Do You Cringe When You Hear The Word "BUDGET"?

Sure, a budget involves a bit of work on your part, but the payoff is financial discipline and peace of mind.  Once you get the hang of it, budgeting is easy and can mean a better financial future for yourself and your loved ones.

What is a budget?

First of all don't cringe at the word, embrace it as it could change your life.  A budget is an excellent money management tool that helps you achieve your financial goals.  It doesn't have to be complicated either...this simple guide will help you make a budget and stick to it.

• If you find money is tight
• If you don't know where your money is going
• If you have problems paying off your debt
• If you don't save regularly
• If you want to find ways to make your dollar stretch further 

Budgeting could be exactly what you need!

A budget helps you see more clearly how much money you receive, and how much you spend and save.  Most people know how much they make.  But do you know where your money is going.  A simple process will help you achieve just that.  Every dollar you spend will have an impact on the overall picture.

Think about your goals!

Before you start making a budget, take some time to think about your financial goals.  Do you need to pay off debt?  Do you want to save to buy a home? Do you want to pay down your mortgage?  Do you want to build your nest egg for retirement?

Creating a budget means looking at your past expenses and creating an improved version that reflects your financial goals.  In a balanced budget, your income exceeds your expenses- therefore you are able to save some money each month towards your financial goals.  Your budget is what will guide your spending in future months and help you save money.

Here is a link to a simple but very effective budgeting worksheet.  START TODAY....IT'S YOUR FUTURE.

Making a Budget and Sticking To It - Worksheet

Getting a Mortgage After Bankrupcty

Sometimes bad things happen to good people.  Canadians who have declared bankruptcy in the past may have difficulty re-establishing their credit in order to obtain mortgage financing.  Many Canadians have been forced into bankruptcy due to divorce, illness, loss of job and other uncontrollable situations.  This doesn't mean that once bankrupt, you cannot obtain a mortgage until the bankruptcy record "falls off" your credit bureau in six years.  It just means that you have to work to re-build your credit before you qualify for mortgage financing.

Here are some tips and steps you should take as soon as you are discharged from bankruptcy:

1.  Send in your letter of discharge, along with the complete list of tradelines that were included in the bankruptcy to both credit reporting agencies in Canada:  TransUnion and Equifax.  This is very important, as often the bankruptcy has not been reported correctly.  The tradelines (credit cards, lines of credit, loans, etc.) that were included in the bankruptcy should have zero balances owing on the credit reports and should be marked "Included in Bankruptcy".  Any reporting errors will slow the credit score rebuilding process.

2.  Check your credit reports to ensure that the bankruptcy has been recorded correctly.

3.  As soon as you are able, apply for a secured credit card that will report to both credit reporting agencies.  If you are married, you can apply for a joint card reporting on both your bureaus.  In Canada, Capital One and HomeTrust Visa offer secured credit cards after a bankruptcy discharge.  The way this works is that you must provide a deposit to the credit card company (best amount is $1,500, but you can start lower and build up to $1,500).  The secured credit card company then issues you a credit card with a limit equal to the deposit (the deposit is kept in an interest bearing GIC held as security against the credit line, but this is not the same as a pre-paid credit card).   Make every payment on time - everytime - no exceptions!  You cannot have any derogatory credit (slow payments, collections, judgements, etc.) on your credit report after bankruptcy, or you will ruin your chances for mortgage financing!

4.  Try to keep the credit outstanding on the new credit line below 70% of your limit to optimize your credit score (example, if you have a credit card with a $1,000 limit, try to keep the balance owing to less than $700.)

5.  If possible, try to establish a second tradeline reporting on your bureau.  You may be fortunate enough to have a relative who would be willing to co-sign a small loan for you.  Sometimes it is a good idea to take out an RRSP loan, and have a strong co-signer - but you must make sure that the loan reports on your credit bureau.

