Posts filed under ‘mortgage advice’
Posted: December 6, 2010 Categories: calgary mortgage broker, calgary mortgages, financial advice, mortgage advice, recession No Comments
Transitioning from renter to homeowner is one of the biggest decisions you’ll make throughout your lifetime. It can also be a stressful experience if you don’t plan ahead by building a budget and saving prior to embarking upon homeownership.
Budgeting is a core ingredient that helps alleviate the stress associated with money issues that can sometimes arise if you purchase a home without knowing all of the associated costs – including down payment, closing expenses, ongoing maintenance, taxes and utilities.
The trouble is, many first-time homeowners fail to carefully think about their finances, plan a budget or set savings aside. And in this society of instant gratification, money problems can quickly escalate.
The key is to create a realistic budget based on your goals. Track your spending and make your dollars go further by sticking to your budget once it’s in place. Budgeting offers a step-by-step formula for figuring out how to best save your hard-earned money to invest in homeownership.
Start by listing your household income, then your household expenses, and review your spending habits. All of this can be done on a pad of paper or on a computer spreadsheet.
Keeping receipts for everything that you purchase will enable you to accurately keep track of where your money is going each month so that you can review and make necessary changes to your plan on an ongoing basis.
Examine all areas of your life from entertainment to the type of food you buy, where you buy your food and clothes, and how and where you travel. Also look at your spending personality and make necessary adjustments. Are you a saver, a splurger, a spontaneous shopper or a hoarder? Become smarter with your money and avoid impulse buying.
If you find you’re spending a lot of money in one area, such as entertainment for instance, set aside a reasonable amount each month and prepare to stop spending money in this area once your budget has been exhausted.
Budgeting provides you with the opportunity to re-evaluate your needs and wants. Do you really need the magazine subscriptions, the gym membership and all the other things you may spend money on each month? Although everyone needs some “me time” to wind down, could you not get that by taking a walk or reading a good book you borrowed from the library?
If you can set your budget solidly in place before you head out home or mortgage shopping, you will be far more prepared to purchase your first home.
Following are three top tips to help you prepare for the purchase of your first home:
1. Set up a savings account. You can deposit a predetermined amount into this account each pay period that you will not touch unless it’s absolutely necessary. This will enable you to put money aside for a down payment and cover closing costs, as well as address ongoing homeownership expenses such as maintenance, taxes and utilities.
2. Save up for big-ticket items. As you accumulate money in your savings account, you will be able to also save for specific purchases to help furnish your home – avoiding the buy now, pay later mentality, which can have a negative impact on your credit when you’re seeking mortgage financing.
3. Surround yourself with a team of professionals. When you’re getting ready to make your first home purchase, enlist the services of a licensed Calgary mortgage professional and a real estate agent. These experts are invaluable to you as you set out on the road to homeownership because they help first-time buyers through the home purchase and financing processes every day. They will be able to answer all of your questions and set your mind at ease. A Calgary mortgage professional has access to multiple lenders, and can help you get pre-approved for a mortgage so you know exactly what you can afford to spend on a home before you head out house hunting, while a real estate agent will be able to match your needs with a house you can afford. Both parties will negotiate on your behalf to ensure you get the best bang for your buck. And, best of all, these services are typically free. They will also be able to refer you to other reputable professionals you may need for your home purchase, including a real estate lawyer and home appraiser.
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage professional, please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!
Posted: October 15, 2010 Categories: calgary mortgage broker, calgary mortgages, economy, financial advice, mortgage advice, recession No Comments
In today’s economic climate of tighter credit requirements and increased unemployment rates taking their toll on some Canadians, there’s no doubt that many people may not fit into the traditional banks’ financing boxes as easily as they may have just a year ago.
Your best solution is to consult your mortgage professional to determine whether your situation can be quickly repaired or if you face a longer road to credit recovery. Either way, there are solutions to every problem.
Mortgage professionals who are experts in the credit repair niche can help credit challenged clients improve their situations via a number of routes. And if the situation is beyond the expertise of a mortgage professional, they can help you get in touch with other professionals, including credit counsellors and bankruptcy trustees.
If you have some equity built up in your home and still have a manageable credit score, for instance, you can often refinance your mortgage and use that money to pay off high-interest credit card debt. By clearing up this debt, you are freeing up more cash flow each month.
In the current lending environment, with interest rates at an all-time low, now is an ideal time for you to refinance your mortgage and possibly save thousands of dollars per year, enabling you to pay more money per month towards the principal on your mortgage as opposed to the interest – which, in turn, can help build equity quicker.
