Mortgage FAQsKirk Muyres Mortgage Associate
Answering popular frequently asked questions about home loan financing so you can be well-informed when you settle into a new home mortgage.
A Mortgage Broker is an independent professional that works with multiple lenders to find you a mortgage that will suit your needs.They will find a lender with the best rates and terms for your situation. There is usually no fee to work with a mortgage broker if you qualify under standard lending guidelines. We get paid a commission or finders fee from the lender. If there is a fee, this will be disclosed and documented up front. I bet your bank can’t say that they are available on a schedule most convenient to you, as I also work evenings and weekends – 7 days a week!
It is important to know what purchase price you are qualified for before you go shopping for a home so that you are looking at houses in the right price range.
It is important to note that a pre-approval qualifies you as the applicant. We will have confirmed your income, credit and down payment at this stage. However, we are not able to pre-approve the property you will be purchasing. This is still subject to lender/insurer approval. Therefore, it is important that you always put a “subject to financing” condition on your offer to purchase. Your real estate agent will assist you in writing the offer to purchase. Also, a pre-approval is only valid if there is no change in your financial situation. If something has changed since you received your pre-approval (e.g. change of job, acquire new debts) be sure to contact me, so that I can review your file.
The minimum down payment when purchasing an owner occupied home is 5%.
- Saved – money saved from our own resources.
- Gifted Funds – most lenders will accept down payment funds that are gifted from family as an acceptable down payment. A gift letter signed by the donor is required to confirm that the funds are a true gift and not a loan that needs to be paid back.
- RRSP – The Home Buyers Plan is a federal government program that allows homebuyers to use up to $25,000 for each purchaser from his/her RRSP.
- Borrowed Down – in some cases, if you have good well established credit, you can borrow your down payment.
Some of the costs associated with obtaining a mortgage include legal fees, appraisal costs, home inspection costs. In addition to your downpayment, we need to show 1.5% for closing costs. This is an industry standard number, which is not touched or taken, simply needed to show access and availability to these funds.
The term is the period for which your current payment obligations are valid. The amortization refers to the maximum length of time that you have for the mortgage to be paid and the house to be “free and clear”. In other words, you may choose a 5-year term with a 25 year amortization.