First-Time Buyer Hints
Here are some helpful hints to assist first-time buyers with working through the new process of buying a home.
Hint #1
A mortgage is a large loan which is secured by the title to the property against which the loan is applied.
Hint #2
There are several types of mortgages that Westcor will evaluate on your behalf. These include:
Conventional Mortgage (Uninsured):
The mortgage amount does not exceed 80% of the property's value. The purchaser is able to pay at least 20% of the property's value for a down payment.
Hi-Ratio (Insured):
The mortgage amount exceeds 80%, and up to 100% of the property's value. The purchaser is supplying a minimum of 1.5% closing costs (lawyer fees, appraised fees, etc.) for a down payment. In these cases all lenders will require the mortgage to be insured (for default purposes) with either C.M.H.C. or Genworth Financial.
Hint #3
C.M.H.C. (Canada Mortgage& Housing Corporation) is a government run program insuring mortgages under the National Housing Act. (Commonly known as N.H.A. Mortgages).
If your down payment is less than 20% of the purchase price, an insurance premium on the mortgage amount is required (this premium may be added to the mortgage amount).
C.M.H.C./Genworth Financial and AIG also charges a premium based on the loan values and amortization.
If you can afford to make a 20% down payment you will save thousands of dollars over the long run!
Hint #4
The total of your principal, interest, taxes, heat, 50% of condo fees, and payments is your Gross Debt Service Ratio (G.D.S.R.).
The total of your G.D.S.payments plus any personal loans and outstanding credits card payments is your Total Debt Service Ratio (T.D.S.R.) of your gross family income.
With a credit bureau score of 680+, GDS is 35% and TDS is 42%.
Hint #5
You can secure an interest rate from 6 months to 25 years.
Hint #6
Here is a list of other considerations which Westcor will assist you with:
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Inspections - typically for older homes or newly constructed homes
- Legal Services - required for property registration including title searches
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Land Transfer - a municipal tax which is levied on each purchase
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Real Property Reports - may be required and are often available from previous owners or building contractors
- Property Taxes - these may be incorporated into your monthly mortgage payments
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Home Insurance - property insurance will be your responsibility and should be on your checklist of requirements
- Life Insurance - required to secure your mortgage, Westcor will assist with ensuring this is in place
Hint #7
Your mortgage payments may be made weekly, bi-weekly, semi-monthly or monthly.
Hint #8
Try to lock in your rate guarantee. This will ensure that in the event of a rate increase by the Bank of Canada you will be unaffected.
Hint #9
What is an assumable mortgage and why is it important?
An assumable mortgage may be taken over by the next purchaser of your home. There are 2 types of assumables:
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With Approval - the lender must credit approve the party assuming the mortgage
- Without Approval - the lender has not approved the party assuming the mortgage which you can be held responsible in new borrower defaults
Hint #10
For new homeowners, you may want to know that your mortgage payments are timed to commence after your possession date so that you can avoid making duplicate rental or mortgage payments associated with leaving your old residence.
Hint #11
Genworth Financial
Genworth Financial Canada, formerly GE Mortgage Insurance Canada, is the country's only private sector supplier of mortgage default insurance. Together with their related affiliates, Genworth Financial Canada is the largest private sector mortgage default insurance company in the world.
Hint #12
AIG
American International Group, Inc. (AIG), world leaders in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of an insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in London, Paris, Switzerland and Tokyo.
Now you're ready to get started...
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