Mortgage Information
Congratulations! You've made the decision to purchase a home...what's your next step?
Visit your Mortgage Specialist.
Many buyers apply for a loan and obtain approval before they find the home they want to buy. Why? If you don't qualify then your Mortgage Specialist can assist you with some options to get you on your way. If you're ready to make that purchase then these are your options;
Pre-qualifying will help you in the following ways:
1. Generally, interest rates are locked in for a set period of time. You will know in advance exactly what your payments will be on offers you choose to make.
2. You won’t waste time considering homes you cannot afford.
Pre-approval will help you in the following ways:
1. A seller may choose to make concessions if they know that your financing is secured. You are like a cash buyer, and this may make your offer more competitive.
2. You can select the best loan package without being under pressure.
What Can You Afford?
There are three key factors to consider:
1. The down payment
2. Your ability to qualify for a mortgage at the benchmark rate*
3. The closing costs associated with your transaction.
* The benchmark rate is a rate that lenders are required to use to qualify mortgage borrowers.
Down Payment Requirements:
Most lenders require a minimum of 5% of the purchase price as a down payment for homes under $500,000. Homes over $500,000 require 5% down payment up to the $500,000 and 10% for every $100,000 there after. For example the home is $700,000 your down payment would be $45,000 ($25,000 for the $500,000 and $10,000 for each $100,000 over that, in this case the amount is $200,000 therefore the additional $20,000). If a minimum of 25% is used as a down payment then the expenses related to C.M.H.C./Genworth can be avoided. They include an application fee and an insurance premium based on a percentage of the amount borrowed (with 5% down), which is added into your mortgage payment.
Closing Costs:
You should budget approximately $2,500.00 + Land Transfer Tax* for additional expenses known as closing costs which include the following;
Visit your Mortgage Specialist.
Many buyers apply for a loan and obtain approval before they find the home they want to buy. Why? If you don't qualify then your Mortgage Specialist can assist you with some options to get you on your way. If you're ready to make that purchase then these are your options;
Pre-qualifying will help you in the following ways:
1. Generally, interest rates are locked in for a set period of time. You will know in advance exactly what your payments will be on offers you choose to make.
2. You won’t waste time considering homes you cannot afford.
Pre-approval will help you in the following ways:
1. A seller may choose to make concessions if they know that your financing is secured. You are like a cash buyer, and this may make your offer more competitive.
2. You can select the best loan package without being under pressure.
What Can You Afford?
There are three key factors to consider:
1. The down payment
2. Your ability to qualify for a mortgage at the benchmark rate*
3. The closing costs associated with your transaction.
* The benchmark rate is a rate that lenders are required to use to qualify mortgage borrowers.
Down Payment Requirements:
Most lenders require a minimum of 5% of the purchase price as a down payment for homes under $500,000. Homes over $500,000 require 5% down payment up to the $500,000 and 10% for every $100,000 there after. For example the home is $700,000 your down payment would be $45,000 ($25,000 for the $500,000 and $10,000 for each $100,000 over that, in this case the amount is $200,000 therefore the additional $20,000). If a minimum of 25% is used as a down payment then the expenses related to C.M.H.C./Genworth can be avoided. They include an application fee and an insurance premium based on a percentage of the amount borrowed (with 5% down), which is added into your mortgage payment.
Closing Costs:
You should budget approximately $2,500.00 + Land Transfer Tax* for additional expenses known as closing costs which include the following;
- Lawyer’s fees and disbursements
- Title Insurance
- C.M.H.C./Genworth application fee (if applicable)
- Property appraisal (if required)
- Adjustments