Following are five steps you can use to help attain a speedy credit score boost:
1) Pay down credit cards. The number one way to increase your credit score is to pay down your credit cards so you’re only using 30% of your limits. Revolving credit like credit cards seems to have a more significant impact on credit scores than car loans, lines of credit, and so on.
2) Limit the use of credit cards. Racking up a large amount and then paying it off in monthly instalments can hurt your credit score. If there is a balance at the end of the month, this affects your score – credit formulas don’t take into account the fact that you may have paid the balance off the next month.
3) Check credit limits. If your lender is slower at reporting monthly transactions, this can have a significant impact on how other lenders may view your file. Ensure everything’s up to date as old bills that have been paid can come back to haunt you.
Some financial institutions don’t even report your maximum limits. As such, the credit bureau is left to only use the balance that’s on hand. The problem is, if you consistently charge the same amount each month – say $1,000 to $1,500 – it may appear to the credit-scoring agencies that you’re regularly maxing out your cards.
The best bet is to pay your balances down or off before your statement periods close.
4) Keep old cards. Older credit is better credit. If you stop using older credit cards, the issuers may stop updating your accounts. As such, the cards can lose their weight in the credit formula and, therefore, may not be as valuable – even though you have had the cards for a long time. You should use these cards periodically and then pay them off.
5) Don’t let mistakes build up. You should always dispute any mistakes or situations that may harm your score. If, for instance, a cell phone bill is incorrect and the company will not amend it, you can dispute this by making the credit bureau aware of the situation.
If, however, you have repeatedly missed payments on your credit cards, you may not be in a situation where refinancing or quickly boosting your credit score will be possible. Depending on the severity of your situation – and the reasons behind the delinquencies, including job loss, divorce, illness, and so on – your Dominion Lending Centres mortgage professional can help you address the concerns through a variety of means and even refer you to other professionals to help get your credit situation in check.
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage professional, please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!
Posted: September 10, 2010 Categories: calgary mortgage broker, calgary mortgages, financial advice, mortgage advice No Comments
Hybrid mortgages – also known as 50/50 mortgage products – include an equal mix of fixed-rate and variable-rate components within your single mortgage. This means you get the best of both worlds – the security of fixed repayments with the flexibility of a variable rate.
Although there was a time in recent years when mortgage experts considered a variable-rate mortgage as the obvious choice to save mortgage consumers money over the long term, with fixed rates remaining near historic lows, a 50/50 mortgage may be a great alternative for you.
In essence, since it’s extremely difficult to accurately predict rates over the long term, a 50/50 mortgage offers interest rate diversification, which can help reduce your level of risk.
If you opt for a 50/50 product, half of your mortgage is locked into a five-year fixed rate and half is at a five-year variable rate. You can lock in your variable-rate portion at any time without paying a penalty. As well, each portion of the 50/50 mortgage operates independently – like two separate mortgages – yet the product is registered as only one collateral charge.
The 50/50 mortgage product is well-suited to a variety of borrowers, including those who:
- Would normally go fully variable but are afraid prime rate is at its bottom
- Aren’t comfortable being locked into a fully fixed rate
- Can’t decide between a fixed or variable mortgage
- Savvy first-time homebuyers
Some features of the 50/50 mortgage include:
- 20% annual lump-sum pre-payment privileges
- 20% annual payment increase ability
- Portability (the option to transfer your existing loan amount to a new property without penalty)
As the 50/50 option is a fairly new offering, according to a recent study by the Canadian Association of Accredited Mortgage Professionals (CAAMP), 5% of Canadian mortgage holders have 50/50 mortgages compared to 28% with variable-rate mortgages and 68% with fixed-rate mortgages. But many experts believe the 50/50 mortgage is quickly gaining momentum.
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage professional, please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!
Posted: July 27, 2010 Categories: calgary mortgage broker, calgary mortgages, mortgage advice 1 Comment
At some point in their lives, most Canadians have probably asked themselves whether it is better to buy or rent a home. And purchasing a home is one of the biggest decisions most people ever make.
Ultimately, the decision is a personal choice, but it helps to look at the pros and cons of buying to determine whether home ownership is right for you.
Some advantages of buying a home
Owning a home is generally considered to be a sound, long-term investment that can provide satisfaction and security for you and your family.
Each month when you make your mortgage payment, you are building equity in your home.
