9 Mistakes That Kill Your Credit

Credit can be a tricky thing — some behaviors are obviously harmful to your credit, like paying late (or not at all), or maxing out your cards. But some mistakes aren’t all that obvious, and in fact some actions that might seem beneficial can actually have a terrible impact on your credit. we’ve compiled the biggest mistakes to help you determine what might be killing your credit.

1. Closing Credit Cards Accounts

Some of you may wonder why closing credit cards is number one on this list — even above missing payments. In fact, closing credit cards is almost as bad of an idea to boost your credit scores as missing your payments, but it is also a clear number one on the list of credit myths. It is perhaps the most common piece of misguided advice that consumers are given when they ask, “How can I increase my credit score?” But here’s the reality: Closing credit card accounts will not increase your credit score, even if you don’t use the cards anymore. Here’s why:

A closed account will fall off your credit report sooner than an open one -Lenders and credit reporting agencies have to follow certain rules determining how long information can remain on the credit report. In most cases negative credit information will remain on your credit files for seven years from the date the debt first became delinquent. Positive credit information can remain indefinitely, however, closed accounts in good standing are usually removed from the credit report within ten years after closing. And while credit scores continues to benefit from the positive history associated with an account for as long as it remains on the credit report – open or closed – once that account is removed from the credit report all of that good history is gone.

Why is this a bad thing? Because a credit score favors a long credit history, as the length of your credit history counts for about 15% of a FICO score. Consumers with a younger credit history tend to be seen as more risky borrowers than consumers who have had credit for many years. So hang onto those old accounts if you can by leaving them open.

You will hurt your “utilization” measurements - In the short run this is significantly more important than your closed accounts eventually falling off your credit reports. “Revolving utilization” is the amount of your revolving credit card limits that you are currently using. For example, if you have an open credit card with a $2,000 credit limit and a $1,000 balance then you are 50% “utilized” on that account because you’re using half of the credit limit. This measurement makes up almost 30% of your score, and is almost as important to your credit scores as making your payments on time. As this percentage increases, your credit score decreases.

2. Missing Payments

Missing payments is number two on the list because it doesn’t take a credit expert to tell you that missing payments is a bad thing. It’s common sense, unlike closing a credit card account. The explanation why missing payments is a huge mistake is also fairly obvious. Credit scores look at your credit history to see how you have managed your current and past credit obligations in an effort to predict how likely you are to miss payments in the future. The most powerful “predictor” of future late payments is having missed payments in the past. There are three ways that missing payments can hurt your credit scores. They are:

• How Frequent Are Your Late Payments? – If you miss payments frequently then you may be penalized more severely than someone who misses payments infrequently.
• How Recent Are Your Late Payments? – Since scoring models are designed to predict how you are going to pay your bills in the future, the more recent the late payment, the worse it is for your score. For example, if your late payments occurred in the most recent two years, then statistically you are more likely to miss payments in the next two years than someone without any recent late payments.
• How Severe Are Your Late Payments? – The severity of your late payment also plays a big part in your credit scores. Consumers who have missed payments by only a few weeks and then bring their payments up to date are likely to score better than consumers who have payments that are 90 days past due or worse. If you have late payments, it is in your best interest to do all that you can to bring them up to date as soon as possible.

3. Settling With Your Lender on a Past Due Account

“Settling” is a term used in the consumer credit industry that means accepting less than the amount you owe on an account. For example, if you owe a credit card company $10,000 but you can’t pay them the full amount, then they will likely make you a deal for less than that full amount. They have “settled” for less than the full amount, which is likely much less than you contractually owe them. This may seem like a good idea because you are happy that you didn’t have to pay the full amount. However, the lender will report that remaining amount to the credit bureaus as a negative item. This remaining amount is called the “deficiency balance.” A deficiency balance is considered just as negatively by credit scoring models as any other severe late payments. If you can arrange a deal with your lender so that they will NOT report the deficiency balance then that will be your best course of action. If they will not agree to this, then work to find a way to pay them in full or your credit will suffer for 7 years.

4. Over-Utilization of Your Available Credit Card Limits

Having high balances on your credit cards are likely to cause your credit scores to go down (as we talked about in Mistake #1). In this situation, your best bet would be to use your cards sparingly and pay them down as much as possible each month. If paying your cards off every month is unrealistic, try your best to reduce that percentage as much as possible, and your score should slowly work its way back up. There is no magic target to shoot at, but it’s safe to say that the lower the percentage the better.

5. Excessively Shopping for Credit

Every time you fill out a credit application, you are giving the lender permission to access your credit reports. When they access your credit reports they automatically post what is called an “inquiry.” The inquiry is a record of who pulled your credit report and on what date. Federal law requires that the inquiry remain on the report for 24 months, however, credit scores only look at inquiries less than one year old.

Inquiries are used by credit scoring models to determine whether or not someone is shopping for credit. It is a statistical fact that consumers who have more inquiries tend to be higher credit risks than consumers with fewer inquiries. Thus, the more inquiries you have the more points you may lose on your credit scores.

6. Thinking That All Credit Scores Are the Same

Credit scoring is already a confusing enough topic to understand. Add to the mix that there are as many different types of credit scores as there are soft drinks, and it gets really confusing. The most commonly used credit score is a credit bureau risk score. A credit bureau risk score is designed to assist lenders in predicting whether or not a consumer will pay their bills on time in the future.

There are many different places where consumers can purchase their credit reports and credit scores, however, not all of the scores being sold are the same. On the surface this might not seem like a big deal, but it certainly can be. For example, if you are in the market for a new car and you purchase an “educational” (sold to consumers, but not used by lenders) or other type of credit score ahead of time for your own information, the score you get might be different from the score the lender is looking at. Every lender has different lending standards, so the same score may earn you a good deal with one lender but not with another.

7. Thinking That All Credit Scores Predict the Same Thing

Adding to the confusion in number six above is the fact that there are models that predict other things than general credit risk. Scoring models can be built to predict almost anything including:

• Insurance Risk – That’s right. Some insurance companies use credit scoring models to predict whether or not you are likely to file an auto or homeowner’s insurance claim. A poor insurance score may mean that you will pay higher premiums.
• Response Rates – If you receive pre-approved offers of credit in the mail everyday, it’s not random. You have been selected from hundreds of millions of other consumers to receive that offer because you have a “Response Score” that indicates you are more likely to respond to that offer than someone else.
• Revenue Potential – Credit card companies also use revenue scoring models to predict whether or not you will use their credit card and, hopefully, generate revenue for them.
• Collectability – For those of you who have collections on your credit reports, collection agencies assigned to collect those past due debts may be scoring you to determine whether or not you are likely to repay your collection debt sooner than someone else.
• Bankruptcy Potential – Bankruptcy scores predict the likelihood that you will file for personal bankruptcy. A poor bankruptcy score could cause your credit applications to be declined.
• Fraud Potential – Amazingly sophisticated, these models actually can predict whether or not a purchase you are trying to make with a credit card is likely to be fraudulent or not. What’s even more amazing is that it takes about 2 minutes to complete your check-out at a store, and in this short amount of time you may have been scored to see whether or not the retailer should accept your credit card.

8. Not Understanding Your Rights Under the Fair Credit Reporting Act

This act, commonly referred to as the “FCRA,” is a list of credit reporting rules and regulations that govern lenders and the credit reporting agencies. You should become familiar with your rights — including the “permissible purposes” under which your credit reports can be accessed, your rights to dispute errors on your credit reports, and your right to a free copy of your credit reports from each of the three credit reporting agencies via www.annualcreditreport.com. See the Federal Trade Commission site for more info.

9. Not Knowing That You Have 3 Credit Reports & Corresponding Credit Scores

Most consumers understand that they have a credit report. However, many do not know that they have three credit reports compiled and maintained by three separate and competing companies called “credit reporting agencies.” These companies are essentially repositories that store your credit history and sell it to lenders and consumers. The three largest of these companies are: Equifax, Experian and TransUnion.

