Saturday, November 19, 2005

Horoscope -

Horoscope -

MSNBC - Harry Potter

For the Harry Potter Fans MSNBC - Harry Potter

Thursday, November 17, 2005

Adjustable Rate vs. Variable Rate Mortgage - What is best for you?

The Adjustable Rate Mortgage is quickly becoming one of the most popular options for consumers. There is a tremendous spread between the prime interest rate and a fixed long term mortgage. This spread can be as much as 3% and with the average mortgage in Canada approaching $130,000, this difference in interest rates can be tremendous.

How does an adjustable rate mortgage work? The adjustable rate mortgage is quite different than traditional mortgages in that long-term mortgages are priced according to Bond market, while the adjustable rate mortgage is priced in accordance with the prime interest rate.
The longer the term, the higher the interest rate. This is not always true but generally speaking it does hold true. By selecting a longer term mortgage you are agreeing to pay a higher interest rate for the term. It is similar to paying an insurance premium to guarantee the interest rate but the insurance premium is the higher rate.
An adjustable rate mortgage gives you total control. Your mortgage would renew every 3 months at a fixed interest rate. If you change your mind and decide to convert to a longer term, you would be guaranteed a minimum discount off the banks posted rates.
The variable rate mortgage allows you to have the best of both worlds. Short term pricing with the ability to lock in your rates at any time.
There are over 70 variable rate or adjustable rate mortgage products in the Canadian market right now. Let us explain your best mortgage options.

Below is just one of the options available:
Prime less .80% for the mortgage term
Maximum 95% Loan To Value
Semi-annual compounding
Five year term delivered in automatically renewed three months fixed rates periods
Prior to conversion open for repayment on payment of three months interest.
Monthly, weekly, or bi-weekly payments available
15% and 15% prepayment/payment increase
Ability to convert to a 3, 4, or 5 year term at any time at a guaranteed discount
The discount off Royal Bank Prime is guaranteed for the renewal periods
Guaranteed 1% discount off banks posted 3, 4, or 5 year rate a time of lock in

Rachelle Czartorynskyj

Wednesday, November 16, 2005

Your Credit Score - What you should know

Your credit score is an important indicator of your creditworthiness.
The higher your score the better chance you have at getting credit extended you. While many lenders use bureau scores to help them make lending decisions, they also take other aspects into consideration.

Lenders will use your credit score to determine if you are likely to pay your bills and also help them place you with the appropriate repayment plan. For example if you have claimed bankruptcy in the past they might place you at a significantly higher interest rate.

The following is used to calculate your beacon score:

Payment history- This indicates if you have made your payments on time
Amount owed - Comparison of what you owe to your credit limits with various lenders
Length of time - This indicates how long you have had credit accounts
New Credit - Shows how often you are looking for new credit
Type of credit - Considers the type of loans you have - car loans, lines of credit, credit card balances
I can't stress the importance of keeping your credit clean and checking your report periodically. This could mean the difference of thousands of dollars when you apply for any kind of credit including a mortgage.

Common mistakes that are made:
From my experience I have seen time and time again, where a client has applied for credit through more than a few lending institutions because they keep getting turned down. This is a common mistake, what they don’t know is that this significantly impacts their credit score negatively. When you have too many inquiries you are basically shooting yourself in the foot. You are guaranteeing yourself a higher interest rate and increased cost for lending. The next lender can see that you applied at "so and so's" and they turned you down. The best way to approach this situation is to find out why you where turned down the first time. Finding out can be a little difficult if you don’t know how to go about it. Most of the institutional lenders will be very vague in explaining why you where turned down, they have policies in place to limit the information they can give out to their clients. There is a way around this, check your own credit score through Equifax periodically to make sure everything is up to date and correct.

You can get your credit report from one of the two credit Bureaus in Canada

They charge a small fee of $14.50 CDN but well worth it to save you frustration down the road. Make sure that your credit report shows what accounts have been closed, what has been paid out and your report is current. After all these things are taken into consideration when you are applying for credit. If you need help understanding your credit report, believe me it is confusing to most at first, contact your local credit counselor and I am sure they would be happy to walk you through it.

