Mortgage Pre-Approval...Down-Payment...Deposit...Mortgage Insurance...Closing Costs...Land Transfer Tax...huh? Are you ready?!  Here's a quick guide to help get your finances in order before you start shopping!

YOUR DOWN PAYMENT

-Congratulations you now have a miminum of 5% tucked away for your down payment! It's now time to visit your bank or mortgage broker.  They will pre-qualify you which will determine your home buying power. 

-If you have less than 20% of the purchase price for your down payment, the mortgage will need to be insured.  These premiums can be rolled into your mortgage however the GST on the premiums will need to be paid on closing.

YOUR DEPOSIT 

-The Deposit is a sum of money that accompanies your offer of Purchase and Sale.  These funds will be held in the listing brokerage's trust account until you take possession.  It will then be credited against the purchase price. 

-Typically 5% of the purchase price in the city of Toronto is a sign of good faith (yes, it might very well be your entire down payment! The amount may differ in other cities)

-These funds needs to readily available so if you need a few days to access them be sure to do it before you start your search!

CLOSING COSTS 

You will also need to factor in closing costs which are in addition to your down payment.  This includes:

-Lawyer fees and associated disbursement such as mortgage and deed registration.

-Any adjustments which have already been paid by the seller such as water, property taxes, maintenance fees.

-Provincial and City of Toronto Land Transfer Tax (see article: first-time buyer incentives!) Clike Here for calculator

-Title Insurance.

Count on roughly 2% of the purchase price for a first-time buyer and 3% for a previous home owner in the city of Toronto to make up for these closing costs. 

Johanna Pigeon, Broker

as published in www.prettysavvy.ca