Lee Morof's Real Estate Blog

There are a variety of factors that are involved in getting your mortgage approved, but few things will have more of an impact than your FICO score and the credit history that goes along with it. Instead of leaving your score up to chance when submitting your application, here are a few ways that you can boost your financial wellbeing and leave your credit score better off than it was before.

Put More On Your Card

It’s important to put purchases on your credit card that you can afford to pay off consistently, but many people are not aware that how much debt you owe can actually positively contribute to your credit score. While it’s good to use up to 30% of your available debt load, a significantly higher percentage than this can be a signal to lenders that you are experiencing financial difficulties. By putting everyday items on credit, it will be easier to give your score an instant boost.

Clear Your Credit History

Many people who think they have bad credit are too afraid to even review it, but it’s very important to take a look at your credit history when it comes to taking control of your finances and your FICO score. If there happens to be incorrect information on your credit report, this will enable you to contact the appropriate lenders and dispute the charges so they can be corrected prior to your mortgage application. It may not seem significant, but this can actually have a marked impact on the outcome of your application.

Make Your Payments On Time

It’s often the case that those who are struggling with debt may push away the bills altogether and give up on the minimum payment, but it’s very important that the minimum is made to keep your financial health in check. It may take a few months to see the results of putting down this amount before the due date, but it will improve your credit over time and forge good habits for the future.

Your credit score is an important aspect of determining your financial health for lenders, and this means that your credit history is of significant importance when it comes to your mortgage. Instead of leaving it up to chance, ensure that you’re making the minimum payments and correct any discrepancies in your credit report. If you’re currently in the market for a home and are considering your options, contact your local real estate professional for more information.

There’s a lot of flexibility and personal freedom associated with self-employment that can be a great benefit to your lifestyle and your pocketbook. However, because of the somewhat unpredictable nature of self-employment, it can make acquiring a mortgage a little more difficult. If you’ve recently become self-employed or have been in the game for a while, here are some things you may want to consider before submitting your mortgage application.

Putting More Money Down

20% is often considered the magic number when it comes to the down payment because this will allow you to avoid homeowner’s insurance. However, if you’re self-employed, you may want to consider putting even more money down as this will be an even stronger signifier to lenders that you’re prepared for homeownership and in control of your finances. While your down payment will provide you with equity instantly, a higher payment will also lower your monthly cost and make your finances even more secure from month to month.

Minimizing Your Debt

The amount of debt a potential homeowner has can adversely affect any mortgage application, but in the event you’re self-employed, a high debt load means even more money is being paid out of a salary that is not necessarily predictable. By paying off the debts you can before applying for your mortgage, you’ll be able to invest that much more of your hard-earned money into your monthly payment without breaking the bank and cutting monthly expenditures.

A History Of Self-Employment

Being self-employed means you’ll have more to prove to your lender, but if you have a spotty self-employment history and long periods without bringing in any income, this will make it even harder. Instead of jumping into the mortgage market soon after becoming self-employed, try and have at least two years of successful self-employment behind you. By being able to prove this, the lender will see that you’re a solid financial bet and an experienced professional who will be able to find work when it’s required.

The nature of being self-employed and the fluctuations in income that can come along with it can make a mortgage lender nervous. However, by having a solid history of self-employment behind you and minimizing your debt load, you’ll be able to prove to the lender that you’re serious about home ownership. 

Most homeowners look at their monthly mortgage payment as their largest cost per month, and something they must do to maintain a good credit history. However, you may have heard of bi-weekly mortgage payments and their ability to lower your debt load and help you pay off your mortgage more quickly. If you’re wondering if bi-weekly payments are too good to be true, here’s some information worth consideration.

What Difference Does Bi-Weekly Make?

Making a bi-weekly mortgage payment may seem to mean that your interest will be automatically reduced, but because the lender is not necessarily receiving that payment until the end of the month, this is not necessarily the case. However, while a typical monthly payment will equate to 12 mortgage payments per year, a bi-weekly payment means 26 half payments will be made each year, which equates to 13 months of payments and an additional month. As a result, this can reduce the amount of interest paid on the principal.