This link might be helpful, it is a non- profit credit counseling service

What can I do to improve my credit score?
Pay all your bills on time. Paying late, or having your account sent to a collection agency has a negative impact on your credit score.
Try to keep your balances under your credit limit. Keeping your account balances below 75% of your available credit may also help your score.
Avoid applying for credit unless you have a genuine need for a new account. Too many inquiries in a short period of time can sometimes be interpreted as a sign that you are opening numerous credit accounts due to financial difficulties, or overextending yourself by taking on more debt than you can actually repay. A flurry of inquiries will prompt most lenders to ask you why. However, most scoring formulas will not penalize you if, for example, you are shopping for the best mortgage rate or the best car loan.
The long and short of it is that if you keep your payments up to date for 6 months - 1 year you have a better chance for getting approved for credit, lower interest rates and all around better deal.

Bankruptcy, collections = bad credit
Having bad credit is not the end of the world
If you happen to have any previous collections or even a past bankruptcy the best way to get back up is to re-establish your credit.

There are a couple of options here Home Trust

Good luck and have a great day,

Rachelle Czartorysnkyj Your Mortgage and Finance Specialist www.MortgageSourceCanada.Com

Tuesday, November 15, 2005


Many people dont even consider buying a home because they believe they cant afford it. In fact most people continue to rent and pay for someone elses mortgage. Homeownership is more affordable than people think in fact in most situations it is more affordable. Some factors to consider would be that rent increases over time but a fixed term mortgage does not, mortgage payments remain more stable over time.

So lets think about it, by owning instead of renting your wealth will increase as you gain more home equity. It makes more sense to stop renting and start buying. Now dont get me wrong, buying a house is a big committment. The house must be kept in good condition, renovations, repairs and insurance expenses all add up. But if we think of it as an investment into increasing our net worth we see the value of owning over renting. Another reason people are stuck renting is that the banks have turned them down.

How can I qualify for a mortgage when my bank has turned me down?
The answer is very simple, banks are very strict in their underwriting and require you to have A credit in order to qualify for a mortgage. Which means that you have credit that is perfect with no room for mistakes. Is that realistic? So most of the time if your credit is even a little less than perfect you will hear that you cant qualify for a mortgage.

Lets take a look at some alternative options to getting a mortgage...
Mortgage Brokers have the ability to shop the market for you, they submit your application to various institutions instead of just one. This makes the qualifying process faster, easier and you get a better rate. A mortgage professional will look at your application and decide where you would fit best, keeping the rate low while meeting your objectives. Unlike banks your applications dont get turned down automatically because you have had a few late payments. A Broker manually considers your application and places it accordingly. But it doesn't stop there... a broker will always present you with your options and they can go back and try with another lending institution if your application doesn't fit their criteria. There are so many more options when you explore this avenue, most brokers have access to private lenders which makes your options even more diverse.

What about fees? Mortgage Brokers generally dont charge any upfront fees unless your specific situation requires a committment fee.

Why do most people go to there own bank?
Because most people are not aware that there are other options available to them. Getting turned down by a bank is frustrating and time consuming, you would wonder why they didn't go to a Mortgage Broker in the first place. I will let you decide, do the research and make sure you feel confortable with your Mortgage agent after all an agent only gets paid when they have closed the deal for you. The BANK pays them. A bank lender is paid on salary or hourly so you can see how there would be little incentive to go above and beyond if your situation does not qualify for a conventional mortgage.

My recommendation would be to explore your options and do a little research, you will be glad you did. A difference in rate could mean a savings of $5000/year or more. That could mean extra money for redecorating or a even a long deserved vacation...

Rachelle Czartorynskyj

Quote of the day!

"The only person who succeeds is the person who is progressively realizing a worthy ideal. That's the person who says, 'I'm going to become this' - and then begins to work toward that goal."

Tuesday, November 01, 2005

Home Equity Loan or Home Equity Line of Credit?

Home equity loans and home equity lines of credit continue to grow in popularity. According to the Consumer Bankers Association, during 2003 combined home equity line and loan portfolios grew 29%, following a torrid 31% growth rate in 2002. With so many people deciding to cash in on their home's equity value, it seems sensible to review the factors that should be weighed in choosing between out a home equity loan (HEL) or a home equity line of credit (HELOC). In this article we outline three principal factors to weigh to make the decision as objective and rational as possible. But first, definitions:

A home equity loan (HEL) is very similar to a regular residential mortgage except that it typically has a shorter term and is in a second (or junior) position behind the first mortgage on the property - if there is a first mortgage. With a HEL, you receive a lump sum of money at closing and agree to repay it according to a fixed amortization schedule (usually 5, 10 or 15 years). Much like a regular mortgage, the typical HEL has a fixed interest rate that is set at closing for the life of the loan.

