22 Jan

Mark Changed His Life Through Cash Flow Planning. You Can Too!

General

Posted by: Roberto Pelaccia

At some point in everyone’s life, there are hard times. Whether it’s the death of a loved one, losing your job, or even getting a divorce. I’ve worked with many people going through divorces and one of the most common problems is that they simply don’t know where to start financially. For years they’ve had this other person to collaborate and share finances with. And now, all of a sudden, it’s all on them to do it solo.

So, it can be overwhelming to have to plan your finances and figure out how you’re going to afford everything on your own. Especially on top of everything else you have to deal with.

When I think of all the people I’ve worked with in this particular situation, one person really comes to mind, and that’s Mark.

Mark came home on a normal day to find out that his wife of 14 years was leaving him. Of course saying that it came as a shock is an insane understatement. They had not only been together for 14 years, but they had two children together. Now, they were going their separate ways.

He knew he needed to move and be able to manage his bills. He wasn’t necessarily worried about being able to pull it off, he just didn’t know where to start from a financial standpoint.

His wife was going to be staying in their current home and knew that she would be able to take over the mortgage on her own. So, she came to me to see what she would qualify for so she could also figure out what she would be paying Mark as part of their separation. And, as I’m sure you can guess at this point, this is how I met Mark.

He was told that he would be getting $200,000, which he thought would be enough to start over and buy another home in their neighbourhood. But, he still didn’t know what kind of mortgage ge would be able to afford since he would be adding child support payments to the mix.

We decided that completing a cash flow plan would be the best way to go for him. And, the plan that we created for Mark had him paying off some of his debts, setting up an emergency fund, and had him pre-qualifying for a mortgage.

Now, this is where it gets really exciting…

Just two-months after setting him up with his brand new cash flow plan, he happily moved into a new home just down the street from his kids. He had an effective method of operation to handle his new shelter costs and child support payments. He had three months of his net income set aside in an emergency fund. He knew exactly what his spending should look like for the amount he was earning. And finally, he had a plan that had him admitting that he had never been so confident about his finances before.

The bottom line is that money and finances are a very real stressor for people. And, with Mark, we were able to create a personalized cash flow plan that not only decreased that stress, but created confidence. Could you just imagine not worrying about paying your next bill or dealing with an unexpected expense? How much more joy would you experience is those stressors weren’t there?

Cash flow planning isn’t a budget. Budgets are restrictive! Cash flow planning is a way for you to achieve your goals and make the most out of the money you have today. Who doesn’t want to be able to do more and achieve more!?

 

 

8 Jan

Does Having A Co-Signer Mean You’ll Qualify For A Mortgage?

General

Posted by: Roberto Pelaccia

This is an option that many people look at, especially if they don’t have strong credit or if they don’t make enough money. This issue here is that a lot of people look at it as the same as cosigning on a lease for an apartment when you’re in your early 20s. People think that it’s a simple case of someone signing on the dotted line to basically say that you’re not as high of a risk for defaulting on payments.

When cosigning for a mortgage, this is not the case. It is a much more extensive process.

In this article, we talk about why someone would have someone cosign on a mortgage, what it means for the cosigner, and some critical things you should know before having someone sign on the dotted line.

Why you would use a cosigner

The reality is that qualifying for a mortgage is getting tougher. If you have some dings on your credit, if you’re not bringing in enough of an income, or if you don’t have a large enough down payment, could result in you not qualifying for a mortgage on your own. It could also be something as simple as switching employers or professional fields. Going through those kinds of transition periods can make lenders pause when deciding whether or not to give you a mortgage.

As a result, some people make the decision to bring in a family member or close friend to cosign on their mortgage.

What does it mean for the cosigner

Putting someone’s name on your mortgage is a big deal. Not only are they putting their name and credit on the line but  they are basically offering up security for the lender. If you default on a payment or can no longer pay your mortgage, then it’s the cosigner who has to step up and make sure things get paid. This also means that default payments will show up on your co signer’s credit as well.

So, to make sure everyone is protected, I would suggest seaking out independent legal advice prior to agreeing to either accepting a cosigner or agreeing to be a cosigner. No matter who the person is!

Should you proceed with a cosigner, you can give it some time and then request that the lender reevaluate your application as an independent and potential have the cosigner removed. Until then, keep in mind that it’s both of your names and credit on the line.

Things you should know before signing!

When you’re thinking of recruiting a cosigner, you need to keep in mind that they will go through the exact same vetting process you have. They will have to provide all the same documentation and prove they they are a strong enough applicant to hold a mortgage. Just the same as you.

In addition, by having their name on your mortgage, it will have an impact on their ability to borrow anything while their name is attached to your mortgage. It’s also the case if they already have a mortgage. They may not qualify as a cosigner because that would mean that they need to be able to carry two mortgages.

When it comes time for you to remove your cosigner from the mortgage, make sure you check with your mortgage broker to make sure that removing the cosigner won’t be seen as breaking your mortgage. Because, there could be some large penalties if that’s the case. So, just make sure you’re covering all your basis.

 

Cosigning is definitely an option available. Especially for someone who might be a first time home buyer who is building up their credit and starting their career. But, just like anything else, it’s important to have all the information before you make a decision. So, consult a mortgage broker if this is the avenue you’re thinking of taking.