11 Dirty Little Secrets Your Credit Card Company Does Not Want You To Know

11 Dirty Little Secrets Your Credit Card Company Hopes You Never Find Out!

 

Those credit card offers just keep coming.  Seems there’s hardly a day goes by that your mail box is not stuffed with some new bank offering some new credit card.  But there’s a danger lurking for you also, one you may already be painfully aware of.  Over use of credit cards is crippling the spending power of millions of Canadians.  The following is the truth about what really goes on behind the scenes at your credit card company.

Dirty Little Secret #1: Debt Addiction

Consumer debt is way out of control, but the dope (I mean “debt”) pushers just keep on pushing.  The average consumer has 7 credit cards with an average balance per card of $3500.  (That’s $24,500 in debt in case you haven’t done the math!)  Millions of Canadians charge an average of $6,000 on credit cards every year.  Sure, there’s safety in numbers, but is this the company in which you want to belong?  I don’t know about you, but I’d much rather belong to the “below average” customer group that has less than $1000 in TOTAL credit card debt.

Credit card companies keep offering us new cards every week (think of how many you have gotten in the last year!) with higher credit limits and cash advances.  Basically, they insult our intelligence.  Many consumers are flattered when they receive their “PRE-APPROVED PLATINUM VISA, just fill out the form below, sign and send back” letter.  We think we’re being rewarded for a job well done.  The job, of course, being able to spend money with the best of them and pay it back better than most.  Don’t get SUCKED into this mental trap!!!  STOP TRYING TO KEEP UP WITH THE JONES’.  THEY’RE HEADED FOR BANKRUPTCY ANYWAY!

Dirty Little Secret #2:  The Never Ending Balance

If you make the minimum payment due on your average balance of $2500 each month, your credit card won’t be paid off for over 30+ years!  It’s called “amortization,” or in the case of credit card repayment, I should say “lack of amortization.”  In lay people’s terms, this simply means, you have no real term set in order to pay this back.  It’s open-ended, as in “NEVER ENDING!!”

They’ll let you pay on that same balance forever if you like.  When you buy an automobile, you may finance it for five years.  You know if you never send an extra dime but your monthly payment to that loan company or bank you will own that car on the day of your 60th payment.  But that’s not the case with credit cards.  They are “revolving” accounts.  Kind of like the earth revolves around the sun… I guess you can say they are like the Energizer Bunny, “THEY KEEP GOING, AND GOING, AND GOING, AND GOING, AND GOING…”

 

Dirty Little Secret #3:  The Transfer Trap

Because banks know that credit card usage is at an all time high, most of them are killing each other to get your business.  Many offer promotions like transferring balances from other cards to the new card they are offering you.  If you transfer balances from other cards, they say they will charge you a reduced rate of interest on those portions that are transfers.  This sounds like a great deal (going from 18% to a promotional rate of say, 9.9%); however, most of them have a catch.  For instance, if you do not charge something on the new card each and every month, the interest goes up to the regular rate of the card (which is often high), or if you make one late payment, you forego the lower promotional rate, and the rate again goes up to the regular rate of the card.  Beware of the “Transfer Trap.”  All you’re really doing is transferring your agony from one company to another, and avoiding the real solution; finding a workable plan that will get you debt free once and for all.

Dirty Little Secret #4:  Minimum Payment Misery

If you keep making your minimum payment only, your balance will rarely ever get paid off.  Have you ever noticed how, while your minimum payment due on your credit card is $85, your balance only came down $6 dollars?  WHY???  That’s because we pay un-Godly amounts of interest on credit cards.  Even the so-called “low-interest rate” credit cards don’t show their payments going toward bringing down their balances.  All they do is just require a lower minimum payment.   Sure, this might help your monthly outgo right now, but what’s it doing to get you out of debt faster?  NOTHING!   That’s because the MINIMUM PAYMENT DUE ON CREDIT CARDS ARE BASICALLY “INTEREST-ONLY” PAYMENTS, and making the minimum payment on a credit card is a guaranteed way to NEVER PAY IT OFF!  Suppose you owe $2,000 on a card with 19% interest and a 2% minimum payment.  Paying just the minimum every month, it will take you 265 months–over 22 years–to pay off the debt, and it will cost you nearly $4,800 in interest payments.

Doubling the amount paid each month to 4% of the balance owed would allow you to shorten the payment time to 88 months from 265 months–or 7 years as opposed to 22 years–and save you about $3,680.

Dirty Little Secret #5:  Fine Print Fiasco

Example:  Your rate of 6.9% is a teaser rate.  After six months, your rate will be 21%.  The Teaser, a.k.a. introductory rate credit card has made credit card banks and centers BILLIONS of dollars.  Because so few consumers ever read the FINE PRINT.  You know the print that only the eyes of a 12-year-old can read without getting a migraine?  These credit cards come with stipulations. There are too many “catches” to name.  But, I assure you, they are there.  Credit card banks don’t make any money if they are financing your debt at below Wall Street Prime interest rates.  So I leave you with one last thought on this topic, “IF IT SOUNDS TOO GOOD TO BE TRUE, IT PROBABLY IS.”

