It is almost becoming an affront to the legacy of George Washington to have to grace the lowly greenback.

While the currency managed to claw back some ground amid turmoil on global markets this week, it remains on the verge of sinking below a pair of important thresholds. The first is the 2008 record low.

But perhaps an even greater indictment of the U.S. dollar is its depreciation against the euro, a currency that’s one sovereign default away from an existential crisis. At US$1.50, the euro will have climbed all the way back from last year’s plunge.

The downward trend is quickly lowering confidence in the currency among the major creditors of the United States.

“I think you’ll see a lot of turnover once we cross those thresholds,” said Mark Calabria, director of financial regulation studies at the Cato Institute in Washington, D.C. “And I think we’re going to cross those thresholds.”

Of the forces guiding the greenback, almost all of them promise further weakness.

About the only mitigating factor is the sheer economic power of the United States, which remains the world’s safe haven of choice, effectively putting a limit on the dollar’s losses.

“Absolutely, there is a floor under the dollar, but we’re not there yet,” Mr. Calabria said. And nobody knows quite where that floor sits.

Against a basket of currencies, the dollar has lost almost 18% since last June and more than 10% since December, raising the concern that panic selling has already set into foreign exchange trade. The U.S. dollar index fell to 72.933 on April 29, nearing the all-time low of 71.329 set during the financial crisis in 2008.

“The rout of the U.S. dollar has begun in earnest,” Dennis Gartman, a trader and editor of the Suffolk, Va.-based Gartman Letter, wrote in a recent commentary, noting the dollar’s fall against virtually every major currency in the world.     For the rest of the story, click here http://www.financialpost.com/news/Vanishing/4743690/story.html

Last September, my wife and I started scouring the city for a new house. We were living in a cozy bungalow, but with a growing kid and another on the way, we decided it was time to move.

Buying a new house is, of course, expensive, so I wanted to do whatever it took to reduce my costs. Most of the fees couldn’t be avoided, but there was one costly payment I desperately wanted to steer clear from: The mortgage penalty charge.

I had just over 12 months left on my five-year mortgage term, which meant that I either had to break my mortgage or stay with my current lender by transferring my mortgage to my new house. The latter option would have allowed me to avoid the fee. However, my lender couldn’t give me the best interest rate.

The new lender, a bank, was offering a variable rate of 2.25 per cent, a much lower rate than my old lender was willing to offer. I calculated that over the term I’d be better off paying the fee and taking the lower rate.

It was going to cost me $10,000 to break my contract. It felt like an unnecessary cost — I paid my lender so much in interest over the four years, why would I have to cough up so much cash?

I asked my broker to see if the lender would waive the fee, even though I was using a new lender for my next house, but they didn’t. Peter Veselinovich, vice-president of banking and mortgage operations at Investors Group, isn’t surprised. “The charge isn’t negotiable,” he says.

While the penalty may seem like an arbitrary sum, it’s not a cash-grab, he says.

The lender takes mortgage funds from money invested in GICs and other products and then it pays investors interest on those investments.

The idea is to match a five-year mortgage with a five-year GIC, so investors can get paid back at the same time as the mortgage comes due.

If a mortgage is broken, the lender needs to come up with money to fill the gap between the investment coming due and the mortgage ending. Hence the fee. The lender then takes that lump sum and invests it, so it can pay investors back when its GIC comes due.

The penalty is calculated two ways: you either pay 90 days of interest or what’s called an interest-rate differential, which is a penalty based on your old rate and a new rate based on a shorter term.

For example, let’s say you wanted to exit your 5 per cent five-year term with three years left to go. The lender would look at the current three-year term rate, which, say, is 3 per cent, and then charge you interest on the difference, 2 per cent, for 36 months. The sum also depends on how much money you still owe the bank.

However it’s calculated, the payment can be huge.

Darick Battaglia, a mortgage broker and owner of Dominion Lending Centres’ Barrie location, says that while it may seem as though people have to empty their bank account to pay the penalty, ultimately, by paying the lower rate, they’re getting that money back in mortgage savings.

