Tuesday, February 28, 2012

Buying a New Home Blog Series – Part Four – Types of Real Estate Professionals

There are many moving variables to consider when buying a new home. You will count on a team of different types of real estate professionals to make your home buying dream a reality. The types of real estate professionals you will need to have a relationship when buying a home include; a real estate agent, a mortgage broker, a property inspector, an insurance broker, a real estate lawyer and a contractor if you plan on doing work to your new home. 

When buying a new home, your real estate agent will take you to see prospect homes, will educate you about the neighbourhood, prices of sales in the area, will make an offer to the purchaser on your behalf once you find a home that you want to buy, negotiate the final purchase price of your home and manage the paper work between the purchaser and your real estate lawyer to process the purchase of your home. 

When buying a new home, your mortgage broker will work with you to obtain the best deal for mortgage financing that is available. Mortgage brokers are very useful because they have relationships with all of the banks so they are able to make you aware of all of the different banks interest rates. They are able to independently review your application for mortgage financing and identify any issues that could come up as it relates to your credit or income. If for some reason you do not qualify for mortgage financing at the bank, they can also access alternate sources of financing to get you a mortgage. This can include accessing financing at credit unions, trust companies, mortgage investment companies and more.  Dealing with a mortgage broker will reduce your risk when buying a home and will ensure that you get the best deal. 

A property inspector will be relied upon to inspect the home to ensure that there are no problems that you are unaware of. The inspector will check the foundation, electrical, structure and other vital parts of the home for issues. If something comes up, you can ask that the seller correct the problem before you finalize on the purchase or if the issue is too severe, you can walk away from the deal entirely. 

Your insurance broker will help you to obtain homeowners insurance. He or she will obtain quotes from all of the different insurance companies to secure the best insurance rate with you at the maximum benefit. Like a mortgage broker, an insurance broker is knowledgeable about the products that all companies have to offer and can educate you through the process to ensure that you choose the right insurance, from the right company, at the right price. 

Finally, your real estate lawyer will represent you in the purchase of your home and with the arrangement of your mortgage financing. He or she will ensure that you are purchasing a home that contains a clear title and doesn’t have any property tax arrears or liens. He or she will prepare all of your legal documents and will also be the last real estate professional that you will work with before taking possession of your home. 

Knowing the types of real estate professionals you will need when buying a new home will enable you to research and establish relationships with the right people to make your home buying dream a reality. 

For more information about buying a home and the types of real estate professionals who will be needed through the process please contact Paul Mangion by calling The Mortgage Centre at 416-204-0156 or visit www.gtamortgagematters.com


Wednesday, February 22, 2012

Buying a New Home Blog Series – Part Three – Closing Costs

Buying a new home can get very expensive, very fast. When people think of closing costs, they may think about their down payment and legal fees but there are many additional small costs that are incurred when buying a new home and they can add up. The 5 most common closing costs are the down payment, land transfer tax, inspection fees, legal fees and homeowners insurance. 

While there is “no money down” mortgage financing available to those who have very good credit and income, it is always best to make at least a 5% down payment. When buying a new home you will qualify for a lower interest rate if you have at least a 5% down payment. “No money down” mortgages often bear a slightly higher interest rate. The more money you can raise towards a down payment on a home, the lower your mortgage payment will be. 

When buying a new home, your land transfer tax is usually 1% of the amount of the property purchase price, except for in the City of Toronto. In Toronto, the land transfer tax is higher because there will be a land transfer tax payable to both the City of Toronto and the Province of Ontario. First time home buyers can qualify for a rebate of up to $2,000.00 of the land transfer taxes payable.  

Home inspections are important. Even if you are buying a new home you should have a home inspection done. Home inspections usually cost about $500. The home inspector will ensure that your home is in good condition and there are no surprises when you take possession of the home. 

When buying a new home you will need a lawyer both to handle the purchase of your property and to close your mortgage. Using a lawyer that can represent you in both the purchase of your home and in the financing of your mortgage will save you money. Usually the cost of a single lawyer who handles the property purchase and your mortgage closing will cost between $1,000 and $1,500 including disbursements. 

Homeowners insurance is mandatory and required by the bank. It protects both you and the bank in the event that there is a fire in the home or other disaster. Homeowners insurance can be purchased and paid for up front or you can make payments on a monthly basis. If you are concerned about the cost to carry your new home, you can reduce your monthly carrying cost by purchasing your homeowner insurance up front. 

Another consideration that many people don’t think of when purchasing a new home is their property tax holdback. Anytime you buy a new home where the bank includes your property tax payment into your mortgage payment, there will be a property tax holdback. Your property tax holdback is usually equal to 3 months of property taxes. When your property and mortgage closes, your bank will hold back your property tax and so you will have to pay the amount of your property tax holdback in addition to your down payment. Your land transfer taxes are also due on closing. 

Being aware and planning for costs that you will have to pay on closing will ensure that you are financially prepared when making the decision to buy a new home. 

