May 2016 Newsletter
May 17 2016 Posted by
Give yourself some credit
When your mortgage application is being considered, your lender will look at your credit habits: do you pay your bills on time? Do you tend to get over-extended on your credit card? These habits are reflected in your credit rating. In order for your lender to assess your borrowing profile, you’ll need two revolving sources of credit that are each at least two years old.
Worried that some sloppy financial habits might keep you from a great rate or even from getting a mortgage? Here’s the thing: you can give yourself some credit. This important factor in your mortgage negotiation is entirely within your control. Start now to develop good credit habits:
- Pay every bill on time. That one habit is your single biggest game-changer.
- Don’t run up your credit cards. Use the 50% rule. If your limit is $5000, never let the card go higher than $2500.
- Don’t ever let any bill go to Collections, even if it’s for a small or disputed amount. These black marks on your credit are hard to erase. If it’s happened, be prepared to explain why, and be sure it’s paid in full and reported to Equifax.
- If you’ve ever been bankrupt or under a consumer proposal, you’re going to have some extra challenges. You’ll need to have been discharged for two full years. And you’ll need to prove that you’ve re-established credit after the discharge, with at least two re-established revolving credit items and a two year history of satisfactory repayment. Strong income and downpayment will help.
If you’re wondering how to polish up your credit, get in touch. I can review your situation and give you some tips on how to boost your credit rating. What are you doing next week? It might be a perfect time to get started.
Build It! Two mortgages to help you build your dream home
Completion Mortgage. Just like it sounds, this is for situations when you don’t need to actually come up with full funding until the home is complete and move-in ready. You’ll need to provide a downpayment when you make an offer to purchase the planned home, and then the mortgage you are approved for is advanced to the builder at possession.
Progress Draw Mortgage. This mortgage will give you funds at specific intervals as the house is built. Generally, you’ll need to provide a progress report and have an inspection in order to secure the next “draw” of funds. While the number of draws can vary, it is common to have three draws: one at rough-in, one at completion, and a final draw when you take possession of the home. Once the home is completed, the mortgage will be converted to a conventional home mortgage.
Be prepared! Get me involved as early as possible in the process. I’ll outline everything you need to consider and all of the documentation you’ll need, so you can dream on!