Each agency maintains credit files on more than 250,000,000 consumers. They do not share credit information with each other, so you are likely to have a unique credit report at each of these agencies. In turn, each of these credit reports can be used to calculate many different credit scores. Do not assume that your credit reports and scores are all the same

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

How Does Your Mortgage Compare?

A new study by the Canadian Association of Accredited Mortgage Professionals details the state of homeownership, mortgage debt and more.

Close to four in 10 Canadians carrying a home mortgage took extra steps to pay down what they owe this year, according to new research released yesterday by the Canadian Association of Accredited Mortgage Professionals (CAAMP). “Our study shows that 38% of Canadians made some additional payments on their mortgages,” said Jim Murphy, president and chief executive officer of CAAMP in an interview with me yesterday. “They increased their payment, increased their frequency or made a lump-sum payment.”

Sixteen per cent reported increasing the amount they paid (over and above their minimum monthly payment), 17% made an additional lump-sum payment and 8% increased the frequency of their payments. Thirty-eight per cent said they did one or more of these.

The report is a treasure trove of data on what Canadians owe, the terms they've negotiated on their mortgages and more. Seven highlights:

1. Canadians went fixed rate this year. No less than 82% of new mortgages signed between January and October 2013 (when the study was conducted) were fixed rate. Variable and adjustable rate mortgages were issued to 9%. The same percentage went with combination mortgages. Among those who refinanced or renewed, 66% went fixed rate, 24% went variable or adjustable rate and 10% went with a combination.
2. Almost four million homeowners are mortgage-free. There are a little more than 9.5 million homeowners across the country. Almost 60% – 5.6 million – carry a mortgage and 3.9 million don’t.
3. Home Equity Lines of Credit (HELOC) remain popular. Almost a quarter – 2.3 million – of Canadian homeowners have a HELOC. Among those with mortgages, 1.7 million owe money on a HELOC. Among those without mortgages, the figure is 650,000.
4. We’re taking equity out of our homes. More than one million homeowners took some amount of equity out of their home this year. Canadians added roughly $36 billion to their mortgages and $23 billion to their HELOCs.
5. On average, Canadians own about two-thirds of their homes. The average equity position is 66%, according to a CAAMP estimate.
6. Ottawa’s 25-year limit is having an effect. The maximum amortization period for an insured mortgage has been 25 years since July 2012. So it is no surprise that 81% of homeowners carry a mortgage with an original contracted period of 25 years or less. The average amortization period is 21.8 years.
7. Canadians are taking advantage of lower rates. Relative to all mortgages, Canadians who signed a new mortgage or renewed their mortgage this year have done better than the national average. The average fixed rate issued this year was 3.65% (3.18% for 2013 purchases; 3.17% for 2013 renewals). The average variable or adjustable rate was 3.05% (2.85% for purchases; 3.21% for renewals). And the average combination rate was 3.7% (4.19% for purchases; 3.54% for renewals). About 1.5 million Canadians renewed their mortgage this year.

This all comes at an extraordinary time for the residential real estate market in Canada, which continues to have an outsized impact on the broad economy. According to a study by Fitch Ratings, housing is 21% overvalued.

Policymakers face a well-publicized dilemma. Steps have been taken to discourage Canadians from taking on too much mortgage debt. At the same time, Ottawa is trying not to stifle economic growth.

“One of the reasons the Canadian economy is slowing is that housing is not contributing as much as it used to,” said Murphy. “Every new condominium is worth about 1.5 jobs. Every new low-rise property is worth about two jobs. We’ve already had a 10 to 15% drop in housing starts. And we’re going to see less activity because new sales are down. So the economic contribution of housing is going to be even less.”

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

How Our Financial Calculators Can Help You in Creating a Budget

The main purpose of a budget is to determine where your money is coming from and where you want it to go. For a budget to show the picture clearly, you need to gather financial statements, record your income sources, list your monthly expenses, categorize your expenditures and make necessary calculations to suit your goal. Creating a budget can be boring and tedious if you don’t enjoy collecting data and crunching numbers. Since the process requires a lot of calculations, you can make the task easier, faster and more accurate by using our financial calculators.

We have five different financial calculators to help you perform all your finance related calculations fast, easy and accurate. Each of these calculators is designed for a specific purpose. However, you can use all of them to assist you in creating a budget. Here is how each can help you create a budget.

Student Budget Calculator:

This calculator is designed to assist students to create their budget when attending a college or university. It allows you to input your income and expenses in categories such as school expenses, professional fees, food and groceries and living expenses. The budget automatically assumes the school year to be of eight months starting from September and ending in April.

How much do you owe?

When creating a budget, it is very important to take into account every penny you owe the bank or any other lender. This calculator lets you enter all your credit cards, loans, other existing installment loans (such as car loan), interest rates and payments. It helps you get a clear picture how much you owe and how long it will take to be free of debts.

Mortgage Loan Calculator:

If you have an existing mortgage or planning to take out one, then this calculator will come in very handy. Once you enter the mortgage amount, interest rate, amortization period and other relevant data, it generates an amortization schedule for your mortgage. It lets you see at a glance your principal balance and how much interest you will have to pay. If you are planning to make any prepayment, it even shows you its impact on your mortgage, including the total saving you will be able to make on the interest. It helps you state your mortgage loan clearly in your budget.

Savings Goal Calculator:

One of the main purposes of creating a budget is to save money by prioritizing the important expenses. This calculator helps you do just that. Once you enter the number of years to save, your savings goal, the amount you have in current savings, savings per period, expected rate of return and the expected rate of inflation, it shows you graphically the current status of your saving and how far from your goal you are.

Line of Credit and Loan Payments Calculator:

Loans and repayments play a big part in every budget. This calculator lets you enter the loan amount, annual interest rate, term in months and other relevant data and gives you a clear picture of your loan or line of credit payment.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Watch Your Wallet With These Personal Finance Tips

Does facing your personal finances leave you a bit bewildered? There are others out there that feel the same way you do. A lot of people find finances to be overwhelming since they were never shown how to manage them. The piece that follows offers some tremendously useful advice on the subject of personal finance.

Steer clear of products or schemes that promise you overnight success. Many people have fallen into the get rich quick schemes located on the Internet. You should certainly learn; however, carefully watch how much time and energy you put into learning. You do not want to spend so much time learning that you are unable to work and earn a living.

Develop a better plan for the future by keeping a journal of all of your expenditures. However, if you put this into a notebook that you can just shut and put away until you deal with it later, you may find it just gets ignored. Try to put up a whiteboard in the office or bedroom that you can list your expenses on. By doing this, you’ll probably see the board much more often, which will ensure it remains on your mind all day.

It may be helpful to keep a small envelope in your purse or bag whenever you go shopping. This way, you have a place to store all receipts that you receive. Keep this information available as a record that you might need at a later date. It will be good to have them on hand, so that you can verify all the charges on your credit card statement and contest any that are incorrect.

Don’t fall for the scam that an organization can guarantee you a clean credit report. A lot of companies out there make vague statements about how they will repair your credit history. But what worked for someone else may have no bearing on your credit issues. There is no way to guarantee success in credit repair and if anyone says otherwise, they are being dishonest.

If you bought a defective item, chances are you will notice it within a few weeks only. Businesses make a lot of money off of extended warranties but they are not always useful for the end user.

Avoid large fees when investing. Most brokers have hefty fees for the services that they render. These fees can really take a chunk out of the money you make. Do not use brokers who take big commissions, and stay away from funds with high management costs.

Purchase your lean meats and other protein sources in bulk. This will provide you with both a cost and time savings. If you use everything you purchase, buying in bulk can be much cheaper. If you cook meals for the rest of the week, it can save you a lot of time.

Your car and house are very likely going to be your biggest expenses. Paying the interest on these things often eats up a lot of money each month. Try to pay them off quickly by making extra payments or applying your tax refund toward the principal.

Sometimes your score will actually drop for no good reason. This can happen without any errors on your part. If you keep up on your credit report your score will go up!

