60 billion covered bond purchase program, or any other non-standard easing measures.

This helped to boost the euro against the U.S. unit, as the Federal Reserve is seen as possibly expanding its Treasury purchases.

However, Trichet was very cautious on the euro zone’s growth outlook. He also spoke on the importance of a strong dollar policy in the U.S. in response to a question on the euro’s three-month rally.

The Bank of England also voted to keep rates unchanged Thursday, as expected.

Elsewhere, emerging markets in Europe were shaky Thursday. Assets continued to feel the fallout from Latvia’s escalating financial crisis, particularly the Hungarian forint and Polish zloty.

Signs that Latvia’s economic woes are worsening have prompted speculation that authorities could be preparing to drop their currency’s peg to the euro, despite repeated official denials.

The Latvian central bank Thursday said it will maintain the stability of the national currency until the euro can be adopted.

A European Commission spokesman said earlier Thursday that European Union and International Monetary Fund officials are currently in Latvia “assessing the situation.”

Bank-lending rates in Latvia rose to record highs Thursday, a new sign of a growing liquidity shortage.

Swedish banks, which are heavily exposed in the Baltic region, saw their stock prices recover heavy losses Thursday after the Swedish government pledged support to any Swedish banks running into trouble. But the Swedish krona remains near the low end of its recent trading ranges against the dollar and euro after falling sharply Wednesday.