Mortgage Question

[shane_c]

We're saving for our mortgage right now. Looking to save up 5%, the house will be approx $190,000. I'm confused about how the whole mortage thing works. The builder wants $1000 deposit when the contract is written, and then the remaining 5% of the purchase price (189,000 x 5% = $9450) once the mortgage is approved, and then the balance of the money upon closing. To get a mortgage we would have to give the bank 5% for the downpayment ($9500). Do the builder deposit costs ($9450) come out of the mortgage? So if that's the case will we be paying a mortgage during the 5-6 months the house is being built? How does it all work? Help!

[Incinerator]

http://www.cmhc-schl.gc.ca/en/bureho...stst/index.cfm

[photon]

Check with your builder on how they do it, there's a few different ways I've seen.

Some builders just want your 5% down. That 5% becomes the 5% down on the mortgage, you don't have to pay your 5% twice.

Other builders want 30% (or some other big $) and do it as three cash draws over the building process. That means you'd have to get financing for the other 25% and make monthly payments on that until you took posession of your house. In the end you still only pay your 5% but some builders want more cash flow through the building process.

I would HIGHLY recommend getting a mortgage broker involved, I find they do a much better job of explaining the process than the banks (and sometimes even better than some builders) plus they can shop around through hundreds of mortgage vendors to find the right one for you. If you want I can give you the # of the person we're dealing with right now, I've found her to be very good.

[The Goon]

I would recommend using a mortgage broker to help find the best bank/mortgage rate for your situation. Here is a lady who helped me last year:

Mortgage broker

[The Goon]

Yeah, she's attractive, but she knows her shinguard when it comes to mortgages.

[ratech]

%$&*&&^%$#$


wow

[shoestring]

My girlfriend is a mortgage broker,not the looker like Nikki but more than makes up for it in personality,lol. PM me and I will send you her phone number.
She works down on 11 ave across from the new co-op if that is convenient.
And she can do most of it on the phone if you want,
28 years in the business and she has helped explain the intracasies to even people that can't speak english,heck she could probably even teach me.
Doesn't cost you a thing.

[Nikkibroker]

Well, although being considered attractive can be a compliment at times, it seems that in this instance, it is a reason to be discriminated against.

Contrary to that old belief system, I can offer some professional advice here.

Photon was correct, most builders want 5% down so that they can feel that there is some security before they start building. This 5% will and is used as your down payment, or part of it. Some builders (Albi, and other master builders) will want substantially more. Putting a down payment on a home that you are having built is no different than putting a deposit down when purchasing an existing property. Just remember that you will have to verify where those funds came from, and provide proof when it comes time (usually 60 days before possession) for locking in your mortgage. Because it is difficult to get a rate guarantee that extends past 120 with most lenders, I usually recommend getting an approval based on a variable rate, with the option to change and lock in 60 days prior to possession.

The benefits to working with a broker are too numerous to list, but the first of course is that we can pull one credit report, and use it to submit to multiple lenders. Most people don't realize that getting your credit bureau pulled numerous times will cause a negative credit grade on your bureau.

Happy to answer any serious mortgage questions anytime.

Nikki Labbe
Mortgage Agent
Mortgage Intelligence
T.403.850.8760
www.nikkibroker.com