Fight Back by Understanding These Terms

The key to reading your credit card statement is to understand the terms on it.  Here are explanations of common terms:

  • Amount due: Some cards use this term to describe the minimum monthly payment.  This is not the total you owe on the card.
  • Annual percentage rate (APR): This is the finance charge, expressed as an annual figure, such as 21%.
  • Cash advance: A loan in the form of cash (as opposed to purchases of goods or services) made through a credit card.
  • Due date: The date by which your payment must be received by the company, for you to remain in good standing.
  • Finance charge: The interest charge on your outstanding credit card balance.
  • Grace period: A period in which you can make new purchases without paying interest. (Not all cards have a grace period.)
  • Late fee: A charge assessed if your payment is recorded after the due date.
  • Minimum monthly payment: The smallest amount you can pay to avoid being delinquent.  Paying the minimum is the most expensive way to handle your credit card bills.
  • Monthly periodic rate: A fraction of the APR (1/12), the rate at which interest is assessed during the billing period.
  • New Balance: The total owed after new charges and credits have been added up.
  • Over-credit-limit fee: A charge assessed if you put charges on your credit card that exceed your approved credit limit.
  • Previous (or outstanding) balance: The amount you owed last month, after that month’s payments and charges were added up.
  • Transaction fee: A charge for making a purchase or receiving a cash advance.

Dirty Little Secret #6:  The Cruel Cost of Cash Advances

A cash advance is a loan billed to your credit card. You can obtain a cash advance with your credit card at a bank or an automated teller machine (ATM) or by using checks linked to your credit card account.   Most cards charge a special fee when a cash advance is taken out. The fee is based on a percentage of the amount borrowed, usually about 2% or 3%.   Some credit cards charge a minimum cash advance fee, as high as $5. You could get $20 in cash and be charged $5, a fee equal to 25% of the amount you borrowed.

Most cards do not have a grace period on cash advances. This means you pay interest every day until you repay the cash advance, even if you do not have an outstanding balance from the previous statement.   On some cards, the interest rate on cash advances is higher than the rate on purchases. Be sure you check the details on the contract sent to you by the card issuer.

Here is an example of charges that could be imposed for a $200 cash advance that you pay off when the bill arrives:

  • Cash Advance Fee = $4 (2% of $200)
  • Interest for one month = $3 (18% APR on $200)
  • Total cost for one month = $7 ($4 + $3)

In comparison, a $200 purchase on a card with a grace period could cost $0 if paid off promptly in full.

THE BOTTOM LINE: It is usually much more expensive to take out a cash advance than to charge a purchase to your credit card. Use cash advances only for real emergencies.

Dirty Little Secret #7:  Hidden or Unexpected Fees

Most people look for a card that doesn’t have an annual fee, but did you know that there are other fees that can cost you more in the long run?

  • Late fees Most cards charge a fee when payments arrive late, after the due date. Some banks wait a few days before assessing this fee, but many impose it the day after the payment was due.

Some companies have a set fee, such as $10 or $15, while others charge a percentage, such as 5%, of the minimum payment due. Just paying late fees twice in one year can cost you more than an annual fee.

To avoid late fees, make your payment in plenty of time to arrive before the due date. If you pay your bill at the bank’s branch or ATM, find out how long it will take to process your payment. Sometimes payments made at a branch or ATM are not credited for a few days.

  • Over-credit-limit fees Most cards assess a fee if you charge more than your credit limit. These fees are charged each time you exceed your limit, so you could be hit with several of them during one billing period.

Most banks have a set fee, such as $10 or $15, while others charge a percentage, such as 5%, of the amount you are over your limit.

If you charge $400 over your limit, with a 5% penalty, you will pay a fee of $20. This is in addition to interest charges.

  • Lost card replacement fees A few companies charge people whose cards have been lost or stolen more than once or twice. These fees are usually $5 or $10.

Pay Attention! Special fees can cost you a lot, so keep track of when you mail your payments and how much credit you have left.

Dirty Little Secret #8:  Surprise Rate Increases

Did you know the credit card company can raise your interest rate if you are late on ANY payment? I don’t mean late just to the credit card but to ANYBODY! Be late on your phone bill, car, house… ANYTHING. Or if in the eyes of a creditor you simply have to much outstanding credit, all bets are off regardless of whatever interest rate you signed up for.

The logic is simple. The industry believes it is within its rights to protect its interest in a more risky unsecured loan venture. Therefore, it is not unreasonable to raise rates if it has reason to think risk of being repaid has changed. And as a lender, the creditor has every right to view your credit file any time it wants… all of your file and not just its own payment history.

Dirty Little Secret #9:  Minimum Notice Rate Changes

If the above is not bad enough, consider the consumer with on time payments every month on everything. No problem, right? WRONG! Buried within the contract (that contract law attorneys admit they have great difficulty interpreting), is a clause that allows the company to change your interest rate “at any time, for any reason, as long as the holder is given 15 days’ notice.

That’s right. They can change their mind AFTER you make a purchase at 6.5% (for example) and any former agreements are null and void. How can a purchase price be changed after the sale? No other industry can do this but the credit card company.

Dirty Little Secret #10:  Sneaky Ways They Calculating Interest

Most banks use an “average daily balance” method to calculate interest.

Average Daily Balance Method

  1. Every day, the bank adds your charges and payments to learn what you owed it that day. It adds these totals and divides that figure by the number of days in the month, to determine your average daily balance.
  2. Then the bank divides its annual interest rate by 12 (the number of months in the year) to get a “monthly periodic interest rate.” For example, an 18% interest rate divided by 12 equals a monthly rate of 1.5%.
  3. The bank multiplies your average daily balance by the monthly periodic interest rate, to obtain the finance charge for that month.

In calculating your daily balance, most banks include charges made during the month (“average daily balance, including new purchases”). Others exclude those charges until the next statement (“average daily balance, excluding new purchases”), which is to your benefit.

Dirty Little Secret #11:  Two-Cycle Billing Method

Some banks retroactively eliminate the grace period by using a “two-cycle billing method.” If you don’t pay the entire balance, the finance charge is based on the sum of the average daily balances for both the previous and current months. (Some banks exclude new purchases from the finance charge calculation of their two-cycle billing method.)

