Step #1: Evaluate and clear up existing debt
It’s crucial to know where you stand before you begin the mortgage application process.
Obtain a credit report from Trans Union or Equifax (the majority of lenders and mortgage brokers today use Equifax). The credit report will list all currently active credit accounts, balances outstanding, credit limits, etc. Many financial experts recommend you should obtain a credit report once a year to monitor any discrepancies in your credit and correct them as necessary.
If possible, try to pay off existing debt, or transfer them to a lender with a lower rate. And of course, saving up for your down payment should be a priority.
Step #2: Find the right mortgage associate
Many people believe that the only way to get a mortgage is by approaching different lenders and asking for the best rate. This approach is time-consuming and often futile.
The preferred and easier way to get a mortgage nowadays is to approach an independent mortgage brokerage. When you go to a bank, they only have access to their own mortgage products; however mortgage specialists have access to many lenders.
The job of the mortgage associate is to shop for the best mortgage for you. Because a mortgage brokerage places large quantities of mortgages, they have more negotiating power with lenders than the average person.
A mortgage associate works independently from lenders and is a great source for mortgage advice. They have access to unadvertised rates at the bank. Often, a mortgage specialist can get a lower rate at your very own bank than you would be able to yourself!
Not all mortgage specialists have access to the same solutions. I hand-pick specialists who have access to 50+ lenders and as many programs as possible in order to make sure that you find the best deal based on your credit. The best part is that these services don’t cost you a penny.
Step #3: Get pre-approved
Getting a pre-approved mortgage shows you mean business. A pre-approved mortgage is a written promise from a lender that states the mortgage amount you can get, your monthly payments and a set interest rate, which is valid for a varying period of time depending on the lender.
A pre-approved mortgage is different from getting pre-qualified. Pre-qualification involves a general overview of your income and expenses to see the general price range you could qualify for; it does NOT specify an interest rate. Getting pre-qualified and pre-approved is free and with no obligation.
A pre-approved mortgage shows your realtor that you are serious and may give you a competitive edge if you place an offer on a property with multiple offers.
To request a pre-approval, Contact Me and I will connect you with a trusted professional that will find you the best deal.
Step #4: Find a home
Of course, this is the fun part! You can shop for and compare homes within your budget. Fill me in on the criteria you are looking for and I can set you up with free automatic MLS® listings for homes that fit your needs. Sign Up Here.
Step #5: From offer to closing
Once you’ve found a home that you want to buy, you make an Offer to Purchase.
The owner of the property can accept the offer, make a counter-offer, or reject the offer.
Think carefully about the conditions and your offering price, as you may only have one chance to snag the property of your dreams. It’s important to note that the Offer to Purchase is a legally binding contract between yourself and the seller. Obtaining legal advice at this step is a good idea before you commit yourself to anything.
The Offer to Purchase includes:
- Your name.
- The seller’s name.
- The address or legal description of the property.
- The offering price.
- The items you expect to be included in the purchase price.
- The amount of your cash deposit.
- Your financing arrangements.
- The closing date.
- Specific terms or conditions that must be met as part of the purchase.
- A time frame for meeting these conditions.
Once you have signed the Offer to Purchase there is no going back. If you want to back out of the offer and the seller has already accepted, you may be sued for damages and will not get your deposit back. If the seller rejects your offer, your deposit will be returned.
Step #6: When your offer is accepted
Congratulations! You are one step closer to owning your home. Now is the time to get back in touch with your mortgage associate to sort out the details.
Typically, he or she will ask you to send over a few documents such as a copy of the real estate listing, a signed copy of the Offer to Purchase, income verification, source of your down payment, etc.
Step #7: Processing the mortgage application
This is when it’s handy to have a mortgage associate take care of the details on your behalf.
Keep in mind that if your mortgage amount is greater than 80% of the value of the property, you fall under a high ratio mortgage. This means that you must pay a one-time insurance premium to an insurance company such as CMHC or Genworth. You have the option to pay this amount in cash or add it to the mortgage amount.
Step #8: Closing the purchase
The closing procedure involves a visit to your lawyer’s office to review and sign the mortgage documents. Make sure you ask questions if you’re unsure of anything before you sign. The lawyer should go over terms and conditions of the contract and details about the property.
At this time, you will present your lawyer with a cheque to cover the closing costs and any outstanding costs.
Closing day is the day you’ve been waiting for—you’re now the owner of a new home!
Contact me to jumpstart the mortgage process and begin shopping for a home with confidence. Whether you’re financing a new home, refinancing or looking for a home equity loan, I can find the right associate for you.