He figured out how to calculate your credit score (thanks Richard!)


Yesterday Richard Moxley and I chatted in a Google Hangout about his book, personal credit and things people should know about the “credit game”.  Some of the points that Richard covered included: joint credit, death and divorce, how to check your credit free as well as some simple things to know that could really improve your credit score.  And by the way, he reverse engineered the credit scoring system to figure out how credit scores are calculated (he loves credit).

Continue reading “He figured out how to calculate your credit score (thanks Richard!)”

What if credit scores did not exist?


As a pick-up from yesterday (click here) regarding why credit scores are so important I thought I would offer another side of credit scores:  What if credit scores did not exist?  Having worked with borrowers for more than a decade I can tell you that a credit score is a real data point that banks and lenders have to know to determine what type of risk a borrower might be.

A credit score is the result of many different factors including the following: Continue reading “What if credit scores did not exist?”

How much does my credit score really matter?


It’s amazing to me that many of the clients that come to us seeking a mortgage or loan do not know their credit score.  In fact, not only do they not know their credit score most of them have never even seen their personal credit report.  I find it amazing because your personal credit score is one of the core criteria that a bank or lender will use when deciding to approve your request for a mortgage or loan.

Continue reading “How much does my credit score really matter?”

Understanding construction mortgages (cost vs value)


Given the numerous construction deals that our office has seen over the past half year, I thought I would provide some details on how construction mortgages work with particular focus on the concept of “cost to complete”.  Banks and lenders use two primary ways to determine their exposure on a construction deal.  One method is referred to as Loan to Value and the other method is referred to as Loan to Cost.  They may sound the same but they are significantly different and can change the entire risk profile of a deal in the eyes of a bank or lender.

Continue reading “Understanding construction mortgages (cost vs value)”

Should I get a second mortgage?


This is a great question that we often get asked and often consider when someone really needs cash but may not qualify to refinance their existing mortgage OR they do not want to pay the penalties associated with paying out an existing mortgage.  There is no perfect answer or a “one size fits all” solution, however here are some things to consider if you are evaluating a second mortgage.

Continue reading “Should I get a second mortgage?”

This is proof that we all follow the herd (well most of us)


It’s not often that an LOL means I actually laugh out loud but today was one of those rare moments when I experienced an genuine LOL.  In reading an article in the Financial Post (‘The little guy can’t win’: U.S. families stuck renting as big investors pay cash to snap up homes) I found myself laughing out loud because it seems like only yesterday that the US real estate market (and other markets) were in a free fall.  Read it for yourself and see if you agree and experience an LOL.  Keep in mind I work with private investors who place their capital in real estate and work with borrowers who need mortgages for real estate (which means I also work with banks and lenders).  In 2008 and 2009 when the credit markets froze it was no laughing matter.  Investors couldn’t wait to get rid of properties and borrowers had a very difficult time refinancing their properties because banks and lenders made it hard to get approved.  Not even five years later this article points to a complete turnaround of market sentiment (and facts) which should remind us all that as a herd of people we will always magnify the highs and lows and continue to move together as one. Continue reading “This is proof that we all follow the herd (well most of us)”

What’s the one thing you believe that no one else does?


Sarah Lacy of PandoDaily holds fireside chats with various people involved in the tech sector and at the end of each interview asks the question “What is one thing you believe that no one else does?”  This question provides insight into the person being interviewed and also makes for great conversation (see here for the fireside chats).  Given what I do each day and the conversations I have about banks, lenders, debt, cash flow, businesses and people needing money, etc. I thought my answer might make for an interesting blog post. Continue reading “What’s the one thing you believe that no one else does?”

Just because you can doesn’t mean you should


In keeping with my theme from yesterday (click here) I continue today with the question:  “Should renters be able to pay their rent with their credit cards?”  I fully appreciate that on the surface this may seem like a silly question however stop for a moment to consider the implication.  As with anything there may be a group of people who can handle their credit card properly and making a rent payment using their credit card would not cause undue financial strain.  However, I think it is fair to consider that there may be a larger group of people who would experience additional financial strain if they were given the opportunity to pay their rent with their credit card. Continue reading “Just because you can doesn’t mean you should”

This won’t make me popular but it makes sense


CNN Money posted an article today titled “BofA considers account that puts an end to overdrafts” which I think is a brilliant idea.  For those of you who have not been following the overdraft issue it may be difficult to appreciate this potential move by B of A but trust me when I say that this is a move in the right direction.  Banks earn money when people go into their overdraft by charging a flat fee per instance or per month.  The fees can be a few dollars per instance to a monthly charge of up to $5.00 in additional to interest rates that can run up to 21.0% per year.  This may not seem like a lot of money but across the portfolio of accounts that a bank would have this revenue can quickly add up. Continue reading “This won’t make me popular but it makes sense”

Bank is 7 days behind (and its not their problem)


Here is an excerpt from a major bank in Canada that sent a message to brokers today (keep in mind that today is October 18)

“we…currently working on deals that were submitted on Friday October 11…please set proper expectations with your clients and referral resources…”

There is much more to the message but you get the idea.  This bank is only looking at requests they received October 11 and are running a week behind.  Why is this important? Continue reading “Bank is 7 days behind (and its not their problem)”