What are the closing costs associated with a Canadian real estate transaction, how much are they and who pays? If I offer my agent a fruit cake, will they “take care of it” for me? First of all — fruit cake?!? When it comes to baked goods we recommend brownies, and when it comes to buying or selling a home, make sure you're conscious of all the closing costs that you’ll be accountable for.

Not sure what closing costs are? That’s okay.  It can be challenging to keep up with everything that’s involved in buying or selling a home. From selling costs such as property staging and the listing agent’s commission fee, to buying costs like land transfer tax, mortgage loan insurance, title insurance and the home inspection fee, there’s a lot to budget for.

You may not know everything about buying or selling Canadian real estate, and why would you? At RE/MAX Canada, that’s our job, and we just happen to have 50 years’ of experience.

How Much do People Really Know About Canadian Real Estate?

RE/MAX Canada hit the streets in a new video series, to find out just how much (or how little) the average person knows about Canadian real estate, and to offer some answers.

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Your best bet for getting the right answers is to connect with a RE/MAX agent. In the meantime, sharing is caring so here are some helpful resources for homebuyers and sellers:

HOME BUYING RESOURCES

HOME SELLING RESOURCES

COMMON QUESTIONS

RE/MAX – Your Unfair Advantage

It’s like having a GPS, helping to navigate the ups and downs of the quickly changing Canadian real estate market. It’s easy to get lost without guidance, so let us lead the way, answer your questions and help make your real estate dreams a reality.

Source: https://blog.remax.ca/what-are-closing-costs-this-and-more-canadian-real-estate-answers/

When you purchase a home, a down payment is typically applied to the purchase price, and the balance is to be paid off over your term of the mortgage. The loan you receive from a lender in order to pay for the house is called a mortgage.

Simply put, a mortgage is a legal and binding agreement between a lender and a borrower for a specific amount of money that must be paid back within a predefined amount of time. The mortgage is a secured loan in that the house you are buying is collateral for the loan. This means that, should you not meet your mortgage repayment obligations, the lender has the right to take the property.

Purchasing a home and taking on a mortgage is a big commitment. In addition to the amount borrowed, the interest rate you receive is also a factor in assessing affordability. Shopping for a better interest rate could save you tens of thousands of dollars over time.

10 tips to help you get the best mortgage rate in Canada

1. Research Mortgage Interest Rates

There is no one-size-fits-all approach to getting a mortgage. There are a few different types of mortgages, each of which will impact the interest rate you receive, based on a few of the factors we will be touching on later.

The first, and also the best option, is a prime mortgage. These are offered to borrowers who are considered less risky by lenders. These borrowers typically have a credit score of at least 670, have contributed a down payment of between 10 and 20 per cent, and have a low debt-to-income ratio. The most significant perk of a prime mortgage is a lower interest rate, which will help the borrower save thousands of dollars over the loan’s lifetime.

The other is a subprime mortgage. These are offered to borrowers with a lower credit score, typically between 580 and 669. Subprime mortgages carry higher interest rates because borrowers are seen as “riskier.”

By knowing your credit score before speaking with a professional, you can be sure to get the appropriate interest rate.

2. Decrease Your Debt-to-Income Ratio

A simple way to get the best mortgage rate in Canada is to decrease your debt-service ratio. This represents the percentage of your gross monthly income used to pay off your debts. Lenders use this value to assess the risk you carry when borrowing money. Canada Mortgage and Housing Corporation recommends keeping your Gross Debt Service (GDS) ratio (your monthly household income that covers your housing costs) below 39 per cent, and your Total Debt Service (TDS) ratio below 44 per cent.

To decrease this ratio, make larger payments on your debts, reduce debt by purchasing only what you can afford in cash, or increase your income. By decreasing your debt-to-income ratio, you signal to lenders that you are less of a risk.

3. Improve Your Credit Score

Improving your credit score takes time, but it can be done. Some easy ways to accomplish this are to make larger payments on your outstanding credit card bills, pay off any collections that may be on your credit report, get caught up on all your bills, and keep outstanding balances on credit cards low.

4. Increase Your Income Stability

Income stability signals to a lender that you’re less likely to default on your mortgage. First, sit down and run an honest assessment on how much money you bring in every month versus how much you spend, to improve your income stability. Then, look for ways to spend less and earn more. This can be accomplished by cutting out frivolous expenses, asking for more hours at work or taking on a side hustle.

5. Gather Your Employment History

Before meeting with a mortgage lender, gathering your employment history is key. Mortgages are large loans, and lenders want to know that you are serious about paying them back and are a low risk for default on your payments. Compiling your employment history shows the lender that you have a track record of gainful employment and are unlikely to be unemployed in the foreseeable future.

6. Save More and Increase Your Down Payment

By contributing a larger down payment, you can reduce the size of your mortgage and attract a more favourable interest rate. Typically, if your down payment is greater than 20 per cent, you will receive a better interest rate than if you put down only five per cent.

7. Use Cash Reserves

Lenders will look at your savings account to ensure you have enough cash in reserve to cover your mortgage in case of job loss. They like to see a few months worth of mortgage payments tucked away in your bank account. This also shows lenders that you are suitable and fiscally responsible. Consider saving up three or four months worth of mortgage payments to get a more favourable mortgage rate.

8. Consider Interest Rates

Currently, interest rates are exceptionally low. Consider timing the purchase of your home during a time when interests rates are lower, to reduce your monthly payments and the interest paid over the lifetime of your loan.

