Mortgage Fees: What You Need To Know

Many people strive for property ownership but many of them are not fully aware of what is involved, which is where Realtors like us come in.

One of the main questions I get asked as a Realtor is about mortgages, so here is an article from written by lawyer Mark Weisleder that breaks down what you should be prepared for when trying to obtain a mortgage.

A mortgage is usually the largest financial commitment a person will make. The interest is far more than any other debt, yet it is troubling that many of the details involved in mortgage applications are poorly explained — if at all — to those applying for the loan.

Many people buying their first home do not have 20 per cent of the purchase price to use as the down payment and must take out an insured mortgage in order to get the loan. You can obtain this insurance through CMHC or Genworth Financial.

This will typically add 2 to 3 per cent to the loan. For example, if you qualify for a $300,000 loan, with a 10 per cent down payment and are not self-employed, the premium is 2 per cent or $6,000. So your mortgage will be increased to $306,000. However, you will not see this amount when you close the deal. The lender takes the $6,000 off the top, to pay for this insurance premium, while the borrower still has to pay the entire $306,000 back.

You must also pay PST on the insurance premium, which is usually not explained. In the above example, it is $780. This amount will be deducted on your closing, so instead of receiving $300,000, you receive $299,220.

There are more deductions that will come off your mortgage loan on closing that are typically not disclosed when you apply.

Mortgage processing fees

This is a subject that bothers many buyers. It is typically on closing that they learn the lender is deducting an additional amount, typically between $200 to $300, in order to pay for the “processing fee.” This is because the lender has outsourced this function to another company, including the preparation of the mortgage instructions that go to the buyer’s lawyer. This is not paid when the lender does the work themselves.

Interest adjustment date

If your loan is advanced in the middle of the month, the lender will deduct the amount of interest owing to the first day of your next month. This could amount to hundreds of dollars being held back on closing.

Who pays the taxes?

In most insured mortgages, the lender will insist that the borrower include an amount for property taxes in every mortgage payment, so the lender can pay this bill on your behalf. However, lenders will often deduct about half the year’s tax bill in advance, so they have enough of a reserve to always pay the taxes. Again, this amount will come off what you can expect to receive on closing.

Finally, more and more lenders are waiting until three to four days before closing to have buyers come in to sign the papers. This often results in mortgage instructions not getting to the buyer lawyer’s office until the day before closing. If there are errors, which often occur, it becomes stressful for buyers to arrange their actual down payment needed, get to their lawyer’s offices to sign the paperwork and complete their purchase on time. Buyers should insist their lenders schedule any appointment to sign loan papers at least two weeks before closing, so that everything can be completed on time, without stress.

Ask your lender or mortgage broker in advance to detail everything that will be deducted from your loan on closing. Being prepared for the mortgage lending process means you are not surprised with the total loan amount you will receive from your lender on closing, but also that your closing will be completed in a stress-free manner.

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1252 King St W Th14


‎$275,000. Priced to Sell: 2 Storey Townhome In An Up And Coming Neighbourhood Of King West. Two Bdrm + Den, Approx. 800Sf With Underground Parking, Fresh Paint, Cathedral Ceilings On 2nd Floor, New Laminate Flooring On 2nd Floor (2010), Facing Away From King St (Quiet Side). Great Low Maintenance Building. Walk To Liberty Village, The Exhibition, Ontario Place, Go Train, Lakeshore With TTC At Your Door Step! Move In Ready. Fabulous Value In An Amazing Location. Great Potential!!!

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For more pictures CLICK HERE

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GTA Monthly Market Figures Released!

The Toronto Real Estate Board just released this morning the February monthly market figures for the GTA.

The GTA average home price is up 11% since Feb 2011 sitting at $502, 508 and the Toronto average home price is up a great number since even last month sitting at $553, 519.

The Toronto average home price last month was $499, 045. The Toronto market just seems to be getting hotter and hotter!

Read it all HERE

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Green Building Trends for 2012!

I stumbled across this article this morning and thought I would share it! Makes me feel great that people are starting to make more of an effort to contribute to this wonderful planet we live in, especially through housing development!

Read it HERE

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Your February Realty Report

Fresh off the press is your February Realty Report. This month has some great features like the Three “P’s”, Beating the Rush and much more!

Don’t forget to also check out the recipe for the month!

Check it out by clicking HERE 🙂

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Are You Thinking of Renovating?

As I was doing my usual daily ritual of internet browsing I stumbled across a very useful calculator developed by the Appraisal Institute of Canada.

This calculator will actually help you determine the return on investment for a specific renovation you have done or are planning to do, by ranking renovation trends in the marketplace.

You simply select from the drop down list what renovation you are considering then enter the amount of money you are planning to spend or spent and voila! 🙂

You can access the calculator here A.I.C. Calculator


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It Seems We Are Far From a Bubble!

This week BMO decided to grace us with some good news stating that even though the Canadian real estate market is somewhat pricey, it is more likely to cool than crash.

Which means we are far from a bubble that many people have claimed we are in!

Read the whole article by clicking HERE 

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