Credit Scoring: Remediation

Google the term “credit repair” and 19 million results are instantly generated. With so much information available, and so much of it conflicting, how do you know which credit repair company is legitimate and which ones are really just looking to take advantage of desperate consumers?

The following are steps you can take to know exactly what to expect from a legitimate credit repair company or professional and the valuable services they provide:

Get a referral from your mortgage professional. Not only do we work with credit repair specialists on a regular basis, our business depends on your success. It’s in our best interest to make sure you are represented by professionals who are experienced in dealing with creditors, the credit bureaus, and collection agencies.

Don’t believe the hype. Credit repair takes time. Don’t fall for advertisements from companies promising miracles in just a few days or weeks. Remember, it took time for your score to get where it is, and it will take a legitimate credit professional time to fix it, depending on your situation. For the most part, expect 3 to 6 months for the best results and up to a year or more if you have more serious problems like bankruptcies or identity-theft issues.

Don’t spend more than $1,500. Depending on your situation, expect to spend between $800 and $1,500 for a legitimate credit repair company. Again, if you have major issues, expect to be in the higher range and vice versa. In today’s market, where FICO scores one point below 680 could cost you thousands of dollars in interest and monthly payments, you’ll be glad you made this investment in your financial future.

Monitor your progress. Be sure to communicate with both your mortgage professional and your credit repair representative throughout the process. To ensure success, we all need to be on the same page. With the right team of professionals, you can expect your credit score to increase between 10 to 220 points over the course of 6 weeks to 6 months. That’s going to save you a lot of money on your mortgage, credit cards, auto loans, and even student loans.

Credit repair is a valuable, worthwhile service when you’re working with the right company. If you have questions about credit repair and how it affects your chances of securing a mortgage or refinance, don’t hesitate to call. I will be glad to review your credit and see what, if anything, needs to be done to help you meet your financial goals and needs.

If you or anyone you know has any questions about credit scores or what can be done to repair them, please don’t hesitate to call.

Written by Danuta Levitzki. Conseillère en Financement Hypothécaire | Mortgage Loan Specialist
For current interest rates or to get more information on mortgage financing feel free to visit her website or call direct at 1-800-605-6154.

Credit Scoring: Dealing with Challenges

Typically, a person with a low credit score is in this position because they lack structure in his or her life. There are, of course, cases where unplanned health or employment complications are to blame, but for the most part, these are individuals who lack the discipline to pay their bills on time or curb their spending.

This is your opportunity to be the “knight in shining armor” that provides them with a simple roadmap to get back on track. Let’s take a look at some examples that can help to quickly improve less-than-perfect credit scores for the potential homebuyer:

Let’s say we have a borrower with a credit score of 664. She has a concentration of credit card debt on one card; let’s say $17,000 on a card with a $20,000 limit. At the same time, she has four or five additional credit cards, all with a zero balance. I would advise the borrower to distribute the debt over a number of her cards. Remember, a borrower’s credit to debt ratio represents 30% of his or her overall score. By simply changing the ratio of available credit to debt, the borrower in this example could possibly increase her credit score to something closer to 700, saving thousands of dollars on her mortgage.

Another thing to take into consideration Continue reading Credit Scoring >>

What you need to know about credit scoring: Part II

Part II: The Five Factors of Credit Scoring

There are five factors that comprise the credit score. They are listed below in order of importance, just as an underwriter would look at the score:

1. Payment History: 35% impact. Paying debt on time and in full has a positive impact. Late payments, judgments and charge-offs have a negative impact. Missing a high payment has a more severe impact than missing a low payment. Delinquencies that have occurred in the last two years carry more weight than older items.

2. Outstanding Credit Balances: 30% impact. This factor marks the ratio between the outstanding balance and available credit. Ideally, the consumer should make an effort to keep balances as close to zero as possible, and definitely below 30% of the available credit limit when trying to purchase a home.

3. Credit History: 15% impact. This marks the length of time since a particular credit line was established. A seasoned borrower is stronger in this area. Read more on Credit Scoring

What you need to know about Credit Scoring

Part I: Good Credit Translates into Lower Rates for the Consumer

In the 1960s, Fair Isaac Corporation started working on a system lenders could use to evaluate the likelihood of receiving repayment on loans. Prior to that, it was really a matter of trusting an individual to be a “man of his word,” so to speak. Fair Isaac sought to take human error out of the equation with a reliable system that could determine whether or not consumers were truly worthy of credit, and thus FICO was born. This evolved to become the standard for lenders by the 1980s.

Credit scoring has an enormous impact on a borrower’s ability to purchase a home. It can mean the difference between getting a good interest rate and the home of their dreams, or whether they even qualify at all. For this reason, it is important for borrowers to understand the credit scoring process, and to know what their credit score is when they look to obtain mortgage financing.

What the credit scoring model seeks to quantify is how likely the consumer is to pay off their debt without being more than 90 days late on a payment at any time in the future. Credit scores can range between a low score of 300 and a high of 900. The higher the client’s score is, the less likely they are to default on their loan. Only 5% of the people in Canada have a credit score above 800. These are the slam-dunk clients that walk away with the best interest rates. On the other hand, approximately 4% of the people in Canada are faced with the possibility that they may not qualify for the loan they want because they have a score between 500 and 600.

Stay tuned for Credit Scoring, Part II: The Five Factors of Credit Scoring

Written by Danuta Levitzki.
Conseillère en Financement Hypothécaire | Mortgage Loan Specialist
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Should you lock in your mortgage?

