Determine What You Can Afford
If you’re thinking of buying a home or transferring or refinancing your existing mortgage, use these handy calculators to:
· Figure out how much you can afford to spend on a home.
· Determine what your mortgage amount and payments will be.
· Compare different ways of paying your mortgage faster.
· Add lump sum or top-up payments to your mortgage calculation.
· See your amortization schedule (which provides a breakdown of principal and interest payments for the life of the mortgage).
The Mortgage Process:
Get a pre-approved mortgage letter
A pre-approved mortgage letter is a written commitment that you will get a mortgage for a set amount of money, at a specific rate of interest that is guaranteed for 60 to 120 days, depending on the financial organization you choose. The commitment is made subject to a financial assessment and property appraisal. The service is free and without obligation.
Why is it a good idea to get a pre-approved mortgage?
A pre-approved mortgage gives you an edge. Before you even go house hunting, you will know the size of your mortgage, the interest rate, and the size of your monthly mortgage payments. With your financing already mapped out, you can concentrate on finding the perfect home in your price range.
A pre-approved mortgage also puts you in a strong bargaining position when you make an offer (promise to purchase). If the seller wants to make a quick sale, you may be able to negotiate a price lower than the list price because the seller will be aware that you are a serious buyer. On the other hand, if several people are bidding on the home you want, you may decide to offer to purchase at a higher price, to beat out earlier offers.
You may choose to work with a Mortgage Specialist (not tied to one particular bank). They work with many lenders which allows them to meet the many needs of buyers.
Making an Offer to Purchase
When you find the home that’s right for you, your next step is to make an offer to purchase the home from the current owner. The owner can accept your offer, make changes to the offer and present you with a counter-offer, or reject the offer.
The Offer to Purchase
The Offer to Purchase is a legally binding agreement between you and the person selling the house. It’s a good idea to have your Real Estate Broker review the offer with you before it is presented to the seller. It contains:
· Your full name
· The seller’s name
· The address or legal description of the property
· The price you are prepared to pay for the home
· The items you expect to be included in the purchase price
· The items that are excluded in the purchase price
· The amount of your down payment
· Your financing arrangements, such as the amount of your mortgage and the mortgage interest rate
· The closing date
· The occupancy date
· Specific terms or conditions that must be met as part of the purchase
· A time limit for meeting these conditions
Discuss the Offer to Purchase with your Broker before you sign it. The offer becomes a legally binding agreement the moment it is accepted. If you decide to cancel an offer that has already been accepted, you could lose your deposit and the person selling the home can sue you for damages. If the seller does not accept your offer, you do not need to give the deposit.
When your offer is accepted
Your offer has been accepted. One step down and a few more to go! Now you need to finalize the details of your mortgage and to finalize the conditions of the offer to purchase. Call your Mortgage Specialist and provide them with the following information:
· A copy of the real estate listing
· A copy of the accepted Promise to Purchase
· Information on the source of your down payment
· Income verification if you are employed
· A letter from your employer verifying your place of employment and income, T4s and Notice of Assessment, or TI General Tax Return and Notice of Assessment.
· Income verification if you are self-employed.
· 3 years of Financial Statements and 3 years of Notice of Assessments, or 3 years of T1 General Tax Returns and 3 years of Notice of Assessments.
Processing the mortgage application
Your Mortgage Specialist will want to verify the value of the property you are buying, your current financial picture and your credit history, so a property appraisal and credit report will most likely be required.
Also, if your down payment is less than 20%, you quality for a high ratio mortgage on which you would have to pay insurance premiums. You decide whether you want to pay the premium in cash or have your lender add it to your mortgage amount. Your Mortgage Representative can contact Canada Mortgage and Housing Corporation (CMHC) or GE Capital Mortgage Insurance Company of Canada to make the arrangements.
Be prepared to pay fees for the mortgage application, credit report and property appraisal.
Closing the purchase
Closing day is the day you become the official owner of your home. However, the closing process usually takes a few days.
Typically, you visit the Notary about 2 to 5 days to review and sign the documents relating to the mortgage. The Notary will ask you to bring the down payment funds in the form of a bank draft. This is when you will sign the Deed of Mortgage.
You generally meet with the Notary and the Sellers, a few days later to review the documents for the property you are buying. The Notary will discuss the conditions of the purchase. You will review the Certificate of Location and provide proof of house insurance to the Notary. Once the mortgage and the deed of the sale is officially recorded, you are the proud owner of the property. Congratulations!
Diane +
Paul Laflamme
Royal LePage Village
514.793.4514
Source: Royal LePage Canada