You are only charged for a two-month time period in the first month you don’t pay all charges. People who sometimes pay in full and sometimes leave a balance will pay about the same amount under the two-cycle method as with a “no grace period” card.

THE BOTTOM LINE: You should know how your bank calculates finance charges.

Are you ready to fight back and take charge of you debts?  Are you ready to get out of debt for good? Great!

Then request your free, no-obligation First Step to Financial Freedom Analysis TODAY by clicking on the following link. You will be taken to our secure Questionnaire Form and all your information will be held in strict confidence.

FREE and Secure Online Application Form: http://www.networthmortgage.com/mortgage-application/

Why do I offer this report free of charge?  I am offering this free of charge because I want to be your mortgage advisor.  I offer more than simply a loan:  I’ll personally advise you on how to use and apply the principles contained in this report. Worried that you can’t remember all of what is contained here?  Call me.  I want to earn your business.  You can find more free reports like this one by visiting www.NetworthMortgage.com

Sincerely, 

Jim Amitofski: Mortgage Broker/Advisor

Networth Mortgage Group – Dominion Lending Centres

Direct/Text: 905-903-0012

Info@NetworthMortgage.com

http://www.NetworthMortgage.com

 

 

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The Facts on Credit Bureaus

The ABCs of Credit Bureaus

Here is a bit of Help to get the credit report you deserve……. 

Clients come to experienced mortgage brokers looking for assistance on all aspects of purchasing a home.  From the beginning of the financing stage to the closing, experienced mortgage professionals can help to educate and inform clients of their options.  First time buyers are often unaware of the process and the steps necessary to secure financing.  Many are also unaware of how their credit history affects their ability to borrow money for mortgages or down payments.

Experienced Mortgage professionals are in a perfect position to help consumers access and understand their credit information.

 

What are credit reporting agencies and credit bureaus? 

A credit bureau or credit reporting agency manages credit information.  There are two major credit bureaus in Canada: TransUnion Canada and Equifax Canada. Tom Reid, Director of Consumer Solutions for TransUnion Canada explains, “TransUnion has 30 years of expertise in credit information management.”  For consumers that means they assist by providing tools to help them manage their finances and for businesses they provide information to assist in evaluating loan applications.

 

Where does this credit information come from? 

Information is provided to credit reporting agencies by lenders through electronic communication.  Once a customer requests or receives a loan or a credit card, that information is submitted to credit reporting agency with the consent of the consumer.

 

Who can access this credit information? 

This information can be accessed by any organization that the consumer has a relationship with through secure means, or by the consumer themselves.

Businesses receive information in a format that is called a credit report.

Consumers receive information in a format that is called a credit profile.

Only authorized companies and individuals can make inquires; these authorizations are often specified in card holder agreements or loan applications.

 

What information is provided in a credit report? 

Information in a credit report will include items such as payment history, outstanding debts, credit account history, any recent inquires into the account and the types of credit a customer has on file, including car loans, credit cards, mortgages, etc.

When an individual first applies to borrow money or open credit card accounts, a credit report is created.  Companies that lend money or issue credit update the information on this credit report on a regular basis including amounts borrowed, credit limits, and whether or not the account is paid on time.

 

What is this information used for? 

Lenders use the information on a credit report to evaluate an individual’s credit behaviour.  Past credit behaviour is an important variable in determining a client’s ability to repay a loan, repay credit debts or repay a mortgage.

It is important for consumers to check their credit report before they get into any major purchases.  If there are any inaccuracies it is critical to have them cleared up right away.

The information on the credit report is taken into consideration when lenders are evaluating loan applications.  Credit bureaus also often provide a credit score, which helps lenders determine the credit risk of potential customers.  Many lenders also use the information on the credit report and apply their own custom scoring system.  This also allows lenders to determine how applicants compare relative to other applications using the same system.

 

What information is provided in a credit profile?

Credit profiles are very similar to credit reports, but are formatted for consumer use.

A credit profile is a snapshot of an individual’s debts and obligations.

A credit profile available online describes the client’s personal information including name, address, phone number and employment information.  Consumers also have the right to add a consumer statement, which is a brief explanation they can add to their file to explain poor credit.  This shows up on their credit profile and credit report.  For example, clients may want to explain to potential lenders that they had an illness, injury or temporary unemployment.

The TransUnion credit profile is formatted with a summary section outlining the number of open accounts, number of payments and outstanding debt.  This is followed by a details section which lists individual credit accounts, balances, and a two and six year payment history.  It also lists any collections accounts, public information such as bankruptcies and any inquires into the credit history and when they were made and who made them.  Equifax also offers access to a credit report online.

 

Credit scores

Credit reporting agencies often have their own scoring systems developed to assist lenders in evaluating applications.  TransUnion Canada uses the Empirica credit score.  Equifax Canada uses the Beacon credit score developed by FICO (Fair, Isaac and Company).  The standard scoring system in the United States is based on scores developed by FICO.

The basic credit scoring formula takes into account several factors from an individual’s credit profile.  The impact of each element fluctuates based on each person’s credit profile.  A regular payment history, an outstanding debt of less than 30%, an established credit history, a minimal number of credit applications and a healthy mix of credit accounts and loans make for a good credit score.

A credit score can be improved.  Changes in a consumer’s behaviour will affect their credit score.  This is important for a client in terms of his/her ability to get financing for their mortgage or to get the best rates available.

“Almost one in five Canadians have checked their credit before applying for a home loan,” according to a TransUnion study.  The flip side of that is that 80%of Canadians did not review their credit before applying for a home loan.

