WeAsked, They Answered - Home Mortgage
Buying a home is most often the biggest purchase you'll ever make. Understanding the mortgage process and how it affects your specific circumstance is critical.
We spoke with Heather Simpson, Mortgage Specialist with RBC in Moncton and asked her a few questions that will get your started.
If you want to ask Heather more questions she can be reached at 506-381-3796 or via email: firstname.lastname@example.org
Question. How does one prepare to buy a house?
Answer. The first thing someone should do in preparation for buying a home is to save for their down payment and closing cost. If they are in the early stages of considering home ownership and aren’t yet prepared with their savings I would recommend meeting with a Financial Advisor to discuss a savings strategy. A preauthorized payment schedule is always a good idea because it forces you to save on a regular basis. Also being mindful of the importance of maintaining good credit payment patterns and keeping balances low on revolving credit facilities should also be a priority in preparing to buy a home.
Question. How much to people need for a down payment?
Answer. The minimum down payment requirement is 5% of the purchase price.
Question. When do you need to use CHMC house and mini home?
Answer. CMHC insurance is always required on a mini home on leased land. It is also a requirement when a down payment is less than 20% of the purchase price.
Question. How will recent rate increases affect home buyers
Answer. Higher interest rates mean higher payments so this will affect affordability and also being able to qualify.
Question. What is the difference between open and close mortgage?
Answer. Open mortgages are typically higher interest rates but are fully flexible and can be paid in full at any time without a prepayment charge. Closed mortgages are restricted to the prepayment guidelines set out by the bank and are subject to a prepayment charge if paid out prior to the term maturing.
Question. What is a Gift Letter?
Answer. A gift letter is provided by the bank that an immediate family member can sign stating that they are gifting the down payment for the mortgage.