Home Buying Basics

What and how much do you need to save? 

Down payment –the minimum down payment typically required is 5% of what the purchase price of the home may be.   

For example;

• A $150,000 house would need a down payment of $7,500.
• A $250,000 house would need a down payment of $12,500.
• A $350,000 house would need a down payment of $17,500.

Normally, the minimum down payment comes from your own savings.  However, a gift of a down payment from an immediate relative is acceptable as well.  Occasionally, even lender’s incentives or other forms of borrowed down payment are permitted. These mortgages are called Cash-back mortgages. You can ask me for more details.  

Closing Costs

You also need to think about closing costs equivalent to 1.5% to 4% of the purchase price. Many first-time buyers are surprised by these costs. Closing costs include but are not limited to one-time items such as; 

1. lawyer fees ($1,000)
2. land transfer tax if applicable (First Time Home Buyers are generally exempt from paying this tax.) This tax is calculated based on the purchase price of the home you wish to purchase (1% on the first $200,000 and 2% on the remainder.)

1. Property Inspection (optional but recommended $300)
2. Title Insurance. Your lender or lawyer/notary may suggest title insurance to cover loss caused by defects of title to the property
3. Fire insurance. The purchaser must have fire insurance before a mortgage can be advanced. Verification of fire insurance may be required on closing.

The link below is for a Home Purchase Closing Cost Calculator. It’s designed to remind you of all the little things J

http://www.cmhc-schl.gc.ca/en/co/buho/hostst/wosh_007.cfm?renderforprint=1.

High Ratio Mortgage Insurance – insurance required by lenders on high-ratio mortgages. It is available from CMHC or other private insurers and usually costs

between 0.5% and 3.75% of the principle amount of the loan. The insurance premium is paid by you, the borrower. These fees are usually added on to your mortgage.

Helpful Links:

Mortgage Calculator– http://calculators.dominionlending.ca/?purchase

High Ratio Loan Insurance – Step by Step Home Buying

http://www.cmhc-schl.gc.ca/popup/step_etape/eng/index.html

Credit Report – to order a free copy of your credit report by mail, just click the link below. I would be happy to review the results with you to ensure your credit rating remains appealing to mortgage lenders.

http://www.equifax.com/EFX_Canada/consumer_information_centre/docs/request_report_form_e.pdf

This link also has excellent credit information. It is provided by CMHC a Canadian Crown Corporation that insures high ratio mortgages.

http://www.cmhc-schl.gc.ca/en/co/reho/yogureho/fore/gest/gest_004.cfm

Fun Mortgage Basics Quiz – http://www.genworth.ca/homeownership/c_on-your-terms/mortgage_quiz.asp 

Apply for a Mortgage @ http://www.katiehommy.ca/how-to-apply-mortgage