Understanding Your Credit Report

As credit has become more and more abundant in our society, your credit report, and thus your credit rating, has become more important in your daily life. Your credit rating affects all aspects of your financial activities when it comes to borrowing money. Your credit rating also has the ability to affect the job you get, the apartment you rent, and even the ability to open a bank account.

Your credit report itself is simply a listing of all of your mortgage and consumer debt. Here in Canada, the two main credit reporting agencies are Trans Union and Equifax. Both agencies have a credit history file on anyone who has ever borrowed money. Every time you borrow money, or make a payment on a loan or credit card, the lender then reports the information about the transaction to these two agencies. In addition to credit information, you will also find liens and judgments 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.

The information on your credit report varies based on your creditors and what they have reported about you. Potential lenders and others, such as employers, view your credit history as a reflection of your character. Whether we like it or not, our financial habits have a lot to say about the way in which we choose to live our lives.

The credit score, or beacon score, is a number which gives mortgage lenders an idea of your lending risk.

Credit scores range from 300 to 900, the higher your credit score the better. The mortgage products and interest rate that you will qualify for are often determined by your credit score.

One thing that many people do not know is that you have the legal right to obtain a copy of your credit report. A mortgage professional can help you obtain a copy of this report and 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. This means that you have the ability over time, to repair any damaged credit and increase your credit score.

If you’d like to know more about your credit report, call or email me and we can discuss it in detail. I will be hosting 2 ‘Understanding your credit’ seminars in January 2011. Please let me know by email if you’d like to attend – scorbitt@dominionlending.ca

Cheers!

Sherry Corbitt

Mortgage Agent

905-995-3143

Tags: Ajax, Amortization, Dominion Lending, Dominion Lending Centres, Durham, Durham region, First time buyers, Mortgage agent, mortgage professional, Mortgages, Oshawa, Sherry Corbitt, Whitby
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Continue of Part 1 and Part 2 of Improve Your Peace of Mind

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.

I’ll show you what the banks won’t tell you!

Cheers!

Sherry

Tags: Accelerated Payments, Ajax, Amortization, Dominion Lending, Dominion Lending Centres, Mortgage agent, Mortgages, Oshawa, Pickering, Sherry Corbitt, Whitby
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Continuing off the last post about Improving Your Peace of Mind:

If it’s not plausible to save money each pay period to have a cushion of security incase you lose your job, 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. Call me to discuss all your options and what works best for you.

I’ll show you what the banks won’t tell you!

Cheers!

Sherry

Tags: Ajax, Dominion Lending, Dominion Lending Centres, Durham, Durham region, Mortgage agent, mortgage professional, Mortgages, Oshawa, Pickering, Sherry Corbitt, Whitby
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Remaining proactive in trying times can be hard.

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.

It is 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.

I’ll show you what the banks won’t tell you!

Cheers!

Sherry

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Selecting the length of your mortgage amortization period – the number of years it will take you to become mortgage free – is an important decision that will affect how much interest you pay over the life of your mortgage.

While the lending industry’s benchmark amortization period is 25 years, and this is the standard that is used by lenders when discussing mortgage offers, and usually the basis for mortgage calculators and payment tables, shorter or longer timeframes are available – to a maximum of 35 years.

The main reason to opt for a shorter amortization period is that you will become mortgage-free sooner. And since you’re agreeing to pay off your mortgage in a shorter period of time, the interest you pay over the life of the mortgage is, therefore, greatly reduced.

A shorter amortization also affords you the luxury of building up equity in your home sooner. Equity is the difference between any outstanding mortgage on your home and its market value.

While it pays to opt for a shorter amortization period, other considerations must be made before selecting your amortization. Because you’re reducing the actual number of mortgage payments you make to pay off your mortgage, your regular payments will be higher. So if your income is irregular because you’re paid commission or if you’re buying a home for the first time and will be carrying a large mortgage, a shorter amortization period that increases your regular payment amount and ties up your cash flow may not be the best option for you.

Your mortgage professional will be able to help you choose the amortization that best suits your unique requirements and ensures you have adequate cash flow. If you can comfortably afford the higher payments, are looking to save money on your mortgage or maybe you just don’t like the idea of carrying debt over a long period of time, you can discuss opting for a shorter amortization period.

Advantages of longer amortization

Choosing a longer amortization period also has its advantages. For instance, it can get you into your dream home sooner than if you choose a shorter period. When you apply for a mortgage, lenders calculate the maximum regular payment you can afford. They then use this figure to determine the maximum mortgage amount they are willing to lend to you.

 While a shorter amortization period results in higher regular payments, a longer amortization period reduces the amount of your regular principal and interest payment by spreading your payments out over a longer timeframe. As a result, you could qualify for a higher mortgage amount than you originally anticipated. Or you could qualify for your mortgage sooner than you had planned. Either way, you end up in your dream home sooner than you thought possible.

 Again, this option is not for everyone. While a longer amortization period will appeal to many people because the regular mortgage payments can be comparable or even lower than paying rent, it does mean that you will pay more interest over the life of your mortgage.

