- Connect with a Mortgage Professional
Whether this is your first home, or have experience purchasing a property, a mortgage professional can take a look at your financial situation and discuss your borrowing needs and home ownership goals. A mortgage broker will introduce you to a full range of mortgage products, interest rate options, and strategies to pay off your mortgage more quickly. A look at your credit rating will help determine which products will work for you.
How much do we charge for our services? … nothing we are paid commission by the lender that we use.
- Budget & Pre-approval
After reviewing your financial situation, determining your housing affordability level within your budget can be established. Once we know the monthly housing costs a mortgage pre-approval can be provided, which will give you your price range before searching for a home. A pre-approval will also protect you in case interest rates increase during a set period usually anywhere from 60 to 120 days. Having a pre-approval letter also shows sellers you are serious about buying their home.
- Working with a Realtor
A good starting point is to think about the type of home that is right for you. There are a lot of choices out there, from condo apartments, to condo or freehold townhouses, to semi-detached or detached homes. Another choice would be a re-sale home versus a new home. Each of these types of homes has its own advantages and disadvantages, and you will have to consider how any home fits within your lifestyle. Another consideration is the neighbourhood and its amenities.
A Realtor can help you locate suitable homes in your pre-determined price range. The house hunt is an exciting time as you narrow down the choices to homes that you would like to make an offer on. A mortgage broker may be able to assist you in finding a Realtor.
- Making the Offer
You’ve taken a look at quite a few homes and are now ready to negotiate a price and submit your offer.
With any offer a “condition of financing” is highly recommended. Remember the pre-approval process determined how much you can afford, and it locked in your rate. The approval process will verify the information provided with supporting documents. The actual property is evaluated to ensure the purchase price is within the expected value of the property type and location.
In a “hot” market and with the potential for multiple offers, it’s not always possible to include a COF (condition of financing) as the offer may not be accepted. In this case you may want to discuss some of the potential risks with your mortgage broker.
Once an offer has been accepted the approval process can be set in motion.
All lenders (CIBC, TD, Scotia, etc…) require the necessary documents that will support the information gathered in the pre-approval process. Property value, downpayment, income, debt service, are just a few items that the lender’s underwriter will confirm before approving the application.
In most cases your mortgage broker will already have asked for most of the documents during the pre-approval process – as they anticipate what will be required. In some cases the borrower may not have some of the typical documents required – which helps the broker, as they know which lenders are more forgiving with weak documentation.
In some cases a lender may require additional documentation that was not requested during the pre-approval process.
- Property Appraisal
Your lender may require a home appraisal to make sure the home is worth the price you’ve agreed to pay and is thus suitable as security for a mortgage. If the home appraises at a value equal or greater to your loan amount, your mortgage lender will then be in a position to approve the loan. If you are applying for a high ratio loan, the mortgage insurer will arrange for the property valuation which may or may not involve a physical appraisal.
- Home inspection
Get an inspection of the property you intend to buy as soon as possible after the sellers accept your offer, and make the transaction contingent on the inspection. That way, if the inspector finds a problem with the property, you have a legal way out of the contract. A pre-purchase home inspection can add peace of mind and make a difficult decision much easier.
- Property Appraisal
Once the mortgage is approved, you can remove your COF, and sign your mortgage commitment documents issued by the lender.
Your financing has been approved based on your current financial situation. Do not make any changes to your income, or debt load before getting possession of your home – eg: Don’t change jobs, or buy a new vehicle.
Meet with your lawyer at least a week before the closing date. You will be asked for your lawyer’s contact information during the document collection process, as the lender will need to know this information. Once the mortgage has been approved, the lender will send instructions to the lawyer to meet the meet the mortgage contract conditions. They lawyer will want you to provide photo id, they will perform title searches to ensure there are no leans on the property, and you will need to sign a few more legal documents that will secure the mortgage with the property.
Along with the documents, you will need to ensure property insurance is arranged, as all lenders require property insurance.
- Welcome Home
- almost – the final walk through
The final walk through typically takes place a day or two before closing. This is your opportunity to go through the house to make sure all discrepancies found during the inspection have been fixed (if that was part of the agreement).
- now…..Welcome Home
Closing is the process that transfers legal ownership of the home from seller to buyer. In most cases, your lender will provide the mortgage funds to your lawyer or notary, who will pay the vendor, register the home in your name, and provide you with a deed to the property. This is the final step before you are handed the keys.Of course, the home buying process is more complicated that this outline of main steps, and your mortgage broker and Realtor can guide you throughout the process. When it comes to a smooth home buying transaction, it pays to have the right professionals on your side.
- almost – the final walk through