Let me help you understand the options available to you at this important stage in your life.
Take comfort knowing that I will provide you with all the information, sound advice, and assistance you need, every step of the way.
Below is a list of topics you'll want to read over as you plan what may be your largest purchase ever. If there's anything you're unsure about, please don't hesitate to talk to me. I'm prepared to do what I can to help make things proceed smoothly, quickly and effortlessly.
- Choosing a Realtor
- Finding and Purchasing the Right Home
- Making House Hunting Fun
- Affordability and Financing
- Selecting the Right Mortgage
- Applying For Your Mortgage - A Checklist
- Before You Sign the Offer
- On Closing Day
- Mortgage Life Insurance
- Prepayment Privileges
Choosing a Realtor
Choosing the right realtor can help ensure you get the right house at the right price. You want a real estate agent whose attitude and availability inspire your trust.
Set up an appointment with your realtor to help them get to know you and assess your needs. Are they prepared? Have they done their homework in advance? Be sure to ask if the realtor is acting for a vendor or for you. Work with someone you relate to, with whom you have some chemistry, and who offers excellent service and value.
Here's a checklist of some questions to ask potential realtors before deciding which is right for you:
Ask how they'll approach your home search. Will they only rely on MLS listings, or do they have other sources of homes to show you? Are they willing to change their strategy to adapt to market conditions?
Length of time for search
How long do they think it'll take? What's the average length of time in your area and in the current market?
What's the current selling price versus asking price in your area and in the current market? Is their personal sell vs. ask price better than average? Do they have examples of comparable property sales they can show you?
Do they prefer to pre-book viewing excursions or are they able to show you listings as they become available?
Do they have any special affiliations or packaged discount programs with other corporations that can save you money on your mortgage, moving costs, or on purchases for your new home?
Consider transportation, distance to work, and proximity to schools, daycare, recreational facilities, shopping, healthcare, and so on.
Making Home Hunting Fun
There's no shortage of information available to help you make an informed purchase decision. Lenders, as well as CMHC, the Canadian Bankers' Association, the Ontario Real Estate Association, and the Home Builders' Association, among others, have information to make home hunting stress-free and fun. Visit their websites for more information.
Affordability and Financing
We'll review your current income and expenses to determine what you qualify for and you what can comfortably afford. I'll help you take into account how your new mortgage may change your monthly expenses. Securing a pre-approved mortgage with a lender that checks your credit rating will allow you to get an idea about how much mortgage you may qualify for, so you can have a price range in mind when you look at different properties.
Lenders determine affordability by looking at your Gross Debt Service ratio (GDS) and your Total Debt Service ratio (TDS). The GDS ratio is based on what you can afford to pay each month; it includes mortgage payments, taxes and utilities. The TDS ratio includes everything covered under GDS plus all your other financial obligations.
The pre-approval stage is also the time to find out about the difference between conventional mortgages and high-ratio insured mortgages.
I will also discuss closing costs, such as land transfer taxes, legal fees, and other disbursements. Before you're pre-approved, I will pull your credit bureau report and ask for written confirmation of income, as well as how much money you plan to use for your down payment on your purchase.
Once you're pre-approved, the interest rate is secured for up to 120 days from the time of your application. If rates drop, you'll get the lower rate; if they rise, you're covered. And just because you pre-approved by a certain financial institution, you're by no means committed to that lender. We'll continue to shop the market to get you the deal that we believe will suit your needs!
Selecting the Right Mortgage
Choices in selecting a mortgage include:
Conventional vs. high-ratio or insured mortgages
A conventional mortgage is a mortgage that has a principal amount that is no more than 80% of the appraised value or purchase price of the property, whichever is less. The principal amount of a high-ratio or insured mortgage is more than 80% of the appraised value or purchase price and requires mortgage default insurance (i.e. CMHC). In general, the borrower pays the default insurance premium.
Closed vs. open mortgages
Closed mortgages generally offer lower interest rates than open mortgages of the same term, but open mortgages let you pay off as much as you want, any time, without paying a prepayment charge.
Short term vs. long term
The term you select is important, too. Short term mortgages are appropriate if you believe interest rates will be lower at renewal time. Long term mortgages are suitable if you feel current rates are reasonable and you want the security of budgeting for the future.
Fixed rate vs. variable rate
You can choose a fixed or variable interest rate. A fixed rate mortgage makes it easier for you to budget for whatever term you select. A variable rate mortgage fluctuates with the lenders' Prime Rate which is impacted by the Bank of Canada's Overnight Lending Rate.
Applying For Your Mortgage - I will provide a checklist of items you will need to get the process started.
Before You Sign the Offer
Select a lawyer as you'd select a real estate agent: seek competitive fees, excellent service, knowledge, and value.
Involve your lawyer before you sign the offer, which becomes a legal Agreement of Purchase and Sale once you and the seller sign it. Have your lawyer read the document carefully with you. Once it's signed and accepted, your lawyer will order a series of searches from various municipal offices to ensure that the vendors haven't been sued, they've paid all of their property taxes and major utility bills, and that there are no outstanding mortgages or liens on the property once you become the owner.
Your lender and lawyer will coordinate and draft the appropriate documents. Your lawyer will notify the property tax offices as well as the utility offices that you will be the new owner as of the closing day.
A few days before closing, you'll visit your lawyer's office to sign the final documents. Bring a certified cheque for the balance of the closing funds, because the lawyer pays the relevant parties on your behalf. Part of that amount covers the lawyer's fee and disbursement costs. The lawyer obtains the mortgage funds directly from the lender funding your mortgage.
On Closing Day
Your lawyer will close the transaction with the vendor's lawyer. At this time, the balance of the purchase price will be exchanged for the keys to your home and closing documents will be exchanged. Your lawyer will register the deed or title transfer and the mortgage. Finally, you pick up the keys to your new home!
After closing, your lawyer will send you a reporting letter and copies of all the documents you signed including the deed, the mortgage, and the survey, as well as a summary of the flow of funds. Be sure to keep these important records in a secure location.
You're now a home owner! Talk with us Today!