Picture this: You’ve finally been able to put away enough for a down-payment on your dream home. It’s taken you years saving diligent but you did it! You have also been working on improving your credit score and paying off debts. You are at a place of financial stability... KUDOS TO YOU!
So now what do you do? Here are the three steps that will take you from browsing for a new home to getting the keys to your new place.
STEP 1: PRE-APPROVAL
BEFORE you start house hunting visit your mortgage broker to get pre-approved. This is the first step for anyone looking to buy a home. When you meet with your broker for the first time they will:
- Have you fill out an application (or you might be able to complete it online)
- Pull your credit history
- Determine your maximum purchase price
Be aware that you may also be asked for additional information when you visit your broker, including a letter of employment/pay stub, down payment verification, two year’s notice of assessment and/or T4’s and a number of other potential documents supporting your current financial condition.
Once you are pre-approved it’s house hunting time for you! The benefit of having this done BEFORE you start looking is that you can work with your realtor to find right properties within your budget.
When you do find just the right home for you, it’s on to step two.
STEP 2: APPROVAL
If you were able to provide the bulk of the paperwork for your pre-approval, then it will be smooth sailing from here. You may have to supply a few pieces of updated information, but otherwise it’s up to your broker and lender to do the hard work at this point.
Your application will be re-assessed and the lender will take a look at the property you are purchasing. Once they confirm that it aligns with the guidelines they have laid out for your loan, it is sent off to a mortgage default insurer such as CMHC or Genworth for approval. Make sure that you do not remove any financing conditions on your offer to purchase until all the lender conditions are met.
Now that you have approval and are waiting for the final conditions to be met, it’s on to step three.
STEP 3: FINAL STEPS
Your broker will notify you once the lender’s conditions have all been met, ensuring that the lender will send the paperwork to the Lawyer’s office to prepare for closing. The lawyer will take a few days review the mortgage and prepare it for your final sign off. When you meet with your laywer you will be asked to present:
- Void Cheque
- Two forms of identification
- Balance of any down payment that forms part of financing (certified funds)
On the day of funding, the lender will send the funds to your lawyer, who will further send them to the seller’s lawyer, who upon receiving the funds will advise your closing is complete.
All that’s left is to hand you the keys to your new home!
MORTGAGE TIP: Keep asking questions at each stage of the mortgage process and check in with your mortgage broker regularly. They are happy to guide you through the process of not only getting a mortgage but also having a mortgage too!