If you have $28,000 worth of credit card debt how long would it take you to pay it off making minimum payments?

Did you know all my lessons start with a story?

It was a warm Friday night that I peddled my bike up to the big metal gate topped with barbed wire.   I knew that gate would be closing soon, so I had to do something to get back home without going around the whole base.








I followed the fence line down a bit and hide my bike in some grass behind a shrub.  I then walked back to the road and the gate thinking I was so smart for planning ahead.  In the past, I realized that getting yourself over a fence, with a bike on your back is so much harder when there is barbed wire on the top, you are wearing shorts, and you may or may not have had a pint of Jupiler.    





I was headed to this little place called “My Friends” which often was an off base meeting spot for many of us brats.   Half way between the gate and the little public house, I heard some loud noises which I immediately identified as fireworks, and everybody loves fireworks!   I picked up my pace so I would not miss the show. Moments later I saw in the bush a group of people running. I walked over to them and asked what was up, as I knew them all.   

 They said someone called the Military Police (MP) on them for the fireworks so they were running away.  Just as that was stated I heard a screech, a big flood light hit me like it was day again.   

I was like a deer in head lights.  Flutterpated so to speak.   My peers in the bush, shouted.  "RUN!  RUN! RUN!.."  What did I do? 

I ran. 



 I climbed over the fence that was separating us, and ran into the bush with the flood light on my back.   Sprinting was so easy back then will all the training we did every day.   What was not so easy?  The poison ivy, and stinging nettles and the branches that burned and scratched my legs as I sprinted through the trees till there was no more light from the MP's.

My legs were cut, and I was curdled in a ball in a bush listening to see if they were were being chased. When the coast was clear, I worked my way back to my bike, and it was gone!  The MPs had taken it according to an innocent bystander.   I went to a buddy’s house changed, and went down to the police station to collect my bike which by this time it was 2 in the morning.  

The hour long question period held all sorts of accusations.  They loved questions like, Why did you run?  What were you hiding?  Did you have anything illegal on you like fireworks or drugs?  The receipt of the bike claimed was mailed to my house, and the pick-up time was highlighted for my parents attention, and they did not seem too happy. I think I was in a little bit of trouble.

What does this have to do with saving money on your mortgage?  Two things.

1) If you do what you’re told before thinking things through you could be at risk of very negative consequences. Like signing a mortgage renewal notice from the bank without checking all the rates.
2) Going with the flow, and not changing or asking yourself why or is the a good move could get you into hot water.

Lets pretend for a second you are not very special, and just completely average.  I know hard to imagine.  But, please just imagine here ok?  

Do you know what the average level of consumer debt is?   

First, we take the national average of consumer debt of $28,853 and for the record this is non-mortgage debt!   Things like credit cards, car loans, lines of credit fall into this category.

Second, we average a rate on these credit facilities.  For ease of numbers we can use the average credit card rate of 19.25%

Third, using these numbers we figure out what we would pay per month to pay off just the minimum payments.  This would take you 364 payments to get it paid off.

Forth step is to figure out how long you would take you to pay it off.  We would be sitting at 30.33 years to get it down to zero.
You would have paid in total around $31,943 in interest as well.


What am I saying?  Two things. 
Pay down your principle as fast as possible by making more than your minimum payments when you can.

AND/OR

If you have existing equity take that consumer debt and roll that debt into your mortgage, then take the money you would have been paying on those debts and put it on  your mortgage. 

Why?  If you are paying that high interest rate you are paying most of your payment to interest and not to the principle.  You could save money by consolidating to a lower rate freeing up your cash flow to pay down more on your mortgage!   Lets do the math to make sure it works for and how much money we can save.  I have my calculator ready, give me a call.  I will do the numbers for you for FREE!  Email me.  Call me @ 4038078779.  Or even text if you are not in the mood to talk!

By Michael Richmond

Are you sure your mortgage is portable? If so, do you still qualify for your mortgage?

Who has not had second thoughts about deciding a mortgage term?  Are you trying to decide how long you want to live in your home before you move?  If you really had to move, did you know you can take your mortgage with you if you get the right product?  Enough with my questions, let's get them all answered as this week we discuss porting a mortgage. 

Two Facts:  

• When porting a mortgage you have to re-qualify with today's lending guidelines.
• You will want to consider porting a mortgage if your mortgage rate is lower than what is available today.

You can save money by making sure if you want to port your mortgage in the future you can.  Want to guess how many buyers make it to the 5 year mark of their mortgage term?   Just about 30%!!!!   Just remember that if rates go up higher than what you have, you don't have to refinance at that higher rate.

One of those couples that did not make it to year 5, I had to find another solution for as they could not port their mortgage like they wanted. 

The reason?  

They did not qualify for the mortgage in today's environment due to the recent rule changes.   This makes me almost as frustrated as watching a law enforcement officer talk on his cell phone while driving as the credit has already been granted why not let them move it! ??!  Did the risk change that much? I would humbly suggest only the rules have in most cases.

Since many people do not know the basics about porting a mortgage here are a couple things you might not be aware of when you have sold your current home and purchased a new one.

What is porting my mortgage?

Porting your mortgage is you transferring your mortgage from one property to your new home.  You are transferring the features, benefits and the rate.  

Why would you want to port your mortgage?

Since porting lets you transfer your rate to this new home its a way to save money if you have a lower interest rate than what is available right now.  You can also avoid prepayment charges that are applied when breaking a closed mortgage early, and depending on how that is calculated and where you are in your term this can be a big savings.

Will my lender let me move my mortgage?