TransUnion recommends that to get the best possible mortgage terms, clients should have an Empirica credit score of above 750.  By assisting your clients in accessing their credit scores you are able to ensure they receive the best term.

If an individual’s score is not 750, paying bills on time, reducing debt balances, avoiding new inquiries into the account and clearing negative inaccuracies form the credit profile can help to improve scores significantly in a matter of a few months.

Credit scores are not the sole tool used by lenders to determine credit-worthiness, but they do give clients an idea of where they stand.

 

Accessing your credit profile

Consumers have a right to view the information in their credit file.  They can receive a free consumer disclosure report by writhing to one of the credit reporting agencies and requesting it.  This report is delivered by mail.

For immediate access to their credit profiles consumers can visit www.transunion.ca.  There is a charge for immediate access to this information but there are also value added options that can help consumers better assess their capacity for increased borrowing.

In addition to a credit report, TransUnion provides access to a credit score.  This information is displayed as a numerical score, with 300 as the lowest and 900 as the highest, as well as graphically to give your clients an understanding of how they fare compared to other Canadians.  It also outlines how potential lenders would view their creditworthiness, from fair to very good.

This credit score information is also accompanied by an analysis, which helps clients by outlining how they can improve their score.  A sample provided on the TransUnion website indicates the individual has too many consumer finance company accounts on the credit report, thereby having too much available credit.  The suggestion is to close a few accounts or have the credit limits reduced.  It also cautions not to close too many accounts, especially the oldest as it could have an adverse affect on the credit score.  Other issues flagged in the sample are high account balances, with the suggestion of lowering them to 35-50% of the limit.  Customers are also encouraged to develop revolving credit with the suggestion of making a few purchases per month on a credit card and paying them off right away.

For an additional fee TransUnion also offers a debt analysis.  The debt analysis helps customers determine their debt-to-income ratio (the difference between the monthly income entered and the monthly amount spent to maintain the debt listed in the credit profile).

Equifax also offers a credit profile online as well as a FICO score and analysis.  The website for Equifax is www.Equifax.ca. The FICO score is presented as a number and also outlines where the consumer fits in terms of national distribution of FICO scores.  The Equifax report shows in details things that need to be done to improve your credit score. It explains in detail what is needed to raise your credit score. It then goes on to explain how to correct errors on your credit report. And then it gives you a brief explanation of the length to improve your credit score. Keeping on track with your credit will benefit you in a lot of ways. A good credit score will help you qualify for the best credit, jobs, insurance, and more. Plus if you take the steps to improve your score, your financial like will be much easier as a result.

 

Jim Amitofski,

Mortgage Broker Professional 

Networth Mortgage Group – Dominion Lending Centres

Direct/Text: 905-903-0012

Email: Info@NetworthMortgage.com

www.NetworthMortgage.com

 

 

 

Know your credit & the 5 C’s of Credit the Banks look at to approve YOUR Mortgage

I have been getting a lot of question on what the banks and other lending institutions consider under the bank act when making a decision on a mortgage application. A lot of factors are considered here but when a home buyer is looking to have the best chances of getting the home of their dreams the financing part is the next biggest thing besides the home and the location. This is why knowing the basics behind what lenders are looking for will help you better understand the process and what the bank considers when making their decision.

Credit Score Help:

The Secrets of Raising Your Credit Score

Why is it important to learn the secrets of raising your credit score? Because your score helps determine whether you’ll be able to get credit and the interest rate you’ll qualify for. If you are planning on making any major purchases within the next few years (such as a home or car), you should start working on improving your credit score now. Since credit scores fluctuate over time, the steps you take now will reflect positively in the future. Credit scores place the most emphasis on information that is reported within the last 24 months, so the actions you take now can really help. This means that even if you currently have a bad credit score, it won’t haunt you forever if you work on improving it. Below are the main areas to work on when trying to improve your credit score.

Correct errors on your credit report

One of the first places to begin improving your credit score is by checking your credit report for errors. This includes such things as accounts that don’t belong to you, or paid accounts that are still showing a balance. Having inaccurate information removed from your credit file can really boost your score, so it’s worth the effort. To correct any errors, you will need to contact all three credit bureaus to dispute the information.

Improve Your Payment History

Since your payment history accounts for 35% of your credit score, you need to make sure that all your accounts are up to date and don’t show late payments. Pay off past due accounts, and then concentrate on paying your bills consistently before the due date. If you tend to forget to mail your payment in on time, consider automatic bill payment options (either through your bank or online).
You may be wondering how liens, judgments, collection s, and bankruptcy will affect your credit score. I won’t lie to you. These bad marks will seriously lower your credit score, but not indefinitely. Since this information may only be reported for 7 to 10 years, it will eventually drop off your record. And, if you can consistently pay your bills on time for two or three years, the impact of these negative items will not be as great.

Lower Your Debt Ratio

If you’ve extended your credit to the limit, it will have a negative effect on your credit score. By keeping your credit card balances low (less than 20% to 30% of the available credit), you’ll not only be in better financial shape, but you’ll also bring your score up.
It’s common to carry a large balance on one card and have another card that you either don’t use, or pay off in full every month. If you will be applying for a loan in the near future, you might consider transferring some of the balance to the other card to even out! The percentage of available credit on each card.

The next thing that you want to concentrate on is paying off your existing balances. Try paying more than the minimum amount due on your accounts, and if possible, pay the balance in full. Once you pay off an account, don’t close it because it will raise your debt ratio due to the fact that you will have less available credit.

