First Time Home Buyer
FIRST TIME BUYERS
There’s never been a better time to buy your first home than now!
A Mortgage World specialist will help you understand the options available to you for making one of the most important decisions of your life.
Our mortgage world specialist will be there for you whenever you need them for providing all the information needed, giving you sound advice.
We have managed to gather below a list of topics which you would like to read and understand when you are planning to purchase your dream home. If you have any doubt in your mind about anything related to purchase of your first home please don’t hesitate to call us. We are just one call away.
- Affordability and Financing
- Selecting the Right Mortgage
- Applying For Your Mortgage – A Checklist
- Choosing a Realtor
- Finding and Purchasing the Right Home
- Making House Hunting Fun
- Before You Sign the Offer
- On Closing Day
- Mortgage Life Insurance
- Prepayment Privileges
AFFORDABILITY AND FINANCING
Before looking out any home first visit or call us and talk. Talk about your family monthly income and expenses. We can then evaluate how much mortgage will be available to you. We will also show you how your monthly expenses will change due to new mortgage. We may tell you to secure pre-approved mortgage with lender. So that when you go outside to check out different homes you will always have price range in your mind. That will help you make sound decision and not an emotional decision.
Lender will determine your Gross Debt Service Ratio (GDS) to make decision about how much money he can lend to you. GDS means ratio of your annual mortgage payments and other obligations against your total gross family income. Generally as a thumb rule if your total obligations are equal to or less than 30% of your gross family income than it is considered as an acceptable level of debt by lenders.
At Mortgage World we will help you evaluate your net income and based upon that can give you an information about the mortgage payment that you can comfortably afford.
We will also discuss closing costs with you, such as land transfer taxes, legal fees, and other disbursements. Before you’re pre-qualified, we will run your credit bureau report and ask for written confirmation of income, as well as how much you plan to put down on your purchase.
Once you are pre-qualified benefits are all yours. The interest rate may be guaranteed for 60 to 120 days from the time of your application. If interest rate decreases you’ll get the lower rate. If it increases than you are covered. And also just because you are pre-qualified that doesn’t mean you have to stick to the lender you dealt with before. If there is another lender with good terms for you, than we will help you to reach to him.
SELECTING THE RIGHT MORTGAGE
Choices in selecting a mortgage include:
Conventional vs. high-ratio or insured mortgages
Conventional mortgage means a mortgage in which you are paying at least 20% of the purchase price as the down payment. Thus, in this kind of mortgage, mortgage insurance is not required. So insurance premium and other application , legal and property appraisal charges are not included in the installments of Principal + Interest.
While High-ratio mortgage are compulsorily required to be taken when you are making down payment of less than 20% of the purchase price. Thus in this kind of mortgage, mortgage insurance must be obtained under an obligation of National Housing Act. In the amount of installments of Principal + Interest, the amount of insurance premium, application, legal charges and property appraisal charges shall be included.
Closed vs. open mortgages
Closed mortgages may let you pay off but with prepayment charges. However, the benefit of closed mortgage is its lower interest rate.
While open mortgage lets you pay off as much as you want without any prepayment charges. But it carries more interest rate than the closed one.
Short term vs. long term
Short term mortgages are beneficial if you believe that interest rates are going to be lower at the renewal time.
Long term mortgages are suitable when you consider that the prevailing interest rate is reasonable.
Fixed rate vs. variable rate
If you are planning to mortgage for a long period of time than fixed rate mortgage is advisable as you can predict the future expenses soundly.
If you are considering for a short term mortgage than you may play your luck on variable rate mortgage which will fluctuate as the market will fluctuate.
Your Mortgage World specialist will help you make the decision of selecting the best option suitable to you and clear your smallest doubt.
Make a Checklist of some things you will need when applying for a mortgage.
When applying for a mortgage, you will need:
- A copy of the accepted Offer to Purchase and the land survey.
- A salary letter from your employer (self-employed buyers may require financial statements for the past three years as well as personal income tax returns).
- Confirmation that your down payment came from your own resources (e.g. bank statements or a gift letter).
- A list of all your assets and debts along with account numbers.
- A copy of the Real Estate Listing if buying an existing home.
- Condominium financial statements, if applicable.
- If you are buying a home to be constructed, bring a picture of the property, a copy of the building plans and specifications, the land survey, plus your agreement with the builder.
Obtain your pre-qualified approved with the help of your mortgage world specialist so you can get an idea about how much you can afford. When you agree to buy your dream home contact your mortgage broker and your deal is sealed.
CHOOSING A REALTOR
Choosing a realtor is not an easy task. You can contact few realtors from different companies and observe their presentation. Choose the realtor who understands your need and with whom you have a good chemistry. As choosing a right realtor will ensure you the right place and right price. A realtor who keeps you informed about all the listings and sales near to your area is probably the one who is best suitable for you.
MAKING HOME HUNTING FUN
There are end numbers of information available for you which can be fetched from Lenders, as well as CMHC, the Canadian Bankers’ Association, the Ontario Real Estate Association, and the Home Builders’ Association, among others to make your home hunting fun and loving rather than boring and stressful. Visit their websites for more information.
Rather than presuming and estimating take your time out to seek for professional resources to purchase your dream home!
BEFORE YOU SIGN THE OFFER
Before signing the offer, appoint a competitive lawyer who has an excellent knowledge and approachability. Let your lawyer read and review the document carefully. Once you sign and accept it, the lawyer will start its search from the municipality as to whether vendor haven’t been sued, whether all property taxes and utility bills have been paid and also to check that there is no other outstanding mortgages or liens on the property once you become an owner.
Your lawyer will also draft a series of closing documents and review the closing documents drafted by the vendor’s lawyer.
Your lender and your lawyer will co-ordinate with each other to draft the appropriate document. Your lawyer will inform you if he is also representing the lender. Then your lawyer will intimate to the property tax office as well as other utility offices that you are the new owner of the property.
While you visit your lawyer’s office for signing the closing documents bring a certified cheque to pay the closing fund which your lawyer has paid to the selling party on your behalf. This closing amount will be inclusive of the lawyer’s fees as well as disbursement costs. The lawyer obtains the mortgage funds directly from the lender funding your mortgage.
ON CLOSING DAY
At the closing day your lawyer will close the transaction with the lender’s lawyer. Balance purchase price will be exchanged at the time of receiving keys to your new home. Your lawyer will register the deed or title transfer and the mortgage.
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. Keep these important documents in a safe place.
MORTGAGE LIFE INSURANCE
Mortgage life insurance policy is a unique kind of life insurance policy which makes your balance debt payment if you somehow meet with a death, terminal illness, or permanent disability but your mortgage while is still in existence. It is extremely smart policy to take if you want to save your family from the burden of debts after your death. Another interesting thing is you can always combine your this policy premium with your mortgage installments. So you don’t have to worry about missing out its premium payment (Because details vary among financial institutions, it’s a good idea to read the policy carefully).
Different financial institutions have different kinds of pre payment privileges. Your Mortgage Centre specialist can discuss your prepayment options with you, based on the mortgage you select.
Choose your mortgage payment method wisely. To save your overall mortgage interest payment you may choose to adopt weekly or biweekly instead of monthly payment system.
Your home is more than just a home, Make the best out of it!