Maybe.  Some lenders will not allow this to take place.  Make sure you tell your mortgage broker or specialist that you want privileges not just the rock bottom rate.   Less frills, means a lower rate, but the savings of taking some frills far outweigh overlooking them.  Since you don't know what will happen in your life, ensuring the mortgage is portable is in your benefit.  All porting clauses are different at each bank- So Ask!

For qualification of porting your mortgage, it's not just about the mortgage amount or the property value of the new place.

• It's about mortgage amortization.
• It's about tighter mortgage guidelines.
• It's about more rules from CMHC for mortgage qualification.
• It's about a Line of Credit interest calculation.
• It's about how they calculate variable income like commissions.
• It's about the stated income programs changing.
• It's changing rules on Rental income.
• It's about rising and more accurate heating costs.
• It's about how they verify income.

With mortgage amortization limits being lower, and lenders criteria being every increasingly tighter on what they can refinance.  It effectively means you have to re-qualify in most cases for the mortgage before you can move it over depending on where your mortgage is.

If you have changed employers or changed the way you are paid, be prepared for far more questions than you might have been asked previously.  This goes double if you are now self-employed.

Additionally the paper chasing you had to do when you first applied might have to be replicated and you might even need a couple more things this time as things have been changing in the last three years very fast.

Its all about this specific point in time. While your situation might not have changed, their lending criteria might have become much stricter.

Should I port my mortgage if I am moving?

  There are many things that go into the equation like:

• Current rate of mortgage Vs. best mortgage rates available now and what will save me the most amount of money.
• Payout penalties on your Mortgage.  Is it based on Interest Rate Differential, Posted rates, bond yields or discounted rates?

Even if you require a larger mortgage amount and you still want to keep the low rate we can blend the existing fixed rate with new funds at the current rate to get a better over all rate.

There are many factors that go into it, and every case is different.   If you have any doubts or want your numbers run to make sure you qualify ask a mortgage professional about this.  Plan ahead is always something I preach from my soap box!

This was not my topic I had scheduled for this week.  Rather a knee jerk reaction to an incident that happened recently.  It can save you money, so I deemed it worthy enough to be shared.    You do know how hard it is to make the world of finance fun don't you?  Personally I think saving money is having fun, and sharing my knowledge gives me a sense of purpose and joy.

If you want to opt in for my email list, or would like to give me any encouragement I would really appreciate the feedback.  The only way I will get better is if you keep giving me course corrections.  
  
After all, none of my clients pay me a cent for what I know, do, or share nor would I charge anything for my services.   I do get a token of appreciation here and there, and the occasional bottle of fermented red grapes.   Which any Calgary Mortgage broker would get a sense of satisfaction from!

Thanks for helping, sharing, and the likes.

Dependably yours, 

Michael

Heard about the doctor with perfect credit who was declined for a mortgage?

This week we are talking about Character, and Credit report surprises when you apply for a mortgage in Canada.

Did you know that some banks are now pulling credit reports from both credit reporting agencies when you submit a mortgage application? 

What does that have to do with saving you money?  I know that most of the readers are here because they are asking:





“How do I pay off my mortgage faster?” To them I say hang on, this is important too!    This is one of the tips that can save people thousands, as it could effect their interest rate on their mortgage!   It is not just about being on a budget to free yourself from mortgage debt.   





Most of my mortgage hacks won’t cost you anything and save you thousands after all.  The concepts discussed here will help give you a new way to look at the big picture.   

I have seen numerous clients totally shocked when I give them the news that they have a collection that is unpaid.   For most, this means that even if you have paid your bills perfectly something could jump up and bite you.  Take the case in point one of my clients who we will call "The Doctor" 

This doctor thought his credit was perfect.  

We did the application, I pulled his credit and that was fine.  When it got to the lender they declined it due to an unpaid collection on his account that was not on the report we pulled. 

He did not even know it was there, rather it was from something associated with some medicine he special ordered online and was not even a real debt. 

We had to resubmit to another lender, that did not pull that credit report, however the delay in the two submissions cost us a little on the interest rate. 

"The Rig Hand" is another client who was declined at one of my lenders because despite his perfect credit, something had fallen off his credit report that was still showing on the banks records as unpaid and written off.  We had to move him to another lender fast to get his conditions of financing met on his purchase and keep the home he wanted to buy.

The character part of the five C’s of Credit also means you should appear stable prior to the mortgage application.  

NO BUYING A NEW TRUCK, QUADS, big toys, or renewing a lease to a much higher payment.

NO CHANGING JOBS FOR A YEAR BEFORE, or less if you are getting a raise in the same industry.

NO MOVING AROUND, AND AROUND, and AROUND!

Many people ask how do they come up with my credit score?

Often they want to know where did that 679 score, or 534 score come from, and think it may be wrong.  My mortgage management course does show the exact percentages that make up your score. 

The FREE Package also includes:

• What impact does over Capitalization have on your total score?
• When to close a trade line?
• What are the lenders looking for on your credit?
• How do I get a better credit score?
• What should I pay off first if I am short on funds?
• What is the quickest way to repair my credit?
• What if it should not even be there in the first place?

You have all heard  the story about the couple that paid off their mortgage 10 years early, then put that extra money into their retirement savings package, and are now living on an acreage outside the city far sooner than their friends, and peers.  

You want to be them, or want to be able to be them.   We all know it’s never that easy, but with some help, and effort we can show you the way to get there as fast as possible.   That is what I am passionate about, helping people reach their goals.  That is why I became an independent mortgage broker in Calgary -I love helping people accomplish these goals.

If I put it all down here in one week would you read it?   I have offered them all in my package for free, yet very few of the thousands of people reading my blogs have asked!   As a gentle reminder, if you venture to my website, or email me, you can get the whole package right away! 
www.you-mortgage.com or  Email Me     Of course it will not have the fun factor of my blog.