Consider More On A Monthly Basis

Bi-weekly payments have the ability to shave a bit off the principal and thereby lower overall interest, but that doesn’t mean you have to switch to paying every two weeks. Instead of bi-weekly, consider dividing your monthly mortgage amount by 12 and adding that amount to your monthly payment. This will bump up your mortgage cost per month, but it will also reduce the total amount you owe. For example, if your mortgage payment is $1200 per month, divide it by 12 to get $100, and add this to your payment, bumping it up to $1300 each month.

Be Aware Of The Options That Work For You

In the event that you decide to make bi-weekly payments, be aware that there may actually be additional fees associated with this offering that will nullify your money savings. As a homeowner, it’s important to stay aware of changes on the market and new mortgage offerings that can benefit you. However, it’s also important to ensure that whatever you choose, you’re aware of the risks involved so they can make for a positive financial shift.

Making a bi-weekly payment on your mortgage may have the benefit of lowering your overall home cost, but you may be able to get this benefit from simply bumping up your monthly payment. 

Delving into the real estate market for the first time can be a very intimidating thing with all of the mortgage and housing options available. Whether it’s market conditions or the amount you should be spending, there are a number of factors you’ll need to be aware of. If you’re just starting out and not sure where to begin, here are some points to consider that will set you on the right path.

Is It The Right Time To Buy?

Many people try to time the market, but the right time to buy a home is when it works for you. If you have a solid down payment and you’re truly prepared for home ownership, it’s probably the right time to start looking. While a good home and low interest rates can certainly push you in this direction, if it’s not quite the right time, hold off until it’s right for you.

What’s Your Payment Plan?

It’s easy for a first-time buyer to be taken in by their dream home, but it’s important to be clear on all the costs associated with home ownership like property tax, insurance, maintenance and other fees that will bump up the monthly payment. If you can formulate a budget that includes all of your monthly costs and is feasible in the long term, you’re good to go.

What Documentation Is Required?

Having your personal documentation in order and available will be one of the most important steps in your application, but there are a number of things you’ll need. Beyond recent paystubs, tax returns and bank statements, you’ll also need your credit report, so take a look over it to ensure that it’s correct and displays your financial history in a positive light.

Starting the Search

You may be ready to move as soon as you start looking, but buying your first home can be a rather lengthy process. Instead of being sucked in by too much house or taking the first home that appeals to you, ensure that you have a good sense of the size, neighborhood and style of house you want so you can get out there and find the home that works for you.

There are a lot of things to consider when it comes to buying your first home, but by being ready to invest and having your finances in order you’ll be well on your way. If you’re currently in the market for a home, contact your trusted real estate profesisional for more information.

Real estate may be one of the most important things that you will ever invest in, but it can also be a useful means of increasing your financial well-being. If you’re getting into the real estate game and are wondering how you can make use of investing in homes to improve your net worth, here are three ways you can successfully work towards a real estate investment portfolio that will make you proud.

Home Equity Line of Credit Loan

Also known as HELOC, this is the type of loan where a homebuyer taps into the equity of their home while they are still paying off their mortgage. As the equity that has been paid into the home is available without the homebuyer having to apply for it, this allows those who invest in real estate to borrow against equity to renovate the property or pay for a deposit on another property.

Pick Properties That Will Appreciate

It goes without saying that most people want to invest in a property that will increase in value, so as an investor you need to be especially careful about what you invest in. Since you may have problems paying all your property fees if the value of one decreases, try and be aware of future market trends and neighborhood hotspots. This means diversifying the properties you invest in and including a buffer in your payment plan so that, even if the market takes a turn, you can still pay off your amount owing.

Investing In Under Market Value

There are few better ways to improve the financial feasibility of your investment portfolio than investing in a property that is under market value. Not only will you have an automatic gain with the purchase price, you will be able to invest that money into improvements in order to bump up the market price even more. While finding this type of property can be difficult for the newcomer, looking for neighborhoods with potential or properties that require little maintenance can be a good place to begin.

There are few better things to invest in than real estate, but it can be hard to know where to put your money in the beginning. Whether through a home loan or purchasing a property under market value, there are plenty of ways to bump up your net worth. If you’re currently considering an investment in real estate, contact your trusted real estate professional for more information.

