Mortgage Puzzles & Looking Ahead....

Hey Everyone, yep me again, your Friendly Neighbourhood Mortgage Broker... and no, I do not wear a red suite and shoot string from the cuffs of my shirts, let along stick to buildings. Although as a side note that would be pretty cool. But before I go off on a tangent, I do want to write a bit about mortgage rates. As you all know rates are on leap frogging upwards daily with the lenders it seems. Every other day I am getting a rate increase email.... I did say it would happen. We are soon I think, going to see all lenders over that 3% marker, heading towards mid threes shortly... which will slow down our summer market. Which for all cases has been insane these last three weeks!

Everyone tends to freak out when this happens, but it happens every year. For myself, with two small kids, I tend to think it follows the school year (although I know it is way more complicated than that, IE Bond Market Cause and Effect etc etc) ... however in Simple terms, I see May till the end of June being busy, but it starts to slow down come the beginning of July but it is still chugging along, come the end of July most things peter off to again be picked up come the end of August/September. School ending and school gearing up again.
                                                     
Using my non-existent crystal ball to look into the future....

Rates I believe, are going to eventually start balancing themselves out, that is, they are going to raise and start to get back to what were our normal rates. I am not saying this will happen tomorrow, but it will happen probably before the end of your current mortgage term... and what are your future plans going to be then? Our 'bubble' of the lower than low rates will not self sustain for ever, they are more of a blip in the bigger picture of economy, rates etc (however amazing the blip is, a blip by definition is "A temporary or insignificant phenomenon, especially a brief departure from the normal"... and in the case of mortgages, which are longer term financial obligations, we need to start thinking into the future. If you are the type of person that wants extended stability, then 10 year rates are currently where it is at, at 3.69% with all the bells and whistles, it is a no brainer. Think on this, most people do not have their mortgage paid off in 5 years... remember I said 'most' as I do have a handful of clients that will do just that, pay off their mortgage in 5 years flat. However back to the point, me like most others, will not accomplish that awesome feat. The 10 year rate allows you cost certainty. You know exactly what your payments will be the whole time, and can really concentrate on hammering it down!

Of course the other way to look, is the great 5 year fixed rates as well & just renew it in the 5 year term. Therefore taking advantage of the super low current rates and take your chances in the future renewal. This allows you to have the lowest possible monthly payment obligation and to hopefully start to utilize all the bells and whistles on your mortgage. Meaning, the 15-20% pre payment options, payment frequency options etc etc... Tip: just changing your mortgage monthly payments to biweekly or accelerated weekly will drastically change your amortization. In a good way! Which means, YOU will be mortgage free sooner!  Variable seems to be off the table for now as the spread between variable and fixed is not that great yet, about 35bps. When the spread is around 100bps then you will see the Variables picking up in popularity again! However for now Variables are only great in the HELOCS, which are still going strong with the Prime +0.50%

We all need to seriously start looking at mortgages, the debt we carry and finding what long term solutions are going to work for either yourself as an individual or for your family as a whole. Mortgage payments, types of mortgages, types of rates, types of pre payment options, owner occupied vs rental, types of properties, down payments etc etc - where you get all these from are going to be important. You should go to the experts that can help explain all the differences as well as help guide you to the right mortgage path for yourself. Mortgages are not just about one thing, rate, but a whole bunch of puzzle pieces that once put together will give you a great picture.......Of course I am always available for a free consultation... look ahead into your eventual "Mortgage Free" Future...the grass is greener there but you have to plan to get there in order to actually cross that finish line.

Think Outside the Box!!! 

Why is your Credit Score Important

Why is your Credit Score Important.

Incurring debt is part of life for most people. Understanding how best to handle credit will help you maintain control of your overall financial situation as your credit affects your ability to borrow money. 

Your credit report is simply a listing of all your mortgage and consumer debt. In Canada mortgage brokers use two credit bureaus, Trans Union and Equifax and they have a credit file on anyone who has ever borrowed money. Every time you borrow money or make a payment on a loan or credit, the lender reports the information about that transaction to these two agencies. In addition to credit information, you will also find liens and judgements on your credit report as well as your address and possibly your work history. The accumulation of all of this information is called your credit report. 

A credit score is a rating used by a lender to help determine whether you qualify for a particular credit card, loan, or service. Credit scores run from 300 on the low end to 900 points based on information on your credit file the credit reporting company analyzes your information using a complex mathematical model to yeild your credit score. CMHC and Genworth have limits of 600 for insured mortgages. If your score is below these numbers you would possibly qualify in the private lending world. 

