Questions That Ottawa Home Buyers Most Frequently Ask

Questions That Ottawa Home Buyers Most Frequently Ask

“Pre-qualified” is a way to determine exactly how much finance you will probably be able to raise to pay for you new home. It means that you and your loan officer have discussed in advance exactly how much you can afford to pay for your new property, bearing in mind the down payment you are able to make, the sum of your current debts, and the amount your mortgage company will probably agree to approve.

“Pre-approved” means that you have taken the process one step further and that your lender has already reviewed your credit, employment, current debts, etc and has approved a specific amount of funds towards the purchase of your new home.

You can estimate that the total amount of closing costs will be approximately 4-6% of the actual sales price of your new property. This amount will be used to cancel various accumulated costs that are associated with your real estate deal – such as:

Appraisal feesApplication feesLand transfer taxesDocumentation feesLoan feesHome Owners Association FeesMortgage InsuranceTax RegistrationOrigination FeesTitle Insurance Premiums, andMovers’ costs

  • Appraisal fees
  • Application fees
  • Land transfer taxes
  • Documentation fees
  • Loan fees
  • Home Owners Association Fees
  • Mortgage Insurance
  • Tax Registration
  • Origination Fees
  • Title Insurance Premiums, and
  • Movers’ costs

A single point = 1% of the amount of your new loan. Points are applied by real estate lenders when they are restricted by government regulations, competitive practices and/or provincial and state usury laws in the amount of interest that they can apply to the loan.

The aim of points is to guarantee the yield for investors in order to ensure that the loan is competitive with other types of investments.

But buyers are not obliged to pay points – they are usually negotiable. However, if you don’t agree to pay points you may end up having to pay more interest over the long term.

“Consideration” is the name for the currency deposit that you have to put down when you make an offer on a property in order to demonstrate that you are serious in your intent to buy the house. This deposit is usually in the region of 1-3% of the price offered for the property and will eventually be deducted from the final price itself when the sale goes through. In the meantime it is held in trust in a separate account until any conditions connected with the purchase of the property are resolved.

The reason for title insurance is to protect the insured party against any losses that may arise due to liens, defects, adverse claims, encumbrances, encroachments, violations of municipal zoning by-laws, and all other matters that may not have been shown or revealed to the new owner and were already in existence prior to the date that the policy was taken out.

There are also certain types of title insurance that will cover against any losses that arise from real estate title forgery, fraud, and false impersonation.

Usually title insurance is paid for in a single premium at the time of closing and is relatively inexpensive. It will stay valid for the whole period that you retain ownership of the property.

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