Credit Score Myths for First Time Home Buyers

I continually meet new clients who don’t know their credit score and have never been educated on how their credit score is impacted by what they do.  Here is a reproduction of a recent article on credit scoring…I hear these often!

4 credit   score myths busted

Your credit score is a three-digit number ranging from 300-900 that tells future lenders how risky it is to lend you money based on your   history of making debt payments.
There are many misconceptions about what it takes to keep your score high.  Henrietta Ross, the CEO of the Canadian Association of Credit (CACCS) to help us sort fact from fiction:

Myth 1:   You must use major credit cards to build a good score.

Truth: If you’re unable to obtain a major credit card, there are other ways to build your credit history. Making regular payments on installment loans such as a car lease can positively affect your score, as do department-store cards and secure credit cards, which require a cash deposit in the amount of the credit   limit.

Myth 2:   You can’t make up for mistakes such as late payments.

Truth: It   takes time, but your credit will become positive as you build consistency with timely payments, Ross says. How much time it will take depends on a   number of factors, including how long the ‘late payment’ has been on your   record and how long you’ve had the debt.

Myth 3:   Paying cash boosts your score.

Truth:   You need to use credit in order to demonstrate your ability to make payments.  Using credit at least once every 30 days and making payments on time will keep you in good standing, says Ross.

Myth 4: I will not qualify for a mortgage if I’ve had a poor credit score.

Truth:   Lenders look at your entire financial picture, including your assets, available cash flow, and debt-to-income ratio. They’ll also review your housing expense-to-income ratio, which is a comparison of your expected   monthly mortgage payment with your gross monthly income.

If you are arranging a new mortgage and don’t know your credit score, please contact me, education is provided for free!

Source: News Canada

 

First Time Home Buyer Angst in Winnipeg

First Time Home Buyer Angst in Winnipeg

 

 

 

 

 

 

 

 

 

So you want to buy a new home?

Here are some important considerations when you enter the housing market in Winnipeg:

1)   You will face competitive offers. No matter how much you say you won’t bid large or write unconditional offers, many still do. The supply of homes in the first time home buyer range up to $250,000 are in demand so be prepared. No matter how much you prepare, when you are out there looking and have missed out on offers on other homes all logic and rationale will go out the window unless you are very patient.  Having the right realtor is something that you have control over so take the time in the selection.  Here are some great questions you can ask your realtor.

2)   Land Transfer Tax, the hidden surprise. Imagine buying your first home for $250,000 only to find out when you meet with the lawyer a week before your possesion date that you need $2720. for land transfer tax. This money goes directly to the Province of Manitoba to transfer the title from one name(s) to another. If this seems like a bit of a tax grab, you are right!

3)   While we are on taxes, in 2012 the Province of Manitoba introduced provincial sales tax on any mortgage default insurance premium. On a $250,000 home with a 5% down payment you can expect to pay $452.38 in sales tax. So first time buyers, the province is your pocket for $3172.38 and you haven’t even moved in yet. We continue to be one of the most heavily taxed provinces when it comes to purchasing a home, how are you feeling now?

4)   Property Disclosure Statements.  If you don’t feel that you need to know more about the property, here is an example of a home owner in Winnipeg who had a major surprise.  This happened on Christie Road in Winnipeg so it can happen anywhere.  Here is an example of a homeowner in Saskatoon who was able to legally go after losses relating to a basement that had water.  The Property Disclosure Statements were brought in to protect would be homeowners on any potential known problems with a home.

In the end, get professional well qualified advice to help make your first home buying experience the best possible.