Credit Card

Use compact florescent bulbs in place of incandescent bulbs where you can. Your new CFL bulbs will significantly reduce both your carbon footprint and your energy bill. As an added bonus, your CFL bulbs will last longer than the average incandescent bulb. Buying bulbs less frequently can help you save money.

Stop buying things with your credit card if you cannot pay it off. Go over your expenses and eliminate things that are not vital to your survival. Try to find another form of payment for the things that you really cannot live without. Finish paying off your balance before using the card again, and then try to pay your credit card balance in full every month to avoid future troubles.

Make a few extra bucks by having a garage sale and clear out some space at the same time. Let all of the neighbors know about the upcoming garage sale – one might even offer to sell items for them in exchange for a small commission. Garage sales offer a lot of latitude when it comes to making money.

Do not take out more student loans than you need this will cause a huge problem down the line. Private schools can be very costly to pay off.

Student loan debt has fewer consumer protections than other kinds of debt, so make absolutely sure that you can repay any student loan debt you accrue. Getting into that private school and being unsure of your future will more than likely put you into debt for a very long time, so be very careful about this.

Flexible spending accounts can be used for a variety of expenses. Flexible spending accounts can help reduce your medical or childcare expenses. These accounts let you set aside a specific amount of pretax dollars for these expenses. There are conditions involved though, so speak to a tax professional.

Your FICO score is effected largely by credit cards. When you maintain a large balance from month to month, your score will be lower than it should. Fortunately, you can start increasing your score rapidly by paying off your cards. Always try your best to keep your balance below 20% of the credit card’s maximum credit limit.

Personal Finances

Don’t waste money on lottery tickets. Put the money in your savings account instead. This is a better option because it will grow over time versus being wasted on a gamble.

As you know, many people are insecure with their personal finances, leading to eventual money problems. Reading this article should have shown you ways to prevent this from happening to you. Utilize the tips above to better your personal finances.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

33 Proven Ways to Reduce Personal Debt

Making Cents of the Dollars
33 Proven ideas to make your budget work and get your Debt under control:
1. Re-shop auto, home and life insurance to see if you can bring down your payments.
2. Downgrade your cable package, or get rid of it entirely.
3. Disconnect your home phone if you have adequate cell service at your home. Or downgrade to a cheaper package.
4. Buy and sell clothes at your local consignment or shop at Goodwill.
5. Have a massive garage sale. (If you’d rather be out of debt than have an item, choose to sell it to help you get you there.)
6. Advertise higher quality items on Craigslist, Facebook, or your local newspaper to get better prices.
7. Focus on buying mostly sale items at grocery store or generic brands to reduce your cost.
8. Use a grocery store awards program to earn money off gas.
9. Cancel unnecessary expenses like magazine subscriptions, newspapers, manicures, pedicures etc. Anything that could be considered a “want” instead of a “need” should go until you are out of debt or greatly decrease your debt.
10. Go to the matinee movies instead of paying full price (and skip the concessions).
11. Or better yet, use the Red Box for at-home movie entertainment.
12. Get temporary work or seasonal part time work to boost your income.
13. Read books from the library or take a few trips to Barnes & Noble to complete a book.
14. Buy your most expensive groceries in bulk at Coscto: meats, breads, cheese, produce, paper products. Establish a monthly grocery budget for the additional needs at regular grocery stores.
15. When eating out, skip the soft drinks and stick with water. Skip the extras too (dessert, etc.).
16. When eating out, share a large entrée or have small appetizers instead of the costly meal.
17. Plan your errands more efficiently to conserve gas.
18. Find friends that you can trade services with…haircutting, handyman, photography, babysitting, pet-sitting.
19. Give home-made gifts, baked goods, or service IOU’s rather than expensive presents.
20. Boxed cereals are expensive; switch to oatmeal, eggs or fruit for more nutritional and financial bang.
21. Call the utility companies and get on a budget plan to give you more consistency with expenses each month.
22. Set a spending limit with family at Christmas and/or draw names.
23. Use exercise videos, walking or hiking instead of paying for the gym.
24.If your haircut is too expensive, find a less expensive stylist or see if your hairdresser will cut you a break on price temporarily – ours did.
25. Say “no” to hosting and/or attending in-home parties where you feel pressure to purchase.
26. Does your family live nearby? Once a week dinners with mom or dad saved us a meal out of our shopping budget. Additionally, it usually led to leftovers and our parents looked forward to our visit each week.
27. Make your coffee at home instead of buying it each day.
28. Pack your lunch – not once a week, but regularly.
29. Make extra dinner servings on purpose to have leftovers for lunch.
30. Our dentist advised us we could skip the fluoride treatments if we were using a daily dental rinse – which we did… and bought on sale.
31. Program your thermostat for savings on heating/cooling when you’re not at home.
32. Tempted by certain retail stores? While digging out of debt, avoid window shopping these places where you've failed to control your impulses before.
33. Give.

Many may say, “What? I need my manicure!” or “My kids will only eat box cereals!” But trust me. If you are serious about climbing out of debt and changing your life, the only thing you need is a roof over your head, clothes on your back and gas to get to work to bust your way out of this.

Plus, take comfort in knowing that you don’t need to eliminate these things forever. Personally, I look forward to hiring back our housekeeper and treating myself to a few pedicures next summer. But until we are debt free and have a fully funded emergency fund, we’ll be focusing on using the dollars we bring into our home to set us up for a lifetime of success.

Many wonder about Number 33 (Give) because it seem counter intuitive to most of us. One thing we never stopped doing – even in the worst of times – was giving. We always gave money to our church, our favorite charities, and foundations that we believe in. It’s easy to say “I can’t give. It’s not in my budget.” But if we’re looking for a lifetime of success and influence – not just the latest gadget or status symbol – how can we afford not to give? Giving reminds us that we can live for a purpose greater than this world and all the temporary treasures it offers. It helps keep everything else in perspective. So pick and choose from our list above – do one or two or everything on the list – but don’t leave out number 33. We can attest from firsthand experience, it will radically transform your life!

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Consolidating Debts Can Be Effortless With One Of These Tips

Consolidating debts applications can be a wonderful alternative in case you are in fiscal stress, however they are not the same. In order to choose the best one, you want a standard comprehension of precisely what the applications can offer, what to take into consideration and what phrases are in your very best monetary attention. This article offers you most of that information and facts. Read more to find out more.

Do your homework in your possible debt consolidation loans firms.

Not each one of these businesses is right for your situation. Some usually are not even trustworthy—there are tons of “take flight by night time” operations in this particular marketplace. Don’t get caught in the trap. Check out the firms completely before making any judgements.

Find a debt consolidation agency that hires competent staff members.

Advisors needs to have a qualification from a professional business. Will be the firm genuine with the support of well-known and very trustworthy institutions? This can help you kind the great organizations in the bad.

Find out whether a debt consolidation loans organization will take your specific condition into mind.

A one size fits all technique generally is not going to operate when it comes to these sorts of financial matters. You need to deal with someone that will take the time to determine what is going on along and work out how best to street address the specific situation.

You can pay off your debt by borrowing dollars underneath the correct terms.

Talk to financial loan providers to find out the costs that you simply be entitled to. You may have to set up security, such as a car, to find the dollars you need. You should make sure your loan is paid back promptly.

Recognize why you are in this article to begin with.

Consolidating debts is only 50 % the combat. You must make changes in lifestyle for so that it is a highly effective means to boosting your monetary well-being. It means going for a tough look at your credit history and bank accounts. Determine what resulted in this circumstance.

With regards to handling debt consolidation loans, make sure that you chill out.

This practice is quite typical and can help improve your financial situation when all is claimed and carried out. You have the opportunity to lower fees each month, reduce great curiosity, get rid of late costs, placed a stop to people harassing phone calls, and ultimately come to be debt cost-free. You can bounce back with this, nevertheless, you should always keep relax and take note of your payment plan.

Lots of debt consolidation loans specialists offer home equity loans but do not present these items as a result.

If you work with your own home as being a security for a mortgage loan, you will be trying to get a residence value bank loan. This may not be a great choice unless you are self-confident about spending this loan again promptly.

