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Trump, lawmakers agree to end government shutdown without border wall funding

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U.S. President Donald Trump agreed under mounting pressure on Friday to end a 35-day-old partial government shutdown without getting the money he had demanded from Congress for a border wall.

A three-week stopgap spending plan, passed unanimously by both the Senate and to the House of Representatives, now sets up tough talks with lawmakers about how to address security along the U.S.-Mexican border, with Democrats appearing unyielding in their opposition to Trump’s wall.

With polls showing most Americans blamed Trump for the painful shutdown — the longest of its kind in U.S. history — the president embraced a way out of the crisis that Democratic House Speaker Nancy Pelosi had been pushing for weeks.

But the Republican president vowed the shutdown would resume on Feb. 15 if he is dissatisfied with the results of the border security talks, or he would declare a national emergency to get the wall money.

With the effects of the shutdown spreading, Trump signed the stopgap spending measure on Friday, after it passed unanimously in both the Republican-led Senate and the Democratic-led House.

The shutdown, which pitted Pelosi against Trump, was her first test since assuming the Speaker post three weeks ago, and she drew praise from fellow Democrats for what they said was an outmanoeuvring of the president.

After Trump announced the agreement, top Senate Democrat Chuck Schumer said he hoped the experience would be a “lesson learned” for Trump and his party that it is self-defeating to shut down the government over policy disputes.

“I am very proud to announce today that we have reached a deal to end the shutdown and reopen the federal government,” Trump — who days earlier had insisted “We will not Cave!” — said in the White House Rose Garden.

A lapse in funding shuttered about a quarter of federal agencies, with about 800,000 workers either furloughed or required to work without pay. Many employees as well as contractors were turning to unemployment assistance, food banks and other support. Others began seeking new jobs.

House Speaker Nancy Pelosi, left, and Senate minority leader Chuck Schumer are seen at a news conference on Capitol Hill on Friday. Pelosi drew praise from fellow Democrats for what they said was an outmanoeuvring of the president. (Andrew Harnik/Associated Press)

Trump said he would act to ensure federal workers get their back pay “as soon as possible.”

Trump had previously demanded the inclusion of $5.7 billion US to help pay for a border wall — one of his signature campaign promises — in any legislation to fund government agencies, but Democrats had blocked him.

An administration official, speaking on condition of anonymity, said stories of law enforcement officials not being able to do their jobs at full capacity helped convince Trump to agree to a short-term solution to reopen the government. The official said the White House ultimately would accept a deal with lawmakers if it includes wall funding, even if it is less than $5.7 billion.

The agreement requires passage in the House and Senate and Trump’s signature. Trump said a bipartisan congressional conference committee will meet to come up with a plan for border security. Schumer said Democrats and Trump have “so many areas” on which they can agree on border security but not a wall.

Trump mulls using emergency powers

Trump says the U.S. has no choice but to build a “powerful wall or steel barrier” along the border with Mexico. 

“If we don’t get a fair deal from Congress, the government will either shut down on Feb. 15 — again — or I would use the powers afforded to me under the laws and the Constitution of the United States to address this emergency.”

Port of Seattle workers carry items donated to federal workers at Seattle-Tacoma International Airport on Friday. With about 800,000 workers either furloughed or required to work without pay, many federal employees as well as contractors were turning to unemployment assistance, food banks and other support. (Ted S. Warren/Associated Press)

He had previously indicated he was considering an emergency declaration to circumvent congressional funding powers if lawmakers refused to fund his wall, an action that almost certainly would be swiftly challenged by Democrats as exceeding his authority under the U.S. Constitution.

Trump triggered the shutdown, which began on Dec. 22, with his hard-line wall-funding demand. The Democrats rejected it on the grounds that a wall would be costly, ineffective and immoral. Trump has said it is necessary to curb illegal immigration and drug trafficking.

