Tag Archives: credit score

Mortgage Specifications for Below Average Credit

Did you have any issues with your hard earned dollars while you were younger? Perhaps you underwent an unpleasant separation and divorce, suffered a small business breakdown, or just struck an area of difficult employment? In any case, your credit score has suffered and you’re discovering it hard to acquire loans for your personal new residence purchase. Therefore, what’s an expectant home buyer to do? While it’s hard to get less-than-perfect credit mortgage acceptance, it isn’t unusual. In reality, it really is becoming increasingly common as the Canadian mortgage loan industry becomes a lot more competitive. When you’ve got a bad credit score, consider our own bad credit property finance loan assistance and talk to a mortgage broker. Mortgage brokers gain access to hundreds of mortgage lenders who are ready to make a deal for a bad credit home finance loan, providing the applicant meets certain qualification specifications.

Less-than-perfect credit mortgage loan acceptance course of action
Before a mortgage lender may agree to support a poor credit score property finance loan or even poor credit mortgage refinance, they should initially look at the consumer to ensure they are not a financial risk. Poor credit mortgage qualifications differ by corporation.

 

The following are a few common criteria:



A higher minimum amount down payment
Having perfect credit, it is easy to obtain a home finance loan along with less than 5% down. If you have poor credit, mortgage brokers will in all probability increase this minimum to 15% of your valuation of the home. The larger the deposit, the more likely it is that you will be entitled to a poor credit mortgage loan.

Proof involving ample month to month earnings
In an effort to be entitled to any mortgage loan you have to be able to prove that you have got enough income to repay the funds and that you’re financially capable of handling a property mortgage loan. In an effort to figure this out, loan providers will want to take a look at gross financial debt service ratio (GDSR), the number of your gross monthly income you can use for housing costs (mortgage payment, utility bills, as well as house taxes). Lenders have a tendency to counsel below-average credit mortgage loan hunters to keep their GDSR at less than 35%; lower than 30% is actually better yet.


An expertly appraised property
In the event that for some reason you are unable to make the home loan payments on your home, the financial institution will take possession of the property and then sell it to be able to recover their financial investment. As a result, before any mortgage lender will give you a mortgage, they will require proof by an appraiser that your potential residence is really worth more than the mortgage loan amount.

 
A reliable co-signer
If you’re hoping to get financing for a poor credit mortgage refinance, it will be to your advantage to ask a friend or member of the family who may have good credit to co-sign for your application. Despite having an excellent deposit as well as stable earnings, mortgage companies often have to have a co-signer to guarantee a poor credit mortgage loan. A co-signer provides the financial institution additional security, however it will also mean that the co-signer is actually accountable for the mortgage should you be not able to make the repayments.

In case you have poor credit, no credit, or have filed bankruptcy previously, not all hope is lost. Get in touch with the mortgage brokers at FamilyLending to get more detailed bad credit mortgage guidance or submit an application online to understand the best way to become pre-approved for a poor credit home finance loan or perhaps less-than-perfect credit mortgage re-finance.

 

Things to Consider Before Buying a House

Buying a home is a big investment – both financially and emotionally. Make sure you’re properly prepared by considering the following things prior to submitting a purchase offer.

Your Credit Rating
If you aren’t aware of your credit rating, now is the perfect time to do a little investigating. Making sure your finances are in order is probably the most important step you’ll need to take prior to purchasing a home. Your credit report will play an important role in the mortgage approval process, plus it will also help determine many of your mortgage terms, including the all important interest rate.

Mortgage Types
There are numerous laws and options associated with mortgages. While you don’t need to know all the ins and outs of the mortgage process (there are lawyers for that!) it is important that you understand the different options available to you. From fixed rates to variable arrangements, there are lots of things to consider when deciding on a lender. A professional mortgage broker can help you narrow down your options, but ultimately it’s up to you to determine which lender is best for your needs.

