July 2008

What Kind of Borrower Are You.

<!– /* Font Definitions */ @font-face {font-family:SimSun; panose-1:2 1 6 0 3 1 1 1 1 1; mso-font-alt:宋体; mso-font-charset:134; mso-generic-font-family:auto; mso-font-pitch:variable; mso-font-signature:3 680460288 22 0 262145 0;} @font-face {font-family:”\@SimSun”; panose-1:2 1 6 0 3 1 1 1 1 1; mso-font-charset:134; mso-generic-font-family:auto; mso-font-pitch:variable; mso-font-signature:3 680460288 22 0 262145 0;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-parent:”"; margin:0cm; margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:12.0pt; font-family:”Times New Roman”; mso-fareast-font-family:SimSun; mso-fareast-language:ZH-CN;} @page Section1 {size:612.0pt 792.0pt; margin:72.0pt 90.0pt 72.0pt 90.0pt; mso-header-margin:35.4pt; mso-footer-margin:35.4pt; mso-paper-source:0;} div.Section1 {page:Section1;} –>

Your credit score and report is one of the most important things you have going for you.

If your hoping to buy the new iphone, a new home theatre system using credit your in store credit will be checked as you stand in line. You won’t walk out with the goods unless you check out .

Banks, employers, car dealers, insurance companies, retail credit lenders want to know what type of borrower you are before they will give you credit.

There are easy and free ways to keep up to date on your credit file.

There are two things two be aware of. One is your credit report the other is your credit score. Your credit report is a record of all your credit transactions including the past 60 days. It shows your outstanding loans, lines of credit, credit cards, credit limits and your payment history.

Your credit score is a number and it is determined by feeding all of the data from your credit report through a complex algorithm,

Your credit score immediately tells a lender what type of borrower you are and determines if you will get a loan or not and what type of loan. If you have poor credit you may still get a loan with a large deposit or down payment but you will have to pay a substantially higher rate than someone with good credit.

Credit Bureaus do occasionally make mistakes so It’s important to check on your credit score once a year. Both Trans Union and Equifax prepare credit reports in Canada. You may want to get one from each and make sure that they both have basically the same information.,

Your credit score is called your FICO or Beacon Score. If you have an R1 rating it means you pay your bills every 30 days as agreed. An R2 means you are a 60 day payer. You pay but you are often late. An R9 means a bad debt which the credit grantor wrote off because you defaulted on your commitment. R9 can also indicate a bankruptcy.

You are entitled to a Free copy of your credit report by mail each year.

To improve and build your score just create a history of paying your bills on time. Also have your credit limits raised on your cards if you can. Never borrow to your cards credit limit. Only ever borrow up to 80% of whats available on your card. When you go to or over your credit card limit this reduces your credit score. When you used just a small amount of your available credit this boosts your score.

Closing inactive cards will damage your credit and so will applying for too many cards at once. Never apply for more than 3 cards in one year.

If you want to buy a car or a home within a years time start working on your credit now. With one year of regular payments you can vastly improve a weak credit score and get in onto more solid ground. This will allow you to get a loan and pay less interest on it.

Trim Your Air Conditioning Costs With These Tips

1/ change your furnace filter monthly. If your filter is gummed up your blower motor has to work harder which will increase your electricity use. This can reduce the chance of equipment failure and save you from an expensive service call.

2/Keep your hands off the temperature. Decide to live in a slightly warmer space say 24%, then stick to it. Resisting changing the temperature will keep your bills down and help the environment.

3/ Buy a new air conditioner. If your system has been around for a decade or more it won’t be very energy efficient. A new system with a SEER rating (Seasonal Energy Efficiency Ratio) of 14-20 will cut your energy bills up to 30% and cool your home more quickly.

4/ Location is important. Install your new system on the north side of your home or in a shaded area. A unit in direct sunlight can use up to 10% more energy. Don’t plant shrubs around the unit, this can block intake and exhaust of air.

5/ Use Ceiling Fans. If you can use ceiling fans instead of air conditioning your electricity bill for cooling will reduce to about .15 cents per day.

6/ Turn off the A/C when your on vacation… you could save up to $70.00 on this one.

7/ Seals Cracks around your windows and doors. This can stop the loss of up to 30% of cool dry air. Caulking windows and weather stripping doors can save you several $ per window and door over the year.

8/ Keep it Shady. On hot days close your blinds. Depending how your home sits this could save you as much as

another 10% in cooling costs.

