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- 1. Evaluate your credit worthiness to figure out your credit rating.
Your credit rating is your record of borrowing and repayment over
the years.
Without a credit rating very few financial institutions will lend
you money.
Your credit rating is established when you establish a bank account,
apply for a credit card, or apply for a loan .
Good and Bad information about how you handle your finances may
be on your file. This information is held for approximately seven
years at a number of credit bureaus.
When you pay all your bills quickly, and pay off loans on time
your credit rating will be good.
When you miss payments and / or make late payments and have an
over abundant of credit cards and borrow more than you can afford,
you will establish a bad credit rating and possibly have difficulty
getting financing.
A good idea is to get a copy of your credit report from the credit
bureaus (possibly for a nominal charge) and verify its accuracy
and correct any errors .
Tip: The less credit cards you own the better the chances are
for acquiring better financing. Cancel and close accounts of credit
cards that you never use.
- 2. Evaluate your financial lifestyle.
Figure out the amount of money that have on a monthly and yearly
basis. Make sure that you able to cover the costs of your daily
living expenses and try to establish an amount of money that you
feel comfortable paying on a monthly basis for your financing.
- 3.Plan ahead for the costs involved:
A. If you are planning to buy a home or property.
Once you have found a home that you would want. Try to discover
all the costs involved in the home buying process. The appraisal
fee(approx. $200 ), the home inspection fee(approx$500 ), Land
survey or title insurance fee (approx. between $225 to $900),
legal costs for notary or lawyer, taxes such as the land transfer
tax, the welcome tax and the gst, fire insurance (approx. $500),
new home warranty (if you are purchasing a new home), Mortgage
application and processing fees and closing adjustments.
B.If you are refinancing to consolidate debts. Always determine
all your costs involved from professional fees involved to taxes
and insurance.
C.If you are financing a renovation make sure that you consider
the costs of added insurance, permits and possible added unexpected
problems which may arise.
D. If you are financing the purchase of other investments make
sure that the cost of professional fees are covered as well as
any tax implications that may be involved.
- 4. Get financing, The Mortgage.
A. Choose a term with rates that you are comfortable with.
Go with long term -if you feel the rates are rising and you can
manage a locked in rate for that amount of time i.e. 5, 7, or
10 year
Go with Short term -if you feel the rates are going to decrease
i.e.6 month convertible or variable rate
B.Choose the features of a mortgage that will help you pay back
the loan faster. Choose from Monthly, biweekly or weekly payments,
closed or open mortgages: open mortgages you can repay without
penalty (6 month or 1 year only), closed mortgages (6 months to
10 years only) repayment of closed mortgages comes with a penalty
of approx 3 months interest , prepayment which allows you to pay
a little extra and receive a bit of savings on your mortgage payment,
amortization period: the longer the amortization period the more
interest that will be paid, increase your regular payment, double
up on payments, early renewal option, portable mortgage, assumable
mortgage, mortgage life insurance
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