Another way to temporarily boost your credit score is to not use your credit cards for a few months before you apply for a loan. Because creditors provide a monthly statement to the credit bureaus (which may occur before your payment is received), your account may show a balance, even if you pay your statement in full every month. By paying with cash for a month or two before you apply for a loan, these accounts will show either a lower balance or not balance at all. The end result is that your debt ratio will be lower, which will raise your score.

Improve Your Length of! Credit History

If you’ve been thinking about closing those old cards that you don’t use any more, don’t do it until after you’ve qualified for a loan. Closing old accounts can lower your credit score it because it decreases the length of your credit history. You want to keep long-standing accounts open because it shows a longer history of established credit. If you are determined to close out accounts, make sure that you keep the oldest one open (it doesn’t matter what the interest rate is if the balance is paid off).
If you don’t currently have any credit accounts showing on your credit report, opening a low balance credit card can actually boost your credit score. Also, if your credit history is less than three years old, work on establishing a good payment history by paying your bills consistently on time.

Limit New Credit Accounts and Inquiries

Every time someone looks at your credit report, it shows up as an inquiry.
There are two types of inquiries, soft and hard. If you order your credit report, it is counted as a soft inquiry, and won’t affect your credit score. Other types of soft inquiries include inquiries for promotional offers (such as credit cards or insurance), account reviews by your current creditors, and internal inquiries by the credit bureaus.
Hard credit inquiries occur when you authorize a company to review your credit report. This happens when you apply for a bank loan, credit card, lease, or cell phone. Hard inquiries may also appear if the CRA is auditing you or if a collection agency is trying to collect a bad debt. Hard inquiries deduct from your credit score, so you want to keep them to a minimum. If you will be shopping around for the best rate on a loan, do it within a short period of time. Inquiries made within a few days of each other will generally be counted as one inquiry.

Diversify the Types of Credit In Use

This area accounts for 10% of your credit score, and the different types of credit will affect your score differently. Having a credit card that you consistently pay on time (with a low balance) will help your score.
Installment loans, such as a mortgage or car payment, can also help your rating if your payment record is good and you have paid the balance down.
Cash loans and finance company credit may deduct from your score because it appears that you might be a high risk and can’t qualify for mainstream financing. The best mix is to have one or two major bank credit cards and one or two installment loans.

How long does it take to improve your credit score? 

This is not an easy question to answer because it depends on how you handle all aspects of your credit. Generally, there’s not a lot of fluctuation during a short period because your score is mainly based on information reported within the last two years. By consistently paying your bills on time, you can see an improvement within 6 to 9 months.

But don’t get discouraged. It is worth the effort to improve your credit score, because a few points can mean the difference between the best rates and a sub-prime loan. When you are working on improving your credit score, aim to have no late payments or derogatory items on your credit report for at least 12 months (preferably 24 months). Also work on paying down your outstanding balances and don’t apply for new loans.

Persistence in following the secrets of raising your credit score will benefit you in a lot of ways. A good credit score will help you qualify for the best credit, jobs, insurance, and more. Plus, if you take the steps to improve your score, your financial life will be much easier as a result.

The 5 C’s of Credit: What are the Five C’s Of Credit that lenders look at:

There are always easy and tough things in life. Credit should not have to be one of them. Though credit is one factor considered when getting a mortgage there are other factors considered. It is not just a score that rates your ability to make payments on time. There is a method used by lenders to determine a borrower’s credit worthiness that weighs five different categories to gauge the possibility of default: capacity, capital, collateral, credit and character. Here is an explanation of them all

Capital

Capital in plain terms is the amount you have saved as a down payment – an indication of how invested you are in purchasing a property. You capital will show to potential lenders your ability to save and accumulate assets. Lenders use a loan to value (LTV) measurement to determine the amount of capital you need as a down payment as well as to decide on the rates and terms of your mortgage. In the field of credit risk the lower the LTV the lower the risk for the lender.

Capacity

This port of the 5 C’s of credit it is capacity to be the most critical of the five categories; it refers to the borrower’s capacity to repay a loan. The lender’s main concern is how you intend to repay your loan and will consider your income (from all sources) against your monthly expenses. This is represented as TDS Total Debt Service Ratio and GDS Gross Debt Service Ratio.

Collateral

When you consider collateral this is for the lender the security of the mortgage being lent out. The property, its value, location and characteristics are one form of security; the lender wants to know that a property is marketable and can be resold if necessary. Another aspect of collateral is also a person or persons who can guarantee the loan or other wise known as co-signers.

Credit

Now when you think about credit and the applicant’s current and past payment history this shows the lender a summary of your repayment history over a period of time. The lender needs to feel comfortable in an applicants potential to make payments; by examining your payment history with existing credit relationships they can predict your predisposition to pay. This is the reason it is your credit score is the most dependable measurement a lender can use to determine your likelihood of payment.

Character

Then there is Character; this is where the lenders will see you s the borrower are trustworthy and will meet your obligations to them. The factors lenders consider are length of employment, your actions taken to save and use credit responsibly to establish your character and determine whether you are a borrower that they can trust with their loan.

This is why it is important to take the advice of an experienced mortgage professional to sit down with you and go over the best mortgage based on your wants and needs. Armed with the right information will ensure when you do apply for the mortgage you will have the lenders offer you their best rate and terms possible.

Any questions or concerns – Call or Text: 905-903-0012 or email me a question: Info@NetworthMortgage.com

Jim Amitofski – Mortgage Advisor

Networth Mortgage Group – Dominion Lending Centres

http://www.NETWORTHMORTGAGE.COM

HOME PURCHASE FINANCE

8 Closing Costs to Be Aware of When Buying A Home

8 Closing Costs to Be Aware of When Buying a Home

 

Special Report Exposes The Closing Costs To Be Aware Of  When Buying A Home

           When you are ready to purchase your home it is important to be aware that it will cost you some money to complete the deal.  There is nothing worse than going through the entire process and finding out that the costs of completing the transaction are higher than you thought.

