The Oshawa Community Credit Union has been assisting borrowers with their mortgage needs for over 70 years. As a first time home buyer, this experience is both exciting, and at times can seem overwhelming. To assist you, we have created this easy to use checklist that we guide you though some of the difficult questions that you may have when buying your first home.
Before you begin shopping for a home, it is important to know how much you can afford to spend on homeownership. You will want to plan ahead for the various expenses related to homeownership. Calculate your household expenses and determine how much you can afford.
It is also a very good idea to pre-qualify for a mortgage from your lender.
When you meet with one of our Mortgage Specialists for pre-qualifying you will need the following information:
Below are some helpful tips on beginning your search for your new home:
After you have found the home you want to buy, you need to give the vendor an Offer to Purchase (sometimes called an Agreement of Purchase and Sale). It is very helpful to work with a realtor (and/or a lawyer/notary) to prepare your offer. The Offer to Purchase is a legal document and should be carefully prepared.
Imagine that your realtor has helped you prepare an Offer to Purchase. This offer includes all the details of the sale. To be extra cautious (since you know an Offer to Purchase is legally binding) ask your lawyer to look at it before showing it to the vendor. The realtor presents the offer to the vendor. What can you expect to happen next? There are three possible responses.
Once your Offer to Purchase has been accepted, make an appointment with one of our OCCU Mortgage Specialists. We will verify (and update, if necessary) your financial information and put together what’s needed to complete the mortgage application. We may ask you to get a property appraisal, a land survey, or both. Our Mortgage Specialists can review various types of mortgages, terms, interest rates, amortization periods and, payment schedules available to best fit your needs.
A conventional mortgage is a mortgage loan that is equal to, or less than, 80% of the lending value of the property. The lending value is the property’s purchase price or the appraised value - whichever is less. The down payment required is at least 20% of the value.
If your down payment is less than 20% of the home price, you will need a high-ratio mortgage. A high-ratio mortgage requires mortgage loan insurance.
Our Mortgage Specialists will explain the term options available for your mortgage. The term is the length of time that the mortgage contract covers including interest rate. The term can be anywhere from six months up to five years. A longer term (for example, five years) lets you plan ahead. It also protects you from interest rate increases. Think carefully about the term that you want, and don’t be afraid to ask for the difference in payments between a one, two or five-year term and of course, the longer the term the higher the rate.
Mortgage interest rates are fixed or variable (adjustable).
Fixed Mortgage Interest Rate
A fixed rate mortgage has locked-in rate that will not increase for the term of the mortgage.
Variable Mortgage Interest Rate
A variable rate mortgage fluctuates based on market conditions. The mortgage payment may change.
A closed mortgage may be paid off early however a penalty typically applies and it can be substantial. Most closed mortgages do have some pre-payment privileges (i.e. a 20%-20% pre-payment privilege means you can increase your monthly payment by 20% AND/OR you can make annual lump sum payments of 20% of the original mortgage balance). A closed mortgage may be a poor choice if you decide to move before the end of the term, need to refinance at any time during the term or if you want to benefit from a decrease in interest rates.
An open mortgage provides flexibility; you can pay it off in part or in whole at any time without penalty. An open mortgage can be a good choice if you plan to sell your home in the near future. It can also be a good choice if you want to pay off a large sum of your mortgage. Most lenders let you convert an open mortgage to a closed mortgage at any time, a small fee may apply.
Amortization is the length of time the entire mortgage debt will be repaid. Many mortgages are amortized over 25 years, but longer periods are available. The longer the amortization, the lower your scheduled mortgage payments will be, but you will pay more interest in the long run. If each mortgage term is five years, and the mortgage is amortized over 20 years, you will need to renegotiate your mortgage three times (every five years).
A mortgage loan is repaid in regular payments — monthly, semimonthly, biweekly, accelerated biweekly, weekly or accelerated weekly. More frequent payment schedules (for example accelerated biweekly) can save some interest costs by reducing the outstanding principal balance more quickly. The more payments you make in a year, the lower the overall interest you have to pay on your mortgage. Refer to OCCU’s on line mortgage calculator to determine your different payment options.
Each province has new home warranty programs.
Tarion Warranty Corporation: www.tarion.com
Closing day is the day when you finally take legal possession and get to call the house your home. The final signing usually happens at the lawyer or notary’s office.
These are the things that happen on closing day:
When planning your move, friends or relatives may be able to recommend a professional moving company. Don’t forget to ask the mover for references. Ask the mover for an estimate and outline of fees (Do they charge a flat rate or hourly fee?). Once you’ve chosen a mover, ask them to come to your home to see what will be moved in case the estimate needs to be changed.
You’ll want to ensure that your belongings are insured during the move. Your home or property insurance may cover goods in transit. Call your broker or insurance company to be sure. Ask if you are fully covered. Many moving companies offer additional insurance coverage. Be aware that professional movers are not responsible for items such as jewellery, money, or important papers. Move these yourself to keep them safe.
If you decide to do your own packing, keep in mind that you will need the proper materials, and that packing can take up a lot of time.
On moving day, go through the house with the van supervisor and give him (or her) any special instructions. The supervisor will note the condition of your goods on an inventory list. Go through the house with the supervisor to make sure the list is complete and accurate. When the van arrives at your new home, mark off the items on the mover’s list as they are unloaded. If you paid for the movers to unpack boxes and remove packing materials, remember that they will not put dishes or linens into cupboards.
Moving day is almost always tiring. But, planning ahead will make the transition as smooth as possible.
The amount you spend depends on your decisions about many things. Here are some to think about:
When you move into your new home you’ll want to change the exterior door locks for security. After all, you want only the people you choose to have the key to your new home. You can change the locks yourself, or call a locksmith to do the job.
Both your old home and your new home should be given a thorough cleaning at moving time. Whether you’re buying cleaning supplies and doing it yourself, or hiring someone to clean for you, the costs can really add up. Plan for this expense.
You might want to re-paint, replace some light fixtures, refinish the floor, re-carpet, or do any number of other re-decorating tasks. Plan your budget, and consider postponing some projects for a period of time.
If your offer to purchase didn’t include appliances, and if you don’t have your own, you will have to buy them when you move into your new home. Some appliances might have installation charges.