Montreal Real Estate Blog » Mortgages

Know the Score: Three Steps to Better Credit

Danuta Levitzki — Mon, 20 Jul 2009 12:35:30 +0000

If you are looking to buy, invest in, or obtain a better rate on your current mortgage now or in the coming months, your credit is going to play a more significant role in today’s tight-fisted credit environment than it has in the past. It’s that simple. Would-be borrowers need to address any and all credit issues now to avoid having to pay for it later.

But, here’s the kicker: a great number of all credit reports contain errors of some kind. The credit reports contain mistakes so egregious that applicants could actually be denied credit! Don’t let this happen to you.

Step One: Get Your Report

The main credit bureau Equifax is required by law to provide you with a free copy of your credit report.

To request your free copy visit http://www.equifax.com/contact_us/en_ca or call 1-800-465-7166. (Note: free credit reports do not include credit scores. Scores can either be purchased online or pulled by your mortgage professional.)

Step Two: Report Inaccuracies

Study your credit reports and make sure everything is accurate. If you do find any discrepancies, you can legally dispute mistakes or outdated items for free. Once notified of a mistake on your report, a credit bureau has thirty days to investigate and respond. If the information can’t be confirmed, then the item should be removed. (If you’d like more information on this process, give me a call at my office at 514-803-9764 and I will send you our Sample Dispute Letter to help get you started).

Step Three: Meet With Your Mortgage Professional

Now that the information on your report is accurate, what if there are still some items in your credit history you would rather forget about? All is not lost. For some, small changes to your credit profile could yield big results that could save you thousands of dollars. For others, enlisting the services of a professional credit improvement company may be required. This important process can take up to six months or more so don’t wait. Give me a call. As an experienced mortgage professional I can share other insights into the ins and outs of credit scoring and credit repair.

Stay tuned for more valuable credit tips.

Posted By: Danuta Levitzki. Executive Manager of Mortgage Agency at HYPOTHECA Ac Accredited. With over 10 year experience, Danuta specializes in residential and multi-unit mortgage financing. Offering the lowest interest rates and finest mortgage service in Montreal, Qc. For home purchase pre-qualification, mortgage refinance, renewal or debt consolidation please visit www.RateDirect.ca http://www.hypotheca.net

Fixed Rates Officially Going Up, Variable Rates going down.

Deya Bautista — Thu, 04 Jun 2009 12:43:12 +0000

Great deals only last for a limited time. We all knew it was coming, we just didn’t know how soon…
Canada’s biggest banks are increasing key mortgage rates. Royal Bank of Canada announced the change on five-year, fixed-rate mortgages to 5.45%, an increase of 0.2%.

Bank of Montreal, Toronto-Dominion Bank, Bank of Nova Scotia and Canadian Imperial Bank of Commerce are following. The changes at RBC and BMO took effect on Tuesday this week, while new rates at TD, Scotiabank and CIBC were to be posted yesterday. ( I haven’t checked the news yet)

And those “special offers” from RBC, BMO and Scotiabank on five-year closed mortgages at 4.15% will also be subject to change without notice, reflecting a 0.2% increase.

On the other hand, variable rates are decreasing from Prime+0.80% to Prime+0.40%.
More info on variable rates on Canadian Mortgage Trends

Posted By: Deya Bautista - Real Estate Broker working as part of the McGill Immobilier team. Specializing in high end condos in downtown and Old Montreal. For buying or selling contact Deya at: 514.917.7889 http://montrealrealestateblog.com/

Mortgage Matters: Fixed vs. flexible – Gazette

Deya Bautista — Mon, 06 Apr 2009 13:26:02 +0000

Last week, the gazette printed an interesting article on the factors to consider when chooing a mortgage. It says that, in the past choosing a fixed or variable mortgage has traditionally been which strategy would save the most money, and now that it’s not always the case.

Choosing a type of mortgage and term today may come down to what makes sense for the individual home owner rather than what saves cents.

