Do you want a Mortgage Life Insurance?

What I Learned This Week


 

Last week, I made a post about Mortgages and it was pretty popular. I’d thought I would follow the trend and share what I learned this week (I hope you’ll get something out of it). Today’s going to be more focused on Canada because I’m Canadian (vive le Canada~). However, it might be translatable over in the USA (don’t quote me on that).

Today, we talk about Life Insurance. More specifically, Mortgage Life Insurance. I know what you’re thinking, “Donald, f*ck off. That stuff’s a scam, you’re a bloody idiot for considering it.” And you know, I’m totally cool with that, a lot of people think it. Hell, I use to be that same person until I decided to go on a route of “diving deeper into everything I’m curious about.” Because really, I don’t lose anything when I don’t give somebody my money, but I do gain something by researching a little bit more than your typical, biased joe (spoiler alert: MLI is a pretty poor decision).


 

Mortgage Life Insurance

Basically, it is a financial product whose value depreciates over time as you pay more premium into it. Here’s an example, Joe borrows $600k mortgage for 30 years and buys Mortgage Life Insurance. He dies that same year, that insurance pays off the mortgage (all $600k). However, let’s say he dies 15 years later and half the house is paid off, the insurance will then pay off $300k (when you qualify for $600k). Now, let’s say he dies 27 years from when he first took out the mortgage and has $50k left on the mortgage, how much does the insurance pay off? You guessed it, $50k (when you qualify for $600k). The horrible part is throughout the years, you’ve been paying a monthly premium for the insurance! So you are paying for a depreciating financial product!

There are better options, a traditional or term life insurance product typically keeps face value as you pay the monthly premiums (that means if it pays out $600k, you will get that amount no matter when you die). It’s just that as you get older, you become more risky and you pay a higher premium.

There has been much controversy surrounding mortgage life insurance. It really does benefit the lender only and is a really bad idea for the buyer, but sometimes it might be your only choice to help take care of the family in case you go early (how morbid). Also, if you are not healthy and do not pass the tests from term life insurance, it might be your only option (another reason to stay active and healthy).

At any rate, you guys know what to do if the banks try to sell you this product. As Canadians, we will politely decline and then curse at them under our breath. If you’re an expat, then act according to your culture. It’d be quite the show.

I hope you learned something today and as always, there’s two videos that I’d like to share below to further explain what Mortgage Life Insurance really is.


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All About Mortgages

What’s There to Know?


Well, it has certainly been awhile. Certainly, I have failed in keeping up with my posts. However, there was a reason for that. I have found myself a job as a Software Engineer at a startup called Time.ly in Vancouver, BC. It’s certainly nice to be able to make a living again, but I am starting at a pretty rough place because the startup is so very disorganized.

At this moment, I feel like passing out, but I will do that after I finish this blog post about what I learned over the time I was absent. A friend of mine recently bought a condo and was raving about all these terms related to buying a place that was above and over me. I started researching about the process of buying a place and more specifically, mortgages.

I learned about credit scores, downpayments, assets, income, etc. and I even made a video that you can find here. It explains what a mortgage is and what you need to qualify for it. It’s very basic, so if you already know a lot about home purchases, you may want to skip it.

I’m from Canada and I really focused on Canada in that video. In it, I explained a little bit about CHMC or Canadian Mortgage and Housing Corporate – or Mortgage Insurance. Essentially, you pay a premium IF your downpayment is less than 20%.

So, let’s say that Jeff purchases a house with a 10% downpayment. The other 90% is from a mortgage. To protect the lenders, borrowers are forced to buy this mortgage insurance. The premium that they pay is based on their situation and is calculated by lenders. So basically, in a monthly mortgage payment you will pay for the interest of the mortgage + insurance premium + principle. If you had a downpayment of 20%, you only pay mortgage interest + principle. In this post, I really wanted to point out the insurance premium you’d pay if your downpayment is less than 20%. I feel a lot of people don’t know how much they lose to this insurance premium (or even knows about it). So, I wanted to bring it to light.

Of course, the video I made explains it in finer details, so make sure you watch it. Also, refer to the CHMC reference page to learn more about it. It is Canadian, but I believe USA also have the same kind of process to protect lenders. Sucks for us buying houses, but now you know what to expect.

(Actually, I made it easy for you to find the video *wink*)

Follow me for more tips and tricks and life hacks about how you can hack your financial life!

