Determine What You Can Afford!

If you're thinking of buying a home, or transferring or refinancing your existing mortgage, you're going to like this handy mortgage calculator. Use it to help you determine:

• How much you can afford to spend on a home purchase.
• What your mortgage amount and payments will be and compare different ways of paying your mortgage off faster.
• Whether you can transfer or refinance your mortgage.
• What you can afford for home improvements or cash take-out on your home.

The Mortgage Process:

Get a pre-approved mortgage certificate

A pre-approved mortgage certificate is a written commitment that you will get a mortgage for a set amount of money, at a specific rate of interest that is guaranteed for 60 to 120 days, depending on the financial organization you choose. The commitment is made subject to a financial assessment and property appraisal. The service is free and without obligation.

Why is it a good idea to get a pre-approved mortgage?

A pre-approved mortgage gives you an edge. Before you even go house hunting, you will know the size of your mortgage, the interest rate, and the size of your monthly mortgage payments. With your financing already mapped out, you can concentrate on finding the right home in your price range.

A pre-approved mortgage also puts you in a strong bargaining position when you make an Offer to Purchase. If the seller wants to make a quick sale, you may be able to negotiate a price lower than the list price, because the seller knows that you are a serious buyer. On the other hand, if several people are bidding on the home you want, you may decide to offer to purchase at the list price, to beat out earlier offers.

Making an Offer to Purchase

When you find the home that's right for you, your next step is to make an offer to purchase the home from the current owner. The owner can accept your offer, make changes to the offer and present you with a counter-offer, or reject the offer.

The Offer to Purchase

The Offer to Purchase is a legally binding agreement between you and the person selling the house. It's a good idea to have your lawyer review the offer with you before it is presented to the seller. It sets out:

• Your name.
• The seller's name.
• The address or legal description of the property.
• The price you are prepared to pay for the home.
• The items you expect to be included in the purchase price.
• The amount of your cash deposit.
• Your financing arrangements, such as your mortgage.
• The closing date.
• Specific terms or conditions that must be met as part of the purchase.
• A time limit for meeting these conditions.

Discuss the Offer to Purchase with your lawyer before you sign it. Remember, it becomes a legally binding agreement the moment it is accepted. If you decide to cancel an offer that has already been accepted, you could lose your deposit and the person selling the home could sue you for damages. If the seller does not accept your offer, your deposit will be returned.

When your offer is accepted

Your offer has been accepted. Good. You're now in the home stretch - finalizing the details of your mortgage and closing the purchase of your new home. Call your assigned Mortgage Specialist. Your Mortgage Specialist will need to receive the following documents and information:

• A copy of the real estate listing.
• A copy of the accepted Offer to Purchase.
• Information on the source of your down payment.
• Income verification if you are employed.
• A letter from your employer verifying your place of employment and income, or T4s and Notice of Assessment, or T1 General Tax Return and Notice of Assessment.
• Income verification if you are self-employed.
• 3 years of Financial Statements and 3 years of Notice of Assessments, or 3 years of T1 General Tax Returns and 3 years of Notice of Assessments.
• Processing the mortgage application

Your Mortgage Specialist will want to verify the value of the property you are buying, your current financial picture and your credit history, so a property appraisal and credit report will be ordered.

Also, if your down payment is less than 25%, you qualify for a high ratio mortgage on which you would have to pay insurance premiums. You decide whether you want to pay the premium in cash or have your lender add it to your mortgage amount. Your Mortgage Representative can contact Canada Mortgage and Housing Corporation (CMHC) or GE Capital Mortgage Insurance Company of Canada (GEMI) to make the arrangements.

Be prepared to pay fees for the mortgage application, credit report and property appraisal.

Closing the purchase

Closing day is the day you become the official owner of your home. However, the closing process usually takes a few days.

Typically, you visit your lawyer's office to review and sign documents relating to the mortgage, the property you are buying, the ownership of the property and the conditions of the purchase. Your lawyer will also ask you to bring a certified cheque to cover the closing costs and any other outstanding costs.

Once your mortgage and the deed for the property are officially recorded, you become the official owner of the property.

Congratulations! You've just bought a home!