Closing The Deal
Take Cover-age!
There are three types of insurance that matter in the mortgage process. Our team are not insurance agents and the following information is not advice, just facts. We suggest talking to a licensed insurance agent before deciding what to do.
- Lender insurance
- Covers the bank or lender in case you default. You pay this insurance if you borrow more than 80% of the value of the home and you have no choice. The amount you pay is between 1-3% and is include in the mortgage, so you do not pay this out of pocket on closing, but you do pay interest on it! It’s easy to avoid…put down 20% when you buy!
See CMHC premiums - Home insurance
- Covers the house and everything in it from fire, theft, acts of God, etc. Do you think you need it?
- Mortgage Payment Insurance
- What happens if you can’t make your payment? Unless you have mortgage protection insurance, #$%@ happens, that’s what! You may have this type of protection in your benefits at work or in your life insurance policy…so check! If not, do not sign your mortgage documents until you have gotten coverage through a reputable insurance agent. The cost is usually between $30 and $60 per month depending on your situation, not a high price to pay relatively speaking.
Making it Legal
No matter what kind of mortgage you are taking, you are going to need a real estate lawyer to make it official. Your lawyer’s job will be to facilitate the transaction of buying the house and disburse money between all parties involved.
If you are purchasing a home, the lawyer receives the mortgage money from the bank and collects your down payment from you, holds it in trust until the closing date and then pays the seller on your behalf. The lawyer will also ensure all conditions have been met by you in order to receive the mortgage money from the bank.
In a refinance situation, the lawyer is also responsible for paying out any debt you may be consolidating into the mortgage. If you have agreed to pay a broker a fee, the lawyer will also ensure the broker gets paid as per your written direction.
In the end, your fee to a lawyer will be based on the amount of time it takes for the lawyer to do what he or she needs to do. The more complicated your deal is (more people to pay out, etc), the more you will pay the lawyer. You can expect to pay a reasonable lawyer anywhere from $1,000 – $3,000 depending on the complexity of your deal, so be sure to ask for an approximate quote at your first consultation.
