How to Avoid haing your Mortgage Pre Approval " Unapproved+"

 It happens every year.  A client will go to a mortgage broker or the bank and get a pre-approval and then go house hunting.  They find a home and make an offer which is accepted. They then go back to the lender with the offer and all the paperwork and all of a sudden, they are not approved.

 How did that happen? What happened to the preapproval?   What most people do not realize is that a preapproval is a brief overview to see if you are creditworthy and it tells you how much you can afford. The preapproval is really no more than an interest rate hold.

   Inexperienced bank employees and a few brokers fail to give their clients the 5 Commandments when they give their clients the preapproval.

 Here they are:

1-      Don’t make any large purchases – don’t buy a new car or change the lease. Do not go out to buy the new furniture for your home until after the mortgage is approved. Even if you have one of those no payments for 90 days plans from the Brick, Sears or Leons , they do appear as purchases made at this time on your credit bureau report.

2-      Don’t apply for new credit – I know the zero down balance transfer looks appealing but you don’t need another hit on your credit bureau. Put off the temptation until after the deal is done.

3-      Keep your job – This may sound like a no-brainer but there are a lot of people who will switch forgetting about the 3 month probation or will become consultants which means they are self-employed. Don’t change industries.  More than one mortgage has been shot down by a job change.

4-      Pay your bills – pay them on time and don’t let the balances get close to the credit limit.

                           If you let your balance get close to your limit you can lose 30 points. Go over by a                   dollar and you will lose 35 points in a flash. Lenders often check for credit score drops in the days leading up to your visit to the lawyer’s office.

5-      Don’t move large amounts of cash around in your accounts. If you are receiving a gift for your down payment from your parents be sure to photocopy the cheque and the deposit receipt. Money laundering is a big worry with lenders so you should wait until your broker tells you it’s okay to move funds.

Finally,  be aware that the lawyer will ask you for 2 pieces of identification. If you make an offer on a house use your formal name, not your nickname. If the name on the offer and the name on your identification do not match you could delay or kill the home purchase at the last minute.

Let’s face it. Buying a home is a life changing event. Deal with a professional mortgage broker and you can avoid making stupid mistakes that will deprive you of owning the house of your dreams. 

Get your pre-approval by contacting me via my website.  

What's the Score ? How to Improve your Credit

The credit score, also referred to as a “FICO score,” is a mathematical formulae created by Fair, Issac and Company.

The credit score is used by most companies to decide if the applicant is a good credit risk or not. Equifax and Trans Union will calculate the numbers from the credit report and generate a number between 300 and 900.

A low score indicates a bad risk. A score of 680 or more puts the applicant in the lenders’ good books.

How scores are calculated:

Factor Weight Points Payment History Bankruptcies, late payments, past due accounts and wage attachments, collections, judgements - none is better 35% 315 Amounts Owed Amount owed on accounts, proportion of balance to total credit limit - moderate use is best 30% 270 Length of Credit History Time since accounts opened, time since account activity – The longer you have had your account open, the better. 15% 135 New Credit Number of recent credit inquiries, number of recently opened accounts - less is best. 5 per year max. 10% 90 Types of Credit Number of various types of accounts (credit cards, retail cards, mortgage) - variety is good 10% 90 Potential Totals 100% 900

 

Fair Isaac reports that the American public's credit scores break out along these lines. It would be similar for Canadians.

Credit score	Percentage
499 and below	2 percent
500-549	5 percent
550-599	8 percent
600-649	12 percent
650-699	15 percent
700-749	18 percent
750-799	27 percent
800 and above	13 percent

How Clients Can Improve Their Credit Score

1. Order a copy of the credit report, review it carefully and correct any significant errors. 
2. Pay bills on time. 
3. If there is a questionable credit history, they could open a few new accounts and use them responsibly, paying them off on time. 
4. Avoid opening accounts without intention of using them. You can, however, open it use it once and then maintain a balance of 0 which will build up your score.
5. Having a credit card or instalment loan can help boost a credit score, as long as the balance is not too high. 
6. Keep balance low in relation to available credit. If the credit limit is $1,000, keeping the balance below $500 (or 50 per cent of the limit) will improve the score. Balances of more than $750 (or 75 per cent of the limit) will decrease the score. Going over the limit has an even more negative effect and you can lose 35 points quickly.
7. Pay off credit card debt instead of moving it around to lower rate cards. Moving balances to other credit cards (i.e., “balance transfer”) and closing an old account can hurt the score.