For those who have a number of bank cards, consider merging your entire accounts into one.

You can save a great deal on your passions and charges if one makes one particular big transaction once a month rather than giving dollars to several credit card banks. Handling the debt is going to be much simpler in the event you blend your accounts.

Have a loan to support consolidate the debt.

Though, this is dangerous for that relationship should you never pay for the money-back. This might be your only opportunity to get a keep in your condition, but handling the debt with debt consolidation will only function if you’re capable of handling the relation to new debt consolidation financial loan.

It is usually much better to try to restoration your debts with out delivering on extra debts, say for example a debt consolidation personal loan. When you can discover ways to pay off whatever you are obligated to pay, even should it be with the help of a credit history consultant, get it done! You will save time and expense.

While engaging in a consolidating debts means a smaller bill for the short term, do not forget that furthermore, it means your instalments will pull on for considerably longer. Is it possible to pay for that in case one thing were to take place later on? Some individuals discover that repaying one of their smaller outstanding debts performs greater for these people. Think about your choices.

As has become stated, not all debt consolidation loans applications are appropriate for everybody. To discover the a single which fits your life-style, assess the advice in the following paragraphs once again. Think about it cautiously when analyzing your options, and ensure to continue having a advanced level of caution. In this way, you can expect to come up with a great fiscal decision which will help to help you get out of debt.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

U.S. Government Shutdown Driving Canadian Mortgage Rates Lower, For Now

The U.S. government shutdown has had an interesting side effect for Canada: It has held out the promise of lower mortgage rates, and therefore a stronger housing market.

Not that the housing market needs much help these days. Housing starts jumped 5.3 per cent in September, according to data released Tuesday by Canada Mortgage and Housing Corp., beating analysts’ estimates. All parts of the country saw rising starts except Ontario, where they fell 15.6 per cent.

September house sales in the two most closely-watched markets, Toronto and Vancouver, are up 30 per cent and 63.8 per cent respectively, according to those cities’ real estate boards (though there is reason to doubt those numbers).

But the housing market could see even more heating, thanks to the U.S. shutdown. That’s because, with the economic uncertainty, investors are flocking to bonds, driving down bond yields. Fixed-rate mortgage rates are tied to bond yields, somortgage rates are going to come down as a result, according to RateSupermarket’s mortgage outlook panel.

Of course the flipside of lower mortgage rates is higher house prices, and Canadian municipal leaders are getting worried about the erosion of affordability, the National Post reports.

In a letter to Prime Minister Stephen Harper, Claude Dauphn, president of the Federation of Canadian Municipalities, urged the federal government to help address the shrinking supply of affordable housing.

“Housing costs and, as the Bank of Canada notes, household debt, are undermining Canadians personal financial security, while putting our national economy at risk,” Dauphin wrote.

But all bets are off if the gridlock in the U.S. Congress extends past the debt ceiling deadline on Oct. 17.

If the U.S. were to suddenly default on its debt, it would “devastate stock markets from Brazil to Zurich, halt a $5 trillion lending mechanism for investors who rely on Treasuries, blow up borrowing costs for billions of people and companies, ravage the dollar and throw the U.S. and world economies into a recession that probably would become a depression,” Bloomberg reports, citing dozens of experts.

So the good news for mortgages could be short-lived indeed.

TROUBLE IN TORONTO CONDOS?
The Toronto Star reports that some buyers of pre-construction condos are struggling to get financing to close their deals.

“Some have had to walk away from deposits worth tens of thousands of dollars. Others have been forced to borrow from family — or against their principal residence — to come up with final payments on condos that lenders are no longer keen to finance,” the newspaper reports.

It’s not just a question of lenders being more cautious in today’s housing market; tighter mortgage rules brought in by the federal government last year mean many who bought condos two or three years ago now have to make larger down payments than they bargained for, the Star reports.

“This is the hardest environment I’ve seen for borrowing money in the last 10 years,” Toronto condo developer Brad Lamb told the newspaper.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Apply With More Than One Mortgage Lender?

Unlike applying for a credit card or auto loan, there is little benefit in applying to more than one lender for a mortgage loan. You might believe you are increasing your chances of getting the best available deal or giving yourself “insurance” that you will receive an approval. But, there are reasons that it is usually not in your best interest to do this.

• In addition to filling out lots of paperwork, it will cost you money to apply (credit report, property appraisal, and, possibly, an application fee).
• A full credit report, usually a “tri-merge” (reports from all three major credit reporting agencies) is required. This will cost you money (around $15) and also bring down your credit score, as each inquiry takes some points off.
• You will end up paying for more than one property appraisal (from $200 to $450).
• You may be required to pay one or more application fees (around $200 each).
• If you want to lock (guarantee) a rate at application and a fee is involved, more than one application will involve multiple fees, only one of which will benefit you.

If you locate an experienced, honest mortgage professional and provide him/her with the correct information, he/she will advise you of the best available terms for which you qualify. Therefore it is usually unnecessary and always costly to make more than one application with multiple mortgage lenders.

Information You Need to Apply for a Mortgage
Since the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) purchase the majority of home loans in the U.S., their standards are followed by most mortgage loan buyers. 

This means most lenders will require the same information from you. The differences relate to either the type of property being financed or the specific type of loan being used. The most common information all lenders require:

• Credit report : The mortgage source will get your report, but you should get one of your own BEFORE you apply so you know your current status in advance.
• Income verification : Keep your pay stubs for at least two months prior to making application. Also have copies of your last two years’ personal income tax returns in the event you need them, including W-2’s. If you earn overtime or other additional compensation, be prepared to prove that it is regular and consistent over time. To verify this, you will need more pay stubs, as many as you can collect. The same rules apply if you earn a significant portion of your income from commissions and fees. You must justify the level of income you wish to get credit for.
• Liquidity (Cash) : Regardless of the type of mortgage you receive or the property you’re financing, there will be costs to close your new loan. In all cases, you will need third party verification of the cash you claim to have. Have your bank or credit union statements for the past twelve months handy. Also gather up all information on investments, mutual funds, and other “cash equivalents”. If some of your cash is coming in the form of a gift, have the giver sign a “gift letter”. You can find appropriate wording from the Internet or you can probably get a demo letter from your mortgage source. Be aware that most lenders will allow a gift letter ONLY from an immediate family member (mother, father, sister, brother, son, or daughter).
• If you’re buying a property, you will need a Purchase & Sale Agreement : Once you make an offer that is accepted, your real estate broker will prepare a formal agreement to purchase the property. Most lenders will require this agreement before they will accept a formal application, since there is no deal without it.
• If you’re refinancing a property, have your current tax bill, hazard insurance information or policy, a copy of your deed and/or legal description of your home: This will greatly facilitate the processing of your application and result in a faster approval.
• If you’re purchasing or refinancing a condominium : Have your condominium documents (e.g., bylaws, budget, master insurance policy declaration page, homeowner’s dues information, etc.) ready.

There may be some other information you need to provide for different lenders but your mortgage source will make you aware of anything further they want.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

9 Things You Must Know About Debt Consolidation

Looking for a way to cope with overwhelming debt? Credit counseling agencies may offer some relief. Their debt consolidation programs, called debt management plans, can help you get back on track — but they can also be unnecessary and even detrimental when done through a poorly run organization or for the wrong reasons.

Here’s what you need to know about consolidating accounts through an agency.

1. It’s a third-party payment system. Tired of juggling many different accounts? With a debt management plan, you make one payment to the credit counseling agency, which distributes the money to your creditors until they are paid in full. These agencies do not make loans, nor do they settle debts. Instead, they have preset arrangements with most financial institutions, many of which lower interest rates and fees, so more of your payment goes toward the balance rather than finance charges. However, if you just happen to have accounts with creditors that don’t offer any concessions, that benefit is reduced.