Twelve Good Reasons To Avoid Cottage Country

If your debating spending time at the cottage whether you want to spend hours in traffic and maybe $30-$40 more in gas just to get there well here’s my list of things that are supposed to be enjoyable at the cottage but which actually may not be so.

 1/ Bugs – this is my #1, I don’t know about you but I hate them.  So being honoured with an invitation to fight them off all weekend doesn’t really appeal.  This year Ontario’s

North Country has a record amount of black flies to eat you… a word for the wise.. Stay away. A chance to be eaten by black flies have your blood sucked by mosquitoes, have ants walking across your food, stung by wasps   oh my gosh.

2/ Sand. Charming and romantic in the moment but when you get home it is still there even a week later… it pours out of your shoe, grates between your toes, it’s everywhere, and it’s everywhere.

3/ Unsightly Views and Loud Noises. So tell me what do loud jet skis, and other water contraptions plus ugly blow up toys have to do with communing with nature. Compare this to staying in the city and taking a long walk on one of our city park systems where you may view a rabbit or a fox in the distance, then having din dins at a nice local tratoria and attending a little theatre afterwards. No long drive home just a 5 -10 min car ride and plop into your own comfy bed with no sand in it.

4/ Traffic, Traffic, Traffic

5/ Gas Price, Gas Price, Gas Price

6/ Cottage Politics. Cottage living is like living in a small town, it has it’s good points but some definite negatives.  If your neighbour decides to build an offensive addition and there is an argument the whole community talks…. Same if young Sally gets caught making out with the neighbours son and the two young ones have to be taken to task, somehow it gets around.

7/ Expectations. Once you own a cottage you feel pressure to invite up your relatives and friends. Then of course you have to entertain them.  This means extra food expense, changing beds, extra laundry and having someone drink your good bottle of Chablis while you were out shopping to feed this lot. Need I say more.

8/ There is nothing to do out there.  You may go into town at night to see a 3 year old movie or to a local corn roast.  But really what fun is that.

9/ Guilt.  Now you’ve bought the place you have to use it.  You can’t just go somewhere else, you can’t just forget it… and there is still maintenance, maintenance, maintenance. After a hard snow fall you may have to go out there and make sure the roof didn’t collapse.  All this and you could have been in  Florida enjoying the sun.

10/  Boring Games.Because there is nothing to do out there you end up playing boring games at night.  Your chance to know every bit of boring trivia about everyone that you never really wanted to know.

11/ Who’s got the supplies.  There is always someone who brings everything and then there are those who don’t bring enough and expect everyone else to supply them with stuff.  They constantly interrupting asking if they can have some of yours and you comply trying to be nice. Before you know it your stuff is gone to and there is no where to go to buy more. 

12/Reciprocity. You can get an invitation to a cottage if you already have a cottage.  The rest must suffer in silence hoping for invitations and they have nowhere to invite you.  This system doesn’t really work.  Try an online house swap  this would be much more reliable and can work really well if you have a home in a desirable downtown location.

Well that’s my list and I am staying home this season.

The Death of Zero Down Mortgages In Canada

As of July 11^th the Gov’t of Canada has tightened the rules on government backed mortgages. 

There are five  major changes to the mortgage rules.

1/ No more Zero down. You will need a minimum of 5% downpayment to purchase a home. If you need to buy Zero Down you can still do so and must close the property by Oct. 15^th.

2/ 40 years amortizations have been pared back to a maximum of 35 years amortization.  Ammortization is the period of time over which you retire your complete mortgage debt and own your home outright.

3/ You will require a credit score minimum of 620 to obtain a gov’t backed mortgage. Your credit score must be consistent and documentation will be required to prove that the valuation of the property is a reasonable one.

4/  No more government backed interest only mortgages.

 Meaning no mortgages where there is no principal paid in the first few years.

5/ A maximum of 45% of a borrower’s income can be used to retire debt.  This means a combination of mortgage payments, car, credit card, student loan and other essential or fixed payments

These were the five major changes that affect First time home buyers primarily.

The Gov’t is prudently trying to avoid a mortgage meltdown similar to that of the U.S. markets.

At the moment in Canada mortgages in arrears are stable at 0.27% the lowest levels experienced since 1990 and well below the highs of 0.65% in 1992 and 1997.

If your mortgage is coming due or you would like to have a mortgage review or mortgage debt consolidation please let me know. I will set up a time to meet with you and review your situation.  You can reach me at mytorontohome@gmail.com.

I am now affiliated with Dominion Lending as a Mortgage Broker.  We can now offer both Real Estate and Mortgage Brokerage services to all of our clients.