 

Closing Cost #1: Down Payment

Every lender will want to see that you have the funds available to pay for your closing costs.  If you have a high ratio loan (less than 25% down payment) it is a rule that you have to prove you have 1.5% of the purchase price available to pay for this.  Even though it may not cost you this much, it will be a requirement for the approval.  

Closing Cost #2: Appraisal Fee

A fee will be required to assess the value of the property you are buying.  If you put less than 25% down and you have mortgage insurance on your mortgage (which will be the case unless you go through an alternative lender), you will have to pay $165.00, which will be deducted from the mortgage proceeds.  If have 25% down or more, or happen to use an alternative lender, then you will have to have an appraisal done on the property to determine the market value.  This appraisal fee can run you around $350-$400 depending on the property.

Closing Cost #3: Site Survey or Title Insurance

You will also have to have either a site survey or title insurance on the property.  In many instances the realtor or seller will have a survey that is valid to use.  However, if there is not one available, then you will be responsible to have one done.  Your lawyer or notary will make sure this is done for you and the cost of a survey is approximately $250.  You can choose to have title insurance instead which is a little bit cheaper, but is a one time thing (if you go to refinance your mortgage, you will need to repurchase this, whereas a survey would be reusable).

Closing Cost #4: Home Inspection

Most people choose to get a home inspection done to make sure the home has no major problems.  This is not a requirement for financing, but it is a smart investment.  Can you imagine buying a home and not having a home inspection done later to find out that there is major foundation issues that are going to cost you thousands of dollars to fix!!  The cost of a house inspection is around $400 – $475 and will be worth every penny for the peace of mind.  I strongly recommend having this done!

Closing Cost #5: Lender Fees (If Applicable)

Although most of the time borrowers will not be charged lender and/or broker fees, there are some instances fees will be charged.  One example is private mortgages.  In these cases usually broker and lender fees will be charged, but will be disclosed up front to clients.  Brokers may also choose to charge fees for some deals and some alternative lenders have some form of application fees.  But in most instances, especially for conforming deals, there are no fees charged to the borrower and the broker gets paid by the lender.

Closing Cost #6: Legal Fees

Another cost to be aware of is the legal fees you will have to pay to either a lawyer or notary for registering your mortgage.  The cost for this for a purchase will be approximately $1000 – $1200 and less for a refinance of your existing mortgage (not all of this goes to the lawyer/ notary).  You will get a statement of adjustments from your lawyer/ notary outlining all the fees involved.

Closing Cost #7: Home Insurance

You will have to have house insurance in place before you get your mortgage.  The reason for this is to protect the lenders security in case of fire or any other damage to the property.  Expect this to cost approx. $70/month depending on the property.  Your notary or lawyer will make sure you have this in place before your mortgage closes.

In most cases, if you have a high ratio mortgage (less than 25% down) you will have to pay a mortgage insurance premium.  This is a one time premium that insures the lender against default of the mortgage.  The mortgage premiums range from .50% to 2.75% for standard conforming mortgages, but can be higher for non-conforming deals.  These premiums do not have to be paid up front, but you will have the option to do that.  Most people choose to have this amount added to the mortgage amount.   Some alternative lenders have their own application fees that usually can be added to the mortgage as well.

Closing Cost #8: Property Taxes

When you buy a home, you will now have to pay the property taxes.  Most of the time you can have 1/12 of your property tax payment added to your mortgage payment.  With high ratio mortgages, lenders will most likely not give you an option, as they will want the taxes added to your mortgage payment.  But if you have 25% down or more, you usually have the option to collect your own taxes or have the lender do this.  If your mortgage closes after the taxes have been paid for the year you will have to have enough to reimburse the sellers for the length of time you own the home for that year.  But if you close the deal before the taxes have been paid then the sellers must reimburse you for the months they have owned the home for that year.  However, you will have to pay the entire years taxes by the beginning of July.

If you have ever owned a home anywhere in the world and buy another home in BC, then you will have to pay a property purchase tax.  This accounts for 1% of the first $200,000 and 2% of the remaining amount.  If you are a first time buyer, you will likely not have to pay this property purchase tax (as long as you qualify).  It is best to discuss this with your notary or lawyer just to make sure.  If you are stuck paying this you want to make sure you have enough funds available to cover this cost.

A Little Note Why I offer this report free of charge?

I am offering these helpful tips free of charge because I want to be part of your home buying team as your trusted mortgage broker/advisor.  I offer more than simply a loan:  I’ll personally advise you on how to use and apply the principles contained in this report. Worried that you can’t remember all of what is contained here?

Call me.  I want to earn your business.  We currently have over 40 creative programs to fit your needs. Please contact us at  905 – 903 – 0012  to set up your FREE No-Obligation consultation where we will meet to tailor a program to fit your needs and comfort levels for monthly payment and investment.

Sincerely,

 

Jim Amitofski – Mortgage Broker/Advisor

Networth Mortgage Group – Dominion Lending Centres

Direct/Text: (905) 903 – 0012

Info@NetworthMortgage.com

P.S. if you would like to get started now please visit: www.networthmortgage.com to fill out a Pre-Qualification Application and we will contact you to schedule your free consultation and get you into the home of your dreams with the best terms available ….regardless of your credit!

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How To Turn Your Huge Home, Car And Credit Card Payments Into Spendable Cash $$$

Double Your Monthly Spending Money

By Freezing Up Monthly Cash Flow You Don’t Even Know You Have!!!