9. Low- Versus High-Ratio Mortgages

If you have less than 20 per cent as a down payment on the home you plan to purchase, you’ll need mortgage loan insurance. This serves as an added layer of security for lenders, should you default on your loan. This fee can be paid up-front or added to your monthly payments. To avoid this expense, save up at least 20 per cent for your down payment.

10. Shop Around

Finally, once you have completed all the steps above to get the best mortgage rate, it is essential to shop around. Some lenders can give you a better borrowing rate than others, and it is vital to know all the options available to you before you commit to one of the most significant investments you’ll make in your lifetime. While you’re at it, research lenders, too, as they may offer different mortgage terms that can affect your bottom line. Finally, consider working with a mortgage broker. This is a third-party intermediary between the lender and the borrower. A mortgage broker will collect your financial information and “shop around” for you, to find the best mortgage rate and terms from their pool of lenders. And the best part? A mortgage broker’s services don’t cost the borrower a thing.

Sources:

Canada.ca

• https://www.canada.ca/en/financial-consumer-agency/services/credit-reports-score/improve-credit-score.html

• https://www.canada.ca/en/financial-consumer-agency/services/mortgages/interest-on-mortgages.html

Forbes

• https://www.forbes.com/sites/robertberger/2015/05/07/6-tricks-to-getting-a-great-mortgage-rate/?sh=3aab6ed93f0f

remax.ca 

      https://blog.remax.ca/10-tips-for-getting-the-best-mortgage-rate-in-canada/

While it’s exciting to pick out furniture and paint colours for your new home, buying a home also means you are also left with difficult decisions to make such as which insurance provider to choose, and what insurance you need. Before you reach that step, it’s important to understand the different types of home insurance you need to ensure you are protected as a homeowner.

Mortgage Loan Insurance

If your down payment is less than 20% of the purchase price of your home, you will need mortgage loan insurance, also known as high-ratio mortgage insurance. It protects your lender — not you — in case you default on your mortgage. Premiums are calculated as a percentage of the amount you put down, changing at the 5%, 10% and 15% thresholds but there is no break for anything in between. Premiums range from 0.5% to 3% and increase if you are self-employed.

This type of insurance is mandatory for high-ratio mortgages, and is only offered through two carriers: CMHC and Genworth Financial.

Title Insurance

Title insurance is yet another type of insurance you will require. Your lawyer will advise you of this type of protection, which insures you against any defects of title to the property. For example, if the previous owners undertook major renovations of the property without proper permits, you would be protected against any costs required to bring the house up to code. Typically, this one-time premium costs less than $500.

Home Insurance

Home insurance protects the owners of potential risks that could occur, such as fire, damages or theft. It also covers liability for anything damaging that can occur on your property such as injury or damage of belongings. Insurance is required by mortgage companies in order to mitigate risk for the property. The cost of home insurance will vary, but takes into consideration:

• Size of the home

• Age and condition of wiring, plumbing, heating systems, etc.

• Property size

• Neighbourhood

• Local weather conditions

Insurers also check your financial past. If you’ve had credit or similar problems, insurance costs rise. Like lenders, insurers will charge you for this credit check. Typically, your home insurance should cost between $400 – $1,200+ annually, but will vary depending on the factors listed above. In Canada homeowners pay on average $840 annually for home insurance

Do you have unanswered questions about the different type of insurance you need to protect you and your new home? Reach out to your RE/MAX Realtor who will be able to answer all your questions, and put you in touch with an Insurance Provider they recommend.

Source: https://blog.remax.ca/different-types-of-home-insurance/?rmxv=1641496878&fbclid=IwAR0-wM_Nj0223Z6SBNvErbaB1q3z62KO1aahB4EX_ek5mpYT5-zr9gdo0sk

A mortgage pre-approval is an important first step in the home-buying process. Having a pre-approval in hand tells you how much you can spend on a home, and it locks in the current low interest rate for up to 120 days, so you can shop the market knowing you’re insulated from rate hikes in the near future. If the rate drops, your lender should honour the new lower mortgage rate when you’re ready to make your purchase.

The amount that a financial institution is willing to lend for a mortgage depends on a number of factors. Your lender will check your financial standing to determine how much you can borrow, how much you can afford, and which loans might be best-suited to your specific circumstances. Applying for a mortgage requires a written application and supporting documentation, and it can be a slightly intimidating process. Here are three things lenders will want to know before giving you a mortgage pre-approval.

3 Requirements for a Mortgage Pre-Approval

The lender will check your credit score.
Knowing your credit score will give lenders an inside look at your credit habits and history, and will help them decide if you’re a good candidate for a loan. You’ll be ranked on a scale of 300-900. Your rating gauges your financial health and indicates the level of risk you present to the lender. High scores are good news, and will typically secure a better mortgage rate, since you post a lower risk of defaulting on your mortgage payments.

The lender will check your employment history.
Lenders will ask for a list of your past employers, how long you’ve been with your current employer, and what your annual salary or take-home pay is. They want to make sure you consistently earn money with no major gaps in income, and that you can make regular mortgage payments over the long-term.

The lender will check your assets and debts.
Be prepared to show your past income tax records, recent bank statements and current debt amounts, including credit card balances, car loan, student loan or line of credit. Lenders want to know your debt-to-income ratio to determine if you can make each loan payment based on the income you earn and your other financial obligations. The lender will also require proof of your down payment.

Many lenders offer a mortgage pre-approval online, so the process is simple. Find a mortgage lender that you’re comfortable with. If needed, your RE/MAX agent can provide a referral. Have more questions about the home-buying process, or ready to move forward with your purchase? Contact a RE/MAX agent today, or download the RE/MAX Home Buyer’s Guide, for everything you need to know about the purchasing process.