Making your first home purchase is a big deal, congratulations! As a first time buyer things can sometimes feel daunting, as there are a ton of deadlines, lingo and processes to get familiar with. This is why having a team that can answer all of your questions, and keep you in the loop, is extremely important. No one likes feeling lost, so check out some of the terms and processes you'll need to know below!
Mortgage Approval Process
The first process you will need to go through when looking to buy a home is the mortgage approval process. A mortgage specialist will review your income, assets, and debts, to assess how much you qualify for. It's good to keep in mind that the pre-approval amount is the maximum you may get for a mortgage. It doesn’t guarantee that you’ll get a mortgage for that amount. The approved mortgage amount will depend on the value of the property and the amount of your down payment. The good news is, the process is not long! Approvals take approximately 24-48 hours to process, from the time of submission.
A down payment is the amount of money you put towards the purchase of a home. Your down payment is deducted from the purchase price of your home, and your mortgage covers the remainder. The minimum amount you need for your down payment depends on the purchase price of the home:
If your down payment is less than 20% of the price of your home, you must purchase mortgage loan insurance.
Mortgage Loan Insurance
Mortgage loan insurance protects the mortgage lender in case you can’t make your mortgage payments. A premium is the fee you pay for mortgage loan insurance. Premiums can range from 0.6% to 4.50% of the amount of your mortgage, and depend on the amount of your down payment. The bigger your down payment, the less you pay in mortgage loan insurance premiums.
You can expect to spend between 1.5% and 4% of the home’s purchase price on closing costs. You usually pay these by the time the sale is completed or “closes”. A few closing cost components are legal fees, home insurance, land registration, GST/HST (on new builds, if not included in the sale price), and adjustment costs. You also want to account for other home-buying costs such as home inspection, home appraisal, and moving costs.
There is a lot to learn, and we know you may have a lot of questions. Get in touch with us. We'll be there with you every step of the way.