6 HOME PURCHASE CLOSING COSTS

When you purchase your home, there are 6 additional costs to account for. They include:

• Home Fire and Flood Insurance
• Title Insurance
• Legal Fees
• Adjustments
• Land Transfer Tax
• GST

Here’s an overview of what you can expect.

Home and Fire Insurance. Mortgage lenders will require a certificate of fire insurance to be in place by the time you take possession of your home. The amount required is generally at least the amount of the mortgage or the replacement cost of the home. This cost can vary on the property size and extras being insured, as well as the insurance company and the municipality. Home insurance can vary anywhere from $400 per year for condos to $2,000 for large homes.

Title Insurance. This is a one-time fee of about $150 and it protects you against any issues, defects or fraud on your title. Your lawyer or notary helps you purchase this.

Legal Fees. Thirdly, you are required to pay legal fees. Your lawyer or notary will charge you anywhere from $700 to $1,000 to help with your purchase. There are also fees to register your title with the municipalities. All told, you’re looking at around $1,000 to 1,300, after tax.

Adjustments. An adjustment is a cost to you to pay the seller back for prepaying any property tax or condo fees on your behalf. Simply put, if you take possession in the middle of a month, the seller has already paid for the whole month and you must pay the seller back for what they’re not using.

Land transfer tax. Land transfer tax, or property transfer tax (PTT) as it’s known as in British Columbia, is a fee that is charged to you by the province. First-time home buyers are exempt from this fee if they are purchasing a property under $500,000. All home buyers are exempt if they are purchasing a new property under $750,000.

In British Columbia, the PTT is 1% on the first $200,000 of purchase and 2% thereafter. However, if the property being purchased is over $2,000,000, then it is 3% on any value over $2,000,000.

GST. GST is only paid on new construction purchases. GST is 5% on the purchase price. However, there is a partial GST rebate on properties under $450,000.

Please don’t hesitate to contact a Dominion Lending Centres mortgage professional for your home financing and mortgage needs.

EITAN PINSKY

Dominion Lending Centres – Accredited Mortgage Professional

MORTGAGES AND PAPERWORK

Paperwork-it’s a fact of life. You need it and we as mortgage professionals also need it. Below is a list of must have documentation BEFORE you start going through the mortgage approval process.

Personal Information
This will be the basic information we require to start your mortgage process. It will include your age, marital status, and number and age of kids. For this first step, a divorce/separation agreement if you are going through a divorce or were previously divorced will also be required.

Employment Details
Your employment details will require more paperwork than your basic details. This will include:

• Proof of income (T4 slips, job letter, paystubs, and/or personal income tax returns – T1 Generals)
• Notice of Assessments from the last two years

If you are self-employed then you will also need to provide any incorporation documents, financial statements and submit full personal tax returns (T1 Generals) as well as a CRA Notice of Assessment (NOA) for both the corporation as well as you personally. If you don’t have these documents on hand or can’t find them, we highly recommend using a document service like Easy NOA. We have had clients use them with fantastic results and no hassle on your end. Check them out by visiting their website – easynoa.ca.

Other Income Sources

• Typically, this is a statement on your part but the lender might ask for back-up documentation. This may include:
• Pension documentation and information
• Rental income property income documentation
• Part time work paystub with job letter
• Child Tax Benefit documentation
• Child/Spousal support documentation
• Investment Income documentation
• Disability income documentation

Documentation of current property
If you already own a property, you will need to have a copy of your current mortgage statement on your current property and a copy of last year’s property tax statement. You may also be asked to provide this year’s up to date property tax statement.

Keep in mind that every person’s situation is unique and this list only outlines the traditional documents required to pursue your mortgage. For example, if you receive child support you will need to have proof of that (i.e. copy of your separation/divorce agreement and the last three months bank statements showing the payment of the child support to you) or if you have experienced bankruptcy you will need to provide a list of debts paid off with a copy of your bankruptcies discharge papers.

Again, we know that sometimes things get lost or misplaced (we have been there too!). If you find yourself scrambling to find one of these documents or another document that your mortgage broker has requested, a service like Easy NOA can have it delivered to your inbox within 24 hours. Having these documents on hand in preparation for going through the mortgage approval process will make the entire experience run much smoother—and make it an enjoyable one! If you have any questions, give your Dominion Lending Centres mortgage specialist a call.

