Our Blog today comes from our colleague Kevin Carlson. In my opinion, he is quite correct in not blaming the mortgage stress test for the woes of Canadian Home owners. Consumer credit is too easily accessible and
I would make an argument that mortgage qualification guidelines apart from the stress test need to be changed.

This is a quick but excellent read! Enjoy the blog!

MORTGAGE STRESS TEST – NOT THE BAD GUY

Ever since the federal government regulator, The Office of the Superintendent of Financial Institutions (or OSFI) brought in the Mortgage Stress Test, there has plenty of blame heaped upon it for slowing home sales and new home starts. Even though it has slightly reduced how much of a mortgage I can approve my clients for, the initial logic is sound. The stress test attempts to protect Canadians from taking on more mortgage debt than they will be able to afford when their mortgage renews down the road.

What it doesn’t do is curb additional debt and other financial factors after the mortgage starts. Many clients do not consider long-term changes like, child care expenses, new vehicle loans, ongoing credit card and line of credit debt payments.

I work with many first and second-time homebuyers with wide-ranging financial details. The stress test is a limiting factor, but in no way is it the largest culprit in preventing my clients from getting mortgage they are requesting. credit cards, lines of credit and vehicle loans have a much larger impact on reducing the mortgage borrowing ability for most of my clients.

Here are some real-world numbers on two hypothetical first-time homebuyer scenarios that help to illustrate what consumer debts can have on a mortgage application.

1. Individual or couple – scenario 1
Buyer(s) with household gross income of $80,000 that have $17,000 as down payment.
There is a student loan with a payment of $200 per month and a vehicle loan of $300 biweekly.
This application would be approved for the purchase of a $250,000 detached home.
An additional monthly credit or loan payment of only $300 per month will prevent mortgage approval for this application.

2. Individual or couple – scenario 2
Buyer(s) with household gross income of $125,000 that have $33,000 as down payment.
There is a student loan with a payment of $200 per month and a vehicle loan of $300 biweekly.
This application would be approved for the purchase of a $500,000 detached home.
An additional monthly credit or loan payment of only $500 per month will prevent mortgage approval for this application.

Credit cards, lines of credit and vehicle loans are exceedingly easy to obtain but could stand in your way when you are looking to buy your first or next home. Please consider carefully before financing anything. If you have any questions, contact a Dominion Lending Centres mortgage professional near you.

Kevin Carlson

Today’s BLOG comes from our Our House Magazine. My unbiased opinion *wink*, is that everyone should use a mortgage broker. Even if it just to get a second opinion. A good mortgage broker will tell you the truth if your bank has a good offer or explain why their own offering may be better!

Enjoy the article!

WHY I CHOSE A MORTGAGE BROKER? OUR HOUSE MAGAZINE – WINTER

Amanda Moss and her husband Robert have had a mortgage on various properties for almost 10 years. The Chilliwack B.C. couple was a few years into their mortgage term, but looking to pay off some extra bills and clear up some financing. They hadn’t considered the option of refinancing until Amanda got some advice of a friend. The friend recommended a mortgage broker to help them through the refinancing process. The couple is now back on sold financial footing thanks to the help of their Dominion Lending Centres mortgage broker.

Why did you choose a mortgage broker?

I happened to be on a girl’s trip to Seattle and I mentioned to a friend, because my husband and I both make decent income, we wanted to refinance. She said she had the perfect broker for me. When I got back to Seattle I called him right away.

How was your experience working with a mortgage broker?

I had a really great experience with Dominion Lending Centres and with my mortgage broker. He was very professional and went out of his way to reassure us through the process. Refinancing can be stressful, with so much paperwork and questions along the way, but our broker was always willing to provide advice and even dropped by our house to pick up documents. Overall it was a great experience!

What advice would you give someone in your situation?

Managing your finances can be very stressful. Our mortgage broker was able to lower our monthly payments which has allowed us to focus on our family and worry less about money. My husband and I found that dealing with a mortgage broker was easy, and also and provided us with multiple lending options, so that we could get the best rate possible. This was a nice change from just dealing with one bank. My advice to you is to be open to using a mortgage broker as they fight for you and your best interest.

