In this issue

Hi Brenda

Welcome to the April issue of my monthly newsletter!

This month’s edition looks at the mortgage pre-approval process and understanding your credit score. Please let me know if you have any questions or feedback regarding anything outlined below.

Thanks again for your continued support and referrals!

You’ve decided it’s time to buy a new home. Whether it’s your first home or 25th, you’re now seeking a mortgage. And one of the first steps to getting the financing in place for your dream home is getting pre-approved for that mortgage. But before you start hunting for your new home, you need to understand a few things about the pre-approval process.

We know going through any financing approval process can be stressful. While it will never be stress free, there are some steps you and your mortgage broker can take to make it less of a nail-biter.

You should never assume you’re going to get financing because you make a lot of money, or if you’ve had numerous mortgages over the years.

A good broker will ask for all the necessary documents up front, like your T4s and recent pay stub. The reason why you want to provide your mortgage broker with all the necessary documents in the pre-approval stage is so there won’t be any surprises once your application hits the lender. This will also provide a game plan for what you’ll need to do if there are any speedbumps in the application, while also utilizing your time and the realtor’s and broker’s time so they know what they’re working with and are able to finance. Getting all the documents early also indicates to the broker and realtor you’re serious and makes the pre-approval more firm.

Where most brokers and lenders go wrong is they do a pre-approval but fail to collect documents. All of the sudden, a live offer comes in, but it doesn’t work.

If you get “pre-approved” without a request for documents, it’s basically worthless. It’s also good to note, no lender will give you a firm approval until you get an offer that is accepted.

So, you’ve now found the home you want and have an accepted offer. You’re moving from pre-approval to actual approval of financing but you’re not out of the clear yet. Any final approval is pending the lender confirming the details. Just because you’re pre-approved, doesn’t mean you’ll eventually be approved for any property you want. In some cases, you could have all the right income and credit on your side, but the property is a mess and you get declined. There’s a lot more that goes into to being approved than just income. Items like strata documents and property details are all part of the ingredients in your final approval sauce.

Even with all the documents, you’ll likely be advised by your mortgage broker, they’re only good for 30 days and you could be asked to update them for final approval when the time comes. But unless you’ve lost your job, bought a new expensive boat or run into some type of financial difficulty, updating should be a lot less stressful.

And it’s better to be stressed out about financing at the beginning of the home-buying process, rather then once you’ve got your heart set on a home you might not be approved to buy.

Does your credit score keep you up at night? For some, this one detail in their life doesn’t pop up in their mind very much, because they know they’re making good money and paying all the bills on time. When you’re in that boat, it feels pretty good. But when you miss a payment or you struggle to pay all those credit cards, lines of credit and even your mortgage, it feels instead like you’re on a sinking ship without a life raft to save you.

If you’re credit challenged but want to get into the housing market, it can be a tough road to hoe. But improving your credit to a point where a lender will give you chance, is very doable.

First, I won’t bore you with the detailed minutia of credit scores. Basically, what you need to know is a score above 680 puts you in a good position to get financing, while below will make it tough and improvement is needed.

Your credit score tells lenders some basic stuff about your credit: How long you’ve had credit, your ability to pay back that credit and how much you owe. And so your credit score is affected by how much debt you’re carrying in regards to limit, how many cards or tradelines you have and your history of repayment.

If you’re a young person and new to the world of credit, consider the 2-2-2 rule to help build up your credit. Lenders want to see two forms or revolving credit, like credit cards, with limits no less than $2,000 and a clean history of payment for two years. It’s also good to note, a great credit score will also include keeping a balance on all those cards at any given time below 30 per cent of the limit.

To ensure your score stays in playoff form, make sure to pay off any collections, like parking tickets, and correct any old or incorrect reporting on your credit score by contacting Equifax to have it removed. Some people also forget their credit cards have an annual fee and fail to pay them off too.

And if you’ve been given the advice to get a couple credit cards but lock them in a vault where they can only be accessed through a sorcerer’s spell, you’re going down the wrong path. It’s all about showing the lender you use them, so go buy a stick of gum and pay it off.

This cannot be stressed enough, if you want to keep or attain a good credit score, you have to pay your credit cards or tradelines on time regardless of whether you owe $1 or $1 million.

There is a tendency when things get really bad to consider declaring bankruptcy or a consumer proposal. A consumer proposal is a formal, legally binding process to pay creditors a percentage of what is owed to them.

You really want to avoid these two options. Instead, there are companies out there that will perform the same function and negotiate your debts, but it won’t impact your credit or carry the stigma of bankruptcy or a consumer proposal.

Lastly, if you already own a home and have some equity, but you’re still drowning in credit debt, consider refinancing your mortgage. Sure, you might not get the great rate you have now or you might get dinged for breaking your mortgage early, but using the equity in your home to get rid of high interest credit payments could keep more money in your pocket at the end of the day.

Homeowner Tips

Exterior Renovations:

If you’re thinking of selling your home, or you simply want to spruce it up, exterior renovations can significantly increase its value and curb appeal. Aside from more expensive undertakings such as new roofing and siding, there are some projects you can take on yourself, such as creating attractive flower beds or purchasing a new front door. With each project completion, you will be happier with your home, and increase its appeal to buyers when it comes time to sell!