2. Agencies range in quality. With something as precious as your finances, be exceedingly careful about who you work with. Look for a nonprofit credit counseling organization that belongs to either the National Foundation for Credit Counseling (NFCC) or the Association of Independent Consumer Credit Counseling Agencies (AICCCA). They ensure member agencies pass rigorous standards set forth by the Council on Accreditation for Children and Family Services Inc., or another approved third party, and that their counselors pass a comprehensive certification program. Even if they are members of such organizations, though, be picky. The agency should be organized, send payments and statements on time and offer strong consumer education and support. If it falls short, contact another branch.

3. All plans are basically the same. Financial institutions don’t give preferential treatment to any one organization, nonprofit or otherwise. So while the agencies and employees vary, the plans are all structured the same way: Your counselor determines how much it will take to pay your creditors in full in three to five years. The payment is usually around 2.5 percent of the total debt, though in hardship situations, there is some wiggle room. NFCC spokeswoman Gail Cunningham says the organization has negotiated with the top 10 credit issuers to reduce the minimum monthly payment to as low as 1.75 percent, while also cutting interest rates to meet the 60-month maximum repayment time frame. You can stop the plan at any time, and you can also pay more — and get out of debt faster — when you have extra funds.

4. Before consolidation, counseling. Why consolidate bills if you can’t pay for basic expenses or if there are better alternatives? You wouldn’t, which is the reason consolidation begins with a counseling appointment where your entire financial situation is assessed. If you have enough cash left over after subtracting expenses from income, consolidation will be presented along with other options. When a counselor is knowledgeable and compassionate, these sessions can be enlightening and motivating. Not all are. If he or she acts bored, judgmental or pushy, request a different counselor.

5. Consolidation is not right for everyone. How do you know if debt consolidation would work in your favor? First, the bulk of your balances should be in unsecured debts, such as credit and charge cards, personal loans and, sometimes, collection accounts. If most of your liabilities include other types (tax debt, child support arrearage, old parking tickets, for instance), these plans won’t help. Second, you should be confident that you can pay not just for a month or two, but for years. And third, you need to have just enough money for essential expenses, some savings and your debt. If you have too much cash left over, you’re better off managing the accounts on your own.

6. It’s simple, steady, and efficient. While you’re on the plan, your payment remains constant. You never have to wonder how much you should be paying each month, as it will be the same amount until all creditors are satisfied. When one account is satisfied, the others receive a larger portion of your payment, which speeds up the repayment process. Consolidation can also provide welcome respite from creditors calling about overdue accounts, as they generally stop when the plan begins.

7. You still have work to do. Those you owe will still be sending you account statements, which you’ll have to monitor and send in. Agency reports do not reflect the interest that you’re still being charged, so if you don’t submit them, the balance the agency reports will be wildly different from what your bank statements say. Many clients get a rude awakening when they think they’re all paid off, only to find they still are in the hole for thousands.

8. No more charging until you’re done. One of the agreements you make when consolidating your debts with an agency is that you will close the accounts and not get any new ones until you are debt-free. This can be a mighty difficult adjustment if you’re used to whipping out the plastic on a daily basis. However, it does make sense. After all, if you are still charging while repaying, you’re spinning your wheels. In case of emergency, you’re allowed to leave one card, which is typically a general purpose account with a low or no balance that you can use anywhere.

9. Consolidation is not bankruptcy — but it can be perceived similarly.By consolidating, you’re paying 100 percent of your obligations, which is quite different from discharging them in a bankruptcy or settling the debt. Still, your credit report can take a hit if your monthly payments are less than what you would normally pay. Also, while consolidation is not factored into a credit score, some creditors notate that you’re paying through a third party, which can be a red flag to a lender or anyone else looking at the report. “We look at it as a bankruptcy. It shows that they need help paying their bills,” says Stuart Davis, a senior loan consultant forPrinceton Capital out of Los Gatos, Calif. According to their underwriters, the plan needs to be complete before they will make a loan. On the other hand, the NFCC’s Cunningham says that most people who consolidate do so because they’re already stumbling and missing payments, so making timely and consistent payments through the service can help their reports.

Clearly, consolidating debts through a credit counseling agency can be helpful, but you may also be able to achieve the same results on your own. How? Suspend charging and request rate reductions from each of your creditors. If they turn you down, make a few larger than average payments and try again. Then, review your budget to know exactly the amount you can afford to send every month. Plug the numbers into a good debt repayment calculator to know how long it will take to become debt free. Pay more to the accounts with the highest interest rate, and when one is paid off, add the payment the next most expensive debt. Finally, commit to living within your means and prepare for life’s inevitable financial emergencies.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Seven Reasons Credit Applications Are Rejected

A credit file profile is not the only reason for having a credit application refused. There may be other less obvious causes for a rejection.

Not on the electoral roll
The electoral roll is something to which lenders turn for confirmation that the applicant is who they say they are. Not being registered on it can lead to a refusal for credit.

Make sure there is uniformity in your address details
Check the address is formatted consistently. There could be problems if Royal Mail’s postcode address file and the electoral roll don’t match. Disparities in address details can mean a lender turns you away.

Social media
Would-be lenders might check you out on social media and if the vibe from you or even your friends seems irresponsible, this might reflect on their readiness to lend to you. [Read more: How your Facebook friends could damage your credit rating]

A lender’s interpretation of earnings
One reader’s bank statement showed a regular payment coming from an employer, so the bank presumed it was a wage. When the bank found out that in fact it was from a scholarship and was not technically earnings it would not then lend to her.

Another reader’s bank couldn’t understand how his earnings, which were largely paid as dividends, were worked out and so reduced the amount it was prepared to lend for his mortgage.

Not being able to produce the right paperwork to establish identity
Problems can arise in meeting identity requirements. For example bank statements and utility bills downloaded from online may well not be acceptable when it comes to proving who you are. A utility bill needs to be recent so some bills, such as a water bill which does not come as frequently as bills for some other utilities, may not be suitable if it is dated some months before.

One person in a couple may receive the utility bills, so the other will not have those in their name.

Not everyone has a passport or a driving licence and few have, say, a police warrant card and gun licence which may be on the list of acceptable documents. Other identity proofs needed may include an assortment of items that also may not apply to the individual at issue, including evidence of state benefits.

Being too old
As you get older borrowing becomes more difficult.

No track record of past borrowing
Not only should a potential borrower be capable of fulfilling the demands of a regular contract responsibly, they need to be able to demonstrate this with some track record. This could be by managing a credit card or a mobile phone contract. Avoid borrowing more than you can repay. Consider closing down any credit facilities that are not needed as they could give a misleading impression about your borrowing intentions.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Settling Unsecured Debts

If you are experiencing money problems, trouble paying your debts or your financial situation is deteriorating you need debt relief. Ideally, you can either avoid paying some of your unsecured debts or you can pay off some of your debts for less than 100 cents on the dollar. Depending upon the situation you might be able to settle one or more of your unsecured consumer debts for anywhere between 5% and 85% of the balance owing.

Type of debts where generous settlements may be available

If you owe money to the government the government will usually take the position that it wants you to repay the entire debt. It is also difficult to settle debts with certain types of consumer creditors such as a landlord or a utility; water, hydro, cable or internet service provider. If you do not pay your rent your landlord is going to evict you. If you do not pay your cable bill your cable service will be disconnected. However, there are plenty of opportunities to settle debts at major discounts with certain types of unsecured debts including credit cards, personal loans, lines of credit and cellular phone charges.

Settlements involving purchased debt

In Canada today about 90 per cent of the debts collection agencies attempt to collect are debts owned by the original creditor. However, in some cases a creditor will sell a large group of debts to a company called a debt buyer, a company that specializes in buying debts. Typically debt buyers purchase debts that are more than 3 years old for pennies on the dollar. If a collection agency is attempting to collect an older debt from you that is owned by a debt buyer the collection agency may be willing to settle this debt for as little for 5 cents or 10 cents on the dollar.

