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Organizing Your Finances
How do I begin to plan my financing?
Cottage or house hunting begins at home... with planning. Before you and I hit the streets, you need to know what you can afford to make the most of your house hunting experience. Knowing your affordable price range will save you time and energy.
Here?s where a Mortgage Specialist can help! As experts in mortgage financing, they will review your individual cottage or home financing options with you, help you obtain a pre-approval, and help you shop with confidence knowing how much you can afford.* I can recommend a few for you to work with.
Getting Pre-Approved
Why should I apply for a mortgage pre-approval?
If you get pre-approved for cottage or home financing, you will save time and increase your comfort level when shopping for a cottage or home... Learn more about getting pre-approved for a mortgage. Please use the mortgage calculators on the left of the screen to understand mortgage payments.
Know What You Can Afford
How high will my monthly mortgage payments be?
Knowing your affordable price range will bring your house hunting into focus.
How much of a house you can afford depends on three things:
1. How much you can afford for the monthly mortgage payment
2. How much of the down payment you have available
3. The amortization, or length of time required to pay off the loan, assuming interest rate does not change
Down Payment
How much will I initially need to purchase my cottage or home?
You will need enough funds to cover your down payment and closing costs, as well as the remaining balance on the cost of the cottage or home. This can be sourced through financing or other means.
A larger down payment means greater savings.
The money you pay up-front for a house is the down payment. Down payments are typically a percentage of the purchase price of the cottage or home. The source of money for your down payment is often either your savings or the net proceeds from the sale of a cottage or home you already own.
The larger your down payment, the more you save in the long run. A larger down payment:
* Reduces the amount of your monthly principal and interest payment
* Reduces the total amount of interest you pay over the life of your mortgage
Closing costs are the legal and administrative fees and disbursements associated with buying your cottage or home. These costs are in addition to the purchase price of the cottage or home. They can vary widely depending on:
* The property being purchased
* Services required
* Taxes
* Applicable insurances
* Closing dates affecting interest adjustments
* The balances of any prepaid expenses
Your Credit
How high will my monthly mortgage payments be?
Knowing your affordable price range will bring your house hunting into focus. How much of a house you can afford depends on three things.
An important step in securing mortgage financing is the credit check. As a routine part of the application process, the lender will order a copy of your credit bureau report.
Access Your Credit Report
Because a credit report contains information about you, you have a right to inspect a copy of it. Equifax, one of Canada?s largest credit bureaus, offers you three ways to obtain your credit report:
1. Online. Order your credit report online quickly and easily with a credit card. You will get your report in real time, provided you authenticate yourself. There are three products that you can purchase online:
2. By Phone. Call in your request to 1-800-465-7166. The credit report will be mailed to you in approximately two weeks. This request method is free of charge. However, the FICOŽ credit score is not included with this report.
3. By Fax. Fill in this form (.PDF) and send it to the fax number indicated. You must include two pieces of ID, including a valid driver's license and a recent utility bill. The report will be mailed to you in approximately two weeks. This request method is free of charge. However, the FICOŽ credit score is not included with this report.
Equifax Score Power? Credit Score
A personalized credit report including details on credit cards and loans opened in your name, companies accessing your credit file, delinquent payments and more.
Your FICOŽ credit score and analysis. You will receive:
* A full explanation of your score and how lenders view your credit risk.
* Tips on how you can improve your credit score over time.
* Custom graphs showing how you rank nationally among other consumers.
* Specific factors that most heavily affect your credit score.
Equifax Credit Watch? Credit Monitoring
Monitoring your credit report for changes is one of the best ways to combat identity theft and ensure the accuracy of what?s being reported about you. Equifax Credit Watch? will automatically alert you of certain key changes in your Equifax Credit Report and Score ? such as when someone tries to open credit in your name ? so you can act before damage is done.
What is in my credit report?
Your personal credit report is compiled by Canadian credit bureaus from various sources. The report shows information generally going back six to seven years, including personal information such as your name, address, date of birth and Social Insurance Number. It also includes historical data such as current and previous addresses, current and previous employers, and public records like bankruptcies, liens or judgments. Most importantly, your credit report contains your credit card, mortgage and loan payment information.
This information is used by lenders to see if you have missed payments, carry high balances, or are in other ways overextending yourself financially. Payment history is the most important factor in your credit rating ? so try to pay your bills on time, even if it is just the minimum balance due each month.
Lenders evaluate your credit risk based on information in your credit report. It is a good idea to review your credit report periodically and check for inaccuracies that may have an impact on your credit standing.
What is a FICOŽ Score?
The FICOŽ score, developed by Fair, Isaac and Company, Inc. (the pioneer in credit scoring) is a number between 300 and 900 that lenders use to determine your credit risk. A FICOŽ score is a snapshot of your credit risk at a particular point in time. The higher your credit score, the more likely you are to be approved for loans and receive favourable rates. Canada's largest financial institutions use FICOŽ scores to make millions of credit decisions each year.
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