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Why Use a Mortgage Broker/Agent & Common Questions Regarding Home-Ownership

General Raymond Walia 19 Feb

WHY SHOULD I USE A MORTGAGE PROFESSIONAL?

Our mortgage can offer better rates, personalized service, flexibility and products at no cost to you, finding you the right mortgage to suit your needs.

HOW DO I FINANCIALLY PREPARE MYSELF FOR HOME-OWNERSHIP?

I suggest you create a budget to start. This helps you to see if you have the financial means to afford your mortgage payment, property taxes, strata/condo fees, monthly utility bills and any other household expenses!

WHAT ARE SOME OF THE ONGOING COSTS I CAN EXPECT WHEN OWNING A HOME?

In addition to your mortgage payments, you need to be prepared for property taxes, insurance, utility bills, condominium fees and routine repairs and maintenance.

WHAT IS A PRE-QUALIFICATION?

A pre-qualification provides you with a ballpark estimate of how much you maybe able to afford based on your own self report of your financial situation. This helps set a realistic price range for those eager to start shopping the real-estate market.

I’M SELF EMPLOYED, CAN I STILL QUALIFY FOR A MORTGAGE?

Yes, you can! However, when self-employed you will need to submit additional documentation including:

  • Two years notice of assessment
  • Two years of T1 Generals
  • Proof of being in business for yourself for two years (i.e.: business license)
I’M WORRIED I MIGHT NOT BE APPROVED FOR A MORTGAGE, IS IT OK TO EMBELLISH MY APPLICATION?

No. It is critical that income details, properties owned, debts, assets and your financial past are accurate. If you have been through a foreclosure, bankruptcy, consumer proposal, there are still options but only if you disclose this info to your mortgage professional right away!

CAN I MAKE A LARGE PURCHASE AFTER I’VE BEEN APPROVED FOR A MORTGAGE?

I do not recommend it! A lender can pull their credit 30 days prior to closing if the original information on the approval changes. Making big financial commitments such as a car or financing furniture, before closing on your home may result in the deal going sideways.

I’M A FIRST TIME HOME-BUYER AND WORRIED ABOUT CLOSING COSTS, HOW MUCH DO I NEED TO BUDGET FOR?

Closing costs are generally 1.5% to 4% of the purchase price of your home.

WHAT DOES A LENDER CONSIDER WHEN LOOKING AT YOUR MORTGAGE APPLICATION?
  1. Credit
  2. Capital, which is your income
  3. Capacity, which is your income to debt-ratio. This determines whether or not you can afford the loan
  4. Character, such as your past credit history to determine if you are reliable and yes – they also Google you!
  5. Collateral, which refers to the condition of the property, location, history; essentially the characteristics of the real-estate that will secure the mortgage
WHAT IS THE DIFFERENCE BETWEEN VARIABLE AND FIXED RATES?

A fixed rate means you are locked-in for a term. The benefit is that you know your monthly mortgage payment and it will stay the same. With variable rates, they are often lower than a fixed rate but they can fluctuate with the BOC posted rate.

WHAT IS THE DIFFERENCE BETWEEN A QUALIFYING RATE AND A CONTRACT RATE?

The qualifying rate is the Bank of Canada conventional 5 year fixed posted rate. A contract rate is the rate offered by the lender on the homebuyer’s actual mortgage payment.

DO I NEED A LAWYER OR NOTARY WHEN FINALIZING MY HOME PURCHASE?

Yes! You will need to make arrangements for a Lawyer or Notary to draw up the mortgage documents for you to sign. If you don’t have a legal professional, ask you mortgage professional if they have someone they can recommend.

WHAT IS TITLE INSURANCE, AND DO I NEED IT?

When you purchase a property, whether a single-family home, condo or cottage, you buy the title. The registration of that title confirms that you’re the rightful owner. Most transactions include a lender’s title insurance policy, which is designed to protect the loan and help the deal close faster. However, only an owner’s policy will offer you protection against title fraud, survey and title issues, or even pre-existing defects.

I HEAR A LOT ABOUT DEFAULT INSURANCE, WHAT IS IT AND WHAT DOES IT MEAN?

If you’re putting anything less than 20% down when purchasing a home, mortgage default insurance is mandatory in Canada and allows consumers to purchase homes with a minimum of 5%.

I AM LOOKING TO PURCHASE A HOME WITH AN INCOME SUITE. HOW DOES THIS AFFECT MY BORROWING POWER?

Your income dictates the size of mortgage. Adding a mortgage helper, such as an income suite, will add income to your application and increases your mortgage qualifying amount.

OTHER THAN A BANK WHERE CAN I CAN GET MORTGAGE FINANCING?

Great question! We work with Monoline lenders who specialize in a single type of financial service. These types of lenders do not have branches but can be accessed through your DLC Mortgage Professional.

Published by DLC.