Well my goal of regularly posting wildly exciting mortgage writings on a regular basis has failed miserably as I am so busy simply servicing all my wonderful client(s) mortgage needs!
So, I thought I would try condensing my words of wisdom into short snippets of financial and mortgage wisdom..
Hopefully that will keep you informed, entertained and liking my webpage and posts! So, my first Mortgage Minute based on some sage advice applies to EVERYONE!
Lets talk SAVINGS!
No matter what, you need to build solid savings habits. You need money for your down payment...Save It...You need money for bills & taxes, you need a savings plan. Start early, save often and your cash & net worth will grow. Then you will have a nest egg for all those financial emergencies that may crop up, or cash to help buy all the things you want.
Plus saving money looks good to bankers when I submit your mortgage application for approval.
So...Start Saving Your Money!
I was given the following article when I started banking 25+ years ago, it is great advice and still applies today...
UPON YOUR FIRST DAY OF WORK – START SAVING!
Jim and Jerry! They’ve been life-long friends, both having gone to University together, graduated from the same engineering course, found virtually identical and well paying jobs, married, bought homes, raised families, etc.
But...this year, both have reached age 65, and their respective firms have a policy of retiring employees at that age. Jim is looking forward to that retirement, Jerry is dreading it.
Both had the same comparative lifestyles, both had saved the same amount of their income (although in different methods), but one was wealthy (Jim) and the other had just enough in retirement to keep the wolf from the door (Jerry).
What made the difference?
Jim started saving from the first day he started working. Jerry starred saving (heavily) later in life, after the house was paid for, and his children had been put through University. Jim decided to start saving 10% of what he earned, from day one. Admittedly, he was only earning $2,000 a year (so was Jerry) 40 years ago, but that was a good income back then. So he saved $200 that first year, and continued to save 10% of what he earned, all through those 40 years, even when he was paying the mortgage, and putting his children through college.
In order to do some mathematics for our fictional friends, let’s assume their average wage was $20,000 per year, all through those years. Let’s look at what the results would be…
Jim would have saved 10% of that $20,000 per, namely $2,000 per year. Sure, it was hard, especially when he was paying for the house, but he took a 25 year amortization period on his mortgage, to keep his mortgage payments lower, and thus be able to save. Jerry, on the other hand, took a 15 year mortgage, with higher monthly payments, because he wanted to pay off his mortgage in a hurry, and then start saving.
Jim, by saving $2,000 per year, putting it in mutual funds each year (which had proven over the past, in good funds to average Over 10% per year) would have invested a total of $80,000 in the 40 years, and, at 10% rate of return, would now have $1,064,222.
Yes, that’s over $1 Million Dollars! (No wonder he’s looking forward to retirement!)
Jerry, on the other hand, was busy making heavier payments on his house, to clear off that mortgage, and paying for his children’s education (Jim paid for his kids’ education, too) He was 50 years old when everything was paid off, and then he really concentrated on building his future retirement funds.
Jerry started saving $5,333.33 a year for the next 15 years, and he too invested it in mutual funds where he averaged 10% per year. His total invested came to $80,000 (same as Jim’s total investment), but his value today is only $208,664 (whereas Jim has over $1 million). What a difference!
Both had invested the same amount, at the same rate of return, but one had $855,558 more than the other. Why the HUGE difference?
Jerry had fallen prey to the “I’ll start saving when everything is paid off’ syndrome, and had thereby lost the most valuable asset of all in building wealth, namely time. Jim had started saving when he started working at age 25.
Each day that you and I do not save that $1 or $2 it is lost, and even if we save double the amount the next day (or later as Jerry did), there is no way we can buy yesterday back.
That’s why we say, start saving the day you start working, or the day you read this article, No Matter what your age. Put TIME plus savings to work for you!
I am thrilled to be participating as a "Special Guest" for HOUSESTOCK in Armstrong this Sunday, April 13th.
11 Open Houses and a bunch of Great Realtors all working in perfect harmony to bring you an awesome few hours of house hunting convenience, PLUS financing options from Yours Truly!!
I applaud all the realtors for participating and working together on this truly unique way to market these homes, providing the sellers with Great Exposure and potential purchasers with a convenient and fun way to view a lot of houses all at once. PLUS...Did I mention...they have prizes?
See you all there!