Settlements involving debts owned by the original creditor

Typically major credit grantors in Canada attempt to collect a debt on their own for 3 to 6 months before placing the accounts for collection on a commission basis with a collection agency. When an account is initially placed with a collection agency it is referred to as a first assign. Some creditors may not permit settlements on first assigns. Other creditors may permit settlements for approximately 85% of the balance owing. After a year a delinquent account may be recalled and placed with a new agency as a second assign and the creditor’s blanket settlement instructions may then be reduced to somewhere around 65% of the balance owing. Upon the expiry of another year the debt will likely become a third assign and the settlement guidelines may be reduced to approximately 50% of the balance owing.

In some cases it may be possible for a collection agency to obtain permission from its creditor-client to settle a debt for an amount even more generous than that permitted under the client’s blanket settlement instructions. A creditor may consider settling a debt for a lump sum payment less than its blanket settlement guidelines where the creditor is satisfied the consumer will never be in a position to repay the debt or the creditor is on the verge of insolvency.

Importance of obtaining a written settlement offer before making a payment

In the event you negotiate a settlement with a collection agency it is important that you obtain a satisfactory written settlement offer from the collection agency before making your payment to the collection agency. Failure to do so may result in the creditor or another collection agency attempting to collect the balance from you.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Coping Debt

Having trouble paying your bills? Getting dunning notices from creditors? Are your accounts being turned over to debt collectors? Are you worried about losing your home or your car? You’re not alone. Many people face a financial crisis at some point in their lives. Whether the crisis is caused by personal or family illness, the loss of a job, or overspending, it can seem overwhelming. But often, it can be overcome. Your financial situation doesn’t have to go from bad to worse.

If you or someone you know is in financial hot water, consider these options: self-help using realistic budgeting and other techniques; debt relief services, like credit counseling or debt settlement from a reputable organization; debt consolidation; or bankruptcy. How do you know which will work best for you? It depends on your level of debt, your level of discipline, and your prospects for the future.

Self-Help

Developing a Budget
The first step toward taking control of your financial situation is to do a realistic assessment of how much money you take in and how much money you spend. Start by listing your income from all sources. Then, list your "fixed" expenses — those that are the same each month — like mortgage payments or rent, car payments, and insurance premiums. Next, list the expenses that vary — like groceries, entertainment, and clothing. Writing down all your expenses, even those that seem insignificant, is a helpful way to track your spending patterns, identify necessary expenses, and prioritize the rest. The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education. You can find information about budgeting and money management techniques online, at your public library, and in bookstores. Computer software programs can be useful tools for developing and maintaining a budget, balancing your checkbook, and creating plans to save money and pay down your debt.

Contacting Your Creditors
Contact your creditors immediately if you’re having trouble making ends meet. Tell them why it’s difficult for you, and try to work out a modified payment plan that reduces your payments to a more manageable level. Don’t wait until your accounts have been turned over to a debt collector. At that point, your creditors have given up on you.

Dealing with Debt Collectors
Federal law dictates how and when a debt collector may contact you: not before 8 a.m., after 9 p.m., or while you’re at work if the collector knows that your employer doesn't approve of the calls. Collectors may not harass you, lie, or use unfair practices when they try to collect a debt. And they must honor a written request from you to stop further contact.

Managing Your Auto and Home Loans
Your debts can be unsecured or secured. Secured debts usually are tied to an asset, like your car for a car loan, or your house for a mortgage. If you stop making payments, lenders can repossess your car or foreclose on your house. Unsecured debts are not tied to any particular asset, and include most credit card debt, bills for medical care, and signature loans.

Most automobile financing agreements allow a creditor to repossess your car any time you’re in default. No notice is required. If your car is repossessed, you may have to pay the balance due on the loan, as well as towing and storage costs, to get it back. If you can't do this, the creditor may sell the car. If you see default approaching, you may be better off selling the car yourself and paying off the debt: You'll avoid the added costs of repossession and a negative entry on your credit report.

If you fall behind on your mortgage, contact your lender immediately to avoid foreclosure. Most lenders are willing to work with you if they believe you're acting in good faith and the situation is temporary. Some lenders may reduce or suspend your payments for a short time. When you resume regular payments, though, you may have to pay an additional amount toward the past due total. Other lenders may agree to change the terms of the mortgage by extending the repayment period to reduce the monthly debt. Ask whether additional fees would be assessed for these changes, and calculate how much they total in the long term.

If you and your lender can’t work out a plan, contact a housing counseling agency. Some agencies limit their counseling services to homeowners with FHA mortgages, but many offer free help to any homeowner who’s having trouble making mortgage payments. Call the local office of the Department of Housing and Urban Development or the housing authority in your state, city, or county for help in finding a legitimate housing counseling agency near you.

Debt Relief Services
If you’re struggling with significant credit card debt, and can’t work out a repayment plan with your creditors on your own, consider contacting a debt relief service like credit counseling or debt settlement. Depending on the type of service, you might get advice on how to deal with your mounting bills or create a plan for repaying your creditors.

Before you do business with any debt relief service, check it out with your state Attorney General and local consumer protection agency. They can tell you if any consumer complaints are on file about the firm you're considering doing business with. Ask your state Attorney General if the company is required to be licensed to work in your state and, if so, whether it is.
If you’re thinking about getting help to stabilize your financial situation, do some homework first. Find out what services a business provides, how much it costs, and how long it may take to get the results they promised. Don’t rely on verbal promises. Get everything in writing, and read your contracts carefully.

Credit Counseling
Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.

Most reputable credit counselors are non-profits and offer services through local offices, online, or on the phone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate non-profit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.

But be aware that “non-profit” status doesn't guarantee that services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, which they may hide, or urge their clients to make "voluntary" contributions that can cause more debt.

Debt Management Plans
If your financial problems stem from too much debt or your inability to repay your debts, a credit counseling agency may recommend that you enroll in a debt management plan (DMP). A DMP alone is not credit counseling, and DMPs are not for everyone. Don’t sign up for one of these plans unless and until a certified credit counselor has spent time thoroughly reviewing your financial situation, and has offered you customized advice on managing your money. Even if a DMP is appropriate for you, a reputable credit counseling organization still can help you create a budget and teach you money management skills.

In a DMP, you deposit money each month with the credit counseling organization. It uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. Your creditors may agree to lower your interest rates or waive certain fees. But it’s a good idea to check with all your creditors to be sure they offer the concessions that a credit counseling organization describes to you. A successful DMP requires you to make regular, timely payments; it could take 48 months or more to complete your DMP. Ask the credit counselor to estimate how long it will take for you to complete the plan. You may have to agree not to apply for — or use — any additional credit while you’re participating in the plan.

Debt Settlement Programs
Debt settlement programs typically are offered by for-profit companies, and involve them negotiating with your creditors to allow you to pay a “settlement” to resolve your debt — a lump sum that is less than the full amount that you owe. To make that lump sum payment, the program asks that you set aside a specific amount of money every month in savings. Debt settlement companies usually ask that you transfer this amount every month into an escrow-like account to accumulate enough savings to pay off any settlement that is eventually reached. Further, these programs often encourage or instruct their clients to stop making any monthly payments to their creditors.

Debt Settlement Has Risks
Although a debt settlement company may be able to settle one or more of your debts, there are risks associated with these programs to consider before enrolling:

1. These programs often require that you deposit money in a special savings account for 36 months or more before all your debts will be settled. Many people have trouble making these payments long enough to get all (or even some) of their debts settled, and end up dropping out the programs as a result. Before you sign up for a debt settlement program, review your budget carefully to make sure you are financially capable of setting aside the required monthly amounts for the full length of the program.

2. Your creditors have no obligation to agree to negotiate a settlement of the amount you owe. So there is a possibility that your debt settlement company will not be able to settle some of your debts — even if you set aside the monthly amounts required by the program. Also, debt settlement companies often try to negotiate smaller debts first, leaving interest and fees on large debts to continue to mount.

3. Because debt settlement programs often ask or encourage you to stop sending payments directly to your creditors, they may have a negative impact on your credit report and other serious consequences. For example, your debts may continue to accrue late fees and penalties that can put you further in the hole. You also may get calls from your creditors or debt collectors requesting repayment. You could even be sued for repayment. In some instances, when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home.