“If you were buying a house 10 years ago, fixed versus variable was the biggest decision you made,” said Moshe Milevsky, finance professor at York University and executive director of the Individual Finance and Insurance Decisions Centre. “But now there are more important things in place. Equity prices are falling, housing prices are falling. I think there are three or four things more important than fixed versus variable now.”

In 2001, Milevsky’s study of five-year rolling interest rates between 1950 and 1999 showed that 88.6 per cent of the time homeowners would have been better off with floating or short-term mortgages rather than five-year, fixed-rate mortgages, saving an average of $22,000 on a $100,000 mortgage amortized over 15 years.

“The last time I looked at it, a year ago, the same strategy was holding up. Roughly … 85 per cent of the time, you were better off going with variable rates, rather than fixed rates.”

Another, lesser consideration was peace of mind: New homebuyers might sleep better when essentially paying an insurance premium as part of locking-in payments for five years.

But saving a few dollars should no longer be the determining factor in the fixed-variable dilemma. “Too much emphasis has been based on this study,” said Milevsky. “It’s the most-downloaded item on our website. But if you look at interest rates right now, you’re debating over a [percentage point]. When fixed rates were nine per cent and variable rates were five, that’s a big difference.”

The flattening of the bond yield curve in recent years meant you might pay only one or 11/2 per cent more to lock in a long-term rate, and that made the stability of fixed rates much more attractive than it was five years earlier.

Under current conditions, only after you think about what house prices, your credit rating and your employment status will be down the line should you worry about where interest rates will be in one, three or five years.

Economists expect rates to remain low for a year or so, then rise two to three per cent.

Source: HouseHunting.ca

What you need to know about credit scoring: Part II

Danuta Levitzki — Tue, 09 Sep 2008 13:00:31 +0000

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.

4. Type of Credit: 10% impact. A mix of auto loans and credit cards are more positive than a concentration of debt from credit cards only.

5. Inquiries: 10% impact. This quantifies the number of inquiries that have been made on a consumer’s credit history within a six-month period. Each hard inquiry can cost from 2 to 50 points on a credit score, but the maximum number of inquiries that will reduce the score is 10. In other words, 11 or more inquiries in a six-month period will have no further impact on the borrower’s credit score.

Remember, a computer that’s not taking any personal factors into consideration calculates these scores. When a credit report is generated, it is simply today’s snapshot of the borrower’s credit profile. This can fluctuate dramatically within the course of a week, depending on the individual’s own activities. The borrower should be made aware of this when they enter into the loan process, and know that it’s not in their best interest to go out on a shopping spree. They need to make sure they are not creating a negative impact on the score while the lender is reviewing their file.

Secondly, it is often beneficial to compile a duo-merge credit report. This provides scores from the two credit bureaus, TransUnion, and Equifax. The lender should be provided with this rounded profile because these two scoring systems can vary in their results.

Stay tuned for Credit Scoring, Part III: Dealing with Challenges

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

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What you need to know about Credit Scoring

Danuta Levitzki — Thu, 07 Aug 2008 13:00:47 +0000

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
Visit her website

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Ottawa is tightening mortgage insurance rules

Deya Bautista — Fri, 11 Jul 2008 18:30:43 +0000

The federal government said Wednesday that it is tightening the rules relating to government-guaranteed mortgages.

The new rules, set to take effect Oct. 15, are a “responsible and measured approach … to reduce the risk of a U.S.-style housing bubble developing in Canada,” the Department of Finance said in a news release.
The measures will apply to new, government-backed, insured mortgages. “Canadians who already hold mortgages will not be affected,” it said.

The changes include:
• Cutting the maximum amortization period to 35 years from 40.
• Requiring a minimum down payment of five per cent, whereas loans for 100 per cent of the price are possible now.
• Establishing a requirement for a consistent minimum credit score.
• Introducing new loan-documentation standards.

The government acknowledged that the proportion of bank mortgages in arrears is stable at 0.27 per cent, “near the lowest levels experienced since 1990 and well below the highs of 0.65 per cent experienced in each of 1992 and 1997.”

Source: CBC News

Why Deal with a Mortgage Broker?

Danuta Levitzki — Tue, 03 Jun 2008 15:30:22 +0000

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.

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