Verico is a Mortgage Broker Network that I belong to.....This network has over a 1000 Mortgage Broker members across Canada and combined we generate over $11 Billion Dollars in mortgages each year, a figure that rivals the big 5 banks. Belonging to the Verico Network allows me to remain independent, while still offering you the rates, products and services typically reserved for only the largest brokerages...
Here's a simple rule when selecting a Mortgage Broker......
CHOOSE JUST ONE!
Do your homework, Ask lots of questions, Get lots of recommendations, and make sure the Mortgage Broker you decide to work with is experienced and knowledgeable, and someone you can connect with & communicate with easily (Like ME!)
Then put your TRUST in them 100% to handle ALL your mortgage needs.
As Mortgage Brokers, we have access to many of the same lenders, and any experienced Mortgage Broker (like myself) will know almost immediately upon taking your application which lender(s) will best suit your specific needs and circumstances, giving us the best possible chance of getting you the mortgage approval you want and need.
But when you start asking 2 or more Mortgage Brokers to do the same job things can go terribly wrong!
Our job is to "package up" all the information you tell us, along with our own professional insights and observations, so as to submit your mortgage request with the best chance of it getting approved.
Just like the game where you sit in a circle and whisper something to the person beside you and by the time it reaches the last person your original message is completely lost or garbled, the same thing can happen with each different Mortgage Broker's interpretation of your application. A bank can end up receiving your application 2 - 3 different times, and each application now contains a slightly different interpretation of your request. if the differences in the applications are serious enough, that lender may simply REFUSE to consider ANY applications submitted in your name, as they don't know what or who to believe, ruining your chances of approval!
In this age of "online" dealings it is far to easy to contact more than one Mortgage Broker quickly and easily thinking you are being proactive in your mortgage search, but trust me, you may be doing more harm than good. When dealing with such a huge and important financial decision like a mortgage, do yourself a favour and meet with your selected Mortgage Broker in person. This should alleviate any doubts or fears you may have in their ability to do what's in your best interest, and hopefully the Mortgage Broker you choose will be ME!
I was asked by a friend to explain in plain english what "GOOD" credit is....So here it goes...
Good Credit is credit that lenders can actually "SEE" on your credit report when you apply for a loan or mortgage. Paying cash for everything, and trying to avoid having credit cards and loans and lines of credit is totally admirable, but does ABSOLUTLEY NOTHING to build you good credit.
To establish good credit most lenders tell us they want you to have at least TWO credit accounts such as a credit card, a loan, or a line of credit, and EACH of these accounts should have a limit of $1,500.00 or more. These accounts should also have been in existence for 2 years or more...And you need to pay these credit accounts ON TIME, as well as keeping your balance(s) owed to 60% OR LESS of the approved limit at all times.
Why? Well lenders want to see your repayment history of your credit accounts in black and white, and credit cards, loans etc. all get reported directly to Equifax, Canada's credit reporting agency. Equifax compiles your personal and credit information and produces a detailed report that gives you a "Credit Score" based on how often you seek credit, how much you owe on your credit accounts, your repayment history of those accounts, basically trying to compute your overall creditworthiness as compared to other Canadians by giving you a number rating.
So what constitutes a "GOOD" credit score? Credit or "Beacon" scores as Equifax calls them, range from 300-900 points...in the lending world anything under 600 is considered "weak" credit, a score of 620-680 is considered "average" credit (80% of all Canadians score in this range) and anything above 700 is considered good credit.
So, what should you do to build an excellent credit rating and credit score?
1) Limit the number of credit accounts you have, 2 as a minimum, but please refrain from applying for every department store card or credit offering that you don't need.
2) Try to keep the balance owed on revolving accounts like credit cards and lines of credit to 60% or less of the approved limit
3) Make your credit payments ON TIME each month, or better yet, pay your accounts in full each month if you can. This way you are not spending money you don't have. Carrying a balance on a credit card is a very costly way to borrow money...so don't do it if at all possible.
Your credit score is probably the most important number (or grade) you will ever be given, so do everything in your power to build, and retain an excellent credit rating.
I guarantee you will need it someday!
With 27 years of direct mortgage lending experience, first with a major bank, then a local credit union and now as a Mortgage Broker, I have arranged mortgages on almost every type of property imaginable....even a 50+ ft fishing trawler!!