Jeremy Deutsch

Today’s BLOG is full of great information. To Co-sign or Not to Co-sign. Co-signing a mortgage these days is a tremendous decision and responsibility. Many of our clients seem to think that if they simply get a co-signer that all will be well. That, simply isn’t the case.

It is really important to understand the process and what co-siging ACTUALLY means.

We hope you enjoy today’s BLog!

WOULD A CO-SIGNER ENABLE YOU TO QUALIFY FOR A MORTGAGE?

There seems to be some confusion about what it actually means to co-sign on a mortgage… and any time there is there is confusion about mortgages, it’s time to chat with your trusted Dominion Lending Centres mortgage professional!

Let’s take a look at why you would want to have someone co-sign your mortgage and what you need to know before, during and after the co-signing process.

Qualifying for a mortgage is getting tougher, especially with the 2017 government regulations. If you have poor credit or don’t earn enough money to meet the banks requirements to get a mortgage, then getting someone to co-sign your mortgage may be your only option.

The ‘stress test’ rate is especially “stressful” for borrowers. As of Jan. 1, 2018 all homebuyers with over 20% down payment will need to qualify at the rate negotiated for their mortgage contract PLUS 2% OR 5.34% which ever is higher. If you have less than 20% down payment, you must purchase Mortgage Default Insurance and qualify at 5.34%. The stress test has decreased affordability, and most borrowers now qualify for 20% less home.

In the wise words of Mom’s & Dad’s of Canada… “if you can’t afford to buy a home now, then WAIT until you can!!” BUT… in some housing markets (Toronto & Vancouver), waiting it out could mean missing out, depending on how quickly property values are appreciating in the area.

If you don’t want to wait to buy a home, but don’t meet the guidelines set out by lenders and/or mortgage default insurers, then you’re going to have to start looking for alternatives to conventional mortgages, and co-signing could be the solution you are looking for.

In order to give borrowers, the best mortgage rates, Lenders want the best borrowers!! They want someone who will pay their mortgage on time as promised with no hassles.

If you can’t qualify for a mortgage with your current provable income (supported by 2 years of tax returns and a letter of employment) along with solid credit, your lender’s going to ask for a co-signer.

Ways to co-sign a mortgage

The first is for someone to co-sign your mortgage and become a co-borrower, the same as a spouse or anyone else who you are actually buying the home with. It’s basically adding the support of another person’s credit history and income to those initially on the application. The co-signer will be put on the title of the home and lenders will consider them equally responsible for the debt should the mortgage go into default.
Another way that co-signing can happen is by way of a guarantor. If a co-signer decides to become a guarantor, then they’re backing the loan and essentially vouching for the person getting the loan that they’re going to be good for it. The guarantor is going to be responsible for the loan should the borrower go into default.
Most lenders prefer a co-signer going on title, it’s easier for them to take action if there are problems.

More than one person can co-sign a mortgage and anyone can do so, although it’s typically it’s the parent(s) or a close relative of a borrower who steps up and is willing to put their neck, income and credit bureau on the line.

Ultimately, as long as the lender is satisfied that all parties meet the qualification requirements and can lessen the risk of their investment, they’re likely to approve it.

Before signing on the dotted line

Anyone that is willing to co-sign a mortgage must be fully vetted, just like the primary applicant. They will have to provide all the same documentation as the primary applicant. Being a co-signer makes you legally responsible for the mortgage, exactly the same as the primary applicant. Co-signers need to know that being on someone else’s mortgage will impact their borrowing capacity while they are on title for that mortgage. They’re allowing their name and all their information to be used in the process of a mortgage, which is going to affect their ability to borrow anything in the future.

If someone is a guarantor, then things can become even trickier the guarantor isn’t on title to the home. That means that even though they’re on the mortgage, they have no legal right to the home itself. If anything happens to the original borrower, where they die, or something happens, they’re not really on the title of that property but they’ve signed up for the loan. So they don’t have a lot of control which can be a scary thing.

