Module 5 Part 2: Mortgages Flashcards
Conventional mortgage is when a borrower has a down payment of at least
20% (based on the appraised lending value or sale price, whichever is less)
high ratio mortgage is when a borrower has a down payment of
less than 20%
high ratio mortgage requires
mortgage default insurance
Institutional leasers are not permitted to lend mortgage money when they amount is in
excess of 80%
High loan to value ratio means
a higher risk (borrower has less equity)
With mortgage default insurance, lenders can provide mortgages w/
as little as 5% downpayment
Canada mortgage and housing corp.
housing agency for the gov of canada
Genworth financial canada
private mortgage insurer
Canada guaranty
private mortgage insurer for new home construction & secondary homes
Mort. insurance premium is charged on
the amount of borrowed funds
Mort. insurance premiums is a
one time payment or can be added to the principal amount
Mort. insurance premiums is based on
loan to value ratio
The higher the
% of the property value is borrowed
the high the % of insurance premium is charged
mortgage amount
purchase price minus down payment
Mort. insurance premium calculation
mortgage amount x premium %
mortgage brokers assist a buyer in
obtaining financing
Who is the client of the appraiser
usually the lender NOT the borrower
Second step of the mortgage process is
appraisal and credit check
last step of the mortgage process is
commitment
Pre-qualifying for a mortgage
can be used as an estimate for how much a buyer can spend
Before a buyer signs a notice of fulfillment the SP should confirm
that the buyer has received a mortgage commitment
Gross debt service ratio represents
max % of a borrowers gross income to be allocated to mort. payments & property tax
PIT
principal, interest, property tax paymetns
PITH
heating costs
Gross debt service ratio is calculated by
total monthly expense/total monthly income
GDS for a purchase excluding heating costs is
(annual mort. payment + annual prop. tax)/gross annual income
GDS for a condo calculation
(annual mort. payment + annual prop. tax + 50% of annual maintenance fee)/gross annual income
Total debt service ratio
everything in the gds ratio + other debt obligations
who pays for a home inspector
seller (pre-listing), buyer (AOP&S)
Who pays land transfer tax
buyer