With the fluctuations in real estate and the increasing cost of home ownership, many people are entering the market with more trepidation these days. Fortunately, there are a number of myths associated with buying a home that may not adversely affect potential homebuyers. If you’re interested in purchasing a home but are unsure about whether it will get approved, here are a few things you may want to dispel.

No Approval With Less Than 20 Percent

While putting 20 percent down can help you avoid having to pay private mortgage insurance, this down payment percentage is still just a suggestion when it comes to mortgages. It’s necessary to put a certain percentage down and be able to drum up the money on your own, but if getting into the market is your priority, buying now may be worth the investment over time. It’s just important to remember that the cost of your monthly payment should be affordable for the long term.

Home Ownership Is Too Expensive

It’s certainly the case that the real estate market is always fluctuating and prices can go up or down, but generally speaking, a home will increase in value over time and that means your monthly payment will be something you can consider an investment. While monthly rent disappears as soon as the calendar month is over, the money you invest into a home month after month builds up your equity and ensures greater stability for your financial future.

You Must Have A Good Credit Report

While it will definitely help your mortgage application if you possess good credit, it’s not necessarily a deal breaker if you don’t. Each mortgage is assessed based on a combination of factors that can include your down payment amount and your debt-to-income ratio, so this means that if you have a higher down payment and a less impressive credit report, you can still be approved. It’s a good idea to pay your bills on time and get your debt down if you’re applying for a mortgage, but there are opportunities for potential buyers who have experienced credit issues.

Home ownership is an important dream for many people, and as a result, there are many myths associated with the mortgage process. However, even if you don’t have 20 percent down or perfect credit, there are still opportunities for improving your financial well-being and investing in a home. If you’re currently looking for a new home, contact one of our real estate professionals for more information.

Deciding to purchase a home will be one of the biggest investment decisions you’ll make in your life, but it can be confusing for the first-time home buyer to know all the ins and outs of buying a home. If you’re wondering what things first-time buyers often forget about before purchasing a home, here are three important things that you’ll want to keep in mind.

Ignoring Their Credit History

If you have a high debt load or you haven’t been making your minimum payments, it can be pretty frightening to consider looking at your credit report, but it’s very important to do this before applying for a mortgage. A lender will be taking a look at your credit history and reviewing it carefully before approving your application, so it’s important for you to be aware of what your credit history says about you and how it might impact your mortgage.

Buying Too Much Home

It’s easier than you might think to be swayed into purchasing your dream home, but it’s necessary to keep a cool head and make an informed decision so that your home investment can be financially beneficial for you. The amount you should be paying for a home on a monthly basis will leave you with enough that you can pay for the necessities, any existing debts and any extras while still having wiggle room in case of emergency. While you may want to spend a little more, this can end up being a mistake if things don’t go as planned.

Forgetting The Documentation

This may be among the easiest of steps, but not having the appropriate documentation can push back your home purchase, so ensure you have all the necessary paperwork for when you need it. Beyond the Verification of Rent you’ll need from your previous landlord, it’s also important to make sure that you have liquid assets not just investments and RRSPs as this will prove to the lender that you can handle a financial hurdle in the event that it arises.

There are so many things involved in obtaining a mortgage that it can be easy to forget some very important aspects of approval. By being aware of your credit history and keeping your payment price within your means, you’ll be well on your way to a sound purchase. If you’re currently looking at homes, contact your local real estate professional for more information.

As a homeowner, you may have heard the term re-financing without being aware of exactly what it means, but there are a lot of pros and cons associated with what it can do for your financial situation. While getting a different new loan for your mortgage can be a good financial decision in certain situations, here are some things you should consider before you decide that this is the right choice for you.

Getting A Lower Rate

One of the main reasons that re-financing can be a popular option for many homeowners is that it can provide the opportunity for considerable money savings. Since you will be acquiring a new loan with a lower interest rate, this will be an opportunity to reduce your monthly payments, increase your equity at a faster rate and invest the extra funds into something else. While a lower rate can definitely mean money savings, it’s important to consult with a mortgage professional so you’re aware of any associated fees and can make a decision that will be financially beneficial.