In my opinion, it’s much better for a co-signer to be a co-borrower on the property, where you can actually be on title to the property and enjoy all of the legal rights afforded to you.

The Responsibilities of Being a Co-signer

Co-signing can really help someone out, but it’s also a big responsibility. When you co-sign for someone, you’re putting your name and credit on the line as security for the loan/mortgage.

If the person you co-sign for misses a payment, the lender or other creditor can come to you to get the money. The late payment would also show up on your credit report.

Because co-signing a loan has the potential to affect both your credit and finances, it’s extremely important to make sure you’re comfortable with the person you’re co-signing for. You both need to know what you’re getting into. I recommend looking into Independent Legal Advice between all co-borrowers.

Co-signing is NOT a life sentence Just because you need a co-signer to get a mortgage doesn’t mean that you will always need a co-signer.

In fact, as soon as you feel that you’re strong enough to qualify without your co-signer – you can ask your lender to reconsider your application and remove the co-signer from the title. It is a legal process so there will be a small cost associated with the process, but doing so will remove the co-signer from your loan (once you are able to qualify on your own), and release them from the responsibility of the mortgage.

Removing a co-signer technically counts as changing the mortgage, so you need to check with your mortgage broker and lender to ensure that the lender you choose doesn’t count removing a co-signer as breaking your mortgage, because there could be large penalties associated with doing so.

Co-signing is an option that could help a lot of people buy a home, especially first time home buyers who are typically starting their career and building their credit bureau.

A final mortgage tip: a couple of alternatives to co-signing that could help someone out:

providing gift funds for a down payment
paying off someone else’s debt, giving them more funds to pay the mortgage

Kelly Hudson

There are a lot of misconceptions about mortgages today. How much do I need as a down payment? The Zero down payment mortgage of the past no longer exists. How it used to work, was a lender would give you 7% Cash Back from the mortgage proceeds which used to be allowed for the down payment. In return, the borrower would have about a 1% higher interest rate & would have a stifling penalty should they ever had to pay out they mortgage early.

This was an option for people who didn’t have their down payment. However, statistic show that many people change their mortgage after 3 years. This either resulted in very high penalties for clients as you had to pay your regular penalty and a portion of the cashback.

Our BLOG Today from Geoff Lee, explains how a zero down payment mortgage could work using the FLEX-DOWN PROGRAM.

ENJOY TODAY’S BLOG!

ZERO DOWN PAYMENT MORTGAGE–DOES IT EXIST?

Did you know that you can buy a home with ZERO down payment?? If a home purchase is your goal this year but you aren’t able to save up enough of a down payment, you may qualify for a low or zero down payment mortgage. One of our Lenders is offering a great zero down program.

What is a Flex-Down Mortgage?
A Flex-Down Mortgage is a mortgage product that has a flexible down payment amount. There is still a down-payment required, but it will vary based on the property value.

For a property valued under than or equal to $500,000, 5% down payment is required (sources available below)
For a property valued at greater than $500,000 and less than $1 million –5% down payment is required up to $500,000 with an additional 10% down payment on the portion of the home value above $500,000.
Flex-down mortgages can only be on first mortgages, not second or third or used in refinance situations. As noted above, the total property value has to be less than $1 million. This type of mortgage will also have insurance included with it—the premium will be lesser of the premium as a % of the total new loan amount or the premium as a % of the top-up portion additional loan based on the rates at that time.

Those that choose to go with this type of mortgage product will have to meet requirements, just like any other mortgage. There are a few specifications with this product:

You must show that you have standard income and employment verification papers
A credit score of 650 or higher is highly recommended
You must have no previous bankruptcies
Some lenders may still require you to have some of the down payment from your own resources
Those considering this type of mortgage are recommended to have very little debt and be able to accommodate the additional cost of higher mortgage insurance (due to the higher risk to the lender on this type of mortgage). Typically, the insurance premium would be 0.2% higher on a flex down mortgage.

How it Works
You can borrow your 5% payment from a Line of Credit or even a credit card. This can then be used for your down payment. You have to disclose this to the Insurer and it will be on the application that goes to the Lender.

