Congratulations on deciding to purchase your first home! At Royal Bank, we take the time to understand your individual goals, educate you on available options and work with you to find a fitting financial solution. We'll guide you through the home buying process step-by-step, so you're in control of your financing decisions. In addition, decisions are made locally so your financial information stays local and decisions are made fast.
Take advantage of a free, no-pressure consultation with one of our lending professionals. Get pre-qualified for a loan, discuss available options and ask questions about what to expect.
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How much you can afford depends on your income, expenses and ability to repay the loan. When calculating monthly payments, it's easy to use just the asking price; however, this is not a realistic cost estimate. Homeowners insurance and property taxes will need to be included in your monthly budget as well as any closing and inspection costs for your short-term budget. With a multitude of loan programs available, the Royal Bank lending team can help determine an amount that is right for you.
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A 15-year fixed rate mortgage gives you the ability to own your home free and clear in 15 years. While the monthly payments are somewhat higher than a 30-year loan, the interest rate on the 15-year mortgage is typically lower and you'll pay less than half of the total interest of a traditional 30-year mortgage.
Although a 15-year mortgage is attractive, many borrowers find the lower monthly payment of a 30-year mortgage more feasible.
The purchase of a home is most likely one of the most expensive and important purchases you will ever make. You, and especially your mortgage lender, want to make sure the property is indeed yours and that no individual or government entity has any right, lien, claim, or encumbrance on your property.
The function of a title insurance company is to make sure your rights and interests to the property are clear, that transfer of the title takes place efficiently and correctly, and that your interests as a homebuyer are fully protected. Title companies typically issue two types of title policies; an owner's policy that covers you, the homebuyer, and a lender's policy that covers the lending institution over the life of the loan. If the loan is a purchase, both types of policies are issued at the time of closing for a one-time premium.
Prior to issuing a policy, the title company performs an in-depth search to determine if anyone other than you has interest in the property. This allows any title problem to be identified and corrected prior to your purchase of the property. Once a policy is issued, any future claim covered by your policy and any legal fees involved in the defense of your rights is absorbed by the title company. They are also responsible to cover losses arising from a valid claim. This protection remains in effect as long as you or your heirs own the property.
Mortgage insurance should not be confused with mortgage life insurance, which is designed to pay off a mortgage in the event of a borrower's death. Mortgage insurance makes it possible for you to buy a home with less than a 20 percent down payment. It protects the lender against the additional risk associated with low down payment lending.
Low down payment mortgages are becoming more and more popular, and by purchasing mortgage insurance, lenders are comfortable with down payments as low as 3 – 5 percent of the home's value. It also provides you with the ability to buy a more expensive home than might be possible if a 20 percent down payment were required.