QWhat is a mortgage?

AA mortgage is a loan guaranteed by real property—that is, by land, a residence, second home, etc.

Mortgages are most often used to purchase property, but they can also serve other purposes. The equity (residual value) that accumulates in real property can be used to leverage other types of investments or property improvements, or even to consolidate and pay off debt. If you are experiencing financial difficulties, it’s important to find out whether you can use the equity on your property to refinance. This is why it’s imperative for property owners to protect their assets and to quickly remedy any defaults.

QWhat is a default?

ABorrowers who fail to respect or comply with one or more of the clauses in a mortgage agreement are said to be in default. This can result when property owners miss mortgage payments, fall behind on their property taxes, or fail to comply with any other clause that can affect the quality of the security provided by the property. The mortgage agreement is the document that describes the conditions and obligations of the borrower and lender, and a default occurs when the borrower fails to satisfy any of its written conditions.

QWhat is a 60 day notice?

AThe term refers to an ultimatum that lenders give borrowers to ensure they comply with their mortgage terms within a 60 day timeframe. If the borrower fails to do so, the lender will exercise its guarantees—that is, take the property as payment or enter into a court-ordered sale. Usually, notices result after a borrower misses several payments or fails to respect one or more clauses in the mortgage agreement.

QWhy should the borrower immediately correct a default?

AFirst, immediately correcting a default is important to preserve the trust-based relationship between borrower and lender. The creditors want to know its loan is secure, and quickly resolving default situations helps you maintain a good relationship with the lender. Normally, lenders don’t issue notices for single late payments.

QWhat is a credit rating?

AYour credit rating tells prospective lenders about your payment history and your ability to manage your finances. Ratings vary depending on the type of debt (credit card, auto loan, personal loan, etc.) and how promptly you make payments. The rating generally consist of a letter (R, O, I) paired with a number from 1 to 9; the letter represents the type of debt obligation and the number, the promptness of payments. For example, if you charge auto repairs to your credit card, which has a $5,000 credit limit, and then pay the credit card company the balance due within 21 days of the payment date, the notation “R1” will appear in your credit file. In the event that you stop making credit card payments and the debt is turned over to a collection agency, your file will include the notation “R9.”

A good credit rating tells lenders that you’re financially responsible and capable of taking on the obligations that come with a loan. This enables you to borrow at lower rates with more favorable conditions. Entries like R1, I1, O1, and so on will boost your credit score.

QWhat is a credit score?

AThe credit score is a three-digit number—generally between 300 and 900—that paints a general picture of your credit profile. It depends on several things: the kinds of loans you get, your payment history, how often you apply for credit, the amount of credit you actually use compared to the credit limit you are granted, and so forth.

The higher your credit score, the more solid your credit is. Financial institutions (banks, credit unions, insurers, etc.) will therefore grant you loans at better terms and rates. Conversely, the lower your credit score is, the less likely it is that lenders will view you as an acceptable risk, which means higher rates and more restrictive conditions on any loans they may be prepared to offer.

A good credit repair strategy is a must if you want to avoid more costly private loans.

QHow long will it take to correct or repair my damaged credit?

AIt all depends on your circumstances and your current credit rating. If you have declared bankruptcy or had unpaid bills turned over for collection, your credit rating will be affected for 6 or 7 years, depending on the credit bureau involved (Equifax or TransUnion) on the date when debts are excused
or the date of last activity (criteria can vary from one credit bureau to another). The effect of a bankruptcy filing or collection agency involvement on your credit rating will gradually diminish and may disappear completely after 6 or 7 years. If neither of these situations applies to your credit file and your current score is sufficiently high, your credit rating can improve in as little as 6 to 12 months.

QDoes CVMA offer only residential mortgages?

ANo. However, we require a mortgage security on all our loans. In some cases, we may accept moveable property or even an insurance policy as security.

QI don’t need a loan, but I am looking for guidance regarding a real estate project.

AWith over 25 years of real estate experience, we can provide advice to help you finance, purchase, sell or manage residential or rental property.