First-Time Home Buyers Guide
January 26, 2009 at 6:01 pm
True North Mortgage outlines the steps new home buyers should make when buying that first property.
Getting on the infamous property ladder and buying your first home is a life changing experience that can be both an exciting and exhausting process. As your home will be one of the biggest purchases of your lives, unless you’re one of the lucky few jet-setting around in your customized Boeing 747, it’s one of the more important decisions you’ll make as well. A good mortgage broker can help simplify the process and that’s what they specialize in. A good mortgage planner can help to explain the options available to you, recommend the various financing solutions in the market and get your first home loan approved at the lowest mortgage rate and the best terms for your own situation.
Canadian mortgage brokers such as True North Mortgage, work with all the major Canadian mortgage banks including ING DIRECT, TD Canada Trust and FirstLine on a daily basis and have an in-depth knowledge of their products and terms and best of all their service is free! Brokers are compensated by the lenders once a mortgage is completed but work for you.
Their in-depth knowledge of the mortgage market allows you work with an expert and can help speed up the home buying process. Finding the best mortgage rate is only one of the steps to securing a home loan, and they can help you get through the entire home buying process and this is one of the many value added services mortgage brokers in Canada can provide and can help first time home buyers through the mortgage process:
1. Pre-Approval
This involves finding out how much you can borrow and what rate you qualify for and this depends on many factors based on your financial situation including your credit history, current level of debt and income. True North provides pre-approvals with a 120 day rate guarantee, so you can hold on to that rate, even if it changes over the next 4 months.
2. Buying your home
Once you’ve found the property you’re going to buy, try and leave a condition day, and give yourself at least 1 week for time to complete all the financing that you’ll need. This gives you some breathing space and is a good time to get the home inspection done.
3. The Paperwork
Your mortgage broker can help explain all the details of the paperwork that needs to get done for the mortgage lender.
Documents that will be needed include:
For your home:
- Property listing copy
- Copy of the signed offer to purchase
- Property details including the legal description (for property tax purposes)
- Lawyer or notary details
- Heating costs, property taxes and condominium fees, etc and this info is usually listed on the real estate agent’s property registration form
- Well and septic tank certificates (if applicable – rural properties)
Employment related documents:
- Confirmation of your employment and income
- Confirmation from your previous employer, if needed
- If you’re self-employed, your financial statement and notice of assessment for the last three years
- Additional income confirmation
Financial documents:
- Pre-approved mortgage loan certificate
- Confirmation of your first payment – if the 1st payment is a gift, you’ll need a letter from the provider to specify that the funds don’t need to be re-paid
- A list of assets and liabilities
- Bank account number
4. Lawyer
Then all the paperwork can be sent to your lawyer.
5. Property registration
Your notary or lawyer will then pay the house vendor, then they will register the property for you in your name, and finally you’ll receive the deed and give you the keys – then the property is yours!
Each mortgage application is different for each person’s situation and a mortgage broker can make this a much smoother, easier process. When you buy your first home, you’ll need money for a down payment, especially since the Canadian government stopped insuring 100% or $0 deposit mortgage back in October 2008. The down payment amounts can vary but generally you should make a payment of at least 10% of the purchase price, but you can down to as low as 5%. You should start off with small monthly payments to make sure you don’t over-extend yourself, and many lenders allow you to pay off lump sums of up to 20% of the mortgage value annually, so there still are payment options available to you.
Government mandated high ratio insurance premiums
|
Loan to Value ratio (LTV) |
25 Year |
0 Year |
35 Year |
|
0% to 80% |
0% |
0% |
0% |
|
80.01% to 85% |
1.75% |
1.95% |
2.15% |
|
85.01% to 90% |
2.00% |
2.20% |
2.40% |
|
90.01% to 95% |
2.75% |
2.95% |
3.15% |
|
* No insurance premiums are required on loan-to-values less than 80% |
|||
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