Are you ready to purchase a home?
The first thing any prospective homebuyer needs to do is determine whether they can afford to buy the home they want. A Mortgage Broker will help you determine this by looking at the information most mortgage lenders take into consideration when providing mortgage loans. This includes income, debts, employment, credit history, and the value of the property you want to buy.
How much of a down payment do I need?
A down payment of 20 per cent or more will qualify you for a conventional mortgage. If your down payment is less than 20 per cent, the mortgage must be insured.
Mortgage insurance provides you with innovative options to help get you into homeownership. Mortgage insurance provides a lender with the flexibility to offer you the same competitive mortgage interest rates available to homebuyers with a larger down payment.
How can you reduce or eliminate fees?
If you want to avoid paying for this mortgage insurance than you will need to save a down payment of 20 per cent.
If this is not realistic for you than there are some ways to possibly reduce these premiums. One way to do this is to request a shorter amortization period. Longer amortization periods are viewed as riskier to lenders. To avoid more risk the lender might charge higher insurance fees.
CMHC Premiums may also be reduced or eliminated by moving, as the “portability option” can drop the premium on a new insured mortgage to buy another home. This depends on your mortgage portability, which you can determine by talking with your Mortgage Broker.
How much does mortgage insurance cost?
This is added to your mortgage. It is not a separate fee to be paid. With each mortgage payment the insurance premium is paid with the principle debt and interest.
The amount of down payment you have will determine how high the premium is. It is a percentage of the mortgage amount. The larger the down payment, the less you will pay in insurance.
Here is an example:
- Purchase Price: $600,000
- Down Payment %: 10 per cent of purchase price
- Down Payment $: $60,000 ($600,000 – $60,000 = $540,000)
- Mortgage Remainder: $540,000
The down payment falls into a mortgage default insurance rate of 3.1 per cent which calculates your insurance premium as $16,740 ($540,000 x 3.1 per cent).
The premium of $16,740 is added to your mortgage, so the new mortgage remainder is $556,740.
Why you should call us
There are many fees associated with purchasing a home. It may seem even more stressful to have to add mortgage insurance on top of these fees, but it might be what helps you get approved for a mortgage.
If you are unsure where you stand financially, contact Client First Mortgage Solutions today. We can help you figure out what works for you. Contact Us Today!