For more information about buying a new home and closing costs please call Paul Mangion at 416-204-0156 or visit www.gtamortgagematters.com

Tuesday, February 14, 2012

Buying a New Home Blog Series – Part Two – First Time Home Buyer Tips

Buying a new home when you are a first time home buyer is very different from buying a new home when you have already purchased a home in the past. Many first time home buyers underestimate what’s involved with buying a home, so here are some first time home buyer tips. 

The first thing a first time home buyer needs to consider when buying a new home is the true cost and what tax credits are available to them. When buying a new home a first time home buyer should prepare for the following costs:

1.       Down payment

2.       Land transfer tax

3.       Homeowners insurance

4.       Property tax holdback

5.       Inspection costs

6.       Legal fees, both for the property transfer and mortgage

7.       Moving expenses and more. 

There are tax credits available to first time home buyers to offset some of these costs. For example, in Ontario there is a land transfer tax rebate available to first time home buyers. This tax credit enables first time home buyers to a rebate on closing of up to $2,000 of the land transfer taxes. Some people, especially unionized employees have benefits that may offset legal costs so if your employer offers you benefits, it is always prudent to check to see if you have any benefits that help when buying a new home. 

The next think that a first time home buyer should consider when buying a new home is “conditions”. There will are different conditions that will apply to the purchase of your home and as it relates to your mortgage financing. When purchasing a home, there are some standards that first time home buyers may want to include. Two of the most common conditions are financing and inspection. When making an offer that is conditional on financing and inspection and if the offer is accepted, the buyers will have 5 days (this is an average and more or less days can be negotiated) to secure their mortgage financing and to have a home inspector inspect the home. 

A home inspection is very important, even in a newer home. A home inspector will check for issues that you may not be able to see. These can include electrical and structural issues. A home inspection usually costs less than $500.00 and will be money well spent. 

When obtaining a commitment for mortgage financing from a bank, there will be conditions in the commitment that will have to be met in order for them to fund your mortgage. The sooner you meet these conditions the better. These conditions can include; proof of your down payment, proof of income (job letter, paystub and sometimes tax assessments), proof of homeowner insurance and more. To avoid surprises on closing, it is always best to at least satisfy the mortgage lenders proof of income and down payment requirements as soon as you get your mortgage approved. 

Home insurance will be required by the bank and will protect you and your bank in the event that there is a fire or disaster like a flood. When arranging home insurance, shop around. Your car insurance company may not provide you with the most competitive quote for home insurance.  

Take advantage of brokers. Whether it is for insurance or your mortgage, brokers will be able to access the best rates offered by all companies in a particular industry and is your best chance at getting the best deal.  

For more information about buying a new home and first time home buyer tips contact Paul Mangion at The Mortgage Centre by calling 416-204-0156 or visit www.gtamortgagematters.com.

Tuesday, February 7, 2012

Buying a New Home Blog Series – Part One – Low Interest Mortgage Approvals

Buying a new home is exciting but involves preparation if you want to get the best deal. Getting the best deal will mean getting a good price on your home, negotiating a low interest mortgage, getting competitive quotes on homeowners insurance and mortgage protection insurance and more. 

A low interest mortgage when buying a home will be important because a mortgage payment for most people represents their largest debt and monthly payment. 

Mortgage interest rates in Canada have been so low for so long that buying a new home is very affordable and in some cases you may be able to buy a new home that bears a mortgage payment comparable with a monthly payment for rent. 

When thinking about how much of a mortgage payment you can afford, it is important to remember that in addition to a mortgage payment you will also have a monthly payment to property taxes, hydro, gas and homeowners insurance. This can really add up and because utility costs in Ontario have increased dramatically over the past few years, it is important to get a low interest mortgage approval that gives you a low monthly mortgage payment so that if your utility costs rise, you can still afford to carry your home. 

There are many different types of low interest mortgage products out there. Your mortgage interest rate will often depend on the type of mortgage product that you choose and the amount of your down payment. 

Those who want to take advantage of the current historically low interest rates but may not have planned to buy a home may not have substantial savings accumulated to cover the cost of a down payment. There is no money down programs offered by many banks that enable families who don’t have a down payment to be able to buy a new home.  

Before buying a new home with a no money down mortgage, you must consider that this will not get you the lowest rate mortgage available. This is because in most cases, a no money down mortgage will involve a slightly higher interest rate because the bank will recover the equivalent of a 5% down payment through interest in the first 5 years of your mortgage. For example, right now National Bank’s 5 year fixed mortgage interest rate is 3.49% if you have a down payment of at least 5%, whereas, their mortgage rate with no money down bears a 5 year fixed mortgage rate of 5.29%. This represents about a $300 difference in monthly payment to the homeowner.  

Also, when buying a new home choosing a variable rate mortgage is often cheaper than choosing a fixed rate mortgage. Variable rate mortgages are less interest because they float with prime. The homeowners carry some risk because if interest rates rise, so will the variable rate on the mortgage. The safest bet is often to choose a low variable rate mortgage with an option to lock in. This allows you to receive the lowest interest rate with the safety net that if rates start to rise, you can lock into a higher fixed rate mortgage. 

Buying a new home is often the single biggest purchase that an individual will make. For this reason it makes sense to research, prepare and establish a relationship with a local mortgage broker who can educate you on what rates are available with all the banks so that you can make the best informed decision.