Here’s the Home Financing Industry’s Newest Secret:

You can take Tomorrow’s Home Equity and put it in your handIn Cash Today! 

  • Reduce your payments by at least 32% (normally more).
  • Double or Triple your monthly spending money.
  • Let your home help pay bills for you.
  • Escape the government’s attempt to double your minimum credit card payments.
  • Make all your bills tax deductible (the CRA hates this).
  • Always know Exactly what your monthly payments will be.

Are you in this list?   If so, you’re just flushing your money down the toilet – For Nothing!

  1. You have a home mortgage payment that is bigger than you’d like.
  2. You have a home mortgage payment that increases unpredictably.
  3. You have a Home Equity Line Of Credit with a payment that keeps growing.
  4. You’re making minimum payments on your credit cards (and don’t want them to double!).
  5. You want more spending money every month… $500, $800, $1,000 or more.
  6. You want a chunk of CASH for investment or to build your business.
  7. You simply want lower payments, want some financial “Breathing Room”. Not just living to pay the bills.

It sure can feel discouraging. Like you’re being taken advantage of. I know, I was there. But…It’s Not Your Fault! 

The “Fat Cat” bankers push easy-to-get credit cards on you,…and almost force you to overspend. They give you a home mortgage you thought was fixed rate. They give you, what they said, was a low interest equity loan.  Then what do they turn around to do?  They start raising your payments on you!  Now wait a minute. It’s Not Fair!

Now you have unpredictable mortgage payments, rising interest rates, and unexpected credit card payment increases.

No breathing room what-so-ever! No money for anything other than payments – and, “sigh”,…No End In Sight!

But don’t panic. Because if you answered “YES” to any of the seven questions listed above, then I have some very Good News for you,…

Help is on the way! But the solution is hidden away where you’d least expect it,

The focus on the entire Home Finance Industry has changed

Most owners simply are not aware of all the creative, low-payment home financing programs that are available today. The gap between slowly rising incomes and rapidly rising home prices and consumer debt caused the home mortgage industry to develop new loan products to address the “Real” issue that home owners face today – Affordable Monthly Payments. I call them “Payment Relief” home mortgage programs.

The Lowest Rates do not equal The Lowest Payments

Not being an industry “Insider” like me, you would naturally think that the most important factor for getting a safe, low, affordable payment would be the interest rate. Not So! The real truth is… the lowest rate almost never gives you the lowest payment. But you wouldn’t know that unless you’re “In The Know” like I am. The interest rate may seem important… But the real fact is… it just doesn’t matter how low the rate is if you can’t afford the monthly payments.

The Magic is in the Payment Structure, not the Interest Rate!!!!

Plain and simple, these “Payment Relief” home loan programs are based on the concept of making “Below Normal” monthly payments. “Normal” meaning the kind of payment associated with the typical Fixed-Rate loan that you’re familiar with. If you simply compare the payments of a fixed rate loan at today’s rates to the payments of a “Payment Relief” loan, the “Payment Relief” payments will be at least 32% less. If you consolidate your credit cards, a Home Equity Line (if you have one), and maybe even your car payments as well… you can slash your total monthly payments to less than half what you’re paying now! Why pay more if you could pay less?

Do this quick exercise and You Won’t Sleep Tonight!

Add up your current home mortgage payment(s), your current car payment(s), and the minimum monthly payments on all your credit cards. Whatever all those payments add up to, your new “Payment Relief” loan payment would be Less Than Half of That!  That’s right! Less than half! Actually your new payment would be up to 60% less than the number you just came up with. So how much Extra Spending Money does that Free-Up for you? How much of a difference would that make to your current lifestyle?  What would you do with all that money??!! And why the heck are you paying it if you don’t have to?

Here’s what I’ve done for so many of our neighbors (just look at the attached testimonials).     Now… I’m offering to do the same for you!

  • Get rid of your unpredictable, high payment mortgage loan and equity line. Why suffer with unexpected payment increases when you can have a predictable, low payment, safe “Payment Relief” loan?
  • Wipe out all your credit card balances! Without bankruptcy, credit counseling, or damaging your credit in any way! You’ll even get better rates and higher limits as a result.
  • 1-2 months no bills to pay anyone! No mortgage, no car payments, no credit cards! Just think what that’ll save you. Some people save as much as $7,483.24 right there alone.
  • I’ll wipe out your car loans! And hand your car titles to you free and clear!  No more car payments!  Now you can say “It’s paid for”!
  • I’ll save you hundreds to thousands of dollars every month! Money you now throw down the toilet!  And not only that, but you’ll live better than you do now!
  • I’ll get you as much as $50,000 in CASH! While still saving you money each month!  I’ve even gotten folks more than that in the past! Some “only” want $10,000 in cash.  Or none at all!  Hey, it’s your choice.  Just tell me which way you want it!

“Some people ‘doubt’ me”!

“Well, they are the ones who are in a worse spot than they were last month!” 

I hate to point this out… But I gotta for you to really understand and be able to trust me completely!  And so that I can really help YOU!  It might not be “fair” or whatever, but I gotta point out this simple truth: I’ll be O.K. whether or not you call me for help! Question is, will YOU be O.K. if you don’t call me for help right now?

If you’re unsure, then there’s only one thing to do………

Call me right now at (905) 903-0012! Or you can get to me Email:at info@networthmortgage.com.

I look forward to helping you too! 