Debt Settlement and Debt Elimination Scams
Some companies offering debt settlement programs may not deliver on their promises, like their “guarantees” to settle all your credit card debts for 30 to 60 percent of the amount you owe. Other companies may try to collect their fees from you before they settle any of your debts. The FTC’s Telemarketing Sales Rule prohibits companies that sell debt settlement and other debt relief services on the phone from charging a fee before they settle or reduce your debt. Some companies may not explain the risks associated with their programs, including that many (or most) of their clients drop out without settling their debts, that their clients’ credit reports may suffer, or that debt collectors may continue to call them.

Before you enroll in a debt settlement program, do your homework. You’re making a big decision that involves spending a lot of your money that could go toward paying down your debt. Enter the name of the company name with the word "complaints" into a search engine. Read what others have said about the companies you’re considering, including whether they are involved in a lawsuit with any state or federal regulators for engaging in deceptive or unfair practices.

Fees
If you do business with a debt settlement company, you may have to put money in a dedicated bank account, which will be administered by an independent third party. The funds are yours and you are entitled to the interest that accrues. The account administrator may charge you a reasonable fee for account maintenance, and is responsible for transferring funds from your account to pay your creditors and the debt settlement company when settlements occur.

Disclosure Requirements
Before you sign up for the service, the debt relief company must give you information about the program:
Price and terms. The company must explain its fees and any conditions on its services.
Results. The company must tell you how long it will take to get results — how many months or years before it will make an offer to each creditor for a settlement.
Offers. The company must tell you how much money or what percentage of each outstanding debt you must save before it will make an offer to each creditor on your behalf.
Non-payment. If the company asks you to stop making payments to your creditors — or if the program relies on your not making payments — it must tell you about the possible negative consequences of your action.

The debt relief company also must tell you: 

that the funds are yours and you are entitled to the interest earned;
the account administrator is not affiliated with the debt relief provider and doesn’t get referral fees; and
that you may withdraw your money at any time without penalty. 

Tax Consequences
Depending on your financial condition, any savings you get from debt relief services can be considered income and taxable. Credit card companies and others may report settled debt to the IRS, which the IRS considers income, unless you are "insolvent." Insolvency is when your total debts are more than the fair market value of your total assets. Insolvency can be complex to determine. Talk to a tax professional if are not sure whether you qualify for this exception.

Use Caution When Shopping for Debt Relief ServicesAvoid any debt relief organization — whether it’s credit counseling, debt settlement, or any other service — that: 

charges any fees before it settles your debts or enters you into a DMP plan
pressures you to make "voluntary contributions," which is really another name for fees
touts a "new government program" to bail out personal credit card debt
guarantees it can make your unsecured debt go away
tells you to stop communicating with your creditors, but doesn’t explain the serious consequences
tells you it can stop all debt collection calls and lawsuits
guarantees that your unsecured debts can be paid off for pennies on the dollar
won’t send you free information about the services it provides without requiring you to provide personal financial information, like your credit card account numbers, and balances
tries to enroll you in a debt relief program without reviewing your financial situation with you
offers to enroll you in a DMP without teaching you budgeting and money management skills
demands that you make payments into a DMP before your creditors have accepted you into the program 

Debt Consolidation
You may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. But these loans require you to put up your home as collateral. If you can’t make the payments — or if your payments are late — you could lose your home.
What’s more, consolidation loans have costs. In addition to interest, you may have to pay "points," with one point equal to one percent of the amount you borrow. Still, these loans may provide certain tax advantages that are not available with other kinds of credit.

Bankruptcy
Personal bankruptcy also may be an option, although its consequences are long-lasting and far-reaching. People who follow the bankruptcy rules receive a discharge — a court order that says they don’t have to repay certain debts. However, bankruptcy information (both the date of the filing and the later date of discharge) stay on a credit report for 10 years and can make it difficult to get credit, buy a home, get life insurance, or sometimes get a job. Still, bankruptcy is a legal procedure that offers a fresh start for people who have gotten into financial difficulty and can't satisfy their debts.

There are two main types of personal bankruptcy: Chapter 13 and Chapter 7. Each must be filed in federal bankruptcy court. Filing fees are several hundred dollars. For more information visit the United States Courts. Attorney fees are extra and vary.

Chapter 13 allows people with a steady income to keep property, like a mortgaged house or a car, that they might otherwise lose through the bankruptcy process. In Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off your debts during three to five years, rather than surrender any property. After you make all the payments under the plan, you receive a discharge of your debts.

Chapter 7 is known as straight bankruptcy; it involves liquidating all assets that are not exempt. Exempt property may include automobiles, work-related tools, and basic household furnishings. Some of your property may be sold by a court-appointed official, called a trustee, or turned over to your creditors.

Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments and utility shut-offs, as well as debt collection activities. Both also provide exemptions that let you keep certain assets, although exemption amounts vary by state. Personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. And, unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or security lien on it.

You must get credit counseling from a government-approved organization within six months before you file for any bankruptcy relief. You can find a state-by-state list of government-approved organizations at the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. Also, before you file a Chapter 7 bankruptcy case, you must satisfy a "means test." This test requires you to confirm that your income does not exceed a certain amount. The amount varies by state and is publicized by the U.S. Trustee Program.

Debt Scams
Advance Fee Loans: Some companies guarantee you a loan if you pay them a fee in advance. The fee may range from $100 to several hundred dollars. Resist the temptation to follow up on these advance-fee loan guarantees. They may be illegal. It’s true that many legitimate creditors offer extensions of credit through telemarketing and require an application or appraisal fee in advance. But legitimate creditors never guarantee that you will get the loan – or even represent that a loan is likely. Under the FTC’s Telemarketing Sales Rule, a seller or telemarketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for — or accept — payment until you get the loan.

Credit Repair: Be suspicious of claims from so-called credit repair clinics. Many companies appeal to people with poor credit histories, promising to clean up their credit reports for a fee. But anything these companies can do for you for a fee, you can do yourself — for free. You have the right to correct inaccurate information in your file, but no one — regardless of their claims — can remove accurate negative information from your credit report. Only time and a conscientious effort to repay your debts will improve your credit report. Federal — and some state — laws ban these companies from charging you a fee until the services are fully performed.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

8 Negotiation Tactics To Help Reduce Your Credit Card Debt

Call at a good time: One of the simplest yet most effective negotiation tactics is to choose the right time to call a credit card company. Call first thing in the morning, as people are more likely to be pleasant and willing to help you out. If you call at the end of the day, people tend to be tired and cranky.

Let them know you will pay back your debt: What concerns credit card companies most are people who are trying all sorts of dirty negotiation tricks to get out of paying their debts altogether. It is crucial that you explain to them that you do intend to pay back your debt. What you are asking is some small help. If you do this nicely, you may be surprised how understanding credit card companies can be!

Take advantage of your first time: If you have not asked for a lower interest rate or to have a late fee waived with this credit card company before, make sure you tell them. These companies are usually much more generous with first time offenders than with those asking for extensions on a monthly basis.

Show them you are a loyal customer: If you've been a long-time customer or a big spender for several years, use this to your advantage. By reminding a company of your loyalty, you'll find that they will be more willing to renegotiate your credit card debt because they don't want to lose your business.

Ask for a lower interest rate: Unknown to many, credit card interest rates are often negotiable. If you have had a good payment history, you shouldn't have any problems with requesting for a lower interest rate. Explain that you'll be able to put more money towards paying off your principal balance instead of your interest rate charges.

Have late payment fees waived: This is such a simple, yet very effective bargaining tactic. Late payment fees can usually easily be waived if you settle your bill within a short period of the due date. If you have, leverage a solid credit history on top. An extra phone call, that is likely to be well worth the effort.

Request to miss a payment: If you have had some unexpected financial issues that you are expecting to resolve in the coming weeks or months, explain your situation honestly to the credit card company and ask very carefully if you could miss a payment or two. Beware though that these kind of skipped payments may have a bad impact on your credit rating.