This is perfect for someone just getting into a new high paying job or for someone who is renting and can afford higher monthly payments but would take forever to save up the 5% down payment. This type of mortgage product can be an excellent option if you don’t quite have enough for the down payment. Are you interested in learning more about this mortgage product? Contact a Dominion Lending Centres mortgage professional who can show you how a Flex mortgage can make the home of your dreams happen sooner than you think!

Geoff Lee

Going through a divorce doesn’t mean you have to split from your home

When we tie the knot with our soulmate, we assume it’s going to be forever. It’s pretty much written in the vows. Unfortunately not all marriages have fairytale endings. In fact, a very significant amount of marriages in Canada end in divorce. The most recent data suggests 38 per cent of all marriages in Canada don’t last until death. The average marriage lasts 14 years, with 42 per cent of divorces occurring in marriages lasting between 10 and 24 years.
The reasons for the divorce rate are many and complicated and not really necessary to discuss here.
What we do know is, divorces can get ugly and be costly for both individuals involved. And if the marriage is years old, there’s likely a home or property that gets caught in the middle.
A typical divorce scenario sees that when the couple breaks up, the matrimonial home is sold and what’s left over is split. In almost all cases, even when one party wants to keep the home, the lawyers, the banks and the professionals always suggest selling the home. It makes sense, since most couples get a mortgage they can afford together, not on their own. But if the home is full of memories, or children are involved, it can be an extremely painful situation.
There is a unique alternative very few professionals even know exists.
All three of Canada’s mortgage insurance providers, Canada Mortgage and Housing Corporation, Genworth Financial and Canada
Guaranty, offer what’s called a spousal buyout program.
This program allows one party to refinance the matrimonial home up to 95 per cent of its appraised value, and pay out any debts related to the marriage.
Traditionally, you can only refinance on an existing mortgage up to 80 per cent of the appraised value.
The program is considered a purchase, so all the requirements and qualifications needed in a traditional mortgage still apply. In this case, you’ll also need a purchase agreement and a separation agreement with all the debts and payments spelled out.
The spousal buyout program is a one-time opportunity. It can be used to pay off other debts outside the separation agreement, but it depends on which one of the three insurers you use.
Even with a helpful loan-to-value ratio, some people still can’t afford to take on the home on their own. The program also allows people to bring on a cosigner, often a new partner or family member.
At the end of the day, divorce is unfortunate. The programs allows you to keep your home and your kids can stay where they’ve grown up. And that makes the situation at least somewhat more bearable.
If you do find yourself in a divorce and you’re not sure what to do about your home, contact a mortgage broker before making any decisions. They can help you.

QUALIFIED TO MAKE SURE YOU QUALIFY – OUR HOUSE MAGAZINE
If you need open-heart surgery, you want to be sure the doctor in the operating room knows what they’re doing. You want to know they’ve got the professional education, skills and experience to carry out the life-saving procedure.
You would expect nothing less from the person handling the biggest financial decision of your life – your mortgage broker.
Though a mortgage broker doesn’t need quite the same qualifications as a heart surgeon, there are still rigorous standards each mortgage professional must meet to do their job.
While regulations can vary in each province, mortgage professionals need to be registered with a government body and be licensed to carry out broker activities.
First, each broker must complete a provincially approved course for mortgage brokering. These courses are offered through various colleges and institutions and can take days or months to complete. In Ontario, for instance, after completing the course, aspiring brokers need to be hired by a Financial Services Commission of Ontario licensed brokerage, in which the brokerage applies to the commission for that particular broker’s licence.
In B.C. for example, mortgage brokers need to pass a course to be registered with the Financial Institutions Commission, or FICOM, and then update their licence every two years.
Agencies like FICOM have the power to investigate public complaints, hand out fines, and suspend or revoke licences of brokers.
“The Registrar of Mortgage Brokers protects the public and enhances mortgage broker industry integrity by enforcing mortgage broker suitability requirements and reducing and preventing market misconduct under the Mortgage Brokers Act and Regulations,” notes the FICOM website.
While Greg Domville, DLC’s vice president of training and business development, noted the course for mortgage brokers is a good foundation, he suggested it’s the background and criminal checks that are most important.
“They make sure you’re a real good person,” he told Our House Magazine. If you’re going to be dealing with someone’s finances, those checks and balances are in place.”
Domville added that consumers can take comfort that their mortgage broker has gone through a rigorous screening process before they have any contact with them. Adding the standards in place are good at weeding out people in the industry.
He pointed out, at DLC, a mentoring program is in place where franchise owners can monitor and train new brokers to ensure they’re doing all the right things along the way. As Domville noted, there’s a good chance even if you’re dealing with a new broker, they’ll have a lot of experience.
There are a number of online resources available to the public through the varying licensing agencies. Don’t be afraid to ask your mortgage broker about their background, they’ll be more than proud to share with you their qualifications.