Whether you’re moving houses, or just want to break a mortgage to take advantage of a lower interest rate, people often pay the penalty so they can free up more disposable income.

“It can help people get into a better financial position, because they have more disposable income,” says Battaglia. “They may find that it’s better to invest that money in an RRSP.”

If you’re moving, there are strategies to help reduce the penalty or even not pay it at all.

Almost all mortgages allow people to put a certain percentage of money down on a house every year; I was allowed to pay 20 per cent of my balance every 12 months.

In some cases, lenders will allow you to designate the first 20 per cent — it could be less or more depending on your lender — of the proceeds of a sale of a house towards the prepayment in order to pay down the outstanding balance and so reduce the mortgage penalty.

Investors Group is one institution that allows this, but not all do.

Battaglia has dealt with many lenders who refuse to honor this type of arrangement. They want two checks: one for the prepayment and one to pay off the mortgage.

My own lender refused to let me make one payment; I had to borrow money from my broker, who paid my prepayment three days before closing. I had to pay him back with some of the proceeds of the sale. It was a major hassle. But I did save about $1,500.

Some lenders will eat the fees themselves to retain the business. Again, most want the money. Battaglia says that some banks — he’s seen this happen with Scotiabank and TD — will waive the fee as long as you extend your term. He often uses the penalty as a negotiating tool.

“I’ll tell a lender I’m shopping around and while we’d like to keep a client’s business with your company, what can you do on the penalty?” he says. “A lot of times the penalty gets reduced or it’s paid off by the lender.”

Porting a mortgage to a new house is another way to avoid the fee.

Let’s say you have $100,000 left on a mortgage with a 4 per cent rate, but you need $200,000 more for the new house. The bank will give you the additional money at the new rate, which could be 3 per cent. You’d keep the same term or extend it and now you’d pay a blended rate, in this case 3.5 per cent on $300,000.

“There are no penalty costs, because you’re still honouring the original contract,” says Veselinovich.

Most people will have to open their wallet when they break a mortgage.

Fortunately, you can avoid paying administration fees that the lender will charge you. It’s not necessarily a big cost — Veselinovich says people get charged between $75 and a few hundred dollars — but why pay more money than you have to?

“These fees should be readily negotiable based on your past performance and your relationship with the lender,” he says.

While I did get my penalty reduced by making a prepayment before closing, I still had to write a cheque for about $8,000. It was painful at the time, but now that I’m in my new house, paying a new mortgage at a much lower rate, I don’t think about the penalty anymore.

Now I have to figure out a way to convince Best Buy to give me a deal on TVs http://www.moneyville.ca/article/981221–why-i-paid-10-000-to-break-my-mortgage

Canada’s economy created an impressive 58,300 jobs last month, almost all of them in Ontario, and a big portion of them part-time.

It was enough to bring the unemployment rate down to 7.6 per cent, matching the lowest jobless level since the early months of the recession.

Economists had expected a more modest 20,000 pick-up following a weak March. But they also noted that a higher number was in the offing due to possible one-time hiring for the federal election. Statistics Canada says most of the gains were in the service sector, but it was unclear whether many were related to the election campaigns. Although the jobs increase was dominated by part-timers, there were 17,200 new full-time jobs created in April.

The agency says that was enough to recover all the full-time jobs that were lost in the 2008-2009 recession for the first time.

However, hours worked still remain slightly below pre-recession levels.

Regionally, Ontario saw 54,800 jobs added, while six of 10 provinces actually saw their level of employment drop moderately during the month. http://ca.finance.yahoo.com/news/Canadian-unemployment-rate-capress-3308494693.html?x=0

A young couple who have been renting in our modest Toronto condo building recently bought a home a couple of miles away in a nice old neighbourhood with the aim of starting a family. The house is a big, detached fixer-upper and the renovation costs will be extensive.