“The walls we are building are not medieval walls. They are smart walls designed to meet the needs of front-line border agents and are operationally effective,” he said. “These barriers are made of steel, have see-through visibility, which is very important, and are equipped with sensors, monitors and cutting-edge technology, including state-of-the-art drones.”

Members of unions, federal workers and contractors hold a rally at Airport Circle in Egg Harbor Township, N.J., on Friday. Some federal agencies have reported much higher absence rates among workers as they face an indefinite wait for their next paychecks. (Edward Lea/The Press of Atlantic City via AP)

Pelosi said she would discuss with Trump “a mutually agreed date” for his annual state of the union address, which she had effectively forced him to postpone amid the shutdown showdown. A senior White House official said the speech will not be on Tuesday, as it had originally been planned, and that it is up to Pelosi to reschedule it.

The temporary funding bill would extend agency funding at the last fiscal year’s levels and would include some money for border security — but not a wall, which Trump had initially said would be paid for by Mexico.

In one of the many effects of the shutdown, hundreds of flights were grounded or delayed at airports in the New York area and Philadelphia on Friday as more air-traffic controllers called in sick. Some federal agencies have reported much higher absence rates among workers as they face an indefinite wait for their next paychecks.

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Real Estate

5 ways to reduce your mortgage amortization

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Since the pandemic hit, a lot of Canadians have been affected financially and if you’re on a mortgage, reducing your amortization period can be of great help.

A mortgage amortization period is the amount of time it would take a homeowner to completely pay off their mortgage. The amortization is typically an estimate based on what the interest rate for your current term is. Calculating your amortization is done easily using a loan amortization calculator which shows you the different payment schedules within your amortization period.

 In Canada, if you made a down payment that is less than the recommended 20 per cent of the total cost of your home, then the longest amortization period you’re allowed to have is 25 years. The mortgage amortization period not only affects the length of time it would take to completely repay the loan, but also the amount of interest paid over the lifecycle of the mortgage.

Typically, longer amortization periods involve making smaller monthly payments and having a much higher total interest cost over the duration of the mortgage. While on the other hand, shorter amortization periods entails making larger monthly payments and having lower total interest costs.

It’s the dream of every homeowner to become mortgage-free. A general rule of thumb would be to try and keep your monthly mortgage costs as low as possible—preferably below 30 per cent of your monthly income. Over time, you may become more financially stable by either getting a tax return, a bonus or an additional source of income and want to channel that towards your principal.

There are several ways to keep your monthly mortgage payments low and reduce your amortization. Here are a few ways to achieve that goal:

1. Make a larger down payment

Once you’ve decided to buy a home, always consider putting asides some significant amount of money that would act as a down payment to reduce your monthly mortgage. While the recommended amount to put aside as a down payment is 20 per cent,  if you aren’t in a hurry to purchase the property or are more financial buoyant, you can even pay more.

Essentially, the larger your down payment, the lower your mortgage would be as it means you’re borrowing less money from your lender. However, if you pay at least 20 per cent upfront, there would be no need for you to cover the additional cost of private mortgage insurance which would save you some money.

2. Make bi-weekly payments

Most homeowners make monthly payments which amount to 12 payments every year. But if your bank or lender offers the option of accelerated bi-weekly payment, you will be making an equivalent of one more payment annually. Doing this will further reduce your amortization period by allowing you to pay off your mortgage much faster.

3. Have a fixed renewal payment

It is normal for lenders to offer discounts on interest rate during your amortization period. However, as you continuously renew your mortgage at a lower rate, always keep a fixed repayment sum.

Rather than just making lower payments, you can keep your payments static, since the more money applied to your principal, the faster you can clear your mortgage.

4. Increase your payment amount

Many mortgages give homeowners the option to increase their payment amount at least once a year. Now, this is very ideal for those who have the financial capacity to do so because the extra money would be added to your principal.

