Entering the housing market for the first time can be a
bewildering experience, especially where financing is concerned.
Our post this week looks at the bare basics of residential
mortgages and how a real estate lawyer can help ensure that a
housing newbie's first go at financing is a smooth one.
Mortgage Types - Conventional vs High-Ratio
Mortgages fall into two categories depending on the amount of
home that a buyer finances. Those able to finance less than 80 per
cent of a property's value can apply for a conventional
High-ratio mortgages are for purchasers who finance between
80-95 per cent of the property's value. These mortgages allow
more individuals to join the housing market, but with the higher
risk involved, the law imposes mandatory mortgage loan insurance on
these transactions as a safeguard against mortgage default. Read
more about mortgage loan insurance in one
our previous post.
It Pays To Shop Around
The first place that first-time homebuyers logically turn to for
mortgage help is their own bank. This can be a good starting point
to obtain information and do some number crunching, but a number of
alternative options exist. These include trust companies, insurance
companies, credit unions and private lenders.
Rates, options, conditions, risks and benefits differ, so
it's wise to treat a mortgage no differently from any other
major purchase decision. Shopping around could also sizably impact
the total money a buyer saves or loses in interest over the long
Working with a mortgage broker instead of a single lender opens
up options. These brokers do the shopping for the mortgagee,
scouring various institutions to gather the best possible packages
to suit the needs in each transaction.
The Role Of A Real Estate Lawyer In Financing
Meeting with a real estate lawyer is the next wise investment,
especially for a first-time buyer. Experienced lawyers have
reviewed hundreds and thousands of mortgage agreements. They can
cut through the fine print and provide clarity to ensure that
buyers know exactly what they are signing to.
Real estate lawyers can also spot existing and potential
problems that buyers are often not aware of. They can also ensure
that legal provisions are in place to protect against possible
future risks. With one of life's largest investments involved,
professional scrutiny makes good sense - both financially and
Buying or selling?
On behalf of Quinn Ross of The Ross Firm Professional
Corporation posted in
Residential Real Estate on Wednesday, April 12, 2017.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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