Interest rates are still low, but they’ve been steadily increasing. Here are some points to help you make the right mortgage decision.

If you are buying a home, you may be wondering whether it’s better to lock in a fixed rate in case rates continue to go up, or choose a variable rate that floats with the prime rate. Similarly, if your existing mortgage is variable, you may be wondering whether now is the time to lock in.

Mortgage rates are difficult to predict. It is best to base your decision on your personal situation and comfort level, rather on economic expectations.

Going variable

Variable-rate mortgages can be attractive - the interest rate is lower than for a fixed mortgage of similar size and duration.

With some mortgages, as rates fluctuate, so does the amount of your mortgage payments. Or, with set payment amounts, the portion of the payment that covers your mortgage principal will fluctuate.

In an environment of falling rates, you’ll pay down more principal and pay less interest. But if rates go up, your principal payments will shrink and it may take you longer to fully pay for your home.

Should you choose a variable-rate mortgage? If you can tolerate the uncertainty, the variable rate could save you money over the long term.

Locking in

When you lock in to a fixed-rate mortgage, the interest rate will be higher than for comparable variable-rate products. The benefit, however, is that your rate is fixed for the term of the mortgage.

Even if rates in general rise substantially, your rate is guaranteed not to change. From the moment you lock in, you’ll know exactly what your payments will be and how much of the principal will remain at the end of the term.

Should you choose a fixed-rate mortgage? If fluctuation rates are going to keep you awake at night, then a fixed-rate mortgage may be worth the peace of mind it can give you.

Your decision

Ultimately, the decision to choose a variable or a fixed-rate mortgage is as personal as choosing the right home. It should always be made with informed advice from a professional, who can help you evaluate the options based on your unique circumstances.

For any questions about mortgage financing, programs, options, interest rates etc., feel free to contact Danuta at 1-800-605-6154

Written by Danuta Levitzki.
Conseillère en Financement Hypothécaire | Mortgage Loan Specialist
Visit her website

Need a mortgage?

1. Let us help you find the best mortgage rate for you.
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Why Deal with a Mortgage Broker?

Brokers search for the best lender package to suit your specific financial situation, whether it’s with a Chartered Bank, Trust or Insurance Company. There is a wide variety of options and features available to homebuyers today. To find the best offer takes a lot of time and effort. The mortgage process within today’s very competitive marketplace makes many Canadian homebuyers puzzled. It truly pays to work with a mortgage professional that will represent you and ensure the mortgage you get is the one best tailored to your needs.

NOTE: Choosing the wrong mortgage can cost you thousands of unnecessary paid interest money.

Why Should You Go To a Mortgage Broker First?

A professional presentation to a lender on the first application will get the best response and save you valuable time and money. Secondary applications with previous credit bureau inquiries may be more costly.
Often the success of obtaining mortgage approval depends on the way a proposal is presented and to whom it is sent. Your Mortgage Broker is trained to present your mortgage proposal to obtain the most immediate and positive result.

Example: You don’t call an insurance company for insurance - you use an insurance broker, because of their expertise, product knowledge and rates. So remember, call your mortgage broker first!

How Do Brokers Get Better Deals Than Many Banks?

Brokers often develop professional relationships with private sources of funds, termed private lenders. These lenders can provide many various mortgage products not available at conventional sources.

Can You Still Go Through Your Bank With Your Broker?

Yes, letting a Mortgage Broker represent you to your own financial institution can often result in a better rate than you could get on your own.

Written by Danuta Levitzki. Conseillère en Financement Hypothécaire | Mortgage Loan Specialist
For current interest rates or to get more information on mortgage financing feel free to visit her website or call direct at 1-800-605-6154.

Need a mortgage?

1. Let us help you find the best mortgage rate for you.
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3. Email(valid email required)
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Your Mortgage Broker: A Source for Financial Solutions

A mortgage broker can assist you in ways that go well beyond offering great rates.

Many people think of a mortgage broker as someone who can help them get a good rate on their mortgage. While this is certainly true, a mortgage broker can also help you with much more than that.

A mortgage broker is a licensed financial professional with whom you can form a long-term relationship that can extend to various types of financing. Here are some examples:

• If you have an upcoming expense, such as sending your child to college or university, your mortgage broker can help you cash out equity in your home or secure a home equity line of credit.
• If you are looking to buy a cabin or lakefront property, a mortgage broker can help you with financing for it.
• Little-known fact: If you are having problems meeting all of your financial obligations, a mortgage broker can help you consolidate your debts by securing a debt consolidation loan, so you have just a single, manageable payment every month.
• If you want to finance a renovation or other major expenditures, your broker can help arrange suitable refinancing options.
• When it’s time to renew the mortgage, your broker can find a competitive mortgage program and interest rate other than your current bank or financial institutions resulting in further savings.
• Mortgage brokers may also be able to give you information about legal services for buying a home and recommend realtors, appraisers, and home inspectors.

Written by: Danuta Levitzki.
Conseillère en Financement Hypothécaire | Mortgage Loan Specialist.
For current interest rates or to get more information on mortgage financing feel free to visit Danuta’s website at www.HYPOTHECA.net or call direct at 1-800-605-6154.

Need a mortgage?

1. Let us help you find the best mortgage rate for you.
2. Your Name(required)
3. Email(valid email required)
4. Telephone(required)
5. Best time to call Contact me during the day Contact me in the evening

 

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