Irrespective of how small the increase might be, in the long run, it would make a huge difference. For example, if your monthly mortgage payment is about $2,752 per month. It would be in your best interest to round it up to $2,800 every month. That way, you are much closer to reducing your mortgage amortization period.

5. Leverage on prepayment privileges

The ability for homeowners to make any form of prepayment solely depends on what mortgage features are provided by their lender.

With an open mortgage, you can easily make additional payments at any given time. However, if you have a closed mortgage—which makes up the larger percentage of existing mortgages—you will need to check if you have the option of prepayments which would allow you to make extra lump sum payments.

Additionally, there may also be the option to make extra lump sum payments at the end of your existing mortgage term before its time for renewal.

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Real Estate

Mortgage insurance vs. life insurance: What you need to know

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Your home is likely the biggest asset you’ll ever own. So how can you protect it in case something were to happen to you? To start, homeowners have a few options to choose from. You can either:

  • ensure you have mortgage protection with a life insurance policy from an insurance company or
  • get mortgage insurance from a bank or mortgage lender.

Mortgage insurance vs. life insurance: How do they each work?  

The first thing to know is that life insurance can be a great way to make sure you and your family have mortgage protection.

The money from a life insurance policy usually goes right into the hands of your beneficiaries – not the bank or mortgage lender. Your beneficiaries are whoever you choose to receive the benefit or money from your policy after you die.

Life insurance policies, like term life insurance, come with a death benefit. A death benefit is the amount of money given to your beneficiaries after you die. The exact amount they’ll receive depends on the policy you buy.

With term life insurance, you’re covered for a set period, such as 10, 15, 20 or 30 years. The premium – that’s the monthly or annual fee you pay for insurance – is usually low for the first term.

If you die while you’re coved by your life insurance policy, your beneficiaries will receive a tax-free death benefit. They can then use this money to help pay off the mortgage or for any other reason. So not only is your mortgage protected, but your family will also have funds to cover other expenses that they relied on you to pay.

Mortgage insurance works by paying off the outstanding principal balance of your mortgage, up to a certain amount, if you die.

With mortgage insurance, the money goes directly to the bank or lender to pay off the mortgage – and that’s it. There’s no extra money to cover other expenses, and you don’t get to leave any cash behind to your beneficiaries.

What’s the difference between mortgage insurance and life insurance?

The main difference is that mortgage insurance covers only your outstanding mortgage balance. And, that money goes directly to the bank or mortgage lender, not your beneficiary. This means that there’s no cash, payout or benefit given to your beneficiary. 

With life insurance, however, you get mortgage protection and more. Here’s how it works: every life insurance policy provides a tax-free amount of money (the death benefit) to the beneficiary. The payment can cover more than just the mortgage. The beneficiary may then use the money for any purpose. For example, apart from paying off the mortgage, they can also use the funds from the death benefit to cover:

  • any of your remaining debts,
  • the cost of child care,
  • funeral costs,
  • the cost of child care, and
  • any other living expenses. 

But before you decide between life insurance and mortgage insurance, here are some other important differences to keep in mind:

Who gets the money?

With life insurance, the money goes to whomever you name as your beneficiary.

With mortgage insurance, the money goes entirely to the bank.

Can you move your policy?

With life insurance, your policy stays with you even if you transfer your mortgage to another company. There’s no need to re-apply or prove your health is good enough to be insured.

With mortgage insurance, however, your policy doesn’t automatically move with you if you change mortgage providers. If you move your mortgage to another bank, you’ll have to prove that your health is still good.

Which offers more flexibility, life insurance or mortgage insurance?

With life insurance, your beneficiaries have the flexibility to cover the mortgage balance and more after you die. As the policy owner, you can choose how much insurance coverage you want and how long you need it. And, the coverage doesn’t decline unless you want it to.

With mortgage insurance through a bank, you don’t have the flexibility to change your coverage. In this case, you’re only protecting the outstanding balance on your mortgage.

Do you need a medical exam to qualify? 

