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We have Kim Nguyen joining us again for Mortgage Mondays. There has been a lot of talk about rising interest rates in the news recently so we will do a quick market update to see exactly what’s going on.
We will then look at the importance of your credit score and just how much that affects your ability to borrow money. We look at what factors affect your credit score, what interest rates you can expect with different credit scores, how bankruptcy or foreclosure will affect your ability to get a mortgage in the future, and so much more.
If you want to help a tenant-buyer to improve their credit on a rent-to-own, do a better job of understanding tenant credit reports, or just want to know how to not screw up your own credit score, this episode is for you!
- Hottest real estate market in January and February in recent history; due to pent-up demand combined with low interest rates
- Bond yields have recently spiked resulting in a rise in fixed rates
- Variable rates likely to stay low for a while
- Millennials gaining confidence in the real estate market
- UPDATE: Canada Recovery Benefit (CRB) has been proposed to be extended to Sept. 25, 2021
- Potentially a large number of foreclosures pending due to pandemic
- Always be conservative when running interest numbers on a potential investment property
Credit Score and Borrowing Ability
- Credit score as important as income
- Minimum score of 680 to be considered for a mortgage
- Careful about applying for credit as you can get dinged when a creditor does a hard check on your credit; car dealerships are notorious for this
- Things that affect your credit score:
- Payment History: 35%
- Utilization ratio: 30%
- Credit History: 15%
- Public records: 10%
- Inquiries: 10%
- A-lender rates: ~1.89% currently
- B-Lender: 2.69-3.5%
- Private Lenders: 4.95% and up
- Go over the differences between Consumer Proposal, Orderly Payment of Debt, and Bankruptcy
- Bankruptcy: credit report goes to zero; stays on your report for 6 years
- Consumer Proposal and Orderly Payment of Debt: you may be able to get considered by A-lender within a shorter amount of time vs bankruptcy
- Foreclosure: as bad as a bankruptcy
- Missed mortgage payments will stay on your credit file forever; don’t do it!
- Don’t run away from your debt; this only makes things worse
- Many non-profit organizations that can help you out of unmanageable debt. Ie. Money Mentors
- Importance of reserve fund for each property
- Get on your debt and talk to someone as soon as possible
- Kim’s Contact info: