As mortgage rates come to historic lows, there has never been a better time for first time buyers!
At Dominion Lending Centres, our specialists want to help you understand all of the options that are available to you. They have the experience needed to guide you through this important time in your life and to help you make the most educated and beneficial decisions for your situation.
There is a comfort to be found in knowing that a Dominion Lending Centres specialist will be there for you, every step of the way, providing you with the information, advice, and assistance you need to make your mortgage process as stress-free as possible.
Tania has compiled the following list of topics for your to review as you start to plan one of the largest purchases you will make. If there is anything you have questions about, please do not hesitate to consult with your local Dominion Lending Centres professional. We are more than prepared to help you move smoothly through the mortgage process, even as first time buyers.
Choosing a Realtor
It is important to choose the right realtor to make sure you find the perfect home at the right price. You will want to choose a realtor you can trust with such an important task. Begin your search by finding out who is the most active in your local area. A realtor who makes a regular effort to keep you informed of listings in your area will most likely work assertively on your behalf. Set up interviews with a few recommended realtors from different companies and evaluate their presentations. How prepared were they? It is also important for you to ask some questions, not just listen to their sales pitch. Make sure to find out if they are working for you or for a vendor.
Do your homework to find out more information about each realtors qualifications, track record, strategy, pricing, support, availability, and affiliations.
This may seem like a long list, but it is important to find out as much information as you can before making your final decision. In the end, make sure you are working with someone who not only checks off all of your requirements but also has chemistry with you.
Making Home Hunting Fun
As you begin your search as first time buyers, you will find that there is a vast amount of information available to you when it comes to making an informed purchase decision. The Canada Mortgage and Housing Corporation, the Canadian Bankers’ Association, and the Alberta Real Estate Association, and many local lenders can all provide you with information that can make hunting for your dream home stress-free and fun. You can find more information on their respective websites.
Affordability and Financing
As first time buyers, reviewing your current income and expenses with your Dominion Lending Centres specialist is the best place to start. Tania will help you account for the adjustments you will need to make to your monthly expenses, taking your net income and projected budget into account, in order to comfortably afford the mortgage you are seeking.
Your affordability will be determined by largely your Gross Debt Service ratio (GDS) and your Total Debt Service ratio (TDS). The GDS ratio includes only your monthly mortgage payments, taxes, and utilities. The TDS ratio includes everything that is covered by the previous ratio as well as all of your other current financial obligations.
There are a few options as you begin the mortgage process. Obtaining a pre-approval from a lender who checks your credit score will give you a better idea of how much you qualify for. This will help you as you begin searching for a home as it provides you with a more solidified price range to work with.
Simply getting pre-qualified is also a great way to find out about the different mortgage options that might be available to you. This is the time where you can find out the difference between conventional mortgages and high-ratio insured mortgages and ask your mortgage broker which would be best for you. Once you have been pre-qualified, the interest rate could be guaranteed for up to 90 days from the date of your application. This means that if rates are lowered, you will receive the lower rate, but if they are raised, your rate will not go up.
As you can see, there are many options to consider so be sure to ask Tania about programs that have been designed specifically for first time buyers.
Selecting the Right Mortgage
Your mortgage choices might include:
Conventional vs. High-Ratio or Insured Mortgages
With a conventional mortgage, the principal amount, or the amount remaining after the down payment has been made, does not exceed 80% of the purchase price. With a high-ratio mortgage, the principal amount is more than 80% of the purchase price, requiring the mortgage to be insured in most cases. Generally, the borrower will pay the insurance premium in addition to any application, legal and appraisal fees.
Closed vs. Open Mortgages
In most cases, closed mortgages offer lower interest rates than open mortgages secured for the same term, however, open mortgages don’t assess prepayment charges. This means that with an open mortgage, you can pay off as much as you want, at any time, and will not end up paying a fee.
Short Term vs. Long Term
Selecting the term of your mortgage is another important step. This is where the market expertise of an experienced mortgage professional will come into play. If it is believed that interest rates could be dropping in the near future, a short-term mortgage may be more appropriate. You will be up for renewal faster with a shorter term and will be able to take advantage of those lower rates. If you are happy with your current rate and feel more comfortable with the security of maintaining that rate, a long-term mortgage might be a better fit.
Fixed Rate vs. Variable Rate
The difference between these two rates is that a fixed rate will remain constant for the entire length of the mortgage, while a variable rate will fluctuate based on the market. Variable rate mortgages offer the opportunity for lower rates in the future, while fixed rate mortgages provide security when planning your monthly budget.
There are certain specialty options that resourcefully combine the best of both options. Your Dominion Lending Centres expert can help you choose the options that work best for your situation.
Before You Sign the Offer
Get your lawyer involved in the process before you sign the offer, which will then become a legal agreement. It is important to have your lawyer carefully review the agreement with you to ensure you don’t have any questions or changes you would like to be made. Your lawyer will also work with your lender to draft the closing documents and review them with you before closing day.
When you meet with your lawyer a few days before closing, you will sign the closing paperwork and give your lawyer a certified check for the payment of any fees associated with the closing. These fees will then be paid by your lawyer on your behalf.
On Closing Day
It has finally arrived! On this day, your lawyer will close the deal with the vendor’s lawyer and the purchase funds will be exchanged for the keys to your new home. Your lawyer will also send you copies of all the documents you signed. These documents will include the deed, mortgage, survey, and a summary of the transfer of funds. Make sure you keep all of this important paperwork in a safe location for future reference.
Mortgage Life Insurance
At Dominion Lending Centres, we high recommend that you consider mortgage life insurance. It is a low-cost way to ensure that your family is financially secure in the unfortunate event of death, terminal illness or permanent disability. Should any of these events occur, your mortgage balance will be usually be paid in full. We provide mortgage life insurance quotes with each approved mortgage and can easily incorporate your premium into your monthly mortgage payments.
There are many options to consider and as a trusted expert in the industry, Tania Grozelle is here to help first time buyers, like yourself, make the best decisions on your home financing. Call today for more information!