Still, regardless of which amortization period you select when you originally apply for your mortgage, you do not have to stick with that period throughout the life of your mortgage. You can always choose to shorten your amortization and save on interest costs by making extra payments when you can or an annual lump-sum principal pre-payment. If making pre-payments (in the form of extra, larger or lump-sum payments) is an option you’d like to have, your mortgage professional can ensure the mortgage you end up with will not penalize you for making these types of payments.

It also makes good financial sense for you to re-evaluate your amortization strategy every time your mortgage comes up for renewal (at the end of each term of your mortgage, whether this is three, five, 10 years, etcetera). That way, as you advance in your career and earn a larger salary and/or commission or bonus, you can choose an accelerated payment option (making larger or more frequent payments) or simply increase the frequency of your regular payments (ie, paying your mortgage every week or two weeks as opposed to once per month). Both of these features will take years off your amortization period and save you a considerable amount of money on interest throughout the life of your mortgage.

Tags: Ajax, Amortization, Dominion Lending, Dominion Lending Centres, Durham, Mortgage agent, Mortgages, Oshawa, Pickering, Saving money, Sherry Corbitt, Whitby
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Canadians purchase homes for a variety of reasons. Some want the stability of owning their own home, while others also look at home ownership as an investment vehicle. No matter what the reason, the truth is that home ownership has proven itself to be a good stable investment over time, and one which many Canadians are profiting from.

While many people have chosen to purchase their first home during these times of lower interest rates, there has also been a large movement to refinance home loans and pull out equity for home improvements, investments, college expenses, and even high interest debt consolidation. Canadians have been borrowing against their home’s equity in record numbers, taking out billions of dollars in cash each year.

In years past, many saw their homes as a shelter of safety, yet today, they are more than ever before willing to borrow against the equity owned in their homes to further their investment portfolios, get out of debt, send their children to university, make improvements to their home, or even boost their RRSP contributions. Where home equity was once sat upon, today it is something to be tapped out and used to one’s advantage.

While tapping the equity in your home can be a good idea, you should do so with caution and understand any of the possible consequences. The best thing you can do is consult a licensed mortgage professional and financial planner to discuss opportunities to make your home’s equity work for you.

Tags: Ajax, Dominion Lending, Dominion Lending Centres, Durham, Durham region, Mortgage agent, mortgage professional, Mortgages, Oshawa, Pickering, Sherry Corbitt, Whitby
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Please meet Susan Parsons from Crossroads Family Solutions.

Crossroads Family Solutions provides divorce mediation and counselling services designed to support the entire family. Welcome Susan. First off, let me say thank you for providing a much needed service to help families cope with a difficult time and to better their chances of having long-term resolutions.

Sherry: Why do you suggest that family approaching a separation contact you?

Susan:  It is important that couples become aware of what options are available to them for negotiating their separation agreement.  Crossroads Family Solutions offers free information sessions to assist couples determine which process is right for them.  As a Family Mediator with 22 years experience helping families transition through complex life events, I offer a time and cost efficient alternative to litigation which produces constructive divorce settlements that are in all famly members best interests.  Additionally, I provide counselling programs for children who have been impacted by separation and divorce.

Sherry: If you could pass on one piece of advice for a couple at this important part of their relationship who have children, what would it be?

Susan:  The most important piece of advice that I can provide to couples is that they ensure their children do not become the victims of divorce.  My Family Mediation Service aims to reduce the negative impact of divorce by negotiating balanced settlements and parenting arrangements that are in their childrens best interests.

My unbiased role as mediator includes managing the conflict level and developing communication strategies so that fair and equitable agreements can be negotiated.  Reducing conflict and hostility between parents has a direct impact on a child’s ability to cope.  My mediation process includes understanding the effects of divorce on children and what each parent can do to support their childen and strengthen the parent-child relationship.

Thank you, Susan for visiting and discussing this much needed service you offer to families in the Durham Region. I look forward to having you return in the future.

If you or someone you know is in need of Crossroad Family Solutions, please visit their website for more details and contact information at www.crossroadsfamilysolutions.ca

If you are a business owner in the Durham region and would like to be featured in Mortgageupdates monthly Spotlight on a Durham business, please contact me for details.

Sherry Corbitt

 Mortgage Agent

 Dominion Lending Centres Bankfighter Inc.             Licence #11129

 Tel: 905-995-3143

 www.sherrycorbitt.ca

 Email: scorbitt@dominionlending.ca

Tags: Ajax, Crossroads, Dominion Lending, Dominion Lending Centres, Family, Mortgage agent, Mortgages, Oshawa, Pickering, Sherry Corbitt, Susan Parsons, Whitby
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Canadians purchase homes for a variety of reasons. Some want the stability of owning their own home, while others also look at home ownership as an investment vehicle. No matter what the reason, the truth is that home ownership has proven itself to be a good stable investment over time, and one which many Canadians are profiting from.

