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Archive for the ‘Financial Insights’ Category

How to Buy a House With Flawed Finances

house white picket fence

Houses are freaking expensive. Probably the most expensive thing you’re going to buy. And they can be a pain to pay for if the banks don’t like your credit. But Fox Business has a couple good tips to help you out.

How to Buy a House With Flawed Finances

The housing market is showing signs of recovery after the housing crash, but many of the homeowners who were foreclosed upon during that time or forced to short sell have found their credit and finances heavily damaged.

Some of those people may never want to own again, but for those who want to give it another shot, there are a few things to keep in mind this time around. The answer to whether you can buy a home with flawed finances is simple. Yes, you can buy a home. But there are some steps you can take to give yourself the best chance at keeping your home for the long run.

Build a Solid Emergency Fund

This is by no means a requirement for buying a house, but it’s one of the smartest things you can do before the homebuying process even starts. Potential homeowners should save up at least three months’ worth of expenses (including mortgage) in order to weather a job loss, family illness or other financial emergencies.

And there’s a reason it’s called an emergency fund: that money should not be touched unless there’s a true emergency. A lot of homeowners were living paycheck to paycheck during the last housing bubble, and when they lost their jobs, they soon also lost their houses since they couldn’t make the monthly payments.

Work on Your Credit

If you have a spotty credit history, then your best option might be to just wait it out. While you are waiting to buy another home, you should work on improving your credit score. There are plenty of things you can do to work on your credit right now.

  • Pay your balances in full every month. Lenders like to see a low utilization rate and debt-to-income ratio.
  • Don’t apply for any other lines of credit. Too many inquiries is a red flag for lenders, since they don’t want to lend money to people desperate for credit.
  • If you’re going to close cards, don’t close any of your oldest ones. Since average age of accounts is a large aspect of your score, you could hurt your score by closing longstanding accounts.

Talk to Your Lender

A lender will be able to give you the best idea of why you can’t get a loan. If you’re constantly getting denied, even after taking all these steps, you might want to check with another lender. Some lenders will still loan to people with low credit scores, but they will charge a higher interest rate in order to account for the risk.

One alternative to traditional financing is to see what your government has available. Many governments have cheaper down payments options but they come with some sort of monthly mortgage insurance payment.


Should You Skip the RRSP Contribution and Pay Off Your Mortgage First?

There are more than a few ways to get yourself to retirement. RRSP’s are a great investment, but so is clearing your debt before you stop earning a regular income. So what should you focus on? Thankfully The Globe and Mail has a great article to help you decide.

The big push is on to convince Canadians to load their extra cash into registered retirement savings plan (RRSP) investments before the Mar. 3 deadline. But though it may seem as though contributing is the only option when it comes time to decide what to do with the money, it’s not.

Many financial planners, accountants and other experts suggest there’s an even better way to work toward a well-heeled retirement down the road: Pay off the mortgage first. And do it as fast as you comfortably can.

That’s exactly what Rock Lefebvre, vice-president of research and standards for the Certified General Accountants Association of Canada, in Ottawa, did when he was younger. Rather than invest in stocks, bonds or mutual funds, he developed a financial strategy that meant paying off his mortgage early. To this day he still advises that most people eliminate consumer debt and then go on to tackle mortgage debt before investing.



Consumerology Report

Consumerology Report

What Canadian consumers are thinking and doing in 2013.


The Cost of Learning in Canada

The Cost of Learning in Canada

Getting a university education is becoming less and less affordable. Since 1990, average tuition fees in Canada have increased three times more than the rate of inflation. As classes begin this fall, which provinces are telling students to take a hike?


Federal Budget 2013 Scorecard

Federal Budget 2013 Scorecard

CGA-Canada made a number of recommendations to the federal government in the areas of government finances, taxation, skills & training, as well as growth & innovation.
Here is how Budget 2013 measure up from CGA-Canada’s perspective.


Mean Debt per Debtor

Mean Debt per Debtor

Canadian Mean Debt per Debtor – a whopping $114,400

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