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Tag: mortgage

  • Closing costs for refinancing your mortgage

    Closing costs for refinancing your mortgage

    With record low interest rates, more homeowners are refinancing their mortgage.  One question we get very often is what the closing costs are for refinancing a mortgage.

    Before we break it down further, you may be caught by surprise that you even need to “close” your mortgage refinance.  You likely remember having to close your home purchase, but refinancing your mortgage? The short answer is, you have to close your mortgage refinances as well. Here's why.

    Refinancing a mortgage means paying off an existing loan (mortgage) and replacing it with a new one.  In most scenarios, your new lender may be a different institution than the one that holds your current mortgage and part of the amount you borrow may be used to pay off your existing loan to your current lender.

    When you refinance your mortgage, your new lender approves your mortgage application and issues a mortgage commitment. At that point, the closing process kicks off and includes formalizing your new mortgage, while paying off your old mortgage from the proceeds of the refinance.

    The mortgage refinancing closing process resembles some steps you may remember from purchasing your home. 

    Namely the title for the property is searched to verify your ownership, you will sign documents for your new mortgage, writs or court orders against the homeowners are searched, your current mortgage gets paid off and discharged and your new mortgage gets registered on title. Your lender may require a title insurance policy as well. When all these steps are done, the remaining funds are distributed as applicable.

    At Deeded, we can help you close your mortgage refinance seamlessly from the comfort of your home.  Get started by getting a free quote.

    Completing these tasks is usually done by a lawyer, notary, or title company and the closing costs for refinancing your mortgage, in most cases, is paid for by the homeowner (or borrower).

    The closing costs for refinancing your mortgage can vary from province to province and can depend on factors such as the number of mortgages on the property, lender conditions, government fees, registration costs and others.  Depending on the circumstances, a mortgage refinance may also require Independent Legal Advice (or ILA for short), for one or more of the borrowing parties.

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  • Insurance: Everything You Need To Know When Closing

    Insurance: Everything You Need To Know When Closing

    Whether you’re closing on a home or refinancing your mortgage, you are going to need to look into various insurance products.  Some of these are going to be mandatory, others are optional, and some are just common sense to have or look into.

    Here are the various types of insurance products you will encounter when closing your home or mortgage transaction:

    Home Insurance

    A home insurance policy covers your home and its contents in various situations such as floods, fires, break-ins and personal liability if someone gets hurt on your property.

    If your property has a mortgage, your lender will likely require that you have the appropriate coverage and that you submit proof of your coverage prior to closing your transaction.

    While home insurance costs can add up, there’s really no good reason to leave your biggest asset unprotected.

    When shopping for home insurance, you can use a broker who would typically shop around for the best rates with the insurers they work with, or you can obtain a policy directly from an insurance company.

    Be sure to read the fine print before you purchase a policy as they are not all the same and coverages of certain items and situations can vary among insurers.  Your mortgage lender may also have requirements for minimum coverage levels which you’ll need to consider when shopping around for a policy.

    Costs vary depending on coverage, home value and additional factors

    Condo Insurance

    Your condo corporation will typically carry a commercial policy to cover common areas and the shared exterior and interior aspects of the condo. In most cases, this policy does not cover your individual unit and your contents. You’ll need a personal condo policy to protect your unit.

    For example, if a homeowner in a unit above you has a flood and the water causes damage to your unit and belongings, the home insurance policy of both parties will likely cover the claim.

    Like home insurance, most mortgage lenders will consider having a policy for your unit as mandatory and you will require to produce proof of coverage prior to closing (often referred to as an “insurance binder”).

    The cost of condo unit insurance varies depending on coverage, condo value and additional factors

    Renter's or Tenant's Insurance

    If you plan to rent your property or rent part of it, your tenant’s contents and liabilities may not be covered, even if you have a homeowner’s policy in place on the property.  

    For example, if your property is tenanted and there’s a flood, your home insurance may cover the cost of repairing your property, but if your tenant’s possessions such as their TV or couch suffers damages as a result, your insurance company will likely not cover these items.

    While tenant insurance is not mandatory in Ontario, as a landlord, it is a good idea to require your tenants to obtain their own insurance to cover their possessions and personal liability while living in your unit.  Landlords typically incorporate such requirements as part of the lease agreement.

    The cost of tenants insurance may vary with the level of coverage needed, but in most cases, it is an affordable monthly payment.  

    Title Insurance

    Your property’s title is legal proof that you are its owner. It describes your rights to the land and any limitations like giving your local phone and power companies legal right to construct, repair, replace and operate wires on a section of your property.

    Title insurance is a policy that protects the homeowner and lender against future issues that may arise with the title of the property.

    For example, you purchased a property with a shed that was built by the previous owners. It is later discovered that the shed partially sits on the neighbour’s property.  In this case, a claim can be made to correct the situation.