With a term life insurance policy from Sun Life, you may have to answer some medical questions or take a medical exam before you’re approved for coverage. Once you’re approved, Sun Life won’t ask for any additional medical information later on.

With mortgage insurance, a bank or mortgage lender may ask some medical questions when you apply. However, if you make a claim after you’re approved, your bank may ask for additional medical information.* At that point, they may discover some conditions that disqualify you from receiving payment on a claim.

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5 common mistakes Canadians make with their mortgages

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This article was created by MoneyWise. Postmedia and MoneyWise may earn an affiliate commission through links on this page.

Since COVID-19 dragged interest rates to historic lows last year, Canadians have been diving into the real estate market with unprecedented verve.

During a time of extraordinary financial disruption, more than 551,000 properties sold last year — a new annual record, according to the Canadian Real Estate Association. Those sales provided a desperately needed dose of oxygen for the country’s gasping economy.

Given the slew of new mortgages taken out in 2020, there were bound to be slip-ups. So, MoneyWise asked four of the country’s sharpest mortgage minds to share what they feel are the mistakes Canadians most frequently make when securing a home loan.

Mistake 1: Not having your documents ready

One of your mortgage broker’s primary functions is to provide lenders with paperwork confirming your income, assets, source of down payment and overall reliability as a borrower. Without complete and accurate documentation, no reputable lender will be able to process your loan.

But “borrowers often don’t have these documents on hand,” says John Vo of Spicer Vo Mortgages in Halifax, Nova Scotia. “And even when they do provide these documents, they may not be the correct documentation required.”

Some of the most frequent mistakes Vo sees when borrowers send in their paperwork include:

  • Not including a name or other relevant details on key pieces of information.
  • Providing old bank or pay statements instead of those dated within the last 30 days.
  • Sending only a partial document package. If a lender asks for six pages to support your loan, don’t send two. If you’re asked for four months’ worth of bank statements, don’t provide only one.
  • Thinking low-quality or blurry files sent by email or text will be good enough. Lenders need to be able to read what you send them.

If you send your broker an incomplete documents package, the result is inevitable: Your mortgage application will be delayed as long as it takes for you to find the required materials, and your house shopping could be sidetracked for months.

Mistake 2: Blinded by the rate

Ask any mortgage broker and they’ll tell you that the question they’re asked most frequently is: “What’s your lowest rate?”

The interest rate you’ll pay on your mortgage is a massive consideration, so comparing the rates lenders are offering is a good habit once you’ve slipped on your house-hunter hat.

Rates have been on the rise lately given government actions to stimulate the Canadian economy. You may want to lock a low rate now, so you can hold onto it for up to 120 days.

But Chris Kolinski, broker at Saskatoon, Saskatchewan-based iSask Mortgages, says too many borrowers get obsessed with finding the lowest rate and ignore the other aspects of a mortgage that can greatly impact its overall cost.

“I always ask my clients ‘Do you want to get the best rate, or do you want to save the most money?’ because those two things are not always synonymous,” Kolinski says. “That opens a conversation about needs and wants.”

Many of the rock-bottom interest rates on offer from Canadian lenders can be hard to qualify for, come with limited features, or cost borrowers “a ton” of money if they break their terms, Kolinski points out.

Mistake 3: Not reading the fine print

Dalia Barsoum of Streetwise Mortgages in Woodbridge, Ontario, shares a universal message: “Read the fine print. Understand what you’re signing up for.”

Most borrowers don’t expect they’ll ever break their mortgages, but data collected by TD Bank shows that 7 in 10 homeowners move on from their properties earlier than they expect.

It’s critical to understand your loan’s prepayment privileges and the rules around an early departure. “If you exit the mortgage, how much are you going to pay? It’s really, really important,” Barsoum says.

She has seen too borrowers come to her hoping to refinance a mortgage they received from a private or specialty lender, only to find that what they were attempting was impossible.

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