Rosemary Papp

With over 36 Years Local Experience to Serve You

778-834-8021

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Buying a home is a big investment – likely the largest one you will ever make. The cost to buy a home should be carefully considered to avoid the risk of financial difficulty in the future.

Since this decision has a large impact on your wallet, we want to take some time to explore the many costs associated with buying a home. Doing your homework and knowing the average cost of these services in your neighbourhood will help you choose a home within a realistic price range.

Deposit: Depending on your location and the price of a home, you may need to put a deposit on a home as a security measure to ensure you don’t lose it to another interested buyer. If you are required to pay a deposit, it will become part of your down payment once you have purchased the home.

Down Payment: In Canada, the minimum amount you need to put down on a home is 5%. While this is realistic for most first time home buyers, having a down payment of 20% or more will help buyers avoid paying Mortgage Loan Insurance.

Land Transfer Tax: When you buy a home, you are required to pay a land transfer tax to the province upon closing. This tax is normally based on the amount paid for the land, as well as the remaining amount on any mortgage or debt assumed as part of the arrangement to buy the land. Cost will vary depending on your municipality, the size of the land and other factors.  Alberta, Saskatchewan, and parts of Nova Scotia do not have Land Transfer Tax at all, while other provinces use a tiered system.

Appraisal Fee: An appraisal will normally cost between $200 and $300 but can vary depending on your location. This will help prevent you from borrowing more than you need to, and will prevent lenders from giving you too much.

Home Inspection: A home inspection is a necessary step in your home buying process and will normally cost an average of $350 depending on the size, age, and condition of the home. This helps ensure there are no unexpected maintenance or home improvement costs upon purchasing the home.

Property Insurance: While property insurance is likely already something you have factored into your budget, it’s important to do your research and find a reasonable quote that will ensure you are covered should anything unexpected happen.

Mortgage Insurance: There is mortgage life insurance, which is designed to protect the repayment of a mortgage if anything were to happen to you. There is also mortgage loan insurance if your down payment is less than 20% of the total house cost. Premiums for this type of insurance range from 0.5% to 3% and increase if you are self employed.

Lawyer Fees: The fee you will be charged by your lawyer will vary depending on the person representing you and must be paid upon closing. Ask your real estate agent for advice as they likely have a preferred trusted lawyer they can refer you to.

Title Insurance: Title insurance is a one-time-fee that provides protection from losses related to the properties title or ownership. Learn more about what it is in this blog post.

Property Taxes: The cost for property taxes is expressed as a dollar rate for every $1,000 estimated to be the market value of your property.

Maintenance and Energy Costs: Potentially your largest ongoing homeowner expense, these costs include lawn care/ yard work, professional services, additions/upgrades and the cost of keeping the house running year-round. You can use our monthly home budget planner to help map out all of these costs.

Moving Expenses: It’s easy to forget about the small things when moving, but it’s important to remember they can add up quickly! Consider the cost for phone, electricity, and other utility installations and don’t forget about movers, a moving truck and feeding your friends who are helping out!

Now that you have a better idea of the cost to buy a home, it’s time to hit the books to find out how much these services will cost in your area. Make a list, create a budget, and get started!

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Source: REBGV

Lenders, including banks and credit unions, regularly turn down mortgage applications from potential home buyers, even those with large down payments.

The reasons vary. The home buyer may be a self-employed entrepreneur and their earnings appear as a low income on a bank statement. The home buyer may be a new immigrant without a credit rating, or they may have a bad credit rating which they’re trying to improve.

The buyer may also have problems meeting the new stress test which requires federally regulated lenders to ensure borrowers can meet the greater of the Bank of Canada’s five-year benchmark rate or the contractual mortgage rate plus two per cent.

This is where alternative lenders can help with mortgage financing, according to Ajay Soni, president of the Canadian Mortgage Brokers Association, past president of the Mortgage Brokers Association of BC and a mortgage broker for 30 years.

In BC, mortgage financing generates between $40 and $50 billion in activity.

“Approximately $3 billion of this is in residential mortgages and another $2 billion in the development and construction side,” said Soni.

Canada-wide, alternative lenders account for 2.5 per cent of the lending market according to a report by CIBC, a rate that has doubled since 2012.

Loaning to riskier borrowers comes with a price tag.

Mortgage rates from an alternative lender are typically higher and vary depending on whether the borrower is getting a bridge mortgage, a second mortgage or third mortgage, or whether they’re refinancing to renovate a property or consolidate debt.

Benefits to borrowers include the opportunity to build or repair credit, or have greater flexibility in structuring loan and payment terms.

Potential home buyers looking for a mortgage should make sure they’re prescreened and prequalified.

As in all matters, buyers should beware.

Alternative lenders aren’t regulated by the Office of the Superintendent of Financial Institutions, an independent federal government agency responsible for supervising Canada’s banks and federally incorporated trust, loan, and insurance companies.

Instead, in BC alternative lenders are regulated by the Financial Institutions Commission. 

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The holidays are almost here and you may have a long list of people to shop for. In fact, you may spend hours looking for the perfect gift for that special someone, or days searching for the most flattering party outfit for yourself. But how much time do you spend looking for the perfect mortgage? Considering it's the largest financial transaction you'll probably ever make, the answer is likely, "nowhere near enough time".

A previous survey conducted by Zillow revealed that the typical borrower spends only five hours researching their mortgage or home loan, the same amount of time as they spend researching their next vacation, and half the amount of time they spend researching their next car!

Lenders offer different types of mortgages with different terms, conditions and interest rates. As you would for any other consumer good or service, comparison shop for your mortgage and make sure you understand what's being offered. While it may be tempting to make your decision solely on interest rates, compare all the different mortgage features, such as prepayment options, that could save you money in the long run.

Let's talk about your housing wants and needs, and the benefits of getting pre-qualified for your housing loan. Confirming your budget prior to starting the homehunting process will allow for a more realistic and more enjoyable home-hunting process.

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PhotoMaking a misstep in the process of shopping for and securing a home loan can be costly. Fortunately, many mortgage mistakes, such as those listed below, are easily avoided.

 

  • Not checking your credit. Mistakes on credit reports are not uncommon. Left unaddressed, they can slow the mortgage application process or stop it altogether, potentially costing you that property you want. Financing based on incorrect information can result in a much higher interest rate, so be sure to fix any errors on your credit report well before home hunting or applying for a loan.
  • Not shopping around for a lender. While many homeowners stick with their current lender when purchasing their next home, loan structures – rates, terms, fees – may have changed significantly since you last applied for a mortgage; comparison shopping can potentially save you thousands of dollars.
  • Choosing a lender based solely on interest rate. Terms and fees (e.g. prepayment penalties) may seem insignificant by comparison, but they can have a much bigger impact on the overall cost of the loan; ignore them and you could end up with a loan structure that doesn't suit your needs, and costs you much more than you bargained for.
  • Getting pre-qualified rather than pre-approved. Pre-qualification allows for an estimate of what your bank may lend you; pre-approval is a more formal process resulting in a firmer commitment from your lender. A buyer who's pre-approved is in a stronger position than one who is pre-qualified, and can act more quickly upon finding the right property.
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Direct: 778-834-8021
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Rosemary's Email: rosemary@homesinlangley.ca
RE/MAX Treeland Realty
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Langley BC V2Y 2E3
www.HomesinLangley.ca