Equity is the portion of the property that you actually build through your monthly payment versus the portion that you still owe the lender.
At the beginning of your mortgage, more of your payments go toward paying off the interest and less toward paying off the principal. But the longer you stay in your home and the more mortgage payments you make, the more principal you pay off and the more equity you accumulate.
Most mortgages also offer you the option of making additional monthly or annual payments to reduce your principal faster. Some prepayment privileges, for instance, enable you to pay up to 20% of the principal per calendar year. This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money.
There is also a tax advantage. If your home is your principal residence, any profit you make when you sell it is tax-free. A home can appreciate – or increase in value – as time passes, building more equity. As you build up equity, it’s usually easier to upgrade to a more expensive home in the future thanks to the profit you’ll make when selling your current home.
As an owner, you can also decorate and improve your home any way you like. Ownership tends to give you a sense of pride and can offer you and your family stronger ties to the community.
If you do decide that home ownership is right for you, it’s important to choose a home you can afford. If you can’t afford to buy your dream home, purchasing a more modest home can be a great place to start building equity that one day may allow you to buy the home of your dreams.
Since we’re currently in a buyer’s real estate market and interest rates have been dropping, now may be an ideal time to enter into home ownership for the first time.
Some disadvantages of buying a home
Since it’s easy to get caught up in the excitement of buying a home, it’s important to remember that home ownership has some additional responsibilities as well.
For one thing, a home can be expensive. Chances are, your monthly payments will be more than what you are currently paying in rent when you factor in such things as your mortgage, property taxes, repairs and general maintenance.
Owning a home ties up some of your cash flow and is likely to reduce your flexibility to move to a new location or change jobs.
While your home might increase in value as time goes by, don’t expect to get a big return quickly. There are no guarantees that your home will increase in value, particularly during the first few years. In the beginning, you could actually lose money if you sell because your home may not have appreciated enough to cover the real estate fees, and moving, renovation and other selling costs.
Real estate is, however, usually considered a good investment over the long term.
When making the decision about whether to buy or rent, it’s important to carefully choose a home you can afford, and then weigh the pros and cons. Millions of people enjoy the rewards of home ownership but, ultimately, it’s a personal decision based on your own priorities.
If you’re thinking of buying your first home, Dominion Lending Centres mortgage professionals can answer all of your mortgage-related questions.
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage professional, please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!
Posted: July 20, 2010 Categories: financial advice, mortgage advice, recession No Comments
With the uncertainty of job loss racing through many people’s minds these days, taking a proactive approach to this issue by putting mortgage payments aside while you’re still actively employed can help set your mind at ease.
Planning for the future and potential job loss is one of the most important undertakings you can make to ensure you can pay your mortgage in an uncertain economy.
Dominion Lending Centres Mortgage Professionals often suggest you put money aside each pay period so you can place six to 12 months’ worth of mortgage payments into a short-term GIC as security for a possible job loss.
And, best of all, if your job remains secure, you can take the money out of your GIC and make a pre-payment back on your mortgage on your anniversary date, which can end up saving you thousands of dollars in interest payments.
Refinancing to access your home’s equity
But if it’s not plausible to save money each pay period, refinancing to access the equity you’ve already built up in your home is another valid option for planning ahead in uncertain times.
In addition to freeing up money to store future mortgage payments in a GIC, some of the money can also be used to pay off high-interest debt – such as credit cards – and get you and your family off to a fresh financial start.
You will find that taking equity out of your home to pay off high-interest debt can put more money in your bank account each month.
And since interest rates are at historic lows, switching to a lower rate may save you a lot of money – possibly thousands of dollars per year.
There are penalties for paying your mortgage loan out prior to renewal, but these could be offset by the extra money you acquire through a refinance.
With access to more money, you will be better able to manage your debt. Refinancing your first mortgage and taking some existing equity out could also enable you to make other investments, go on vacation, do some renovations or even invest in your children’s education.
Keep in mind, however, that by refinancing you may extend the time it will take to pay off your mortgage.
Options for paying your mortgage down quicker
There are many ways to pay down your mortgage sooner that could save you thousands of dollars in interest payments throughout the term of your mortgage.
Most mortgage products, for instance, include prepayment privileges that enable you to pay up to 20% of the principal (the true value of your mortgage minus the interest payments) per calendar year. This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money.
