Before you commit your hard earned dollars to monthly mortgage payments, consider these 6 issues. Effective consideration of these important areas can make your payments work much harder for you. 

 

  1. You can, and should, get preapproved for a mortgage before you go looking for a home.
    Preapproval is easy, and can give you complete peace-of-mind when shopping for your home. Your local lending institution can provide you with written preapproval for you at no cost and no obligation, and it can all be done quite easily over-the-phone, or even on the internet.
  2. Know what monthly dollar amount you feel comfortable committing to.
    When you discuss mortgage preapproval with your lending institution, find out what level you qualify for, but also pre-assess for yourself what monthly dollar amount you feel comfortable committing to. Your situation may give you a preapproval amount that is higher (or lower) than the amount of money you would want to pay out each month. By working back and forth with your lending institution to determine what this monthly amount is, and what value of home this translates into at today’s rates, you won’t waste time looking at homes that are not in your price range. 
  3. You should be thinking about your long term goals, and expected situation, to determine the type of mortgage that will best suit your needs.
    There are a number of questions you should be asking yourself before you commit to a certain type of mortgage. How long do you think you will own this home? What direction are interest rates going in and how quickly? Is your income expected to change (up or down) in the near term, impacting how much money you can afford to pay into your mortgage? The answers to these and other questions will help you determine the most appropriate mortgage you should be seeking. 
  4. Make sure you understand what prepayment privileges and payment frequency options are available to you.
    More frequent payments (for example weekly or biweekly) can literally shave years off your mortgage. Simply by structuring your payments so they come out more frequently, will significantly lessen the amount of interest that you will be charged over the term.
    For the same reason, authorized prepayment of a certain percentage of your mortgage, or an increase in the amount you pay monthly, will have a major impact on the number of years you will have to pay and could shorten your payment term considerably.
    These two payment options can cut years off your mortgage, and save you thousands of dollars in interest. However, not every mortgage has these prepayment privileges built in, so make sure you as the proper questions. 
  5. Ask if your mortgage is both portable or/and assumable.
    A portable mortgage, where available, is one that you can carry with you when you buy your next home and avoid paying any discharge penalties. This means you will not have to go through the entire mortgage process again unless you are making a move up to a much more expensive home.
    An assumable mortgage is one that the buyer for your home can take over when you move to your next home. This can be a very powerful tool at the negotiating table making it much easier and more desirable for a buyer to buy your home, and again saves you any discharge penalties. 
  6. You should seriously consider dealing with a Mortgage Expert.
    Consider dealing with only a professional who specializes in mortgages. Enlisting their services can make a significant difference in the cost and effectiveness of the mortgage you obtain. For example they can make the process faster thereby avoiding costly delays. Typically there is no cost or obligation to enquire. Bruce Fournier and Associates can even recommend a good mortgage expert for you!
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Whether you’re looking to buy your first home, or trading up to a larger one, there are many costs - on top of the purchase price - that you must figure into your calculation of affordability. These extra fees, such as taxes and other additional costs, could surprise you with an unwanted financial nightmare on closing day if you’re not informed and prepared.

 

Some of these costs are one-time fixed payments, while others represent an ongoing monthly or yearly commitment. Not all of these costs will apply in every situation, however it’s better to know about them ahead of time so you can budget properly. 

 

Remember, buying a home is a major milestone. Whether it’s your first, second or tenth home, there are many important details to address, during the process. The last thing you need are unbudgeted financial obligations cropping up hours before you take possession of your new home. Read through the following check-list to make sure you’re budgeting properly for your next move. 

 

  1. Appraisal Fee
    Your lending institution may request an appraisal of the properly which would be your responsibility to pay for. Appraisals can vary in price from approximately $175-300.
  2. Property Taxes
    Depending on your down payment, your lending institution may decide to include your property taxes in your monthly mortgage payments.
    If your property taxes are not added to your monthly payments, your lending institution may require annual proof that your taxes have been paid. 
  3. Survey Fee
    When the home you purchase is resale (vs a new home), your lending institution may ask for an updated property survey. The cost for this survey can vary between $700-$1,000. 
  4. Property Insurance
    Home insurance covers the replacement value of your home (structure and contents). Your lending institution will request proof that you are insured as it protects their investment on the loan. 
  5. Service Charges
    Any new utility that services your hook up, such as telephone or cable, may require an installation fee. 
  6. Legal Fees
    Even the simplest of home purchases should have a lawyer involved to review all paperwork. Shop around, as rates vary greatly depending on the complexity of the issues and the experience of the lawyer. 
  7. Mortgage Loan Insurance Fee
    Depending upon the equity in your home, some mortgages require mortgage loan insurance. This type of insurance will cost you between 0.5% - 3.5% of the total amount of the mortgage. Usually payments are made monthly in addition to your mortgage and tax payment. 
  8. Mortgage Brokers Fee
    A mortgage broker is entitled to charge you a fee in order to source a lender and organize the financing. However, it pays to shop around because many mortgage brokers will provide their services free to you by having the lending institution absorb the cost. 
  9. Moving Costs
    The cost for a professional mover can cost you in the range of $50-100/hour for a van and 3 movers and 10-20% higher during peak demand seasons. 
  10. Maintenance Fees
    Condos charge monthly fees for common area maintenance such as groundskeeping and carpet cleaning in hallways. Costs will vary depending on the building. 
  11. Water Quality and Quality Certification
    If the home you purchased is serviced by a well, you should consider having your water checked by your local experts. Depending upon where you live, determines whether or not a fee is charged, to certify the quantity and quality of the water. 
  12. Local Improvements
    If the town you live in has made local improvements (such as the addition of sewers or sidewalks), this could impact a property’s taxes by thousands of dollars. 
  13. Land Transfer Tax
    This tax is applied whenever property changes hands and the amount that is applied can vary. 
Get in touch with Bruce Fournier and Associates to discuss these costs in detail. 
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Bruce Fournier: Chilliwack Realtor
Office: (604) 819-0120
Toll Free: (800) 830-7175
Bruce's Cell: (604) 819-0120
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Bruce Fournier & Associates are RE/MAX realtors located in beautiful Chilliwack, BC. We serve all parts of Chilliwack and the surrounding areas including Agassiz, Promontory, Sardis, Greendale, Cultus Lake, Harrison Hot Springs, Rosedale, Yarrow and Ryder Lake.