GEOFF LEE

Dominion Lending Centres – Accredited Mortgage Professional

WHAT IS THE CANADIAN MORTGAGE AND HOUSING CORPORATION (CMHC)?

The Canadian Mortgage and Housing Corporation (CMHC) is a corporation that most are semi-familiar with, but do not know what CMHC actually does.

CMHC is Canada’s authority on housing. They contribute to the stability of the housing market and the financial system. They also provide support for Canadians in housing need and offer objective housing research and advice to Canadian Governments, Consumers and the Housing Industry.

CMHC offers a variety of different services, all pertaining to Canadian Housing. These services include:

1. Policy and Research
One of CMHC’s cornerstone services is the provision of market analysis information, housing-related data and information, and key housing sector data and information. They are one of Canada’s leading sources of reliable and objective housing market analysis and information. Their research and activities support informed business decisions, policy development for governing bodies and housing program design and delivery.

2. Affordable Housing Measures
CMHC (on behalf of the Government of Canada) also is the primary funder for affordable housing endeavors across Canada. Each year, CMHC invests approximately 2 billion on behalf of the Canadian government to help provide safe, affordable, stable housing opportunities for each province and territory. CMHC oversees approximately 80% of the existing social portfolio administered by provinces and territories, and manages the remaining 20% independently to fund federally housing units such as housing cooperatives. They also work under the IAH (Investment in Affordable Housing) Act, which allows for cost-matching the federal investment to allow for new construction, renovation, homeowner assistance, rent supplements, shelter allowances, and more.

3. Consumer Assistance
The final key services that CMHC offers to Canadians is providing relevant, timely information that can be accessed and used by the public. On their website you can access detailed information on topics such as the:

• CMHC green building and renovation practices
• Homeowners How-To Guides
• Housing Related Research
• Homeowner grants and opportunities

4. Mortgage Loan Insurance
In addition to the above, CMHC is also the #1 provider of Mortgage Loan Insurance to Canadians. Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment starting at 5%* – with interest rates comparable to those with a 20% down payment. In addition to CMHC, there are also 2 other primary mortgage loan insurance providers, Genworth Canada and Canada Guaranty.

CMHC strives to promote mortgage literacy and provide home buyers with in depth knowledge and tools to help them prepare to purchase a home.

Essentially, CMHC is the Canadian Government’s organization that seeks to inform and educate Canadians on the housing and mortgage industry. It reports to the Parliament of Canada through a Minister, governed by the Board of Directors. CMHC makes recommendations based on it’s data and surveys to advise and assist the government of Canada in making decisions that directly impact the mortgage and housing industry. For instance, the date and information provided by CMHC provided information that led to:

February 2016:
Minimum down payment rules changed to:

• Up to $500K – 5%
• Up to $1MM – 5% for the first $500K and 10% up to $1MM
• $1MM and greater requires 20% down (no mortgage insurance available)
  Exemption for BC Property Transfer Tax on NEW BUILDS regardless if one was a 1st time home buyer with a purchase price of 750K or less.

July 2016
Still fresh in our minds, the introduction of the foreign tax stating that an ADDITIONAL 15% Property Transfer Tax is applied for all non-residents or corporations that are not incorporated in Canada purchasing property in British Columbia.

October 17, 2016: STRESS TESTING
INSURED mortgages with less than 20% down Have to qualify at Bank of Canada 5 year posted rate.

January 1, 2018: B-20 GUIDELINE CHANGES
The new guidelines will require that all conventional mortgages (those with a down payment higher than 20%) will have to undergo stress testing. Stress testing means that the borrower would have to qualify at the greater of the five-year benchmark rate published by the Bank of Canada or the contractual mortgage rate +2%

While CMHC does not implement or guide the mortgage/housing changes, they play an integral part in them. They provide the cornerstone of data that the provincial and federal governments use to determine updates, rules, and changes to help to regulate the industry. So, well we may not always like what the data indicates and implicates, it does serve to regulate and make the process of owning a home easier for Canadians. If you have any questions, feel free to contact your local Dominion Lending Centres mortgage professional.

GEOFF LEE

Dominion Lending Centres – Accredited Mortgage Professional
Geoff is part of DLC GLM Mortgage Group based in Vancouver, BC.