Jeremy Deutsch

Your credit score today is SOOOOO important when applying for your mortgage. Mortgages today are more of a planning process that a transaction. As a mortgage broker, I have been predicting this change for a while. Time after time, I find my clients getting insufficient advice from their bank or credit union. The tiniest and most insignificant little detail can cost you your mortgage approval. Contact me today!

Enjoy the blog from our colleague Len Lane…

LOOKING FOR A MORTGAGE… YOU BETTER KNOW YOUR CREDIT SCORE

Over the last month, as the big banks and many of our monolines mortgage lenders wind down their fiscal year, we are starting to see some very obvious changes in what your credit score can get you.

I heard a few months ago that 720 beacons were going to become the new 650. The 650 beacon credit score for many years was the mid-range norm for most mortgage lenders. Today on many of the sites we use, we are seeing that the primary borrower must have a credit score of 720 and the secondary beacon can’t be below 650. It’s a big change from what we have seen in the past.

There are more changes coming as the banks will need to set aside more balance sheet if your mortgage is conventional. The one report I read said that if your credit score is lower, then the banks will now need to set aside 1.5% or possibly more if the score is low enough. That of course will then mean that an investor will need to be compensated more for having that in their portfolio, aka higher rates for you on a conventional mortgage.

If you are in the market for a house and you don’t know where to start, at least contact Dominion Lending Centres mortgage broker who can guide you through the process and let you know where you start. If you use a DLC broker, they can set you up with a CleverCredit account and you can work together to make sure your credit is strong enough to apply for a mortgage when the time comes.

Len Lane

Today’s Post in the blog is actually an article posted recently by Mortgagebrokernews.ca by Ephraim Vecina. The full article is available on their website. I have posted the link towards the bottom of the post.

Mortgages From Banks Are More Costy Than Alternatives

The lowest mortgage rates offered by the country’s leading banks are uniformly higher-priced than those available from alternative lenders, according to a new analysis by online comparison portal LowestRates.ca.

Combined with the fact that Canada’s “Big Six” banks account for a vast majority of the national mortgage market, the situation is contributing to a significant portion of consumers’ fiscal grief – and they might not even realize it.

“Brokers and smaller lenders often drop their rates first to be more competitive, and banks are slower to implement changes because they know they own the market,” LowestRates.ca CEO and co-founder Justin Thouin said.

“This will only change when Canadians realize they’re being overcharged and begin to shift away from the banks, and that will only happen as we increase awareness about the alternative market. The best deals are found online, not in your family’s legacy bank branch.”

Read more: Alternative financing increasingly popular in Ottawa

For instance, in January, RBC cut its 5-year fixed-rate mortgage to 3.74%, but LowestRates.ca found that the best currently available 5-year fixed-rate term in the non-bank lending market boasts of a 3.23% rate.