It is possible to get mortgage financing with as little as 12 months re-established credit reporting on your credit reports, providing that the minimum credit limit is at least $1,500.  CMHC will approve mortgage financing with 5-10% down payment if you have a lender who is supporting the mortgage financing, the reason for the bankruptcy was understandable, and all other conditions are "perfect" (job stability, down payment from your own resources, etc.)  Many lenders, however, are looking for 2 years re-established credit and a minimum of two new tradelines reporting.  Some "A" lenders will decline mortgage financing if there is a bankruptcy on record, so it is important to consult an Accredited Mortgage Professional to help you select a lender willing to work with previously bankrupt mortgage applications.  If you have not re-established new credit, your credit score will be frozen at the score reported on your bankruptcy discharge - likely well below the minimum credit score of 600 required for mortgage financing.  So re-establishing credit is the most important thing you can do to get back on track.

There are alternative and private lenders who will finance previously bankrupt individuals who have not re-established credit, but the interest rates and down payment required will be substantially higher.

As an Accredited Mortgage Professional,  I would be able to assist you with advice on how to re-establish your credit and find a lender who would be willing to support your mortgage application. 

Things To Ask When Buying A Cottage

By Mark Weisleder | Fri May 27 2011 MoneyVille.ca

Buying a house in the city or suburbs can be complicated enough, but buying a cottage or vacation property outside of town requires even more due diligence.
In town, you probably wouldn’t ask if the water coming out of the tap is drinkable. Nor would you wonder if the plumbing was hooked up to the sanitary sewer. But these are exactly the sorts of questions you should ask when buying a cottage, plus a few more.
1. Get an inspection: Cottages are usually occasional residences and so may not be as properly maintained as they should be. This is why every purchase should be conditional a satisfactory professional home inspection. If the cottage has a wood-burning stove or fireplace, then a certificate must be requested from a Wood Energy Technical Transfer specialist, to confirm that the system was installed and is operating correctly.
2. Is the water drinkable? There are two areas of potential concern when it comes to water – the quantity and quality. Is there enough to satisfy family needs and is it good enough to pass the local health department requirements.
Ask the sellers for these things:
• A potability certificate from the local health authority, confirming the water is safe to drink;
• Confirmation that the well, the pump and related equipment have performed adequately during the Seller’s occupancy;
• Confirmation that there is an adequate rate of flow for normal household use;
• Provision of a well driller’s certificate, if available; and
• The location of the well.
A separate inspection may be needed by a well specialist. If nothing else it gives you an idea of what it would cost to replace the well if it fails.
3. How’s the septic system? Septic systems present their own difficulties because it is usually difficult to tell during an inspection how long the system may last. The replacement cost can be up to $20,000, especially if there are stringent environmental regulations in effect in your area.
Buyers should ask for confirmation that:
• The system was installed with all necessary permits;
• The system has been adequately maintained;
• The seller is not aware of any malfunctions;
• The seller will provide copies of any inspection or approval reports in their possession;
• The seller agrees to pump out the tank at their expense prior to closing; and
• There are no work orders on file with the Ministry of the Environment or the local municipality.
The buyer should arrange for their own separate inspection of the system itself.
4. What’s the road allowance? Even if your cottage fronts on water, this does not give you ownership of the land up to the lake. The first 66 feet fronting onto the lake is typically owned by the local municipality and is referred to as the shore road allowance.
Although you have access to the water, you can’t stop others from using it. Nor can you build anything on that 66-foot piece of land. Many cottagers have found out afterwards that either all or part of their cottage was built on land that they do not own.
You may be able to buy the land from the municipality, but it is a process. If you can get an up to date survey from the seller, this should answer your questions. Also inquire to make sure that any required permits were obtained to build a dock or boathouse, as there is no automatic right to do this. In all cases, make sure you have title insurance, which should assist with most of these types of issues.
5. Access to the cottage: If you do not have year round access by a city road, then you must ask how you get from the road to your property. If it is a private right of way over a neighbour’s land, you must understand the terms of this agreement to ensure it is year round access and it is clear who is responsible for maintaining the road.
If there is no registered right of way, it can be a nightmare, with owners fighting over who has the right of way and who owns it.
For all of these reasons, it is recommended that buyers work with a local real estate agent who should be familiar not only with each of these issues, but more importantly, will be able to recommend the professional inspectors and town officials who can satisfy a buyer’s concerns.
By being properly prepared before buying a cottage, you will avoid unwelcome surprises after closing.