Having a written pre-approval letter provides you with the confidence and leverage you need to obtain the very best price and terms when negotating an offer. In a competitive situation, you gain an advantage with a strong pre-approval letter. Did you know that financing isn't the only cost to consider when buying a home? Click the link for more information and see our list of recommended Mortgage Brokers & Specialists!
WHY GET PRE-APPROVED?
The Benefits of a Pre-Approval:
You gain significant advantages in negotiating by being prepared where other buyers may not be
You prove to the seller that you are a very serious buyer who is ready to act
You eliminate wasted time, frustration and stress
You are approved for your loan in advance — you can feel comfortable eliminating the "financing condition"
All you need to do is find the home you want and write an offer
You know what your monthly payment will be
You know how much cash you need to purchase your future home
Important to keep in mind: What you are qualified to pay versus what you are comfortable paying for a monthly mortgage payment may be two different numbers. You can often be approved for a much larger monthly payment than what you will actually be comfortable paying each month- this is something to discuss with your lender and your Realtor. A good Realtor will respect those boundaries regardless of what the numbers say you can afford. Do not let anyone convince you to look “just a little bit higher” if you are not comfortable doing so.
MY PERSONAL RECOMMENDATIONS FOR LENDERS
It is so important to find a lender you are comfortable with. Be sure to speak with more than one lender before making a decision. If you would like my recommendation on local or GTA Mortgage Brokers/Specialists I would be happy to pass that information along.
OTHER COSTS TO CONSIDER
The financing for your new home, although the most important cost, it is not the only cost that needs to be considered when buying a home. Here are the other costs that need to be considered:
Home Inspection: It is not required, but highly recommended, to make any offer to purchase conditional on a home inspection. This is for the protection of a buyer in a real estate transaction. To ensure they know the condition of exterior, roof, structural, A/C, heating, electrical, plumbing systems as well as fireplaces, insulation barriers, ventilation systems and all vital information that would contribute to your decision to purchase a home as well as any work that may be required after purchase. The cost is $400-$750 for your piece of mind.
Land Transfer Tax: Buyer’s are responsible for paying the land transfer tax. This tax varies based on the purchase price of the home. You can use this calculator in the link below to determine the cost of the Provincial Land Transfer Tax (PLTT) and Toronto Land Transfer Tax (TLT).
Adjustments: Adjustments are made once a sale is finalized. Calculated by your lawyer, these costs would include any pre-paid costs by the seller (for example; the most common adjustments are for utility bills & property taxes.) This cost varies.
Legal Fees: A lawyer on the buying end of a transaction will need to do a series of searches including a title search to verify ownership of the property and to ensure there are no liens, as well as registering the title deed and mortgage. You would be looking at approximately $1000-$2000 for lawyer fees.
Home Insurance: If you’re buying a home and getting a mortgage, you will be required to get home insurance coverage. While the cost varies widely depending on the home you buy, where it’s located and the type of coverage you require, expect to pay at least $900 per year for coverage.