While many people have chosen to purchase their first home during these times of lower interest rates, there has also been a large movement to refinance home loans and pull out equity for home improvements, investments, college expenses, and even high interest debt consolidation. Canadians have been borrowing against their home’s equity in record numbers, taking out billions of dollars in cash each year.

In years past, many saw their homes as a shelter of safety, yet today, they are more than ever before willing to borrow against the equity owned in their homes to further their investment portfolios, get out of debt, send their children to university, make improvements to their home, or even boost their RRSP contributions. Where home equity was once sat upon, today it is something to be tapped out and used to one’s advantage.

While tapping the equity in your home can be a good idea, you should do so with caution and understand any of the possible consequences. The best thing you can do is consult a licensed mortgage professional and financial planner to discuss opportunities to make your home’s equity work for you.

Contact me if you have any questions. I look foward to working you to provide you and your family with the best mortgage products.

Cheers,

Sherry

Tags: Ajax, Dominion Lending, Dominion Lending Centres, Durham, Durham region, First time buyers, Mortgage agent, Mortgages, Oshawa, Pickering, Sherry Corbitt, Whitby
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It’s easy to get caught up in the idea that comparing mortgage rates will guarantee you get the best bang for your mortgage buck. While this may be true for particular situations, there are many scenarios where this strategy is not effective. Following are three reasons why it doesn’t always pay to make a decision based solely on rates.

 Reason #1

Your long-term plan and risk tolerance should determine which mortgage product is right for you. This product may or may not have the lowest rate.

 For instance, there are cases where lenders will offer lower rates for insured mortgages. With insured mortgages, however, you’re charged an insurance premium, which is usually added to the mortgage amount. But if you’re not planning on keeping the property for a long enough time to offset that cost, it may be better to take an uninsured mortgage with a slightly higher rate. The cost difference you will pay with the higher interest rate may still be less than what you may pay in insurance premiums.

 As another example, if you prefer to budget for a consistent payment and can’t handle rate fluctuations, it may be better to go with a fixed-rate mortgage. If you think current rates are low enough and you will be living in your property for at least five years, it may be wise to also opt for a mortgage with a longer term.

 Reason #2

One of the biggest mistakes people make when merely comparing mortgage rates is failing to consider important factors such as prepayment options to help pay off the mortgage faster, whether secondary financing options are allowed, early payout penalties, or what fees are involved.

 It’s not enough to simply compare mortgage rates because you have to know what “clauses” are contained within the mortgage deal. There may be cases where you will find a lender with the lowest rate and willing to pay for your closing costs, or even provide you with cash-backs after closing.

 Reason #3

Lenders can change their rates at any time. As such, if you’re shopping for rates with one lender and then approach another that gives you a lower rate, it’s quite possible that the first lender has also dropped its rates. This is why it’s important to get pre-approved with a lender once you a mortgage that fits your needs. In some cases, you can secure your rate and conditions for up to 120 days.

 These are just three reasons why it’s not enough to merely compare mortgage rates. The mortgage rate you may qualify for is also highly dependent on your credit score among other things. In order to get the best mortgage deals, you need to have solid credit.

Have a great week! Think of me for all your mortgage needs.

Cheers,

Sherry Corbitt

Tags: Ajax, Amortization, Dominion Lending, Dominion Lending Centres, Durham, Durham region, First time buyers, Mortgage agent, Mortgage rate, Mortgages, Oshawa, Pickering, Rates, Saving money, Sherry Corbitt, Whitby
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Did you know?

 Mortgages in Canada are generally amortized between 25 and 35 year terms. While this seems a long time, it does not have to take anyone taht long to pay off their mortgage if they choose to do so in a shorter period of time.

 With a little bit of thinking ahead, and a small bit of sacrifice, most people can manage to pay off their mortgage in a much shorter period of time by taking positive steps such as:

• Making mortgage payments each week, or even every other week. Both options lower your interest paid over the term of your mortgage and can result in the equivalent of an extra month’s mortgage payment each year. Paying your mortgage in this way can take your mortgage from 25 years down to 21.
• When your income increases, increase the amount of your mortgage payments. Let’s say you get a 5% raise each year at work. If you put that extra 5% of your income into your mortgage, your mortgage balance will drop much faster without feeling like you are changing your spending habits.
• Mortgage lenders will also allow you to make extra payments on your mortgage balance each year. Just about everyone finds themselves with money they were not expecting at some point or another. Maybe you inherited some money from a distant relative or you received a nice holiday bonus at work. Apply this money to your mortgage lender as a lump-sum payment towards your mortgage and watch the results.

By applying these strategies consistently over time, you will save money, pay less interest and pay off your mortgage years earlier!

Think of me for your mortgage needs!

Sherry Corbitt

905-995-3143

www.sherrycorbitt.ca

Dominion Lending Centers, Bankfighter Inc #11129

Tags: Accelerated Payments, Ajax, Amortization, DLC, Dominion Lending, Dominion Lending Centres, Durham, Durham region, First time buyers, Mortgage, mortgage professional, Mortgages, Oshawa, Pickering, Saving money, Sherry Corbitt, Whitby
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