In moving up to the rungs on the property ownership ladder, our young friends are committing themselves to a quantum leap in monthly expenses: They came up with a substantial down payment; they are taking on a mortgage payment, property tax bill and other expenses almost twice as large as their $1,600 rent; and they are spending a large amount on the renovation and other costs associated with buying a house.

It is a story that has unfolded millions of times in Canadian history and one that will continue to unfold because home ownership is deeply ingrained in our culture, a cornerstone of getting established and getting on our way in life. People will make great sacrifices and otherwise twist themselves out of financial and emotional shape to buy into the dream.

They willingly become what we used to call “house-poor,” paying well over the one-third of household income that many professionals believe should be the threshold.

Over the past decade, owning has been a financial success for most people, with prices rising almost in a straight line, with low, low interest rates feeding into the equation and with homeowners’ equity subsequently bounding higher.

And yet, if it has been just about as good as it gets for so long, perhaps conditions are going to deteriorate at least somewhat, with prices likely to stabilize or retreat a little and with interest rates set to rise modestly at least.

Our friends and other buyers this spring will know that Canadian house price gains have been flattening out. The Teranet-National Bank House Price Index for February published this week showed house prices gained just 0.1% from January for a 12-month gain of 3.8%. It was the eighth consecutive month of deteriorating gains.

While the forecast of a 25% drop in house prices over the next few years by one widely quoted economist seems far-fetched under present circumstances, a pattern of smaller gains likely signals a flat to slightly lower market.

So, is it time to revisit buying versus renting? For most of the 30% of Canadians who rent their accommodation it’s simply not an option. Getting their hands on a significant down payment and having the flexibility to meet higher payments if rates rise is difficult at best.

But some people with the wherewithal to buy a property might want to keep renting, keep saving and investing, and keep their options open. Other long-time owners might even want to consider selling and renting, thereby locking in their tax-free gains.

If you wish to see how the math works, visit United Mortgage Group’s Rent vs. Buy Calculator website. Even your technodunce reporter could plug in some numbers and come away with worthwhile conclusions.

A two-bedroom condo in our building might sell for $400,000. Let’s say you have a $100,000 down payment, a mortgage rate of 4.5% over five years, a $672 monthly condo fee, $200 a month in property taxes and other expenses of, say, $100 month.

Let’s also say that a two-bedroom might rent for $1,600 a month in the building, other costs might total $100 a month and the rent might rise 2% a year over five years.

All other things considered, the purchased condo would have to appreciate 2.33% a year, selling at $441,571 to match the gain made by renting a similar property in the building and investing the difference in outgoings at a conservative 2.5% a year.

The other way around, an owner could sell for $400,000 — with net proceeds of about $375,000 — and rent for $1,600 a month. The $375,000 could pay a conservative net return of, say, $10,000 a year. That $1,600 a month plus $100 in expenses would add up to $20,400 a year.

But deduct the net investment return of $10,000 a year and the condo fees of $672 a month, property tax of $200 and other expenses of $100 (for $11,664 a year), and the monthly rent for the former owner is basically paid. Or the former owner could invest the $10,000 a year and still end up paying only about $728 a month more than he was when he was owning.

Of course, this is just the rough math, which doesn’t take into account other factors, such as pride of ownership, the sense of place and the strong probability of building equity.

But geez. If I could live in the building basically for what I’m paying now in fees, taxes and insurance (by deploying my $10,000 a year investing return), and have my $375,000 to “invest” in winters in Waikiki and nice overnighters in Niagara-on-the-Lake, well then ….

It’s a thought, but only that. They’ll probably carry me out of here feet first from our condo, the equity in which may one day be needed to help us out in one of the emergency situations that can arise in older age.

Meantime, it wouldn’t hurt for everyone to do some math and determine what’s best financially for them — renting versus buying. And then, of course, throw the math out the window and succumb to the emotional tug of home and hearth. http://www.financialpost.com/personal-finance/mortgages/Rent+math/4691358/story.html

The number one question you need to ask yourself if you’re selling your home this spring is: How do I net the most money?

It’s not how do I get the most money for my home. It’s how do I keep the most money in my pocket after paying all my expenses, including commissions and fees.

