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5 C's of Credit Analysis: How To Get Approved For A Mortgage - YouTube
Channel: Toronto Living by Lei Villar-Cisneros
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Thinking of buying a home? Your mortgage聽
approval will play a big role. In this series,聽聽
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I will share with you five criteria聽
that a lender looks for when they're聽聽
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reviewing your mortgage application. Stay tuned.
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Hey everyone, Lei here, your real estate go-to聽
expert in the Greater Toronto Area. Today's topic聽聽
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is the five criteria that a lender is looking for聽
when they are reviewing your application or we聽聽
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call it the five Cs of credit. One of the most聽
important, if not the most important factor in聽聽
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achieving your home ownership dream is, securing聽
a mortgage or a home loan and one of the criteria聽聽
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that a lender checks for is your credit or your聽
credit worthiness. This is the snapshot of your聽聽
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overall credit history. In the layman's term,聽
this is your report card on how you use your聽聽
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finances so you might be wondering how did you聽
ever start having a credit score? Let me share聽聽
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you some light, so when you first started聽
saving, let's say, this is your first job,聽聽
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you got your S-I-N or social identification number聽
that you use with your employer. So this is being聽聽
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recorded and they send it to the credit bureau. In聽
Canada, there are two credit bureaus that we use,聽聽
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the Equifax and the TransUnion. It is very聽
important that you check both of this credit聽聽
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agencies to find out if you your reporting is聽
matching or in sync because they have different聽聽
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ways of reporting one may not be as updated as聽
the other one or vice versa it's very important聽聽
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that you check this at least once a year if you're聽
looking to check it you have you are entitled to聽聽
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one free credit reporting without the score every聽
year so all you do is you contact them and they聽聽
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will send you that information going back to our聽
topic on how you got your credit history started聽聽
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so when you first get a job when you first start聽
an account with your back let's say you started a聽聽
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savings or a checking and then after a few years聽
you might be wondering how suddenly you get this聽聽
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offers from credit cards for you to apply for a聽
loan so that's because you already started getting聽聽
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history and and from then on so if you apply for聽
any types of credit so for example you got a car聽聽
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loan you got a credit card a line of credit a聽
student loan you name it any type of credit in聽聽
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Canada will be recorded and it will be reported聽
to your credit bureau this is how they started聽聽
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the records and I won't go into detail on how they聽
score it that will be another series that we're聽聽
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gonna talk to but for now we'll just gonna leave聽
it at that so you need to have a good credit score聽聽
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in order for you to pass a mortgage application聽
this is an indication that you are a good loan聽聽
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repair so that means that they would be able to聽
extend to you a credit number two in the criteria聽聽
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is your character character in other words your聽
willingness to pay you might have a lot of money聽聽
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but if you're not willing to pay any logs then聽
that's not a good character right so they look at聽聽
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this and how do they check that in the same place聽
the credit your credit reporting so what they see聽聽
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there is are you paying your bills on time are you聽
missing any payments did you file any bankruptcy聽聽
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then you run away and don't pay or do you have聽
collections do you have any student loan that you聽聽
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don't pay or any types of loans so it will show聽
there and if you're unemployed it also shows there聽聽
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so you know when you're applying for a credit聽
just tell the truth you know because you can't聽聽
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really run away from it and when an underwriter or聽
the person that review your application looks for聽聽
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every single detail it is very important that they聽
know why rice because sometimes we won't have a聽聽
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perfect credit because some of some circumstances聽
that happen in the past what matters is how you聽聽
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resolve it so when you are giving your information聽
do not skip on anything because they will find it聽聽
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out anyway and so when you skip on it they know聽
you lied on your application then chances are you聽聽
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won't get it anyway okay so number three is your聽
capability or capacity capacity is sure ability聽聽
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to pay do you have an income we have a cash flows聽
to support a mortgage payments if you are making聽聽
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say a thousand dollars every two weeks and you聽
are going to pay 800 dollars every two weeks for聽聽
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your mortgage it shows the lender you don't have聽
the ability to pay so right there and then they聽聽
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know that you will be missing ailments in the聽
future if you're in this situation that you're聽聽
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barely meeting the ends and that means it is not聽
the right time for you to get mortgage because聽聽
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that will only cost you I had a number for is聽
the capital there wants to see how invested are聽聽
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you in this mortgage application otherwise known聽
as the down payment they want to make sure that聽聽
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you have a down payment in addition to the terms聽
and conditions of the mortgage repayment number聽聽
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five is the collateral or additional security to聽
the lawn so aside from your down payment and your聽聽
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monthly mortgage payment to the loan sometimes聽
they will ask you for additional security in聽聽
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terms of Akko application if your income is not聽
that high or for them your application is not聽聽
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strong enough they might ask you for additional聽
person or additional security when they extend聽聽
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you the loan you are basically giving them the聽
title to your property until such time that you聽聽
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were able to repay the full loan and that can聽
take about 25 to 20 years and sometimes longer聽聽
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if you are breaking the mortgage Midway of the聽
term now let's recap on what we have learned聽聽
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so far number one is credit or credit worthiness聽
number two is your character or your willingness聽聽
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to pay number three is your capacity do you聽
have the income to pay your monthly mortgage聽聽
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payment number four is your capital do you have聽
a down payment and deposit that will be added聽聽
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to the mortgage number five and the last one聽
is your collateral or the additional security聽聽
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it can be the subject property and an additional聽
applicant so they looked at all these things and聽聽
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see if you are a fit to the criteria that they聽
are looking for in order for you to get a lot聽聽
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there you have it the five Cs of credit I hope聽
that you learned something from this series and聽聽
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if you have questions please comment it below and聽
if you wanted to reach me please see my contact聽聽
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information on the description and don't forget聽
to subscribe thanks for watching bye for now
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