Things to Consider When Purchasing a Home – Part 1

Things to Consider When Purchasing a Home – Part 1

By |2014-10-16T00:00:00+00:00October 16th, 2014|Categories: Mortgage|

You have made the decision to purchase a home rather than rent, you have a down payment and you’re ready to get the Best Rates. Is that all there is? No, there is more to consider when you purchase a home. When you shop for a home and find a realtor, it’s best to be prepared first, get pre-approved and find out the cost associated with a mortgage, you then get a more realistic idea about how much you can afford. If you only look at the price of the home and mortgage rates, you may be biting off more than you can chew. So what are the “Things to Consider When Purchasing a Home?”.

Today’s blog for Green Monday we take a look at Insurance.

Insurance

Mortgage Loan Insurance (also referred to as Mortgage Default)

If you have secured more than 20% of a down payment, mortgage default insurance is not applicable, but if you have less than a 20% down payment, you are required to get Mortgage Default Insurance.

Home and Property Insurance

Most financial institutions will not give you a mortgage without proof of insurance and is a requirement Home Insurance protects you and your property against accidental Damage, pays for damage to or loss of your house, condominium, or property, damage, theft or loss of personal and liability. Also protects personal property stolen from your vehicle.

Title Insurance

Title insurance is not a requirement in some Provinces, and if not a requirement in your Province, you will want to well aware of all the facts before making an informed decision as to whether or not you should buy title insurance. Title insurance can assist in ensuring that a closing is not delayed due to defects in title and other risks that include; Fraud and forgery, Encroachments that would be disclosed by a new survey, Easements, referred to as “servitude” in the Province of Quebec, Zoning non-compliance and someone other than the home owner having interest. Title insurance policies protect you for as long as you own the property.

The Title Insurance Premium is generally purchased when you purchase or refinance your home and usually due at the time of closing, but some insurers will allow you to purchase the title insurance at any time. The premium differs, depending on the cost of the home, whether it is a house or condo and the province, with that in mind, the cost can run anywhere from $180 – 350.

Mortgage Life Insurance

What happens if something should happen to you or whoever else is listed on your mortgage and the mortgage cannot be paid? The question is, should you get Term life or Mortgage Insurance? Not to be confused with Property Insurance, Mortgage life insurance is not a requirement.

What is the difference between Term Life and Mortgage (life) Insurance? Actually there are quite a few differences and we will list them for you:

Term Life Insurance – Insurance policy that covers you for a set number of years, typically 10 to 30 years, is more portable, less expensive and you may be asked to qualify before been approved for the insurance with urine and/or blood test and your doctor may need to be contacted. Your beneficiaries can decide how the money will be spent.
Mortgage Insurance – It may be convenient with only a few simple questions asked, but even though you are paying a premium, should there be a claim, only will the insurance company delve into your medical history and your claim can be denied. If you have a health condition when getting the insurance, even if you or your doctor are not aware of it, and it is not disclosed, it can cause your claim to later be denied. The balance of your mortgage is paid to the bank if a person listed on the mortgage passes away. You pay a higher premium as you age, so you are getting less.

There are many differences between the two and we suggest you look into each option very carefully before making a decision on which to purchase and talk to an expert on the subject.

Hopefully by reading this blog, you have more information on Insurance Costs and we want you to have as much information as possible, but insurance can be very confusing and we want you to be as best informed as you can. A Mortgage Broker can also direct you to more information on the types of insurance.

Make sure you check back next week when we continue our blog, Things to Consider When looking to Purchasing a Home Part 2, where we talk about Closing and Moving Costs.

See you next week!

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