Check out some of our helpful tips & tricks:
- Protect yourself from fraud and know your credit score daily!
- How to avoid a massive annual income tax bill
- How to consolidate debt, the right way!
- How to get around the new require of 35% down for self employed clients!
- How to keep the best credit score possible!
- Annual Mortgage Review
Home Equity Solutions actually pays for one entire year of Equifax monitoring for our beloved clients. That’s right, we actually cover the cost for our clients if they ask during the term of the Home Equity Solutions mortgage.
So many self employed people don’t take the time to simply set up an separate a “hard to access” bank account that takes automatic monthly deductions for income tax. Contact your bank about this, it’s not hard to set up and you will thank us later.
Debt consolidation can we a great thing if done properly but a sipper slope if done wrong. Most people consolidating debt free up cash flow but miss one key step, Payment Matching. Here is an example when consolidating debt:
Monthly payments for someone with bad debt
- $1,500 Mortgage at 3%
- $500 debt (credit cards, line of credit, car loan, investment loan, etc.)
- $2,000 total debt payments
Consolidate debt through Home Equity Solutions paying off all liabilities and then waiting 3 – 6 months for credit score to go up. After the credit score comes to the required level, we consolidate the first and second mortgage into one low payment of $1,600 (for example).
This frees up $400 a month which is great but most people fail and spent this new money when they should be Payment Matching. You must set your new mortgage payment to be the same as before the restructuring. Put that $400 back on to your mortgage. DO NOT use your home as an ATM machine or you will never grow in net-worth.
Mortgages for your self employed clients keep getting harder and harder to obtain.
- 35% is the required down payment in most circumstances with the majority of lenders.
- Equity programs now require 35% down.
- Some lenders are even asking 35% down for rental purchases!
- Rules for qualifying on terms less than 5 years or variable rate mortgages have become more stringent too.
Fear not my friends, there are still options. Yes, the first lender will only go to 65% LVT (loan to value) but that doesn’t mean you can’t follow with additional financing through Home Equity Solutions!
- First mortgage to 65% followed by a 2nd to 75 or 80% from Home Equity Solutions.
Who cares what Equifax considers a good credit score, it’s what the lenders think that counts. What is the most important thing you are ever going to purchase in your life time? A home.
Here are some tips to keeping a great credit score:
- Never go over your limit and try to keep your balance below 75% of the limit
- Always pay your bills on time
- Avoid applying for credit unless you have a genuine need for a new account. Minimize your inquiries
What are the most common factors that can negatively affect a credit score?
- Public record or collection field
- Time since delinquency is too recent or unknown
- Level of delinquency on accounts is too high
- Number of accounts with delinquency is too high
- Amount owed too high on accounts
- Ratio of balances to credit limits on revolving accounts is too high
- Length of time accounts has been established is too short
- Too many accounts with balances
Your credit score aka beacon score ranges from a low 300 to a high 900 (we have never seen that before). The two governing bodies who monitor your credit scores are called Equifax and Transunion. We are going to focus on Equifax as the majority of lenders use Equifax over Transunion.
Equifax states that a 700 is nothing special but by mortgage lending standards, this will get you pretty much anything you want. What is the minimum requirement for a mortgage with great rates? 620 – 650 (through a mortgage broker) depending on the mortgage product you require. Most people fall into the 750 – 799 range (according to Equifax) which is pretty high if you ask me. Here’s where it gets interesting, a credit score of 850 can mean nothing! Without an established history of payments and at least two trade lines (line of credit, student loan, credit card, car payment, etc), a high credit score can mean nothing. It takes time to establish a good credit score so start today if you haven’t already.
Your credit score is a statistical formula that translates personal information from your credit report and other sources into a three-digit score. For example, when you fill out a loan application, pieces of information from the application along with information from your credit report will be used to compute a score that indicates to the lender the statistical probability that you will become delinquent on the loan.
There is no quick fix for removing past aspects of your credit history that may be negatively affecting your credit score.
Will inaccurate information in my credit report affect my credit score? It certainly can depending on what is reported. If you want to correct inaccurate information on your Equifax report, download the Consumer Credit Report Update Form, which is used to correct inaccuracies. You can fax the completed form to (514) 355-8502 (514) 355-8502.
We can not emphasize more the importance of an Annual Mortgage Review. Whether you have perfect credit or not, you should be doing this process every 12 months to ensure you are finances remain in order. The process is simple and straight forward and we do all of the work for you.
Home Equity Solutions has adopted the same system from Oprah Winfrey’s Million Dollar Neighbourhood hit reality show and provides this service free of charge for our existing clients.
Each year we now provide this free service to our existing clients as a value added service. If you are not an existing client, we are happy to provide this service to you. Just ask us how.
We use all the information we collect to make sure your mortgage / portfolio is optimized and your potential savings are maximized. We make sure that you are paying down your mortgage as quickly as you can and that you are not making unnecessary payments and incurring unnecessary fees. Once complete, you will receive an annual review report showing your mortgage / total debt balance at term completion with current path and potential mortgage / total debt balance with our suggestions. This allows you to track your progress on paying down your debt. More importantly, it allows you to see the benefits and costs of different strategies. For instance:
- Making bi-weekly payments shaves years off of the length of your mortgage, however, many mortgage holders have difficulty appreciating this when all they see is an increased frequency of payments; and
- Lump sum payments can be done every year (depending on the mortgage product you choose). These payments go directly to the principal of your mortgage and save a lot in terms of amortized interest payments.
The long-term nature of mortgage debt puts the benefits of paying it down faster well into the future, but no less important. Our annual mortgage review helps give our clients much needed perspective and piece of mind.