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Apr 21 2017

Pre-Qualification vs Pre-Approval

With the spring real estate market underway you hear a lot about how simple getting a pre-qualification or a pre-approval can be. You’ll be told you can go online, fill in a few fields and are given a magic number. While getting a pre-qualification is a quick and simple process, it won’t leave you feeling as confident as a pre-approval with a licenced professional would.

Clients are often confused about the difference between a pre-qualification and a pre-approval so let’s talk about the differences and why getting a pre-approval is more worth your while.

During a regular pre-qualification a representative will ask you for details about your income, debts and give you a general idea of how much you could afford. It is a very basic analysis and it does not take into account your credit report which plays a large factor in whether you are approved or not later down the road when you find a property you want to put an offer on.

Getting a pre-approval done with a licenced mortgage agent involves a few more factors, however provides you the best results and allows you to go into a bid for a property with confidence. Your licenced mortgage agent will require your recent paystubs, a current employment letter and will pull your credit report to evaluate your credit history and beacon score. You’ll remember from a previous article 680 and above is where you would like to be. Other important factors such as property tax estimates and the cost of heating will also be taken into account. After looking at all this information they can give you a pre-approved amount and also provide you a letter if you wish. Often time Real Estate Buyer Agents will not work with you unless you can confirm you have been pre-approved for a mortgage. By knowing your pre-approved amount you won’t waste time looking at properties you can’t afford and can focus on finding your ideal home within budget.

If you have any questions about the pre-approval process or would like to get started on yours please reach out anytime.

Ericka Kodituwakku is your trusted Mortgage Agent in Ottawa specializing in first time home buyers. Contact her today for a FREE Homebuyers Guide and with any questions on the mortgage process.

Ericka Kodituwakku, Mortgage Agent
Mortgage Alliance Licence # 10530

(613) 413-2781
www.mortgagealliance.com/ErickaKodituwakku
ekodituwakku@mortgagealliance.com
https://www.facebook.com/KodiMortgage/

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Written by Dwania Peele · Categorized: Ericka Kodituwakku · Tagged: loan, mortgage, pre-approval, pre-qualification, Real Estate

Nov 19 2014

HOW TO REBUILD YOUR CREDIT AFTER IT HAS BEEN DAMAGED!

Amina

For the last few months I have been working with numerous other Rent-to-Own companies to help them qualify either potential tenant/buyers and/or potential investors.

One problem I have been coming across specifically is the lack of credit.  Too much credit can cause just as many problems as no credit or lack of credit.

Some people are in the enviable position of paying for every purchase with cash.  This is great – except for when it comes to establishing credit. The strength of your credit history determines if you qualify for a car loan, mortgage or even credit card and also at what interest rate you will pay.

Lenders will use credit reports and credit scores to quickly assess an applicant’s creditworthiness and to check their credit history.

For new or young borrowers or even borrowers who suffered damage to their credit and are now scared to have any credit, however, this poses a serious catch-22: How do you qualify for credit without a credit history, and how do you rebuild a credit history after it has been damaged.

Step 1 – CHECK YOUR CREDIT RATING
Credit bureaus will open a legitimate credit file in your name when a creditor (bank, credit card company or other lender) reports that you’ve had an active credit account for at least six months. All borrowers, not just first-timers, are encouraged to check their credit reports at least once a year and scan them for errors.  Mistakes can damage your credit score for years — up to 5 years for negative information like late loan payments and 7 years for a serious default like bankruptcy. If you find a mistake, contact the credit reporting agencies immediately and have the mistakes corrected.

Step 2 – PAY YOUR BILLS ON TIME
Whether it is a credit card, utility bill or any other type of bill, get into the habit of paying your bills on time. While your utility bills are not recorded on your credit bureau, lack of payment that goes to collections, is recorded and that can affect your credit score and your ability to get a good interest rate on a credit card.

Step 3 – GET A CO-SIGNER
Most lenders will allow someone with an established credit history to co-sign the credit application with you.  This can include your parents, older siblings or family friend. As with any financial transaction, you should be careful when co-signing for credit. First of all, make sure that your co-signer actually has a good credit history. If your older brother tends to exaggerate, don’t take his word for it. In the eyes of the lender, you are only as good as your brother’s credit score, so ensure that you see it in writing and you can only get that through their credit bureau report.