    Title insurance also protects against existing liens against the property’s title (e.g. the previous owner had unpaid debts from utilities, mortgages, property taxes or condominium charges secured against the property), title fraud, and errors in surveys and public records.

    Most lenders will require you to obtain a policy to insure your title as the policy also protects the lender’s interests in having a marketable property.  Learn more about title insurance here.

    Unlike usual insurance premiums that are paid monthly or annually, Title insurance is a one-time premium based on the value and location of the property.

    Mortgage Default Insurance

    Mortgage default insurance (also known as “mortgage insurance”) is mandatory on all mortgages with a down payment of less than 20 percent of a home’s purchase price.

    This insurance protects lenders, but also allows qualifying buyers purchase a property with as little as 5% down payment.   

    Mortgage default policies typically costs between 2.8% to 4% of the mortgage amount. This cost can be rolled onto the mortgage so it’s not an out-of-pocket expense.

    Life, Disability and Critical Illness Insurance

    While it is difficult to imagine, when taking on a mortgage, it is a good time to consider unfortunate scenarios whereas you may not be able to pay your lender and may put your home at the risk of foreclosure.

    While life or disability insurance may not have been a topic you thought about in the past, it may be worthwhile considering a policy to protect you and your family in a worst-case scenario. 

    Life insurance is not mandatory, but a good idea to look into.  Disability and critical illness policies are also options that would supplement your income should you not be able to work due to a disability or a critical illness.  These products are also typically offered through your employer’s benefit plans.

    Costs can vary depending on type, coverage, and personal factors. 

    Home Systems Warranty

    You moved into your new home in the summer.  Come fall, you turn on the furnace and discover it isn’t working.  You’re devastated when find out that you need a new furnace at a cost of $4500.  

    In reality, the systems in your home are complex and can be expensive to repair or replace.  There are several options that will cover major home systems and even appliances should they break down or require repair. 

    While absolutely optional, if you are looking to reduce the risk of expensive repair bills during the course of your home ownership.  There are various options that will have you covered and sleeping well at night.

    Costs vary depending on the coverage you are looking to get and the home’s age.

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  • Mortgage Refinancing – What is it and What’s The Process?

    Mortgage Refinancing – What is it and What’s The Process?

    Mortgage refinancing is the process of paying off an existing loan and replacing it with a new loan with different terms than your original mortgage.

    There are many reasons why home owners choose to refinance a mortgage. The most popular reasons being converting from a variable rate mortgage to a fixed rate one (or vice-versa in some cases), consolidating debt from higher interest loans or credit cards or accessing some of the equity in the home to finance larger purchases such as renovations, a new vehicle, or a down payment on an investment property. 

    Refinancing is often confused for having a second mortgage, but in reality, the two are very different.  A second mortgage is in addition to your first and does not replace it as a refinancing would.  Mortgage refinancing gives the borrower new money that can be used to pay off the original mortgage, ideally with better terms.

    Should I Refinance?

    The decision on whether or not to refinance should be based on your financial goals. For example, if you’re looking to improve your monthly cash flow, take advantage of lower interest rates to reduce your payment or consolidate debt, refinancing may be a viable option.

    Unfortunately, every situation is unique so consulting with a mortgage professional who can calculate potential costs, penalties and legal fees for your refinance is always a smart decision before proceeding.

    I’ve Decided To Go Ahead, What’s The Process To Refinance?

    If you decide to take advantage of refinancing, your mortgage professional or current lender will need to process an application, similar to the one you did when you first got your mortgage.

    This means you'll need to be prepared with documents, paperwork, and an appraisal that supports your application.   

    1. 1. Depending on your credit and other variables, your mortgage professional will likely ask for proof of income, such as pay stubs, T4 slips and employment letters.  
    2. 2. You will likely need to have an appraisal done on your property to determine the current value and thus what you’ll be able to borrow.  Your mortgage professional can order an appraisal on your behalf, but you may be on the hook for costs of the appraisal
    3. 3. You’ll need to hire a lawyer to put together required documentation, title insurance and arrange for signing the new mortgage documents.  

    Deeded can help with your mortgage refinancing and make closing your refinancing a breeze.

    How Can Deeded Help?

    When it comes to refinancing your mortgage, our team at Deeded makes the process as easy as possible so you can "close" and access your money quicker.    

    Our team helps you understand your obligations, can expedite the process and help you navigate the legal documents that needs to be signed before funds are released to you. 

    With Deeded you’ll never need to leave your home to close your mortgage refinancing deal. We’ll come to your home and office, making it convenient and stress-free.

    We also made our fees for refinancing your mortgage clear and transparent so we can avoid surprises at closing and leave more money in your pocket.

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