Category: Mortgage Information

Are you thinking about buying a home in Kamloops and are wondering what role your credit score plays? I have included some information below regarding credit scores and mortgage financing and how it will affect your real estate purchase.

Your credit score, also known as a beacon score, is generated by 2 main organizations in Canada; Equifax and Trans Union. They have a system which tracks any personal loans, credit cards or lines of credit that you have. The system gives you a score somewhere between 300-900, with 300 being the worst and 900 being the best.  In order to obtain the very best mortgage rates, you generally need to have a score of 660 or better, however exceptions are made when it makes sense. If your credit score is not this high, there are a whole other group of lenders willing to help you out, but generally at a higher cost.

What determines your score?

All of your creditors will report monthly to Equifax or Trans Union. They report how much you owe, what your monthly payment is, and whether you have made your payment on time.  A record is kept for as long as you have the debt, showing how many times you have ever been 30 days late, 60 days late or 90 days late. It will also show if the account has ever been sent to a collection company. The longer that you have had credit reporting to the credit bureau without late payments, the higher your score will climb. Also, if you have credit cards or lines of credit, try to keep your outstanding balance under 50% of the limit. Points are deducted for high balances in comparison to the limit, late payments, collections, and too many inquiries for credit.

Important things to note:

• Your utility bills, cell phone, gym membership, car insurance, etc., do not give you credit for paying on time. They will never show up on the credit bureau unless you don’t pay them. If you plan on arguing or disputing a charge with one of these companies, expect it to show up as a collection on your credit bureau and drastically lower your credit rating. It’s generally better to just pay the amount owing and dispute your case after the fact.
• Unless your mortgage is with a credit union, it probably doesn’t report to the credit bureau either.  So, even though you might pay your mortgage perfectly for 5 years, you won’t have any credit score at all unless you have established some unsecured personal credit. (ie..credit card, car loan, personal bank line of credit, etc)
• Bankruptcy and Credit Counseling programs make it near impossible to qualify for a mortgage until you have been finished with the program for at least a year or two, and reestablished some new credit for another year or two. If you are considering one of these options, don’t just take your trustee’s advice. Make sure to talk to a mortgage broker about how this will affect your ability to purchase a home.

It is always important to be conscious of your borrowing habits as they will affect your credit score. Buying a home in Kamloops is a big commitment and you want to make the process as easy and as inexpensive as possible. Feel free to post any questions here about mortgages or contact me directly. I would be happy to help you out.

Brenda Colman, Mortgage Consultant, Invis Kamloops

P. 250-318-8118  E. ac.sivninull@namlocadnerb W. www.BrendaColman.ca

It is essential that you are aware of the costs associated with a Kamloops home purchase. It is important to speak with a mortgage professional before shopping for a home; this will allow you to shop within a price range that is realistic for your situation. At the same time, make sure you are prepared financially for the standard costs associated with a purchase of real estate.

Some of these costs may include:

Deposit:  Once you have an accepted offer on a place, there is generally a five to ten business day period to remove subjects (ie. Inspection, financing, etc.)  Once those subjects have been satisfied, you are required to put down a deposit on the property.  This amount varies, so make sure to ask your Realtor.

Property Purchase Tax:  If you are a first time home buyer and you meet the qualifications, this does not apply to you.  However, if you have ever owned property, anywhere in the world, this tax will be charged on your purchase completion date.  You calculate the amount by taking 1% of the first $200,000 and then 2% of anything over that.

GST:  When purchasing a brand new property, GST will be charged.  Your realtor will advise you of this amount, and it does not apply to used homes.

Closing/Legal Fees:  Be prepared for a legal bill of approximately $1000 for a standard purchase or sale.  If you are buying and selling at the same time, budget approximately $2000 for this expense.

Property Tax Adjustment:  This is calculated at the lawyers office.  A person is always responsible for the property taxes due during the time lived in the home.

Appraisal:  Depending on the lender and how much money you have down, an appraisal of the property may be required.  A standard, residential appraisal will run between $250-$350, and is due at the time of appraisal.  Different properties will have a higher cost, so ask your mortgage professional once you have decided on a property.

Insurance Premium (If Applicable):  In Canada, if you are financing a property to more than 80% of the property value, the mortgage needs to be insured (This is called a “high ratio” mortgage).  This is generally done through CMHC, Genworth Financial, or AIG. They charge an insurance premium that is added to your total mortgage.  The percentage that you pay will vary depending on how much money you have down and how straight forward the approval is.  If you have a 20% down payment or you are refinancing to no more than 80% of the property value, a fee is generally not charged.  A typical fee ranges from 1.75% to 3.10% of the mortgage amount.

It is essential to get pre-approved before making a commitment to purchase a home in Kamloops. If you have any questions for me about mortgages don’t hesitate to post a comment here or contact me directly.

Brenda Colman, Mortgage Consultant, Invis Kamloops

P. 250-318-8118  E. ac.sivninull@namlocadnerb W. www.BrendaColman.ca

Introducing Brenda Colman. Brenda is a mortgage specialist with Invis here in Kamloops. She will share her knowledge and expertise on a monthly basis. If you have any questions for Brenda, please post them here or give her a call.

Interest rates touching historic lows and more attractive house prices in parts of the country have added up to better affordability for first-time home buyers. The federal government’s recent budget has added more reasons for Canadians who aren’t yet homeowners to consider entering the Kamloops real estate market this year. Under the new federal budget, first-time home buyers can qualify for a $750 tax credit, to help with closing costs, such as appraisal or legal fees.  Also, home buyers can now withdraw up to $25,000 from their RRSP under the Home Buyers Plan for a down payment – up from the previous limit of $20,000. Couples can access an extra $10,000 from their RRSPs under the plan.

For those who are feeling secure about their income and want to take advantage of low rates and a more affordable market, the new federal budget provisions could make an enormous difference in terms of the properties they can afford, We’re now seeing more first-time buyers seriously considering making the jump into the Kamloops market this spring.

Here are some tips to help first-time home buyers:

Start the process early.
A mortgage consultant can help you with getting the right documentation in place, such as proof of income and down payment. A consultant will also check your credit history to avoid any unpleasant surprises and ensure you can meet the lender’s requirements. If you are thinking about a home purchase, consulting a mortgage specialist is critical to navigating the mortgage process.

Know your price range.
If you want to buy a home within the next few months, getting a mortgage pre-approval will help you determine the right price range of homes to shop for. Many lenders will also guarantee a rate for up to 120 days when pre-approving potential borrowers for a mortgage.

Don’t rush your decision.
A buyer’s market means that you now may have the leeway to negotiate more with sellers on the price as well as other terms of the transaction such as the possession date and extras to be included in the purchase.

Accelerate your payments – early and often.
A mortgage is the largest debt that most consumers will ever take on, and paying it down faster can mean large savings on interest costs over the long term. Get in the habit of making lump sum payments whenever possible, and consider making bi-weekly payments as a way to decrease the life of the loan.

Know your goals.
Choose a mortgage that accommodates the present state of your finances but also fits your long-term goals. Similarly, don’t just buy because it’s a buyer’s market – choose a home that fits your lifestyle as well as your family’s needs in the years ahead.

Brenda Colman, Mortgage Consultant, Invis Kamloops

P. 250-318-8118  E. ac.sivninull@namlocadnerb W. www.BrendaColman.ca