The most important thing to understand is that co-signing for credit means that both parties are now responsible for its timely repayment. If your dad co-signs your credit card application and you run up hundreds of dollars in late payment fees, both of your credit scores are going to take a hit.

Step 4 – START WITH A SECURED CREDIT CARD
Secured credit cards are a great way to establish credit or even rebuild your credit, when it has taken a hit.  Unlike regular credit cards, secured credit cards are tied to collateral in your bank account.  In other words, your credit limit equals your checking account balance or another amount required by the card company — although payments for purchases made with this card won’t be drawn from your bank account. If you have $500 in the bank, then your credit limit for the card is $500. If you try to charge more than $500 on the secured card, the transaction simply won’t go through.

Be careful of the distinction between secured credit cards and prepaid credit cards. Prepaid cards are not really credit cards. They’re actually debit cards in disguise. Because it’s not real credit, your activity on your prepaid card won’t be reported to the credit bureaus.

In addition, some secured credit cards carry higher interest rates and fees but with good history, most lenders will let you graduate to an unsecured credit card, which will increase your credit limit and help you establish a better credit rating.

Step 5 – APPLY FOR A SMALL LOAN
A loan is also known as installment credit, since you pay back the loan, with interest, in set monthly installments. A mortgage or a car loan is a good example of installment credit. If you want to make one of these major purchases someday, it’s a good idea to show lenders that you have some positive experience with installment credit.

Student loans are just one type of installment loan. Banks and other lenders allow you to take out small loans for just about anything: a used car, an appliance, a vacation or even a personal loan.

Where most people get in trouble is when they cannot make their monthly installment repayments, which in some cases leads to bankruptcy.  It is important to remember to only borrow what you can repay.

Step 6 – GET A GOOD JOB!
If you apply for a mortgage, salary history is one of the most important considerations that lenders will make. Usually, you’ll be asked to supply income tax forms for the past two years and current pay stubs as proof of your earnings.

When lenders examine a borrower’s employment history, they’re looking for stability. If you’ve been at the same job for years and your salary has continually risen, then you’re a good prospect for credit. If you constantly jump from job to job and your salary has been erratic, that puts you in a less desirable position for lenders.

Your employment history is also a good indication of your capacity to repay credit. A person with a low average annual salary wouldn’t have the same capacity to repay a large credit card balance than someone with a higher salary.

Step 7 – DON’T MESS UP!
One of the best ways to build good credit over the long term is to avoid the small and large mistakes that can stain your credit report for years.

Pay all of your bills, loan installments and credit card payments on time. Not only will you pay a fortune in late fees, as most credit cards charge over $30 for late payments – but lenders will raise your interest rates for future credit.

Avoid bankruptcy at all costs; it’s the credit equivalent of death. Bankruptcies will mar your credit report for 7 years. Keep in mind that letting a debt go into collections is just as damaging as it also stays on your credit report for 7 years.

Establishing your credit can be done with due diligence and also making regular payments on time.  Rebuilding your credit can also be done after it has been damaged – make sure to take great care and seek advice if you are unsure about the necessary steps.  It will be time well spent!

The following links will assist you with establishing your credit.
There are two Credit Reporting Agencies:
-Equifax Canada – www.equifax.ca
-TransUnion – http://www.transunion.ca

You can read more about it here at Office of Consumer Affairs – Government Agency http://www.ic.gc.ca/eic/site/oca-bc.nsf/eng/ca02178.html

Amina Mohamed is a Mortgage Agent and Real Estate Investor who believes in helping other investors look at all of their options when it comes to finding a mortgage.  She writes a weekly blog on her own website and for other investors as well and is keen on helping people fix their credit issues so that they too can become homeowners and possible real estate investors.  Amina can be reached through her website at https://www.aminasmortgageservices.ca  or on Facebook here or on Twitter here

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Written by Dwania Peele · Categorized: Amina Mohamed · Tagged: account, Amina Mohamed, bank, bankruptcies, bills, business development, Business Woman, buyers, Canadian Small Business Women, co-signer, credit, credit application, credit card, credit cards, credit history, credit rating, credit report, equifax, Government Agency, installment, investors, lender, loan, mortgage, office of consumer affairs, pay, Real Estate, rebuild credit, Rent-to-Own, salary, secured credit card, small business development, tenants, transunion

May 29 2014

Easy Steps to Kick-Start Your Business … Practical Tips for Success!