Mortgage Pre-Approval

Being pre-approved for a mortgage can be a huge advantage to any home buyer. Not only does a mortgage pre-approval allow you to better understand and set your budget, it also gives you an advantage when putting in an offer on a property. Sellers have a tendency to favour offers accompanied by proof that a buyer has a mortgage pre-approval from their bank or lender. This shows there is one less obstacle in the transaction process, and could give you the edge to successfully purchasing the home or property you want.

Needs, Wants, and Real Estate Agents

Before you even start looking for homes, sit down and create a well-defined list of needs and wants. Clearly knowing what you need in a home, what you want, and what you get within your budget, will help you and your realtor find an ideal property. Speaking of realtors; before hiring a real estate agent, take the time to understand the particular duties, loyalties, and roles a real estate agent should, and will play in the home buying process

How to Find Your Home

Today, the most obvious tool available in the home search adventure is the internet. There are dozens of quality home search websites in North America that will put photos, amenities, and prices at your fingertips. Just because the Internet is convenient, doesn’t mean you should neglect “old fashioned” methods like driving to visit neighbourhoods, flipping through newspaper ads and classifieds, or grabbing a local real estate magazine.

Time to Make an Offer

One of the most stressful moments for any home buyer is putting in an offer. You’ve got a mortgage pre-approval, you’ve found a home you love; now it’s time to put your money on the table, and sign the papers. As a standard feature to any offer, it’s important to include a home inspection. This protects you against any hidden issues with the structure and construction of a home. Similarly, when it comes to navigating what can often be a long and confusing contract, be sure to have the paperwork checked over by your real estate agent and a lawyer.

Buying a home can be a long and stress-filled event, but if you follow these tips, and do your research before buying a home, you’ll be well prepared, and find a property that meets your unique needs and wants.

Call the Knowledgeable Staff at FamilyLending.ca today to learn more 866-941-6678

Chantielle Kennedy writer for FamilyLending.ca

Saving Strategies for Canadian Homeowners

Save Smart: How to Manage Money and a Mortgage

According to a recent Canadian Payroll Association survey, nearly 60% of Canadians don’t have enough money in the bank to cover even one month’s worth of necessary expenses. Too many homeowners are living on the edge of financial disaster, spending money that they should be saving. If you’re finding it difficult to save, now’s the perfect time to reassess your financial strategy, curb your spending, and improve your investment portfolio. Keep more of your money with these saving tips from the mortgage brokers at FamilyLending.ca.  

Saving Strategies for Canadian Homeowners

Saving is easier than you think. All it takes is a little financial knowledge and foresight.

  • Saving Tip #1 – Pay Yourself Saving is simple when you don’t have to think about it. The mortgage brokers at FamilyLending.ca recommend setting up a savings or investment plan that automatically transfers money from your paycheque into your savings account. Not sure how much you should be saving? Start with 10% of your gross income. Whatever amount you choose, make sure you don’t spread yourself too thin.
  • Saving Tip #2 – Get Rid Of Debt Carrying consumer debt can really hurt your ability to improve your savings. Let’s pretend that you’re carrying a credit card charge of $1,000 plus 18% simple annual interest. Every year, you’re paying an additional $180 in interest charges. Pay off that debt and you’ve saved $180. That’s the same as investing $1,000 in something that earns an 18% return after tax. The more debt you carry, the more money you waste paying off high interest charges. Eliminate debt and you’ll automatically save more money.

Save Money on Your Mortgage

Are you paying more than you have to on your mortgage? Refinancing your mortgage could save you thousands of dollars. The mortgage brokers at FamilyLending.ca recommend refinancing your mortgage if:

  • Your mortgage rate is more than 2% higher than current rates, and you have less than 2 years until maturity. Remember to always check with your mortgage holder to determine if there’s a penalty for getting out of your current arrangement.
  • You’ve built up enough equity in your home. The more equity you have, the more likely you’ll be able to refinance and tolerate a floating or variable rate mortgage. This type of mortgage is known for offering lower interest rates, but unpredictable monthly payment requirements. Speak with your FamilyLending.ca mortgage broker to determine if this is an option for you.

Expect Ups and Downs When Investing

It’s no secret that too much risk can hurt your investment portfolio’s growth rate, but so can sticking to ultra-safe investments that pay one percent or less. When reassessing your investments, make sure that:

  • You’re in it for the long haul. Don’t chase every market fad in hopes of making a quick buck. Studies have shown that it’s long-term discipline that provides the highest average returns.
  • You diversify with a healthy mix of stocks and bonds. A good rule of thumb to stick to: the fixed-income holdings in your portfolio should equal your age. This is because as you get older you’ll want to be more conservative in your approach.
  • Know when to sell. The financial experts at FamilyLendingFinancial.ca recommend that no holding should make up more than 5-6% of your portfolio.

Need more help making senses of your money? Then contact the mortgage brokers at FamilyLending.ca. Or our financial gurus at Family Lending Financial are here to help you save.

 

Chantielle Kennedy writer for FamilyLending.ca

Understanding your Credit Score

 

We thought it would be helpful to pass along a little information about understanding your credit score and some do’s and don’ts to be aware of. How you handle your credit now can affect your ability to get a mortgage as well as the rate you will receive.
 

 

Understanding your credit score 101

 

Driven by the financial industries desire for an equitable method of comparing the credit worthiness of borrowers, Fair Isaac & Co developed a credit measurement tool in the 1950’s called the FICO® score.

Now considered to be the industry standard, the FICO® score is used by most lenders from across Canada and the United States to assess lending risk.

 

 

 

 

FICO® score, BEACON® score, EMPIRICA® score

The three most recognized credit reporting agencies include Equifax, Experian and TransUnion, with Equifax being the most recognized agency in Canada. Known as a BEACON® score at Equifax, EMPIRICA® score at TransUnion and the Experian/Fair Isaac Risk Score at Experian, all use formulas developed by Fair Isaac & Co.

How is a FICO® score determined?

*In general terms, the FICO® score evaluates five main categories of information:

 

Payment history (35% of the overall score)

  • Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.).
  • Presence of adverse public records (bankruptcy, judgments, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items).
  • Severity of delinquency (how long past due).
  • Amount past due on delinquent accounts or collection items.
  • Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any).
  • Number of past due items on file.
  • Number of accounts paid as agreed.
 

Amounts owed (30% of the overall score)

  • Amount owing on accounts.
  • Amount owing on specific types of accounts.
  • Lack of a specific type of balance, in some cases.
  • Number of accounts with balances.
  • Proportion of credit lines used (proportion of balances to total credit limits on certain types of revolving accounts).
  • Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans).
 

Length of credit history (15% of the overall score)

  • Time since accounts opened.
  • Time since accounts opened, by specific type of account.
  • Time since account activity.
 

New credit (10% of the overall score)

  • Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account.
  • Number of recent credit inquiries.
  • Time since recent account opening(s), by type of account.
  • Time since credit inquiry(s).
  • Re-establishment of positive credit history following past payment problems.
 

Type of credit used (10% of the overall score)

  • Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.).
 

Add it up and you get…?

  • Each of the above noted factors, along with others, are assigned a value and a weight. The results of these factors are then added up and combined into a single number. FICO® scores can range from 300 to 800. The higher the number the better.

In general terms, borrowers with reasonable credit typical have FICO® scores, which range between 600 and 800.

Comments:
A score takes into consideration all these categories of information, not just one or two.
No one piece of information or factor alone will determine your score.
The importance of any factor depends on the overall information in your credit report.
For some people, a given factor may be more important than for someone else with a different credit history. In addition, as the information in your credit report changes, so does the importance of any factor in determining your score. Thus, it’s impossible to say exactly how important any single factor is in determining your score – even the levels of importance shown here are for the general population, and will be different for different credit profiles. What’s important is the mix of information, which varies from person to person, and for any one.
Contact FamilyLending.ca for more information.