“The big banks never offer the lowest posted rates on the market, but Canadians aren’t spending enough time researching rates before signing their mortgages, and that’s potentially costing them thousands of dollars a year,” Thouin warned.

https://www.mortgagebrokernews.ca/news/alternative-lending/mortgages-from-banks-are-more-costly-than-alternatives-254417.aspx

Refinanincing your home can be a powerful financial planning tool. It can give your and your family the ability to pay off much, or all of your consumer debt and allow you to take control of your finances and start saving for retirement or your kid’s education. In recent years, the Government of Canada has made it a little tougher for you to refinance. However, we are often able to qualify our clients. An mortgage professional can offer you many alternatives to your mortgage. Becoming more popular in recent years are Hybrid mortgage such as All-in-One mortgages or more simply mortgage with a line of credit portion. This can help you cut your mortgage amortization by half. To discuss any refinancing strategies, please call me.

Enjoy today’s blog!

WHAT QUESTIONS TO ASK WHEN CONSIDERING A REFINANCE

Many of my clients and friends regularly ask me when or if they should consider a refinance. Here are 4 quick questions that I ask of them. The answer they give me, will very quickly tell me if we should be taking a deeper look at the mortgage refinance options available to them.

What do you believe the current value of your home is and what is the outstanding balance on your mortgage?
Have you ever heard your mortgage broker or banker talk about “loan to value”(LTV)? They are looking to determine what your outstanding balance of your mortgage is as a percentage of your property value. The reason we look at your LTV is because there are limits in Canada with respect to how large your mortgage can be based on the current value of your home. This gives your mortgage broker insight into how much equity or money you have access in the event that you were to refinance your mortgage.

What is the maturity date of your mortgage and your current rate/term length?
Understanding who your current lender is, what your maturity date is, and what your rate/term details are, will help your mortgage broker determine what type of penalty you might have for breaking your current mortgage contract. Knowing your rate will also give them the details they require to calculate the interest savings that you would receive from a refinance. When looking to refinance, your mortgage broker should be factoring these potential costs and overall interest savings into their overall benefits analysis when trying to determine if refinancing is the right option for you.

How is your household monthly cash flow impacting your short and long term financial goals?
Budget, budget, budget… this is one of those tools that we all know we should do, but it often gets very little of our attention each month. By understanding how much net income you have coming in each month and where that cash is going (cash flow) we can look at how a restructured mortgage could help. If you are finding that all of your money is disappearing each month and you’re having trouble getting by, a new mortgage can help restructure your monthly debt payments giving you some added breathing room. It is important to note that sometimes it is not about debt payments and it can be about high household expenses. Taking the time to assess your spending and cutting it back if necessary, might be enough to get you back on track. Check out our blog post on basic budgeting tips and tricks.

Looking at your outstanding debt, what are the current interest rates that you are paying and are you only making the minimum payments each month?
A quick snap shot of your current debt load, respective interest rates and monthly payments can give us some insight into how a refinance can save you interest. By understanding what your financial picture looks like and the amount of interest that you are currently paying to service that current debt, we can very quickly estimate how much interest you could save with a refinance. If you take a number of those high interest rate credit cards and roll them into a new, low interest rate mortgage, the savings can very quickly become quite substantial.

In closing, a refinance is a financial tool that can make a significant difference in your current financial picture. If you have reviewed the questions above and would like to take a closer look at your situation, there is never a better time than the present to make a change that will have a positive impact on your future.

Take the time to have a conversation with a Dominion Lending Centres mortgage broker who can give you some insight into how a new mortgage could help you with a brighter financial future.

Nathan Lawrence

First timers are my favourite. I have a soft spot in my heart for helping brand new, bright eyed clients get into their first home! I love it! There is so much to teach them. Mortgages are not just about rate and payments. There is so much information to review. Household budget, future plans, closing costs, property tax adjustments, property tax collection, Insurance….. the list is extensive. This is a great Blog by our colleague Geoff Lee.

Enjoy!

FIRST TIME HOME BUYERS

Your First Home. What a THRILLING thing that is to think about!! One of the best parts about our job is helping individuals purchase their first home. We know that the process can seem daunting at first, but we have an in-depth understanding and knowledge of what steps are required to make the process go smoothly. Follow these and you will be turning the key into your new home before you know it.