 

yvonne

You’ve been thinking about it, but something keeps stopping you from starting your business? And by now you’ve most likely come across many articles such as this on ‘How to …’. If the truth be told, giving advice is sometimes easier said than done. I myself can testify to that. However, here are a couple of practical tips you can easily implement today to help you raise finances and kick-start your business.

Do your research. Research simply put is knowing your market and customers. How do you know your market? Read trade magazines and newspaper, visit industry seminars or conferences, check online or take a drive round your business geographic area and see what similar services and products exist, sample some of these services or products, ask suppliers about the market, and ask potential customers who they currently patronise. All these and more will help you build a broad picture of the market before you entering.

How do you know your customers? If they will want your products or services and what exactly it is they want? As many people as you come into contact with and see as potential customers, ask them questions. When you go to an event, take the opportunity ask people pertinent questions in a conversation-like manner. Develop a questionnaire, and email to all your family, friends, colleagues and former colleagues, ask them to email to their network of people, and voila! you have conducted your research. However, do bear in mind that the bigger your investment risk and the more complex your business model, the more structured your research should be.

For more information on business research check this article Business Research Demystified

Raising finance. The usual advice is personal savings; loans from family, friends or the bank; government funding; grants; venture capitalists etc. But what if these sources don’t quite cut it for you? You don’t have the savings, you can’t get a loan, or you fall outside the qualifying criteria for grants and funding. Here are some additional avenues and tips;

  1. Trade by barter. Offer your services, products or skills in exchange for goods or services that will help build your business i.e. you need to develop your website, and you are a marketing consultant, why not offer some free consultancy to the web designer in exchange for your website development
  2. Cut down on your personal overheads, which may include; downgrading your car or moving back to live at home saving on the monthly rent, reduce your spend on social outings such as cinemas, suspend club memberships (except of course it is required for effective business networking purposes)
  3. Start your business with incremental steps such as piloting your business idea, or starting with one product or service, and as the business starts bringing in returns, you can then consider expanding and implementing more plans and ideas
  4. Consider alternatives to reduce your start-up cost  If you are low on capital. This includes working from home without needing to lease office space, converting your garage, shared office space, virtual assistants, start with offering your services and products online etc.
  5. Consider crowd funding or sourcing capital from customers or suppliers. With some services pr products you could actually seek to get upfront payments or deposits from clients, which could then be used for your initial capital requirements. A successful example is that of a hosting company who offered potential clients a lifetime hosting package if they would pay a certain amount upfront to help fund the start-up of the business.

These tips are not all-encompassing, and there are many things that go into having a successful business such as a business plan. There is no running away from it either now or later in your business life cycle.  If you need help with your business plan, also read Business Plan Demystified, Writing Your Business Plan Once And For All.

Get a free eBook to get started on your goals: http://eepurl.com/xeDrf

Yvonne is a Change Consultant, Coach and Speaker who is passionate about working with Individuals, Entrepreneurs and Organisations to implement change, drive results and achieve their goals.   She can be reached at:   www.facebook.com/oliveblueinc,www.twitter.com/oliveblueinc, www.oliveblue.com

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Written by Dwania Peele · Categorized: Yvonne Ruke Akpoveta · Tagged: barter, business, business development, business networking, business plan, Business Research, Canadian Small Business Women, career coach, coaching, consultancy, crowd funding, entrepreneur, funding, grants, incremental steps, know your customer, know your market, loan, OliveBlue Inc, personal overheads, raising finance, research, start your business, start-up cost, success, venture capitalists, Yvonne Ruke Akpoveta

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