Yours truly,

Donald

Kickstarter for Customer Validation – My 2.0

Welcome back,

Today has been quite a day of reads for me. Here is a list of reads regarding Kickstarter and Customer Validation (the last one is creating a million dollar business):

Right now, I have two major projects going on mealshelf.com and this blog. I cannot say that everything is going super well. Actually, there has been a lot of thinking because MealShelf is not gaining traction the way I want. In the first article from segment, a lot of lean methodologies are mentioned. Specifically, I want to point out stretch goals. MealShelf is a B2C business with us being the middleman of aggregating information from businesses for consumers. Now, I did validation for it as a platform for grocers to just list their products. They were interested in that. I also did some validation for a pre-order system that I prototyped, they were interested in that too.

That’s great, then “What’s the problem Donald?” you may ask. My problem right now is that I did not ask them to buy it during my customer validation, or simply put, I didn’t put a dollar value on the pre-order system. Now, looking into it, I don’t know the statistics for how many people actually preorder niche, exotic food from their local butchers on a frequent basis enough for that idea to be profitable (i’m expecting it to be small). So, i’m on the verge of pivoting and not positioning MealShelf as a preorder system.

I still see some value in it being an aggregation of available products for the consumers (wouldn’t you like it if you found out that your local butcher sold ostrich?). I called some local stores, there was interest. Though, they don’t see value in paying for it. The revenue plan right now is shaky, as my only revenue model is through ads (Google Adsense, anyone?). However, for that to pay off well, I have to generate a lot of page visits, which means Mealshelf must have a presence beyond where I live in Vancouver, Canada, which is a pretty small city. The Adsense idea came from PlentyOfFish, I had forgotten that a website with large page visits can generate a lot of revenue. However, it’s still very unsettling to know that is likely your main source of revenue. In essence, this would work if revenues from ads > cost of hosting and servers. I’m betting that it would with large interest. At the same time, it took Yelp 5 years for it to actually get started and go global. At this point, a fog has cropped up and I don’t know where to go. I still see potential in its grassroots as an aggregation of available products, if it starts gaining speed, I would see money rolling in. However, I know that it would take a lot of effort to which I can’t foresee whether the result I aim for will ever materialize.

Though, the work and experience in this project did bring about other ideas, to which I will discuss in my next post.


On a side note, back to the story in my first post about the girl who told me to go away after I walked up to her because I thought she was stunning. I told her that I interrupted her because I thought she was beautiful. She was. Suddenly, she became the friendliest and most talkative girl that day. Sadly enough, I had 6 hours until my flight, so I couldn’t ask her out on a date later. Fortunately, I might have dodged a bullet if her attitude flipped in 2 seconds.

At any rate, the lesson learned there is compliments does wonders. Honesty and transparency forges the path for some very spontaneous and organic connections.

Next post, I’ll talk more about Kickstarter and Customer Validation. I kind of went off on a tangent here, but it was a good organization of thoughts.

Hello world!

My first blog. I’ve been told that writing the first blog always takes a lot of time, so I just want to experience that for myself. Actually, one may ask, why have you started writing a blog? One answer could be, I started my own business called MealShelf at mealshelf.com and I wanted to use it for shameless self-promoting.

Another reason would be that I like challenges and I want to see how much of a presence I can build from nothing.

The most exciting reason would be – well, have you ever done journal entries back in grade school? You see, from around grades 3 to 5, we always had to write small journal entries about random things after lunch. It was incredibly boring, and I did not much like it, but we wrote journal entries about our lives.

How ironic that today at 23, I start seeing the value of sharing my thoughts and opinions with unmet readers.

Right now, I am writing from Simon Fraser University in downtown Vancouver. Instead of doing my homework, I shall be dedicating some good time to create some good reads. My opinion on startups, personal thoughts, and random spontaneous events in my life is what I would share. I’m very open to responses, both positive and negative, I’m pretty sturdy.

Funny story, on my travels, I walked up to a girl in a café with her friend because I thought she was stunning. “Excuse me, I want to tell you something.” I said. “What do you want? Can you go away? Can’t you see we’re having a conversation.” she responded.

It was a shock, but not something that kept me up at night. I found it both hilarious and memorable. As for what happened with that, I guess I’ll conclude it in my next post.