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Buying A Home? Top 4 Mortgage Questions Answered

July 14, 2020

MonsterMortgage.ca wants to be by your side on this exciting journey! Our commitment is to provide you with the advice and guidance needed to navigate your way through home ownership. We are here to make sure you reach your home ownership goals and financial success.

 

MonsterMortgage.ca understands that this purchase might be the biggest financial decision of your life. Monster mortgage agents are here to walk you through every step of the process and make sure you have peace of mind.

 

To help get you started, we’ll answer a few common questions that home buyers have:

 

  1. WHAT IS THE MINIMUM DOWN PAYMENT NEEDED FOR A HOME?
    1. A minimum down payment of 5% is required to purchase a home, subject to certain restrictions. In addition to the down payment, you must also be able to show that you can cover the applicable closing costs (i.e. legal fees and disbursements, appraisal fees and a survey certificate, where applicable).
    2. Lenders will generally accept a gift from a family member as an acceptable down payment provided a letter stating it is a true gift, not a loan, is signed by the donor.
  2. WHAT IS A PRE-APPROVED MORTGAGE?
    1. A pre-approved mortgage is one of the first steps a home buyer should take before beginning the buying process.
    2. A pre-approved mortgage provides an interest rate guarantee from a lender for a specified period of time (usually 60 to 90 days) and for a set amount of money.
    3. Most real estate professionals will want to ensure you have a pre-approved mortgage in place before they take you out looking for a home. This is to ensure that they are showing you property within your affordable price range.
  3. WHAT ARE THE COSTS ASSOCIATED WITH BUYING A HOME?
    1. Firstly, you have to make sure you have enough money for a down payment.
    2. Secondly, you will require money for closing costs (up to 2.5% of the basic purchase price).
    3. If you want to have the home inspected by a professional building inspector – you will need to pay an inspection fee.
    4. You will be responsible for paying the fees and disbursements for the lawyer or notary acting for you in the purchase of your home.
    5. There are closing and adjustment costs, interest adjustment costs between buyer and seller and (depending on where you live) land transfer tax – a one-time tax based on a percentage of the purchase price of the property and/or mortgage amount.
    6. Finally, you will be required to have property insurance in place by the closing date and you will be responsible for the cost of moving.
  4. HOW DO I KNOW WHAT I CAN AFFORD?  
    1. When shopping for a home it’s important to determine the maximum mortgage and the home price you can qualify for. To determine your maximum affordability, lenders take several factors into account, including:
      1. How much cash or liquid assets you have.
      2. Whether a monetary gift is part of your down payment.
      3. What your gross family income is.
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