1. Find a Fantastic Mortgage Broker
Finding a mortgage broker who can help with your pre-approval process can allow you to determine the price point of home you can really afford. Finding a mortgage broker right off the bat can also give you an advantage over working with your bank:

Mortgage Brokers work for you, not the bank or lender
They have access to multiple lenders and are not limited to one single product
They are an expert in the field. They focus on mortgages and mortgages alone!
2. Get Comfortable With The Numbers
There are two numbers that all first-time homebuyers should keep in mind: 39 and 44. These two numbers can help you budget and determine what you can truly afford when looking to purchase a home. Why 39 and 44? Here’s why:

A maximum of 39% of your total income can go towards your housing costs. This will cover your mortgage payment, property tax payment, heating costs, and strata fees.
A maximum of 44% of your total income can go towards your housing costs and total debt payments. This will include ALL housing costs and all debt repayments (credit cards, car loans, student loans, etc.)
Now, here are a few other key numbers that can help you in your house hunting:

3. Know What Your Down Payment Needs to Be
You know the numbers, now let’s look at what you need to know about the down payment itself. First, if you have less than 20% down payment your mortgage will be insured and have insurance premiums added to your mortgage. If you are considering putting the minimum down, that would be 5% if the property is worth $500,000 or less. A down payment of 10% is required for any amount over $500,000. Here’s a quick example of what this looks like:

Purchase Price of $600,000

5% of $500,000 $25,000

10% of $100,000 $10,000

Total Down Payment: $35,000

4. Take Advantage of The RRSP Home Buyers Plan
The Canadian government’s Home Buyers’ Plan (HBP) allows for first time home buyers to borrow up to $25,000 from you RRSP for a d own payment, tax-free! You are able to combine this with your partner if you are both first time home buyers you can both access the $25,000 from your RRSP for a combined total of $50,000. Certain qualifications do apply for you to use this plan, we have laid them out here for you to review.

5. Don’t Forget About the Closing Costs!
This is one so many people overlook! Closing costs are something that can add up quickly when you are purchasing a home. Here is an approximate breakdown of the funds you will need:

Legal Costs: $1000
Title Insurance: $200
Appraisal: $350
Property Transfer Tax: Pending on purchase price
An additional few facts on property tax for you to consider:

This is an approximation of what your closing costs may be, but it is always good to budget for them beforehand.

6. Have your Documents Ready to Roll
Mortgages = paperwork! There are a number of documents that you will need to have to give to your mortgage broker. This will vary depending on your employment situation and where your down payment is coming from, but here is a general list you can follow:

Most Recent paystub
Letter of Employment
NOA’s (2 years)
T4’s (2 years)
Down payment verification—up to 3 months of bank statements
Contract of Purchase and Sale (Your realtor will provide this)
Property Disclosure Statement (Realtor will provide)
if you are self-employed you may also have to show:
o T1 Generals
o Articles of Incorporation
o Financial Statements
7. Start Working on Your Credit Score
Yes, your credit score does directly impact your ability to get a mortgage. Lender’s want to see that you can responsibly manage credit and debt repayment before loaning you a large sum of money to purchase a home. Your credit score will be a determining factor in the terms and rate associated with your mortgage.

Just what impacts your credit score? Good question! Here are a few things:

Late payments will lower your score
Collections, judgements, consumer proposals, bankruptcy this will lower your score
Exceeded limits on credit cards
Ideally, you will be able to show a minimum of 2 active and current trade lines
The longer your trade line is, the better increase in your score!
Lenders also like to see a minimum of $2,000 limit on your credit cards.
Understanding and using this knowledge can help make your first home buying experience a great one! Once you have gone through the pre-approval process with a mortgage broker the fun part begins! Upon you receiving your preapproval, you can begin the house hunting. From there, you can put an offer on your dream home (yay!) Once your offer is accepted, we go through the mortgage process with you and then it’s moving day for you!

This is an exciting time for first time homebuyers—we enjoy getting to help our clients go from start to finish and helping them get the keys to their first ever home. If you have questions or are looking to find out just how much you will qualify for you can check out our mortgage calculator OR you can reach out to a Dominion Lending Centres mortgage professional directly!

Geoff Lee