Today I want to talk about debt and more importantly, how to get out of it! No one sets out to get into loads of debt, it just seems to happen to some and not to others.

Here are 7 traits of debt-free people that sets them apart from everyone else…

1. They are repulsed by debt – it’s not just a preference, it’s a passion. Some people simple hate the feeling of being in debt, so they avoid it like the plague.
2. Debt-free people are willing to sacrifice – if need be, they’re willing to give up eating out or wearing the latest fashion. They know that these sacrifices are temporary and will lead to better things like future prosperity!
3. They are goal-driven – Not only do they set a goal, they made detailed plans and take the necessary steps to make sure they get there.
4. These are patient people – Impulsive and impatient people tend to get into debt more quickly, but debt-free folks are content to wait until they have the extra cash flow to buy what they want.
5. They have more confidence – they don’t care that they may be dressed out of style, drive a beaten up car or still use a flip phone. Debt free people are more concerned with reaching their goals than what people think.
6. Debt-free people are responsible – taking responsibility for their actions – knowing that if they want something, they are going to have to pay for it TODAY, not next year, along with the interest.
7. Finally, debt-free people are not materialistic – they aren’t impressed by big shiny cars, or big houses. Their MO is to build long-term financial security, which will benefit them far more than fancy toys.

So, are you ready to change some of your goals and values to become debt-free? Giving up some of the things that bring you joy, can be really difficult, but the long term gains and peace of mind are worth every sacrifice!

Sincerely,
Kim

Have you ever wondered what your credit score is or how it’s calculated?

Your credit score is a three-digit number between 300-900 that lenders use to predict your creditworthiness. Credit reporting companies calculate your score based on your payment history, how much you owe, how long you’ve had credit and how often you apply for new credit.

In general, the higher your score, the less likely you are to become delinquent on credit. If it’s above 680, you’ll probably qualify for a standard loan, but if it’s lower than that, you may have trouble getting new credit.

If your score is lower than you’d like, here are 6 ways to raise it…

1. Check your credit report regularly – at least once a year and make sure your report agrees with your records. Correct any errors you notice as soon as possible and watch for signs of identity theft. There are two main credit reporting companies in Canada: Equifax and Trans Union and their reports can be different from each other, so it’s good to check with both companies – even though they do charge a fee. Free credit checks from Credit Karma are not accurate and may not reflect reports from Trans Union or Equifax. And, if you are thinking about applying for a mortgage, it’s especially important to check your report a few months in advance. That way, if your score is on the low side, you have some time to raise it.
2. Make sure your credit limits appear – If your credit card limits aren’t listed, your cards are assumed to be maxed out – and this damages your credit score. Ensure your limits are indicated and stay well below them to maintain a higher score. If you can keep your balances below 50% of your available credit, that is best. For example, having two credit cards with $3000 limits and balances of $1000 is much better than having one credit cards with a $3500 limit and $2000 balance. Make sense?
3. Pay ALL of your bills on time! I know that this can be difficult, especially in a pandemic, if your income has been impacted. However, if you have been falling behind, take care of past due accounts first – delinquent accounts reduce your score more than anything else.
4. Pay new liens or charge-offs (debts that your creditor thinks is not likely to be collected) – These are your next priority, however, if they are older than 24 months they have already done their damage. While you may still need to address these, your effort will be better focused on the other suggestions I’m discussing.
5. Don’t cancel your credit cards – credit scoring software totals your available credit limits across all your cards. If you close a credit card, suddenly you have a total lower limit which means your credit to debt ratio is higher. This drives down your score. An exception to this rule is if you know you don’t have self-control and know you will max out these cards and not keep up with payments.
6. Keep your old cards active – the longer you’ve had an account open, the longer your average credit history and the less likely you are to default on it. But it’s not enough to simply keep these accounts open, you have to use the card – even if it’s only a couple of times a year. Keep these old cards open and don’t apply for credit you don’t need – too many inquiries over a short period of time can reduce your score.

I hope you have found this helpful. If you have any questions about your credit score and want help, please call me and we can set up an appointment to chat about which options will work best for you.

Sincerely,
Kim

So, you’re thinking about buying a home! Maybe it’s your first home, maybe it’s your third…in any case, there are 5 MUST DO’S before you jump in that will minimize your stress and make this process as smooth as possible.

1. Most important – get all of your documents in order! There are necessary documents that must be submitted before a lender will even consider approving your loan. A lot of people get frustrated and confused trying to find all these docs, or wonder “why do I need to give you all of this?”. We want to show the Lender that you will be able to easily pay back the mortgage loan they give you. Your trusted mortgage professional is able to help you track down these documents, making this less stressful.
2. You have your docs in order. Now, let’s figure out how much money you have for a down payment. You will need at least 5% of the value of the house you want to buy, but 20% or more is better. If you put down less than 20%, you will need to get mortgage insurance. If you can put down 20% or more, you will not need mortgage insurance and you will pay a lot less in interest over the life of your mortgage.
3. It’s time to get a pre-approval. Pre-approved is different from pre-qualified, in that there is no guarantee that you will get a mortgage with a pre-qualification. To be pre-approved, you must fill out an application and submit your documents to a lender. Based on your current situation, the lender will agree to loan you an amount they trust you can repay. They will even guarantee your interest rate for 90 days. Next step?
4. Now that you are pre-approved, you have to make sure nothing drastic changes in your life. This means: don’t change jobs, don’t lease a car, don’t apply for another credit card. Anything that impacts your financial situation could nullify your agreement with the lender and you will have to start all over again.
5. Finally…you’re ready to start shopping. Pair up with a great Realtor who will have your back while hunting for your perfect house.

My biggest recommendation is to start early. In fact, I recommend that you meet with your mortgage agent at least 3 months before you want to buy. This will give you the time needed to get all of your ducks in a row and have a clear picture of your financial situation before setting out to find your dream home.

I’m here to help make your home buying experience as easy as possible. Please don’t hesitate to book a free consultation with me and start making a plan!

Sincerely,
Kim