 If you would like advice on how to improve your credit score so that you can buy a home contact me through my website at davidcooke.ca    

First National Financial, one of Canada's largest mortgage companies issued this market summary today. "The latest interest rate announcement and policy statement from the Bank of Canada make it pretty clear there’s unlikely to be any increase this year. While the economy appeared to be making all the right moves early in the first quarter, in the end, the results didn’t meet expectations. The resurgence of the Greek problem, the growing troubles in Spain (the euro zone finance ministers agreed to lend Spain up to $125-billion (U.S.) to shore up its struggling banks),slowing in the rest of Europe, China and the U.S., and weaker than expect growth at home have the central bank backing away from hints about a hike. Nonetheless the Bank remains concerned about the risk of a housing bubble and a high level of household debt." If you are concerned about your mortgage or whether you would be able to purchase a home in the future contact me to discuss this further. David Cooke your Calgary mortgage broker

Canadians locking into low interest rate mortgages

An article in the Vancouver Province newspaper highlighted some changes going on in the Canadian mortgage market. People are slowly moving away from variable rate mortgages. At this time 29% of homeowners have variable rate mortgages but over time, they switch to fixed rates. Why? Interest rates are at all time lows, where will they be going? Up , of course. Another interesting trend is how people are taking advantage of pre-payment privileges. 23% of mortgage holders are increasing their monthly payments, and 19% of making lump sum payments. Is there an incentive behind this? Yes, every dollar that you pay down saves you $3. In interest over the term of the mortgage. Put down an extra $1000 from your Christmas bonus and save $3000. Canadians have also been bombarded by news reports about how average household debt is increasing. This is how many people are reacting. Personally I think that you should start with your high interest debts. Pay off your credit cards at 19% , follow that up with your car payments at 6-8% and then tackle your mortgage. You may wonder where you can come up with the money. Well, it's the time of year when we all get our tax refunds. Instead of spending it on sometime we don't need why not spend it on paying down debt and saving huge amounts of interest. That can be very rewarding and gratifying. Try it now and see how much more money you will have next year at this time. For more information on mortgages and credit visit visit your favourite Calgary mortgage broker

Picking a Good Mortgage Broker

I recently read an article written by a realtor in Orlando, Florida complaining about mortgage brokers not doing their job correctly. He suggested that you contact lots of mortgage brokers and then pick one.
This could cause a big problem. I don’t advise clients on real estate or law because I leave it up to the professionals who work in that field. In this case, the advice this realtor is giving could result in a ding to the client’s credit score which might prevent him or her from buying the property they really want.
Every time you contact a bank or a mortgage broker, they will obtain a credit report to determine what sort of rate you qualify for . Too many inquiries will lower your credit score and can result in you being denied financing.
The author further says that you should pick a local lender as the financing could be delayed if the lender is too far away. How far away is too far away? I don’t know, but I would suggest that if time is short you pick a lender who is fast. Some lenders in Calgary take a long time while other lenders in Toronto are quick. My suggestion is to leave it up to the mortgage broker.
Finally, I would like to add my suggestions as a mortgage broker. If you are looking for a mortgage broker check out their online presence. Do they seem knowledgeable? Do they write articles or just long winded advertisements. ? In Canada, one way to tell if someone has been in the business for more than 2 years is to see if they have their Accredited Mortgage Professional designation , the AMP.
This tells you that the broker is experienced and takes regular continuing education. In addition, they have taken an ethics course and have swore to put your interests first. (Keep this in mind if you are thinking about going to a bank to get a mortgage. Who do they work for? You or the bank? )
You can find a reputable mortgage broker by going to your provincial mortgage association, in Alberta this is AMBA , or the national mortgage broker’s association which is CAAMP for find a broker in your area. Remember that brokers are licensed for their province only. If you are buying a property out of province ensure that they are licensed for that province as well.

Using a mortgage broker is easy , they do the leg work for you and find you the best rates and terms for your particular situation. Mortgage brokers help take the stress out of one of life’s most important events, the buying of a home.
David Cooke is a senior mortgage consultant with Mortgage Alliance in Calgary , Alberta. If you require further information you can contact David Cooke at his website or on Facebook

Welcome to Calgary Mortgage Talk

Welcome,
Do you need information on mortgages? Mortgages have changed so much over the past few years. Even within the past few months new products have been introduced.
As housing prices have gone up in the province of Ablerta, lenders have been searching for ways to make home buying affordable.
In March CMHC introduced 30 year insured mortgages. A few days later, their competition, Genworth Financial introduced 30 and 35 year mortgages. On a typical $200,000 mortgage the monthly savings would come out to about $250. This made affordable housing a possiblility for many.
In May, GE Money introduced a 40 year amortized mortgage. Wow !!
If you want more up to date information visit my website at:
http://mortgagealliance.ca/davidcooke