Most credit scores estimate the risk a company incurs by lending you money or providing you with a service-specifically, the likelihood that you’ll fail to make payments in the next two to three years. The hisgher the score, the less risk you represent. 

One thing that many people do not know is that you have a legal right to obtain a copy of your credit report. As Mortgage Agent, I can assist you in obtaining a copy of your report ( you can do this online) I can go through it with you to verify that all of the information is true and correct. The good news is that your credit report is a working document which means you have the ability, over time, to repair any damaged credit and increase your credit score. The number one way to increase your score is to pay down your cards to 30% of their limits. Revolving credit like credit card seems to have a more significant impact on your score than car loans, lines of credit, and so on. By paying down your cards 30% you are leaving a big gap between what your limit is and what you owe a month-- that is very favourable to increasing your credit score.

Raking up a large amount and then paying it off in monthly installments 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 paid it all off the next month. By being more accountable of your spending on a daily or weekly basis through the use of a budget, you can keep those cards below the magic 30 % mark. 

Make sure everything is up to date. Old bills that have not been paid can come back to haunt you. When making
payments online, do so about a week before the closing date printed on your latest statement to ensure the 

payment is received on time. It can take up to five business days for a payment to be received. 

This won’t raise your reported limit but it will widen the gap bewtee your limit and 

your closing balance which should boost your score. 

Older credit is better credit. If you stop using those older credit cards, the issuers may stop updating your accounts. As such, they will lose their weight in the credit formula and, therefore may not be as valuable-even through you have had the card for a long time. Use these cards periodically and then pay them off.
As a mortgage agent, when you are in the process of buying a home I have to only check your credit once. This allows us to use it for the next 30 to 60 days depending on the lender. If you shop by yourself for mortgages and continually have banks pull your credit this will affect it as the more inquiries the more points it will take away from the score. 

Mortgage brokers are credit professionals, we are trained to read and interpret credit bureaus and how they can affect your ability to get a mortgage. 

Contact me at www.arianaleroux.com today for an analysis of your current situation. 

Wednesday Evening Thoughts

So it is Wednesday evening with grey skies and a down pouring of turrential rain. I am watching my dogs and kids sit by the glass storm doors as they are watching sheets of rain blanket my lawn and flowers. My content relaxation soon morphs to a mad dash, to take the flower hanging baskets down and place them into the Mother Nature provide water.  Coming inside dripping water onto the floor, with now giggling kids, there were somethings that I wanted to again mention. Rates and mortgage products. On the heels of getting another wonderful approval for a great client & am of course continually working on all the others that I have pending/looking/thinking/building/waiting... etc etc...  it has been something I wanted to write about all day but had no "time". Ha, water does good on clearing minds that is for sure... so here goes....

You all have heard me say, "rates are going up", and you can see this when you watch the bond market. When the bond rises - our rates are not far on its heel. This has come to pass with pretty well all lenders raising rates this week. Now it is not a huge raise - but it did go up. As well as in the Mortgage Product market, we lost yet another lender that would do stated income for our business for self clientele. More so now than ever it is important I believe that you have someone working in your corner to make sure you have the knowledge to make the important decisions that a mortgage requires. That you have options and direction. Really someone that can protect you from the turrential down pour of garbage, but still know that you need some light nitrogen rain in which to grow.  (nice visual huh). What I am trying to state, is that you do need a Mortgage Agent on your side. You do not need nor want an order taker or data entry person. You need someone that specializes in what you are wanting to participate in, the Mortgage Market. Some who lives and breathes what they are talking about and have your best interests at heart always. :)
                                                      Mortgages are not all about rate, although it is

important, but they are about so much more than just the percentage you receive. I mean, did you ever think "what if I move?", is the mortgage portable? "what if I want to change my payments?" can you?, "what if I want to pay down my mortgage?" well can you? , "what if I have a plan when I want to be mortgage free...", is someone really helping you get to that goal? ... there are so many questions.  Like did you know you lower your given amortization if you make weekly or biweekly payments vs monthly? Can your current mortgage product do this for you? do you want it to? I mean... mortgages are long term for 99% of our population, we have to think past our noses when we are signing on the dotted line. And in order to do that you have to have information, and options.

We still have stated income business for self lenders, but they are dwindling. As well as we will start to see corrections in the interest rates - especially in the Spring/Summer Market... we always do. So if you have questions... Ask. Come into the rain... get wet.. I have an umbrella... and we will get you into something that you qualify for and will work for you as an individual or family. Its what I do, what I love, give me a call to talk about your mortgage options. Even to get a check up on your current mortgage. There is NO COST! But it may save you in the future... it never hurts to ask questions! :)