Pre – Pre – Approval Quick Tip

General Mark Goode 28 Mar

 When entering into the loan process, it’s not in your best interest to go out on a shopping spree. No new car, new appliances, all of these very tempting ‘extras’ should be saved for after you have secured your mortgage and after you KNOW that you can afford them. You need to make sure you are not creating a negative impact on the score while the lender is reviewing it. Secondly, a Tri-Merge Credit Report. This combines the scores provided by (1)Fair-Issiac (FICO), with the score generated by (2)Trans Union (Empirica) and the Beacon Score produced by (3)Equifax. We are providing the lender with the rounded profile because these three scoring systems can vary in their results. The lender is going to look at the middle score and throw out the other two. This is, in many cases, a benefit to you.

Mortgage Man – Dominion Lending Centres | FSCO# 12254 | 180 Memorial Avenue | Orillia, ON L3V 5X6 | Ph: 705-326-8523 | Fx: 705-326-8645 |  www.markgoode.ca

Original Article credit to: Tim Braheem President, First Rate Financial Group, Westlake Virginia, Calif., 818/707-4131, E-mail: timb@firstratefinancialgp.com

Article may have been edited for content. Corin Payie MMDLC

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The Five Factors

General Mark Goode 28 Mar

What the credit scoring model seeks to quantify is how likely [you,] the consumer is to pay off their debt without being more than 90 days late on a payment at any time in the future.

Credit scores can range between a low score of 300 and a high of 850. The higher the [your] score is, the less likely they are to default on a loan. Only a very rare 1/1,300 people in the United States has a credit score of above 800. These are the people who walk away with the best interest rates. On the other hand, 1/8 prospective home buyers are faced with the scenario that they may not qualify for the loan they want because they have a lower score, between 500 and 600.

This score comprises five factors.
I will list these in order of importance, just as your underwriter will look at the score:

Payment History: 35 percent impact. Paying debt on time and in full has a positive impact. Late payment, judgments and charge offs have a negative impact. Missing a high payment has a more severe impact than missing a low payment.

Outstanding Credit Balances: 30 percent impact: The ratio marking the difference between the outstanding balance and the available credit is important here. Ideally, the client should keep their balance below 10 percent of the available credit limit. Ideally, the client should keep their Balance of the body of the available credit limit.  

Credit history 15% impact: This marks the length of time since a particular credit line was established borrower is stronger in this area.

Type of credit 10% Impact: a mix of loans Credit cards and mortgages more positive than a concentration of debt from credit cards only.

Inquiries 10% of impact: This quantifies the numbers of inquiries that have been made on a consumer ’s credit history within a six-month period. Each hard inquiry can cost from two to 50 points on a credit score but the maximum number of inquiries that willreduce the score is 10. Eleven or more inquiries in a six-month period will have no further impact on the borrower’s credit score.

Mortgage Man – Dominion Lending Centres | FSCO# 12254 | 180 Memorial Avenue | Orillia, ON L3V 5X6 | Ph: 705-326-8523 | Fx: 705-326-8645 |  www.markgoode.ca

Article credit to: Tim Braheem President, First Rate Financial Group, Westlake Virginia, Calif., 818/707-4131, E-mail: timb@firstratefinancialgp.com All credits and copyrights to their respective owners on reposted articles. ~ Article may have been altered or edited from original. Corin Payie MMDLC

 

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Canada Student Loan Bankruptcy Legislation

General Mark Goode 21 Mar

Hardship Provisions and Student Loans in Consumer Proposals

I have written extensively on the hardship provisions in the Bankruptcy & Insolvency Act, including What Constitutes Hardship with a Student Loan after Bankruptcy in Canada? and Good Faith, Hardship and Student Loan Discharges in Bankruptcy.  In summary, under section 178(1.1) of the Act:

(1.1) At any time after five years after a bankrupt who has a debt referred to in paragraph (1)(g) ceases to be a full- or part-time student, as the case may be, under the applicable Act or enactment, the court may, on application, order that subsection (1) does not apply to the debt if the court is satisfied that

  • () the bankrupt has acted in good faith in connection with the bankrupt’s liabilities under the debt; anda
  • (b) the bankrupt has and will continue to experience financial difficulty to such an extent that the bankrupt will be unable to pay the debt.

In simple English: a student loan is automatically discharged in a bankruptcy if, at the date of bankruptcy, more than seven years has elapsed since the bankruptcy ceased to be a student.  Under the hardship provision, after five years you can apply to court to have the student loan discharged, provided you can demonstrate hardship (see the articles referenced above for more details).

What happens if you file a consumer proposal instead of a bankruptcy and you have student loans?  The same seven year rule applies, so a student loan is automatically discharged if you have been out of school for seven years when you file your proposal, and you complete your proposal.

But what about the hardship provision? Can you ask for forgiveness under the hardship rule after five years if you file a consumer proposal?  Up until this month, the answer was “no”.

In October 2012 a Toronto bankruptcy court judge ruled (and I’m simplifying here) that since the Act refers to a bankruptcy, it does not apply to someone who files a consumer proposal.  That is certainly the plain meaning of the Act, and presumably if Parliament had wanted the section to apply in both bankruptcies and proposals, that’s what they would have said.

However, in the case of Re Cardwell, 2006 SKQB 164, Registrar Herauf stated that, logically, the sections should apply in both bankruptcies and proposals, since not allowing this section to apply to proposals discourages people from filing consumer proposals.

So, on appeal, Mr. Justice H. J. Wilton-Siegel of the Superior Court of Justice – Ontario ruled on March 15, 2013 that the hardship provisions apply in a consumer proposal and in a bankruptcy (the case citation is Eric Joseph Sitler (Re): 2013 ONSC 1576.

What does this mean, in plain English?  Simply put, if you file a consumer proposal when you have ceased to be a student for more than five years but less than seven years, although the student loans are not automatically discharged, you can apply to court to get relief from your student loans, just as if you had filed bankruptcy.

Sound complicated?  It is, so contact a consumer proposal administrator to request a no charge initial consultation to review your options and determine which option is best for dealing with your student loans.

 

Mortgage Man – Dominion Lending Centres | Ph: 705-326-8523 | Fx: 705-326-8645 |  www.markgoode.ca | FSCO# 12254 | 180 Memorial Avenue | Orillia, ON L3V 5X6 |
    
 All credits and copyrights to their respective owners on reposted articles.  
Article may have been altered or edited from Original Post LinkedIn.
Corin Payie MMDLC

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Reposted All credits and rights to their respective owners Original post @  http://student-loan-bankruptcy.ca/2013/03/hardship-student-loan-consumer-proposal.htm?goback=.gde_4061544_member_223900776

~Article may have been edited from original. Corin Payie MMDLC Scotchmints.com