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Rebuilding Credit And Improving Your Credit Score
Everything you were taught about credit was probably wrong, but rebuilding credit doesnt have to be complicated. Thats a bold statement to start off with but its probably true. Generally speaking, we arent taught how to handle money properly. Not by our parents Or our teachers We had to learn the hard way. And if we werent taught how to handle our money well, what odds did we have when that charismatic person offered us our first credit card in college andgave us just enough rope to hang ourselves with? Have I got a deal for you! You need to know the rules of the game if youre ever going to win. If you want to get a handle on your credit today, you need to understand the rules of rebuilding credit first. The Nine Rules of Credit Rule #1: Always pay your bills on time Rule #2: High balances equal lower scores Rule #3: You must have established credit Rule #4: Some types of credit are better than others Rule #5: What you dont use, you lose Rule #6: Be careful with joint credit Rule #7: Applying for credit lowers your score Rule #8: Closing your credit account lowers your score Rule #9: Dont let someone else wreck your credit Check out the book The Nine Rules of Credit by Richard Moxley as well as Richards website for a more in-depth look into each rule. In this post, we are going to talk about the first two rules and how most people ignore them to their detriment. Rebuilding Credit: High Balances Equal Lower Scores Most people understand that if they dont make your payments on time, their credit score will go down. Thats not a great sign of creditworthiness after all. But the majority of Canadians dont realize that the balances theyre carrying have as much of an impact, if not more. If you loaned a friend a $1000 with the expectation that they would pay you back over time and theystarted missing their payments, do you think you would be eager to loan them more money? What almost no one realizes is that carrying a balance over 50% of your credit limit is also a negative factor. Thats right, you could be making regular payments to your credit card, on time every time, and your credit score will still go down every month! Think of the scenario with your friend again. Lets say you know how much your friend earns (just like the credit card company knows how much you earn) and you have an agreement that your friend can borrow up to the $1000 from you and they have to pay it back at regular intervals, but they can always borrow more, up to the $1000 limit. Youve determined that the $1000 is the maximum amount youre comfortable with risk-wise and your friend opts to borrow the full $1k. A few months go by Theyve made the payments each month, but they always end up borrowing the money again and floating around the $1000 mark. How would you feel about your friends ability to pay you back in whole? What are your odds of getting the full thousand back if you needed it today? This is an example of what your credit score ultimately is. Its a number that measures how companies offering credit feel about you and how risky you are. Having a balance over 50% of the limit on any of your credit cards is actively making yourcredit worse. Read More: Avalanche Method Vs. Snowball Method Generally, the credit bureaus like Equifax and Transunion dont care about how much you owe. It could be a $1000 or it could $100 000. The consider the ratio of how much you owe compared to your limit a much better indicator of how risky you are. So, if you want to start rebuilding credit and see yourscore start rising each month instead of gradually declining, get your balances to below the 50% mark and keep them there. If you can pay off the balances each month, even better. We will cover the remaining Rules of Credit in the next few articles. In the meantime, you need to know where you stand. You can access yourcredit score for free by going to Credit Karma or directly from Equifax and Transunion. Until then, if you want a mortgage professional to take a look at your situation and work on finding you a solution give us a call today at 519-772-7615. Originally published at https://ardentmortgages.ca/rebuilding-credit-and-improving-your-credit-score/
Canadian home sales activity eases in October
Ottawa, ON, November 15, 2018 Statistics released today by the Canadian Real Estate Association (CREA) show national home sales declined between September and October 2018. Highlights: National home sales fell 1.6% from September to October. Actual (not seasonally adjusted) activity was down by 3.7% from one year ago. The number of newly listed homes eased 1.1% from September to October. The MLS Home Price Index (HPI) was up 2.3% year-over-year (y-o-y) in October. The national average sale price slipped by 1.5% y-o-y in October. Home sales via Canadian MLS Systems edged back by 1.6% in October 2018. While activity is still stronger compared to the first half of 2018, it remains below monthly levels recorded from early 2014 through 2017. (Chart A) Transactions declined in more than half of all local markets, led by Hamilton-Burlington, Montreal and Edmonton. Although activity did improve