Sincerely, your friend;

 

Jim Amitofski

Mortgage Broker

OK. JIM, I’m in!    I’m going to take the next step because I want to:

  • Reduce my monthly payments by 32% to 60%
  • Always know exactly what my payments will be
  • Drastically increase my monthly spending money
  • Go for the two month no payments on anything at all
  • Make all my bills Tax Deductible
  • Give myself some financial

 

********** Here’s all you have to do ************************ 

Simply call me at (905) 903-0012 for a Free, No Obligation “Payment Reduction Audit”. We’ll discuss your particular situation. I’ll answer all your questions, and we’ll determine whether or not a “Payment Relief” loan is right for you – before you commit to anything. 

P.S.  I only work with 15 clients per month. If I’m already booked, you have to wait.

P.S.S.S.  This is your opportunity to beat the bankers and the CRA!

NOTICE:  Everyone I help is required to sign a Non-Disclosure Agreement to keep my proprietary methods and financing sources SECRET from the general public. You will be too!

 

Call Jim Amitofski at (905) 903-0012 OR Email: Info@NetworthMortgage.com

 

What does it mean to work with an experienced Alternative Lender Broker?

Experience does matter….Guaranteed!

When it comes to getting a mortgage approved now it is important to work with a mortgage broker who has what it takes to structure your mortgage to getting your mortgage request approved.

Working with clients who have been turned down by the banks and other so called mortgage professionals is what my team and I do BEST.

We work on structuring a deal to ensure whether it be for a First or Second mortgage be APPROVED. We look at all factors when getting the deal done.

It is not only about rate now…it is about getting the funds required. Whether it be for a Purchase, Debt Consolidation, Renewal, Or using existing equity for a particular need you require.

From our informative website: Mortgage Website and now to our Mobile APP: Mobile APP you have the tools necessary to make the right decision with our guidance and support every step of the way.

Feel free to contact me to get you started

 

Times are getting tough for mortgage options – But we are here to HELP!

It has been apparent that these days getting a mortgage is getting tougher and tougher. They might be making it sound that it is for your own good but do not be fooled. The big banks and the government are stating that the new mortgage rules which are in place are for your own protection.

This is so weird that it is amazing to me how they are ok with saying that you can not manage your own mortgage. To get a mortgage you need to be able to pay it back, whether this is for a purchase or a refinance. And you have some sort of equity, whether it be sweat equity or a cash down payment.

Lets face it the banks are ok for the day to things like chequing, savings, and investing….but when it comes down to it the BEST advice has always and still continue to be from an educated, experienced, and knowledgeable independent mortgage broker. The mortgage broker can actually sit down with you, go over your wants and needs and put together the right plan of action to get the best mortgage product for your needs.

It is not a matter of rocket science just pure common sense.

And not each and every client is the same. Whether you are looking to purchase, consolidate debts, renew and existing mortgage, pull equity out for an investment or business venture or for the needs of your children….everyone has a different need.

My company is here to get what you need and that is a mortgage that truly is there for your particular situation.

*************************

We deal is all sorts of situation.

WE GUARANTEE TO BEAT ANY BANK MORTGAGE – Call and Speak to Jim for Full Details on this offer and how YOU can benefit. 

Looking for the right answers to ALL your Residential and Commercial mortgage financing needs?

***SECOND MORTGAGES; STARTING FROM 6.99%

 

Some of the services I offer:
– Residential FIRST mortgages up to 95%.
– Residential SECOND Mortgages up to 95%.
– INSURED Mortgages (90% financing with a 5% cash back).

– NON-INSURED Mortgages (95% financing).
– Commercial mortgages up to 90% financing.
-Rent To Own programs if you do not get approved through regular financing.
– Mortgage packages and rates better then the banks.
– Private Mortgages available.
– Mortgages to buy a rental property with little MONEY Down.
– Mortgages to CONSOLIDATE ALL your debts and have ONE LOW MONTHLY PAYMENT.
– Mortgages to STOP POWER OF SALE proceedings.
– Mortgages to payout property tax arrears.
– Mortgages to use equity in your home to expand your business.
– Mortgages for the Self Employed Professionals.
– Equity-take out mortgages to invest in high return investments.
– Re-establish credit with a credit card with $1000.00 security deposit.
– Mortgages to help with you children’s education or take a great vacation.

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 There is also those that in a very tough situation and the bank have been dealing with for years say they can not help….but in fact they do not want to help.

A good question is this situation: Are you behind on your mortgage payments? 

  • Are you 1,2,3,4, or 5 months behind and is the lender about to take over your home?
  • Will your current mortgage lender not renew your mortgage?
  • Is the sheriff’s office knocking at your door?
  • Are creditors calling you night and day?
  • Is the Canada Revenue Agency coming after your home?
  • Is your property tax department proceeding with a tax sale?
  • Is the Retail or GST Tax department after you?
  • Have the banks and other lender’s turned YOU down?
  • Do you think there is no solution for you and your family?

THINK AGAIN!!

  • I have the money to get you the help you need.
  • There are other solutions that I can offer if mortgage refinancing will not resolve your current issue. 

Do you need help?  Do you want help? 

Quick closings…. Quick process…. Honest help.

I am not here to judge, just help. 

Call me and I will show you how I can help.

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 Want proof: Ask for my list of references from all my past clients – They were happy I got them what they needed.

****** DOWNLOAD MY FREE MOBILE APP: CLICK FOR FREE APP HERE

The Networth Mortgage Group

DominionLending Centres – Mortgage House #10557 
Direct/Text: 905-903-0012
Toronto: 416-491-0200 ext.732
Fax: 416-491-4247

Email: info@NetworthMortgage.com
Website: http://www.NetworthMortgage.com

Blog: http://www.NetworthMortgage.Wordpress.com