Consolidating Your Debt

It is often the case that people will choose to refinance their mortgage with a lower-interest rate in the hopes of paying off the debt they’ve accumulated, but with the cost of refinancing this is not necessarily the best financial decision. While consolidating debt can be great if you go into it with a budget that you plan on sticking too, if you’re leaning too much on the idea of a lower interest rate meaning instant savings, it may be a good idea to take a look at the numbers.

Investing In Your Home

For many people, re-financing their mortgage is a good opportunity to renovate their home and increase its value. However, while renovating your home can be a good idea for resale, there are many home renovations that will not necessarily increase the value of your home and make up for the amount you’ve invested. If you’re making forward-thinking renovations, refinancing is one thing, but ensure you’ve seriously considered what will add value.

There can be a number of financial benefits when it comes to refinancing your mortgage, but it’s important to work out your tentative budget and crunch the numbers before you make a final decision. If you’re currently looking into re-financing your home and are curious about what it entails, contact your local real estate professional for more information.

A mortgage broker can be a helpful tool in finding the right opportunity for you, but it can be tempting to deal with mortgage apps that may be able to consolidate all the information you need in one place. While many modern apps can be quite convenient, there are a few reasons you may want to use a knowledgeable mortgage professional to ensure the credibility of your most important purchase.

Up-To-Date On Credible Lenders

A mortgage app can certainly provide many mortgage insights, but it’s not necessarily an able replacement for a broker who has dealt with many different lenders and knows the ins and outs. While an app can point you in the right direction, a broker will be able to keep you informed of all the little details.

Access To Better Rates

There are no guarantees that working with a broker will get you a better deal, but because brokers work in conjunction with a variety of different lenders, they can often get lower rates or special deals which you may not be able to find on your own.

Saving On Fees

In addition to assisting you with finding the best rates, a broker may also be able to minimize fees like the application and/or appraisal fees so that you can knock some of the costs off your mortgage. Since brokers have an established relationship with lenders, this is something you can use to your advantage.

All The Available Options

It can be overwhelming to go through all of the available lenders, and even a detailed app may not be able to provide this information. However, instead of the most popular current options, a mortgage broker will have lending information available from all kinds of institutions so you can choose what will work best.

Making The Process Run Smooth

An app may seem like a time-saver with all the information at your fingertips, but having a broker to look through things for you can provide a lot of comfort and clarity. While you do have the option of diving in on your own, having an expert to help you over the hurdles can go a long way.

There are so many apps out there that can make life a lot easier, but mortgage apps may not be the place to start when it comes to your mortgage process. If you’re currently considering your options, contact your trusted real estate professional for more information.

It can be a bit of a surprise if your home turns out to be valued at less than the purchase price offered, but this is the type of thing that can occur in an appraisal situation. While this can change everything from your contract to the amount of your down payment if your home has been appraised at less than you envisioned, here are some options you may want to consider.

Review The Appraisal Contingency Clause

If an appraisal contingency clause is built into the terms of your contract, this means that the terms of your contract can be re-evaluated and re-negotiated if an appraisal happens to come up short. While this is meant primarily to protect the homebuyer against a lower appraisal, it doesn’t mean that the terms of a new deal can’t be met for the good of both parties.

Get A Second Appraisal

It’s entirely possible that the initial appraisal is accurate, but it doesn’t necessarily hurt to get a second opinion in the event that the first appraisal seems too low. While you can work in conjunction with your lender to get a second appraisal, you may need to pay for it the second time around in order to get your initial purchasing price. Whether it happens to be good news or bad news, it can be worth the peace of mind to know how to proceed.

Consider A Lower Price

It’s less than ideal when your home is appraised for less than the purchase price, but this doesn’t have to be a deal breaker when it comes to selling it. While you may be able to get away with a higher price for your home in a hot real estate market, if things have cooled off, this can be an important time to re-negotiate the deal you’ve got. If a potential buyer likes your home and has already made an offer, they may be happy to decide on new contract terms.

It can be quite disappointing if your home is appraised at a value that is less than the offer you’ve received, but this doesn’t necessarily mean that you’ll have to put your home back on the market. Whether you and the potential buyer decide to re-negotiate or get a second opinion, there are options that can be beneficial for both parties. If you’re currently going through the appraisal process, you may want to contact your local real estate professional for more information.