Speak to the decision maker: An effective negotiation tip is to talk to the person in charge as soon as you can. When you first call, you will probably be diverted straight to a customer service representative. If this is the case, request to talk directly to the manager or another person who can make decisions. Don't forget to write down all the names, designations, and contact details of everyone you talk to, as well as the time, day, and details of the discussions.

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

A couple of weeks back, a debt collection agency based in Glendale, Calif., agreed to pay $1 million to settle complaints from the Federal Trade Commission over its business practices. The agency, which went by the name “National Attorney Collection Practices,” had been harassing delinquent borrowers with debt collection notices bearing an illustration of Uncle Sam’s fist upending some hapless soul and “shaking him down” for loose change.

The harassment didn't end there.
Targeting Spanish-speaking debtors and lower-income consumers who’d fallen behind on loans to payday lending operations, “National Attorney” inundated debtors with phone calls, postal mailings, and text messages to their cellphones that: 

• falsely represented that its notices were coming from attorneys 
• "unlawfully … threatened legal action, arrest, imprisonment, or garnishment" if debtors didn’t pay up 
• and failed to include necessary “disclosures” advising debtors of their legal rights. 

In some cases, the FTC accused National Attorney of even sharing details about consumers’ debts with their friends, family, and co-workers, apparently in an attempt to pressure the consumers into paying. And to top it all off, the FTC says that National Attorney “refused to provide their business address or validation letters to consumers, thereby depriving consumers of the right to send cease-and-desist letters or to dispute alleged debts.”Summing up its charges, the FTC alleged that National Attorney “engaged in deceptive and unfair practices in almost every facet of their dealings with these consumers” — and fined the company $1 million.


Know Your Rights
Of course, the FTC can’t step in to stop every debt collector from breaking the law — at least not in real time.So what can you do to protect your rights, and prevent companies like National Attorney Collection Practices from taking advantage of you when the FTC’s not looking? Well, the first step is knowing what your rights are.Online consumer complaint service Scambook.com cites at least four main rights you have to protect yourself:

• Keep work and home separate: National Attorneys crossed a big red line when it tried to collect debts from consumers at their place of work. Tell debt collectors not to contact you at work — ever. 
• Let’s keep this between you and me: Even legitimate attempts to collect a debt are matters to be discussed between the lender and the debtor. If you find out that a debt collection agency has contacted your friends or family — or anyone else — about your debt, tell them to stop and then file a complaint. 
• You catch more flies, and fewer FTC lawsuits, with honey:What constitutes “harassment” is often going to be in the eye of the beholder, but Scambook says that once communication from a debt collector has risen to the level of harassment, it’s no longer kosher. Tell them to knock it off. 
• Support your local post office: Technology is a marvelous invention. But even so, debt collectors have no right to harass consumers over the phone and by text, by day and by night. If you are the subject of such harassment, tell them you want all future communication to be conducted by mail. This is a request they must honor. 

Also keep on the lookout for other instances where debt collectors are playing fast and loose with the rules. To name just a few violations, the FTC called out National Attorney for:

• Failing to disclose in the very first text message that the company was a debt collector trying to collect a debt. 
• Failing to provide details on the supposed debt the company was attempting to collect, and failing to inform the consumer of his or her right to dispute the debt’s validity. 
• Including statements on the outside of the envelopes on postal mailings, noting that the contents relate to an attempt to collect a debt. Because these envelopes could be seen by anyone, that’s a violation of the rule against informing third parties about a consumer’s debt situation — and it’s a no-no. 

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.

Buyers Today Want a House for the Long Haul

When Amy Lewis sits in her Lafayette, Calif., home, she can envision her three young daughters growing up there. She sees them forming lasting friendships with the neighborhood kids, graduating from the local schools, coming home for visits during college breaks.

It doesn’t stop there: The 43-year-old can also imagine grandchildren running around the halls.

It’s a different mentality than in years past, when people would buy a home, stay for several years and move up to something bigger or better. First and foremost, Lewis said she and her husband wanted an experience similar to one that they had growing up, one where the neighborhood kids went from preschool to high school together. Her parents still live in the same house they moved to when she was 2 years old (and they’re also flush with home equity in their 80s).

But Lewis adds there is another financial reason to staying put: Mortgage rates are very low, and there is a good chance it will be hard to trade in that monthly payment in several years.

“Definitely, for the next 30 years, we feel confident we want to be there,” Lewis said.

More home buyers today are planting deep roots in their communities, according to research from the National Association of Realtors. That’s especially true for buyers younger than 45 years old—those most likely to be move-up buyers, said Paul Bishop, NAR’s vice president of research.

In 2012, 27% of home buyers between the ages of 25 and 44 and 18% of buyers between the ages of 18 and 24 said that they planned to be in their homes for 16 years or longer, according to a NAR survey of 8,501 home buyers. In a comparable survey in 2006, 18% of buyers between the ages of 25 and 44 and 8% of buyers between the ages of 18 and 24 said the same.

Expectations have adjusted, and trading up is no longer the goal for many, Bishop said. People became accustomed to the move-up mentality when they’d see their neighbors move for extra square footage or a more desirable area. Now, your neighbors probably aren’t going anywhere.

“[Buying a home] is a very complex procedure—much, much more than before,” said Sherry Chris, chief executive of Better Homes and Gardens Real Estate, a national real-estate brand. “People are in it for the long haul, and it’s not just ‘I’m going to buy a house and see what happens in a few years.’”

Added Cara Ameer, broker associate with Coldwell Banker Vanguard Realty in Ponte Vedra, Fla.: “A lot of people tend now to think more logically than irrationally. They are really scrutinizing ‘do I need this?’ They’re looking at hard costs, and not throwing caution to the wind.”

Simple math

For many homeowners, it is a matter of simple math, said Jeff Taylor, co-founder of Digital Risk, a mortgage processor. Today’s buyers are capturing mortgage rates near historic lows—and that’s allowing them to get “double the house” today compared with what they could get several years ago. The monthly payment on a $300,000 mortgage for a home bought in 2005 at a 7% rate is roughly equivalent to a payment on a $600,000 mortgage obtained in 2013 at a 3.5% rate, he said.

These buyers may never even have the desire to refinance in the years ahead, since doing so would likely increase their rate. The Mortgage Bankers Association predicts rates on the 30-year fixed-rate mortgage will rise to 4.8% in the fourth quarter of 2013, and to 5.1% in the fourth quarter of 2014. A decade from now, a mortgage obtained this year will likely look very reasonable, Taylor said, compared with what’s available in the future market.

What’s more, these days home values don’t appreciate at the same rate they did seven, eight or nine years ago, Ameer said. So people don’t plan on their home appreciating by $100,000 in two years, giving them the equity to move up to a bigger home.

That said, “as you’re paying that [mortgage] down and home prices appreciate, 10 to 15 years down the road, that equity will build,” Taylor said. “We’re going to see the home being the nest egg.”

Of course, some homeowners will be tempted to tap their equity during their tenure in the home. For that, those who buy today are more likely to turn to home-equity loans instead of cash-out refinancing, so as to keep their low mortgage rates, Taylor added.

Seeing into the future

The tricky part about buying a home to live in for decades is anticipating your needs at different points of your life. Most importantly, make sure you’re buying in a prime location. A good school district might be important to you, or walkability to public transportation or shopping.

Another telltale sign of a neighborhood where you might be able to live for the long term: Blocks of homeowners who also have deeper ties to the community.

“Every area has those little places where no one moves. It can’t be replicated anywhere else,” whether the appeal is a good school district or highly sought after neighborhood amenities, Ameer said. Typically, “these areas are the best for that, for staying for a longer period of time.”

For Amy Lewis and family, their new neighborhood hits many of those points. In addition to good schools, there are many restaurants, mom-and-pop stores and ideal weather (without the kind of fog that nearby San Francisco gets). In fact, Lafayette almost feels like a “mini San Francisco,” she said.

“I grew up about 40 minutes from here, and it has a similar feel,” she said. “This is a perfect location.”

Visit Dominion Lending Centres Mortgage Village to consult a mortgage professional.