In contrast, a home equity line of credit (HELOC) in many ways is similar to a credit card. At closing you are assigned a specified credit limit that you can borrow up to - not a check. HELOC funds are borrowed "on demand" and you pay back only what you use plus interest. Depending on how much you use the HELOC, you will have a minimum monthly payment requirement (often "interest only"); beyond the minimum, it is up to you how much to pay and when to pay. One more important difference: the interest rate on a HELOC is adjustable meaning that it can - and almost certainly will - change over time.

So, once you've decided that tapping your home's equity is a smart move, how do you decide which route to go? If you take time to honestly assess your situation using the following three criteria, you will be able to make a sound and reasoned decision.

1. Certainty or Flexibility: Which do you value the most?! For many borrowers, this is the most important factor to consider. Your home is collateral for either type of home equity borrowing and, in a worst case scenario, it could be seized and sold to satisfy an outstanding unpaid loan balance. People do remember the double-digit interest rates of the early 1980's and, for many, the mere prospect of interest costs on a variable-rate home equity line of credit rising rapidly beyond their means is reason enough for them to opt for the certainty of a fixed rate HEL.

>From the borrower's perspective, "certainty" is the main virtue of a fixed-rate home equity loan. You borrow a specific amount of money for a specific period of time at a specific rate of interest. You repay the loan in precise monthly installments for a precise number of months. For many, knowing exactly what their future obligations will be is the only way they can borrow against the equity in their home and still sleep at night.

A home equity line of credit, in contrast, is short on certainty but long on the virtue of flexibility. With a HELOC you borrow funds on an irregular schedule that meets your needs at adjustable interest rates that can change quickly. Loan repayment is also flexible: you typically are required to make only relatively small "interest-only" monthly payments on a HELOC. However, you have flexibility to make any size payment above the interest-only minimum or payoff the loan at your will.

2. Do you need money for a one-time, lump-sum payment or will your cash needs be intermittent over several months or years? Home equity loans are best suited for one-time payment needs (a good example is consolidating debt by paying off several high-rate credit cards at one time). This is because at the time you close on a HEL, you will be provided with a lump-sum check in the amount you've borrowed (less closing costs). While it may be empowering to have that much money handed over to you, be humbled by the fact that you will immediately begin incurring interest costs on the entire balance.

When you close on a HELOC, on the other hand, you will be given a checkbook (or debit card) that you use only as needed. So, for instance, if you're embarking on a multiyear home improvement project for which you'll be writing checks at varying times, a HELOC might be best. Similarly, a credit line is probably best for paying sporadic college expenses. Interest on a HELOC is only charged from the time that your HELOC checks clear the bank and only on amounts actually disbursed…not the value of the entire credit line.

3. Do you possess sufficient financial self-discipline for a HELOC? Financially-disciplined borrowers can have the best of both worlds…almost. By taking out a HELOC but paying it back according to a self-imposed fixed amortization schedule they can enjoy both the flexibility of borrowing cash only as needed and the certainty of a fixed repayment schedule. HELOCs are typically more efficient in terms of lower closing costs and a lower initial interest rate. Also, a HELOC may be somewhat easier for borrowers to qualify for since the low, flexible monthly payments mean debt to income ratios that loan officers look at are more favorable for the borrower.

The one big factor not within the HELOC borrower's control is the interest rate (see #1 above). Interest rates will almost certainly change over the life of a HELOC. This means that a self-imposed "fixed" amortization schedule may need to be periodically refigured. Numerous internet sites provide free, powerful mortgage calculators that can assist you in preparing updated amortization schedules whenever needed. Some lenders are also meeting borrowers' demand for greater certainty by providing HELOC products that can be converted (for a fee) into a fixed rate loan when the borrower elects.

As mentioned earlier, HELOCs are much like credit cards and the similarity extends to spending temptation. If you are a person who has trouble keeping credit card debt under control and you haven't taken steps to change habits, then a HELOC probably isn't a smart choice.

You might be wondering which home equity product most people actually choose. According to the Consumer Bankers Association 2002 Home Equity Study, home equity lines of credit account for 28% of consumer credit accounts followed by personal loans (23%) and regular home equity loans (16%). In terms of dollar value, home equity credit accounts (HELs and HELOCs together) represent a full 75% of consumer credit portfolios with HELOCs having a 45% share of the market and HELs a 30% share. Of course, the popularity of HELOCs may subside if interest rates continue to rise.

Whichever home equity product you decide on be certain to shop for the best deal possible. The market is extremely competitive and there are many non-traditional options, including on-line lenders and credit unions, which should be considered in addition to your local bank.

By Tim Paul