Another way to lower the time it takes to pay off your mortgage involves changing the way you make your payments by opting for accelerated bi-weekly mortgage payments. Not to be confused with semi-monthly mortgage payments (24 payments per year), accelerated bi-weekly mortgage payments (26 payments per year) will not only pay your mortgage off quicker, but it’s guaranteed to save you a significant amount of money over the term of your mortgage.
If, for instance, you have a $100,000 mortgage, an interest rate of 5% and an amortization period of 25 years, your monthly mortgage payment would be $581.60 and your total payments for a year would be $6,979.20 ($581.60 x 12).
To understand the savings accelerated bi-weekly mortgage payments can make, take the monthly mortgage payment of $581.60 and divide it by two ($581.60 ÷ 2 = $290.80). Next, take that payment and multiple it by 26 to arrive at your total payments for the year ($290.80 x 26 = $7,560.80).
As you can see, by using the monthly mortgage payment plan, you’ve made payments totalling $6,979.20 for the year, while using the accelerated bi-weekly mortgage plan you’ve made payments totalling $7,560.80 – a difference of $581.60.
Basically, with accelerated bi-weekly mortgage payments, you’re making one additional monthly payment per year.
Using this example, you would reduce the amortization on your $100,000 mortgage from 25 years to just over 21 years and your total savings on interest over the life of the mortgage would be just over $12,000.
By refinancing now and paying off your debt or putting money aside for future mortgage payments, you can put yourself and your family in a better financial position.
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage specialist, please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!
Posted: July 14, 2010 Categories: calgary mortgage broker, calgary mortgages, mortgage advice No Comments
There are generally two ways to get a mortgage in Canada: From a bank, or from a licensed mortgage professional.
While a bank only offers the products from their particular institution, licensed mortgage professionals send millions of dollars in mortgage business each year to Canada’s largest banks, credit unions, and trust companies … offering their clients more choice, and access to hundreds of mortgage products!
As a result, clients benefit from the trust, confidence, and security of knowing they are getting the best mortgage for their needs.
Mortgage professionals work for you, and not the banks; therefore, they work in your best interest. From the first consultation to the signing of your mortgage, their services are free. A fee is charged only for the most challenging credit solutions, and it’s especially under those circumstances that a mortgage professional can do for you what your bank cannot.
Whether you’re purchasing a home for the first time, taking out equity from your home for investment or pleasure, or your current mortgage is simply up for renewal, it’s important that you are making an educated buying decision with professional unbiased advice.
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage specialist, please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!
Posted: October 23, 2009 Categories: mortgage advice No Comments
There seems to be a lot of conflicting information regarding home loans and mortgages. In particular, you have probably heard that lenders are requiring more money down than ever, and that you shouldn’t even consider purchasing a home unless you have 20 percent to put down on the home.
What’s fact and what’s fiction?
Although the myth that you must have more than 20 percent down is not exactly true, it does shed light on the changes that the mortgage industry has made since the decline of the credit sector and subsequently of the housing market.
The fact of the matter is that lenders are pickier than ever regarding to whom they will extend a mortgage. With a record number of homes going into foreclosure, and literally millions of Americans behind on their mortgage payments, lenders must do what they can to ensure that an individual will be able to repay a mortgage loan; and a down payment is often a good indicator of that.
The amount that you will need to come to the table with in order to secure a mortgage will depend on the lender. Most homebuyers today are required to put at least five percent down, while others may need to put as much as 20 percent down to secure a home loan.
Very expensive homes or homes bought in areas that are burdened by an overabundance of foreclosures may even require more than 20 percent down.
Q: Can I still get a home loan with no money down?
A: Given today’s economy and lending market, do not expect to snag a home loan with no money down. The only exception currently offered is the cash back mortgage (also goes by other names depending on the lender), but in this case the lender still requires the minimum 5% down payment, the difference is that they provide the down payment. Even better is they do not require it to be paid back, they simply provide the down payment. But don’t get too excited just yet, they do have very strict guidelines on these offers , so if you have a beacon score less than 680 you probably won’t get approved. Also don’t expect the best rates out there either, you will be looking at bank posted rates, which are typically 1-2% higher than the best rates offered by lenders.
Q: What is the minimum I can pay for a down payment?
A: With regards to conventional loans, for single-family homes, you may be able to secure a mortgage for as little as five percent down. The neighborhood must be flourishing and the property must meet the exacting standards of the lender, but it can be done. However, it is important to point out that you must have a great credit score, adequate income and assets and an acceptable debt-to-income ratio, as well.
