Low mortgage rates can offset high prices

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While rising home prices are good news for sellers and buyers seeking a sound investment, they can also make it that much harder for some Canadians to enter into homeownership.

As a recent article from The Globe and Mail points out, even with mortgage tightening and a dip in sales, home prices continue to remain high throughout the country. As home sales decreased, so did the number of homeowners putting their properties up for sale, keeping the inventory of available properties fairly low, and, by extension, prices high.

"The latest data suggest that the softening in prices is likely to be milder than expected," the article stated. "In Vancouver, the city that was the frothiest in 2011 and the hardest hit by last year's correction, prices did decline. But they're already on the mend." Continue reading

Fitch Ratings highlights six default factors

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According to Fitch Ratings' Canadian Residential Mortgage Loan Loss Model, there are six primary factors that influence mortgage defaults. These include borrower equity, borrower credit score, total debt service ratio, loan purpose, occupancy and property type.

A mortgage borrower's equity is the difference between the value of a home and value of all mortgage secured against it. As a borrower pays off their home loan, they build equity. This can be a valuable asset to homeowners, as the more equity that's built up in a home, the more that can be accessed through home equity loans or home equity lines of credit. This essentially allows homeowners to turn the value of the home into cash for any number of purposes, including renovations, college tuition or medical costs. Continue reading

Preparing your credit for a mortgage application

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While it's easier than ever for Canadian homebuyers to lock in low mortgage rates, it's important for individuals to understand how their credit will influence the process. While current mortgage rates are currently at historically low levels, the best rates will only be made available to borrowers who can show exemplary credit on their mortgage applications. It's with this in mind that prospective homeowners should do all they can to prepare their credit for the mortgage application process.

Check your credit score
The first step for homebuyers should be to receive a copy of their credit report. Canadians are allowed to order as many free copies of their credit report as they require each year, as long as the request is made in writing for a printed copy delivered by mail. While these requests will be noted in an individual's report, they will not affect their credit score. Continue reading

Buying a rental property

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For Canadians looking to add to their income, investing in a rental property is an attractive option. Acting as landlord and renting out a home allows you to collect extra income in a much simpler way than taking on a second job. Best of all, you get to act as your own boss, allowing you to make money on your terms.

The current state of the housing market is also making buying rental properties an appealing alternative. Canadian mortgage rates remain at historic lows, meaning home loans will cost you far less in interest down the line. Meanwhile, a report from the Royal Bank of Canada shows that home affordability is on the rise throughout the country.

Data from the RBC’s affordability index shows that the total income necessary to afford a two-story home has decreased by 1.2 percent as of the most recent quarter, reaching 47.8 percent. Detached bungalows and condominiums also saw declines, falling to 42 percent and 28 percent, respectively.

However, certain hurdles remain on the path to buying a rental property. Luckily, proper preparation will allow you to smooth out the buying process and ensure a good deal on your investment. Continue reading

Get to know your credit report: Easy tips from the FCAC

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Regardless of whether people know anything about their credit scores – or the complicated math formulas that go into determining them – the three-digit numbers are a part of life, just like death and taxes.

As intimidating as it may be to get judged on a credit score, it can be somewhat reassuring to know that the score changes over time. Did you receive a score that made your head spin and dashed all hopes of ever owning a home? It is possible to improve scores so lenders feel comfortable enough to loan a first-time homebuyer money, improve interest rates and even offer higher credit limits. People's scores may also improve as their lives progress, which may include changes to their jobs and number of assets in their name.

OK, this is great, but what's even in a credit report, anyway?
We're all familiar with how online banking provides a history of transactions which ultimately affect the account's balance, right? Well, a credit report is kind of similar in the sense that it takes all credit-based transactions into account and the "balance" is the credit score.

The credit score range in Canada is 300 to 900 – the higher the number, the better. However, a credit report includes more than simply a three-digit number. It also includes nitty gritty details about specific credit cards, loan balances, missing or late payments and exceeded credit limits. Continue reading

How to avoid a credit repair scam

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From the time we get our first job to when we get our hands on our first credit card, we are constantly informed of the importance of maintaining a strong credit rating. In Canada, just like many other countries throughout the world, people with good credit are more likely to obtain financing for a car loan, mortgage, insurance or another big-ticket expense than individuals with poor credit.

Credit can be a needed boost, but it can also be debilitating. Learning how to protect yourself from becoming a victim of fraudulent activities is one way to keep your credit score and report in strong standing.

Several companies make the bulk of their money by targeting poor-credit consumers with promises to clean up their credit report. A promise many hurting consumers will believe because they need assistance to qualify for a new home or expense. But in most cases, the companies cannot deliver on their promise, leaving the consumer with more debt and in a worse hole than when he or she started the process. Continue reading

Improve Bad Credit in Six Easy Steps

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Credit score is one of the major players in determining the amount of financing and interest rate you are eligible to receive. Credit history proves to lenders how reliable you are when granted funds. Leading up to your mortgage application, there are six, quite simple steps you can take to help improve your credit rating.

Remember that regardless of a company’s claim to possess the ability to repair your credit score for you, in Canada, this is just not possible. Don’t fall prey to a credit repair scam. Though there are actions you can take to improve your own credit rating, there is no easy way out or fee you can pay to have the slate completely cleaned. Instead, follow the following and improve your credit rating the right way. Continue reading