Closing costs are a necessity when it comes to purchasing a home. They are not included in the down payment, the monthly mortgage payments, nor are they included in the purchase price of a home yet you are still responsible for paying them in full. Knowing they exist is half the battle. Nobody wants to find out a week before possession date that they suddenly owe thousands of dollars before they can get the key to their new home. Correctly budgeting for closing costs will take that huge weight off your shoulders.

In order to approve your mortgage, lenders will require you to have 1.5% of a property’s purchase price available in cash to be able to cover closing costs. This amount is in addition to the 5% minimum required for a down payment. Actual closing costs could be closer to 3% of the purchase price and even higher in some cases. What are closing costs specifically? The following is a list of what you might be able to expect for closing costs depending on your province:

1. Appraisal – sometimes required by the lender to determine the value of a home.
2. Interest Adjustment – the amount of interest due between your mortgage start date and the date from which the first mortgage payment is calculated.
3. Property Transfer Tax – a tax paid to the provincial government when a property changes hands.
4. Legal Fees – costs associated with finalizing the sale or purchase of a property.
5. Prepaid Property Tax & Utility Adjustments – amount you will owe if the person selling the home has prepaid any property taxes or utility bills.
6. Property Survey – legal description of the property you are purchasing including its location and dimension.
7. Sales Taxes – some properties are sales tax exempt (GST and/or PST), and some are not. Always ask before signing an offer.

As you can see, many factors go into determining the size of these costs. That is why it is also important to speak with a mortgage broker prior to making an offer on a home. Also, some costs may be exempt, such as the property transfer tax for first-time home buyers in BC. Contact a Dominion Lending Centres mortgage professional to find out if you would qualify to have these costs covered.

To find the perfect realtor for you, you’ll need to do a bit of legwork. It can seem like an overwhelming decision akin to deciding on which ice cream you want to try! You go to the ice cream store and they have over 50 flavours and after you have contemplated, you opt for vanilla – just because it was easy.

When it comes to a slightly larger transaction such as purchasing a home, you probably won’t want to make a decision on which realtor to go with just because it was the easy choice.

Here are five questions that you should always ask your next potential real estate agent:

1. How does your experience benefit my specific real estate transaction? If the agent just completed a course on negotiation skills or sold a home in your neighbourhood, they should be able to bring a unique edge to the table.

2. If you were buying or selling your home, what would you look for in an agent?
This question is a great way of getting the inside scoop on the industry. What do industry professionals see as an essential asset? How does each agent vary in those priorities?

3. Could you tell me about a recent success that you’ve had as a realtor? Give the agent a chance to discuss their latest win, and you’ll learn what they’re passionate about as well as how they’ll turn your transaction into their newest achievement.

4. What are your most effective approaches to marketing a home? Rather than the standard ‘how will you market my home?’, ask which methods are delivering results. If your agent is particularly successful with new school social media or tired and true networking, you’ll have expectations on how they’ll tackle selling your home.

5. Ask for the rundown of the conditions, commission fees and agreements. These basics will play a major role in how you choose your real estate agent. Ask for the specifics at each interview, and you can see how each partnership measures up.

If you have any questions, contact your local Dominion Lending Centres mortgage professional.  We work with many realtors and will happily provide quality referrals for your next interrogation/interview.

The first time you heard the term “Monoline Lender” you might have felt a bit of suspicion or at least a feeling of needing more information before proceeding. It’s understandable, I mean why is this “bank” you’ve never heard of willing to loan you money when you’ve never even heard of them?

In an effort to help you see the benefits of working with a Monoline Lender, here is some basic information that will help you understand why you’ve never heard of them, why you want to, and the reason they are referred to as lenders instead of banks.

Monoline Lenders only operate in the mortgage space. They do not offer chequing or savings accounts, nor do they offer investments through RRSPs, GICs, or Tax-Free Savings Accounts. They are called Monoline because they have one line of business – mortgages.

This also plays into the reasons you never see their name or locations anywhere. There is no need for them to market on bus stop benches or billboards as they are only accessible through mortgage brokers, making their need to market to you unnecessary. The branch locations are also unnecessary because you do not have day-to-day banking, savings accounts, investment accounts, or credit cards through them. All your banking stays the exact same, with the only difference of a pre-authorized payment coming from your account for the monthly mortgage payment. Any questions or concerns, they have a phone number and communicate documents through e-mail.

Monoline Lenders also have some of the lowest interest rates on the market, the most attractive pre-payment privileges, and the lowest pre-payment penalties, especially when compared to a bigger bank like CIBC or RBC. If you don’t think these points are important, ask someone who’s had a mortgage with one of these bigger banks and sold their property before their term was up and paid upwards of $12,000 in penalty fees. An equivalent amount with a Monoline Lender would be anywhere from $2,000-$4,000 in fees.

Monoline Lenders are not to be feared, they should be welcomed, as they are some of the most accommodating and client service-oriented lenders around! If you have any questions, don’t hesitate to call your local Dominion Lending Centres mortgage professional.

Prepayment, Portability and Assumability

Prepayments

One of the most common questions we get is about mortgage prepayments. The conditions vary from lender to lender but the nice thing about prepayments is that you can pay a little more every year if you want to pay off your mortgage faster. A great way to do this is through prepayments.

There is always something to ask your broker about because each lender is very different. You can always do an increase in your payments which means that you pay a little bit more on top of each mortgage payment. You can also make a lump sum payment. Perhaps you get a bonus every year or you get a lot of Christmas money. You can just throw that on your mortgage. It goes right on the principle so you’re not paying interest on those extra funds. Paying a big chunk at once also means that a higher percentage of future payments will also go towards the principle.

Portability

Portability means that if you sell your house and you want to take your current mortgage and move it to your new house you can. The one thing about portability that we always have to keep in mind is that we can’t decrease the mortgage amount but we can do a little bit of an increase often through a second mortgage or an increase we call a blend and extend. It just gives you the flexibility of moving the mortgage from one property to the next property. It also gives you the flexibility of being in control of where your mortgage is going and not having to break your mortgage every time you decide to move.

Moving a mortgage to a new property avoids things like discharge fees, the legal cost of registering a new mortgage and the possibility of a higher interest rate. It’s great to be able to keep that rate for the full term rather than having to break and pay those penalties halfway through.  Not every mortgage is portable.

Assumability

Assumability comes into play more often where there are family ties. Say your parents have a mortgage and you move into that house. Rather than you going out and getting a new mortgage and your parents having to pay those discharge fees, you might have the ability to assume their existing mortgage at that current rate. All you have to do is apply and make sure you can actually afford the mortgage at what they’re paying. You have to be able to be approved on the remaining balance on the mortgage just like you would on any other mortgage. Just because your parents have an eight hundred thousand dollar mortgage doesn’t mean you’ll be able to take that over.

If you have any questions, contact a Dominion Lending Centres mortgage specialist for help.