Q: Will I need more money down if I buy in an area that is currently dealing with a high foreclosure rate?
A: Probably. Many lenders keep a close eye on areas that they feel are declining, and will often ask for an additional five percent down if you want to purchase a home in one of these areas. In other words, if you are using a lender that typically requires five percent down, they may require 10 percent down if you want to purchase a home in area with a high foreclosure rate.
Q: What about condos?
A: Lenders typically require a larger down payment for a condo, but this is not necessary. As long as you have good credit you can land yourself a condo in downtown Calgary for 5% down, or if you have excellent credit you may be able to qualify for a cash back mortgage as described above. Just keep in mind that to get the best rates in Calgary Mortgages, and the Calgary Condo market you will be expected to have excellent credit.
Your best course of action is to simply talk to a lender and get a loan pre-approval before you begin looking at homes so that you can become educated regarding the lender’s down payment requirements.
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable Calgary mortgage broker, please contact us today!
Posted: October 19, 2009 Categories: calgary mortgage broker, mortgage advice No Comments
Your home will likely be the largest purchase you ever make, thus it requires that you take the time to find the best loan program and the best mortgage lender to handle your home loan.
Finding the best mortgage lender is a lot like any other industry. You must ask plenty of questions and perform due diligence, ensuring that you can make an educated, well-informed decision regarding your mortgage loan.
For many home buyers, particularly first-time homebuyers, the process of finding the perfect mortgage lender can be quite daunting; even overwhelming. It pays to take your time and research all of your options so that you can be rest assured that you made the right decision.
To ensure that your mortgage loan needs are best served, follow these simple tips:
- Find the best rates. Mortgage rates are published in the daily newspaper, so you can make this resource a first stop. You can also view current mortgage rates through a variety of websites, including ours. There is simply no better way to stay abreast of all changes in the lending industry than to read the latest news, either through the newspaper or Internet.
- After you locate a lender who offers a good mortgage rate, look further into the associated fees of the loan, such as application fees, origination fees and appraisal fees. Many lenders may offer low interest rates, but once you get done paying all of the related fees you are in over your head for thousands of dollars.
- Once you have chosen a few lenders who fit the bill when it comes to mortgage rates and related fees, make sure they are a trusted lender with a solid reputation. This is not the time to find subpar lenders who may or may not have a good history of lending.
- Ask friends, family members and neighbors for mortgage lender referrals. Often times, the best way to find a great lender is through the referral of a trusted individual. Although this should certainly not be the only way in which to find a mortgage lender, it can help narrow down your search.
- Make an appointment to meet with several lenders. Now is the time to ask plenty of questions regarding their loan products and your financing needs. If the lender is inpatient with you or is difficult when it comes to answering all of your questions and addressing all of your concerns then it is best to move on.
- Ask the mortgage lender professional which loan products are best for you. A good mortgage lender will take the time to thoroughly research your loan needs so that you won’t get stuck in a loan that’s simply not suitable for your situation or budget.
- Take a first-time homebuyer course. Many first-time homebuyers choose to take a first-time homebuyer course through a local real estate company. A course in home buying should also cover the home loan process, and is often a great place to ask questions and gather information so that you can make the best decision regarding your choice of home loans. Alternatively, download our new homebuyers guide!
Or let us do your homework for you. Calgary Mortgage Brokers and Calgary Mortgage Associates do the due-diligence for you. Mortgage specialists go through the above process everyday and don’t charge the client a dime to for their effort, so call contact the Purcell Mortgage Team and let us take the guess work out finding the lender that is best for you!
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage broker please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!
Posted: October 9, 2009 Categories: mortgage advice 1 Comment
Your home is likely the single largest purchase you will ever make. Sounds a bit scary, doesn’t it? It doesn’t have to be!
The process of purchasing a home, however, should not be taken lightly, as the type of financing you will secure for your home purchase will dictate your monthly budget for years to come.
With that said, it is important to understand that finding a good mortgage rate may just be the beginning. There are many strategies that you can employ to secure the best, possible mortgage for your home.
Below are several key strategies for your consideration:
- Just like anything else, mortgage rates can be negotiated. It is not out of the question to ask for a reduction in a published mortgage rate, even if it is just a quarter of a point.
Remember that mortgage lenders are just like any other business, and they are out there, competing for your business. In other words, don’t just choose a mortgage lender without thoroughly examining other lenders and their rates in your area before committing to a particular lender. Check out the published rates and take the time to learn about all of the loan programs available so that you can find the one that best meets your needs and your budget.
