Questions about Mortgage

[tobiwobi]

Thanks. That's another mistake that people make is to buy too quickly. Four years was a bit excessive, but it was definitely worth it as far as location and price was concerned.



Another point that I neglected about the inspection. Have a clause in your contract stating something like that you have the right to a house inspection that is satisfactory to your sole discretion.

What this means, is that after your offer is accepted, you are not obligated to buy yet. You get to have an inspection made, and if there are some serious problems that you overlooked, you can back out of the deal with no penalties whatsoever. Furthermore, it allows you to back out even if the inspection is perfect, but you just say that you were not satisfied, but that's a grey area morally speaking (even though it is perfectly legal), so I would leave it up to individuals as to whether or not they are comfortable with using it just as an extra "escape hatch".

Furthermore, if there are some serious issues, this inspection can be used to back you up in case you believe that the problems are serious enough to warrant a reduction in price if the deal is still to go forward. You are not obligated with the offer price if "issues" are discovered later. This is not to say that the seller is obligated to lower their price.

We had two previous accepted offers where problems came up in the inspection - serious problems. When we approached the listing agent and sellers about price abatement, we were met with shock at the mere idea. Their stand was "pay full price, problems and all, or nothing". Well, in the end they both go nothing from us. Both houses sold later at significant reductions to our offer price due to the problems found - in fact, both sellers would have been better served by lowering their prices for us to buy the house.

Bottom line, until you take possession of the house, the problems with the house are the owners' problem, not yours. If an unnoticed problem pops up in the inspection, they fix it, not you. You may wish (and I think that it is wise) to accept certain problems as just being par for the course in purchasing a house. But big problems change the deal entirely.

Brunt you obviously didn't buy a detached house in the city of Toronto.

[Angelica Francisco]

hi. iam a new home buyer as well. first time moving out of my parents. my question is, is it better to be with a broker than going yourself to the banks? PC financial offers 2.99% mortgage rate with 5 yr fixed rate. we are talking to a broker but i don't want to ask if he gets a commission once we get a house

[themortgageguy]

hi. iam a new home buyer as well. first time moving out of my parents. my question is, is it better to be with a broker than going yourself to the banks? PC financial offers 2.99% mortgage rate with 5 yr fixed rate. we are talking to a broker but i don't want to ask if he gets a commission once we get a house

Generally speaking your mortgage broker should be remunerated by the lender her sets you up with. The service shouldn't cost you anything.

Broker vs. bank..

the 2.99 rate from pc financial is not a great rate currently as it is about 1/4 higher than what is available
broker should be able to set you up with a lender that has more generous prepayments and less onerous breakage terms.
he can shop dozens of lenders while every lender you visit will pull your credit bureau.

Feel free to email me if you have any further questions

Rob

[Angelica Francisco]

what is a collateral mortgage?

[MortgageQueen]

Primarily a collateral mortgage is how the bank registers your mortgage. In simplified terms, they would generally register your home for the "actual value or more" What this means to you is that your equity is completely tied up. You cannot use any of the equity in your home to borrow any further funds "unless" your bank decides to advance you more.
That is their selling point to people BUT more often than not they will REFUSE to advance more and then you're stuck.

The other negative of a collateral mortgage is it costs more to have the registration removed when either switching to an other bank or selling the house. This is another trap banks use to retain customers because if they're tempted to switch banks, they have to fork over $400-500 dollars to have that done.

[brunt]

Brunt you obviously didn't buy a detached house in the city of Toronto.

You are right. I wouldn't have touched a deal with a twenty nine and a half foot pole if I couldn't have had the inspection as a condition. So by definition, I would not have bought one.

Just because the sellers can make demands doesn't mean that I would yield to them. I would far, far rather rent (been there) or commute (done that) than buy a house without an inspection. Others may disagree, but that's my stand.

[brunt]

hi. iam a new home buyer as well. first time moving out of my parents. my question is, is it better to be with a broker than going yourself to the banks? PC financial offers 2.99% mortgage rate with 5 yr fixed rate. we are talking to a broker but i don't want to ask if he gets a commission once we get a house

You have the absolute right to ask what you have to pay the broker. In fact, you would be crazy not to ask.

As far as if you are going to ultimately better off with a broker or bank, it depends. I got rid of my mortgage 16 years ago, so it has been a while.

We got a rate from the bank, and we weren't happy with it (but at 12+%, who would be?). We tried a broker, who promised us the lowest possible rate. We got a rate from him, and went back to the bank to deal with some other business. We mentioned that we would be moving our mortgage, and all of a sudden, bargains could be had, and they beat the broker's rate by a quarter percent.

The big deal is whether or not you feel comfortable dickering with the bank. If you can't bring yourself to do it, then certainly, go to a broker. What was the eye-opening thing for me in this transaction was that you can get a better deal from the bank just for asking for it.

And another thing - never, ever, ever pay a renewal fee at a bank. Tell them that you can pay that fee anywhere by changing your bank, so you may as well change banks. You will suddenly find that that fee is entirely optional.

[tobiwobi]

You are right. I wouldn't have touched a deal with a twenty nine and a half foot pole if I couldn't have had the inspection as a condition. So by definition, I would not have bought one.

Just because the sellers can make demands doesn't mean that I would yield to them. I would far, far rather rent (been there) or commute (done that) than buy a house without an inspection. Others may disagree, but that's my stand.

my personal experience selling houses and having the buyer's (certified/qualified/approved whatever they are) inspector come through to view my property - they walk through with the buyers and point a few minor things out to them to show they are worth their fee, but miss more serious issues and on their way out, make sure to offer their service to me in regards to whatever house I am moving into (already on to their next pay cheque).

[brunt]

my personal experience selling houses and having the buyer's (certified/qualified/approved whatever they are) inspector come through to view my property - they walk through with the buyers and point a few minor things out to them to show they are worth their fee, but miss more serious issues and on their way out, make sure to offer their service to me in regards to whatever house I am moving into (already on to their next pay cheque).

It's an industry with not enough rules, but we found two very good ones in the two cities where we were shopping. They were well worth the money, pointing out some pretty important stuff that we had missed.

Not saying that they are all good, like any industry, but a good one is well worth the fee.