modestly in many markets, it was offset by a decline in sales elsewhere by a factor of two. Actual (not seasonally adjusted) activity was down 3.7% compared to October 2017 and in line with the 10-year average for the month. While sales were down y-o-y in slightly more than half of all local markets in October, lower sales in Greater Vancouver and the Fraser Valley more than offset the rise in sales in the Greater Toronto Area (GTA) and Montreal by a wide margin. This years new mortgage stress-test has lowered how much mortgage home buyers can qualify for across Canada, but its effect on sales has varied somewhat depending on location, housing type and price range, said CREA President Barb Sukkau. All real estate is local. A professional REALTOR is your best source for information and guidance in negotiating a purchase or sale of a home during these changing times, added Sukkau. National sales activity lost momentum in October, said Gregory Klump, CREAs Chief Economist. In part, this reflects waning activity among some urban centers in Ontarios Greater Golden Horseshoe region and the absence of an offsetting rise in sales in the Lower Mainland of British Columbia. Even so, the balance between sales and listings in these regions points to stable prices or modest gains. By contrast, the balance between sales and listings for housing markets in Alberta, Saskatchewan and Newfoundland indicates a weak pricing environment for homeowners who are looking to sell. The number of newly listed homes edged down 1.1% between September and October, led by the GTA, Calgary and Victoria. The decline in new supply among these markets more than offset an increase in new supply in Edmonton and Greater Vancouver. As for the balance between sales and listings, the national sales-to-new listings ratio in October came in at 54.2% close to Septembers reading of 54.4% and its long-term average of 53.4%. Considering the degree and duration to which market balance readings are above or below their long-term average is the best way of gauging whether local housing market conditions favour buyers or sellers. As a rule of thumb, measures of market balance that are within one standard deviation of their long-term average are generally consistent with balanced market conditions. Based on a comparison of the sales-to-new listings ratio with the long-term average, about two-thirds of all local markets were in balanced market territory in October 2018.
Most First-Time Homebuyers Spending All They Can Afford
Millennials have made up a significant portion of homebuyers in recent years and based on the 2018 Mortgage Consumer Survey, they continue to do so, representing just under half (49%) of first-time buyer respondents. Although this is a decrease from 60% in 2017 and 58% in 2016, Millennials continue to influence and shape the homebuying and mortgage process. Heres more of what we learned about Millennials and first-time buyers as a whole, powered by the 2018 Mortgage Consumer Survey. What does the typical first-time buyer profile look like? Forty percent are married, 80% are employed full-time and about one-quarter (26%) have a household income between $60,000 and $90,000. A strong percentage of them were born outside of Canada, with 22% identifying as newcomers to Canada. Mortgage professionals can help meet the unique needs of newcomers with the support of CMHCs homebuying information which is available in 8 different languages. The top 2 reasons first-time buyers bought a home: they wanted to get a first home and they felt financially ready. Although certain urban markets continue to exhibit high house prices and other barriers to entry, the survey found that 61% of first-time buyers bought a single-detached home. In fact, single-detached home was the top housing type purchased in all regions across Canada, except in British Columbia where condominium apartment was the most popular housing type. The vast majority (85%) of first-time buyers spent the most they could afford on their home, compared to 68% of repeat buyers. This indicates that first-time buyers, including Millennials, may be stretching themselves financially to purchase their home. When it comes to the down payment, savings from outside an RRSP was the main source for first-time buyers. This suggest there is an opportunity to further educate first-time buyers about other options to help fund their down payment, such as the Government of Canadas Home Buyers Plan (HBP). To get assistance with the mortgage process, first-time buyers contacted, on average, 2 brokers and 3 lenders. First-time buyer satisfaction levels with mortgage brokers and lenders remains high. However, mortgage professionals could further increase satisfaction levels by conducting more post-transaction follow-up and by providing clients with more information on closing costs, house purchase fees, interest rates, and steps involved in buying a home. CMHCs Step by Step guide is a valuable tool for mortgage professionals to share with homebuyers to ensure they feel confident throughout the entire homebuying process. https://www.cmhc-schl.gc.ca/en/housing-observer-online/2018-housing-observer/most-first-time-homebuyers-spending-all-they-can-afford