- Consider the advantages of a seller concession. A seller concession essentially involves asking the seller for a percentage of the home in a concession (which is usually no more than six percent). For example, if you purchase a home for $200,000 and ask for a seller concession of five percent, the price of the home will become $210,000, but the seller will return that $10,000 seller commission to you at closing, thereby enabling you to use the funds toward your closing costs.
In other words, you are effectively rolling the closing costs of your mortgage back into the loan, thereby providing yourself with additional cash funds for closing expenses.
Another bonus to a seller concession is that, because mortgage interest is tax deductible, you can write off the costs associated with closing. Although you will end up paying a slightly higher mortgage payment, many buyers find the relief of not having to come up with the cash at closing to be a good trade-off.
However, it is important to note that the only way you can swing a seller concession is if the house is appraised for at least the amount being taken out for your mortgage.
- Assume the seller’s mortgage. You may be able to save money by simply assuming the existing mortgage on the home that you’re buying, assuming that the mortgage is at a lower interest rate than current interest rates. You may be able to save some costs this way, particularly in administrative costs, although you will need to provide enough cash to cover the difference between the purchase price of the home and outstanding mortgage.
- Pay down the principal on the home, when you are able. There is simply no better way to pay down your mortgage balance and the interest that goes along with it than to pay extra payments on your loan every year. Even one extra payment each year will allow you to pay off your mortgage years before you would have otherwise.
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage broker please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!
Posted: October 5, 2009 Categories: calgary mortgage broker, mortgage advice 1 Comment
There’s no doubt about the current credit market: mortgages are not what they used to be. Stricter lending guidelines can make your home buying experience all the more complicated – unless you prepare yourself and your credit in advance.
Before you begin perusing neighborhoods and dreaming of your first home, you should instead begin thinking about your credit. Because, let’s face it, if your credit isn’t in order, obtaining a mortgage may simply be unattainable, especially in today’s economic climate.
Don’t let this information scare you; instead, begin the road to understanding your credit so that you can be fully prepared to take on a mortgage lender and walk away with a mortgage for your first home.
The Road to a Better Credit Report
The first step is to understand that one of the first things a lender will do is review your credit report. In fact, the lender will likely pour over it with a fine-tooth comb.
What is the lender looking for? Evidence that you have managed your finances well; that you have a strong history of paying your bills on time; and that you aren’t overextended with debt.
Therefore, your first plan of attack should be to order a copy of your credit report from all three, national reporting bureaus: TransUnion, Equifax and Experian. Best of all, you are entitled to a free copy of your credit report, from all three credit agencies, on an annual basis.
How to Evaluate Your True Credit
Once you have possession of your credit reports, you will need to make sure they are accurate. This may involve quite a bit of your time, but it is necessary, as even minor errors or discrepancies on your credit report can lower your overall credit rating, thereby either preventing you from obtaining the best, possible interest rate or from obtaining a mortgage at all.
If you locate any discrepancies or errors on your credit report, it is crucial that you immediately contact the appropriate credit reporting agency, who will then investigate and hopefully resolve the issue on your credit report.
What Your Mortgage Lender Evaluates
Your mortgage lender will ultimately be looking at your FICO score, which is designed to help lenders decide whether they think you are a good credit risk. Your FICO score is comprised of several factors, including:
- Your payment history – Have you paid your debts on time?
- The total amount of your debt – Also referred to your debt-to-income ratio, or how much debt you pay out each month in relation to your overall income. Now is a good time to begin paying off as much debt as possible.
- Your credit history – A lender will look for a history of responsible credit management on your part.
There is no magical formula for determining your FICO score; instead, it is a culmination of several factors, all of which work together to give a lender a good idea of how you have managed your credit in the past, and how much debt you have taken on at any given time.
The best rule of thumb is to simply pay your bills on time, keep your debt to a minimum and check your credit reports for accuracy before applying for a mortgage so you can be ahead of the game and ready to secure a mortgage.
About the Purcell Mortgage Team:
The Purcell Mortgage Team are an industry-leading pair of mortgage professionals who have been serving Calgary for several years. JoAnne Purcell was ranked within the Top 50 Canadian Mortgage Professionals in the CMP Magazine. If you are in need a reputable calgary mortgage broker please contact us today!
The Purcell Mortgage Team are experts on Calgary mortgages!
JoAnne Purcell, AMP