This will always, always be step one before anything else. You can complete my application on this website and we will go through it together to discuss every option available to you. I will review your income, credit, discuss down payment, current mortgage and what your options are. We will review the documents needed and I will make this as easy as possible on you. For example, if you are self employed, simply introduce me to your accountant and I will request the documents required to take that off your to-do list. We will chat in depth about the process of buying a home as well. We can run as many payment scenarios as you like with varying purchase amounts and down payment. Interest rates will be part of the discussion as well. All of the following points below will be considered and talked about. You might feel like an expert after your pre-approval 🙂
Affordability of New Mortgage
Before taking the plunge on selling your home or jumping into home ownership, let’s run the numbers to make sure you understand your budget, what the new payments will be and make sure the mortgage and payments align with what you are expecting to pay. If you have enough equity built up in your current home, we can discuss options such as paying off debt, so you can move into your new home with only a mortgage payment and manageable cash flow. A full review of your financial situation will offer all of the options available to you!
If you are a first time homebuyer, you should only have to give your landlord sufficient notice to move when your lease is up for renewal, or tell mom and dad you’re leaving the basement. If you currently own a home and have a mortgage, you need to find out what your prepayment penalty on your mortgage will be and how to avoid it if possible. If your mortgage is coming up for renewal, that is the perfect time to sell because there is no penalty at all! What is a prepayment penalty anyway? It’s when you break the term of your mortgage before your renewal date. In other words, you are breaking a contract, and there is a pre-set penalty calculation which you agreed to when you signed your mortgage agreement. The penalty can range from as little as 3 months interest, to an IRD penalty. Here’s a great resource on penalty information for mortgages in Canada https://www.canada.ca/en/financial-consumer-agency/services/mortgages/reduce-prepayment-penalties.html#toc3
Cost of Moving
There are costs to consider when thinking of moving. Besides possible mortgage breaking fees, consider the largest cost of moving being your real estate fees if you are planning to sell your home on MLS. The fees are paid to a realtor if they sell your home for you. The cost ranges from 3-5%, usually landing around 4%. As an example, you’d pay 2% to a buyer’s realtor and 2% to your realtor for selling your home for a total of 4%. The fees a realtor charges are set individually and are certainly case by case depending on the sale price of the home, experience of the realtor, and many other factors. There are also legal fees to sell, which are roughly $1000, and to purchase a new home is roughly 1% of the purchase price of the home. As your mortgage broker, I always get quotes for your legal fees so there are no surprises! Unless you have friends with trucks who will move you for a few slices of pizza and a case of Bud Lite, you may want to price out hiring a professional mover as well.
Get a Realtor’s Opinion of Value for your Current Home
I can connect you with a trusted, experienced realtor to have them give you a value for your home based on comparable sales in your area. This will allow us to calculate if you have enough equity for a down payment on your new home, after the costs of moving. Your realtor will also give you many considerations for when you’re ready to sell. Check out Regina’s Jen Fuessel’s blog if you are considering selling! https://www.homesinregina.ca/thinking-of-selling-a-few-tips/