Discounters are popping up everywhere now that they can access the Multiple Listing Service. Then there’s still the full-service broker who promises a better price and ultimately more money in your pocket.

A settlement last year between the Competition Bureau and the Canadian Real Estate Association, which represents about 100 boards across the country and almost 100,000 agents, allows consumers to have “a mere listing” on the MLS. Being on the MLS system is key since about 90% of transactions are handled by organized real estate.

A poll commissioned by LawPro and TitlePLUS, which sells title insurance, was released Tuesday and it shows confusion still exists in the marketplace.

The poll found even though 72% of Canadians were not aware of the changes made to the MLS, 45% of Canadians would still consider selling privately or using a real estate lawyer to help them sell.

“What these findings show us is that there is an appetite among Canadians to conduct the sale of their home privately,” says Ray Leclair, vice-president of TitlePLUS.

So you can be a do-it-yourself real estate agent and use the MLS. But do you want to?

Market conditions have to factor into your decision. There hasn’t been a U.S.-style collapse here, but it’s no longer a seller’s market, meaning you don’t just stick a sign in the ground and wait for the pigeons to flock. You’re going to have to work.

“For the discount that you’re getting, am I willing to take the gamble that my house is being shown at its optimum,” says Gary Siegle, Calgary-based regional manager for mortgage broker Invis Inc., about private selling.

He says the industry has been sticking to its guns when it comes to commission rates -generally around 5% of the purchase price -so if you’re using an agent, the negotiation might be on the service being provided for that commission.

“The professional service real estate agent is not going to give [commission up] just because someone has access to the MLS. They have to articulate the value more to justify their fee,” Mr. Siegle says.

Phil Soper, chief executive of full-service firm Royal LePage Real Estate Services, says the industry has not moved much off commissions since the agreement with the government.

“I think the impact in the market in the first year postchanges has been in the low end of the market,” says Mr. Soper, who says that narrow segment of the market is less than 15% of the overall sales volume.

He says for sale by owner or FSBO companies are now merging their operations with independent agents so customers also get an MLS listing as part of their service. “I don’t think they are actually selling any more houses. The listings are just showing up on more websites than they used to,” Mr. Soper says.

One of those FSBO companies is PropertyGuys.com. Walter Melanson, managing director of the Moncton-based company, says he currently has about 9,000 active listings across the country.

“I watch the comments [of the major real estate companies] and they say nothing has changed and nothing will ever change and that’s the way they built their mousetrap,” Mr. Melanson says.

What he and others are doing is creating a service that allows you to list with his company for as little as $399. When you sign up, his website hooks you up with a registered real estate agent who doesn’t do much but put your home on the MLS, for an extra $299.

The company’s Ontario representative, a licensed real estate agent, has close to 1,000 listings. She’s based in Hamilton but accepts listings from as far away as Elliot Lake, so she’s not doing too many showings.

“We want someone to compare how much it costs to sell your home using PropertyGuys to, say, Re/Max. You do that math and you’ll see quite the difference,” he says.

It’s no small amount. When you consider the average home is now selling for close to $375,000, at 5%, that’s $18,750 in commission.

However, consider if you do choose do it yourself on the MLS, you are forcing buyers to jump through one more hoop. In the case of Property Guys, the buyer has to click on the MLS broker’s listing office and then punch in the listing number before he’s directed to the seller.

“The bounce rate is amazing,” Mr. Melanson says. “Who wouldn’t look for their dream home and make that extra click? Our data says people will make that click. We’ve had to deliver magic within a narrow set of rules.”

But you have to wonder whether that extra work will affect your sale price at the end of the day. If you save $20,000 in commission, what’s the point if your house sells for 5% less?

Market conditions ultimately play into any decision. It comes down to whether you think your agent can earn that commission by getting you a better price or meeting a goal of selling your home in the time frame you want. http://www.financialpost.com/personal-finance/mortgages/Selling+house+just+about+highest+price/4680266/story.html