Wexford Realty Corporation

The main rule: Don't just look at the mortgage interest rate. Take a close look at all the terms of the mortgage program. Check with several lenders, either directly or through a mortgage broker.

How long will it take to process my mortgage loan application?
Usually it takes about 45 to 60 days, although it can take as few as 30 days and as long as 90 days for some transactions. The actual time depends on how quickly the lender can get an appraisal of the property, a credit report and verification of employment and bank accounts.

What documents do I have to provide?
You will need to provide proof of income and assets in order to get a mortgage loan. Different lenders may require more or less of these documents.

What are the qualifying guidelines for the particular loan?
The qualifying guidelines can relate to your income, employment, assets and liabilities, and credit history.

What is the minimum down payment?
Depending on the amount of the down payment, you can get different interest rates, loan terms, and avoid private mortgage insurance. Some loans require the standard 25 percent down payment; others are special low down payment programs .

Can I lock in the interest rate?
The interest rate of the mortgage you're applying for may go up or down before you close on the home. That's why it may be wise to lock in the rate for a specified period of time, rather than let the rate float until the closing. Be sure to ask the lender if there is any fee for locking in the rate and whether you also can lock in points.

What are closing costs?

Closing costs are the legal and administrative fees and disbursements associated with buying your home. Understanding each one will help you budget more accurately and lead to a more comfortable home-buying experience.

A conventional mortgage is a loan for no more than 75% of the appraised value or purchase price of the property, whichever is less. The remaining amount required for a purchase (25%) comes from your resources and is referred to as the down payment. If you have to borrow more than 75% of the money you need, you'll be applying for what is called a high-ratio mortgage.

Here's how it works:

You must have at least a 5% down payment when you buy a home. Any purchase where the down payment is between 5% and 24% is considered a high-ratio mortgage, and the mortgage must be insured by the Canada Mortgage and Housing Corporation (CMHC) or GE Capital Mortgage Insurance Company (GEMICO). The insurer will charge a fee for this insurance. The amount of the fee will depend on the amount you are borrowing and the percentage of your own down payment. Typical fees range from 1.00% to 3.25% of the principal amount of your mortgage. This amount can be paid up front or added to the principal portion of your mortgage. A Mortgage Specialist can help you determine the exact amount.

Most provinces levy a one-time tax when you buy a home (subject to change). The tax is based on a percentage of the purchase price of the property, and varies from province to province. In Ontario , for example, the rate is ½% on the first $55,000 of the purchase price, 1% on the next $195,000, 1.5% on the next $150,000 and 2% on the remainder.

You should be represented by a lawyer or notary during the purchase and mortgaging of the property, and you are responsible for paying the lawyer's or notary's fees and disbursements.

You are required by the mortgage lender to have fire insurance effective at the time you legally take possession of your new home. Some insurance companies may demand proof of a home inspection or may not insure certain types of dwellings. Make sure that you enlist your insurance agent early.

Is there a prepayment penalty on the loan?
The prepayment question is for all loan shoppers. Find out the duration of any penalty period and how the fee would be calculated. Some penalties are 1 percent of the loan amount: others are more complicated. Knowing how much the prepayment penalty would be is important if you think you will sell the home before the mortgage is paid off, which most homeowners do .

What can delay the approval of my loan?
If you provide the lender with complete, accurate information, everything should go smoothly. However, there could be a delay if the lender discovers credit problems, which is why it is critical to get your credit in order.