Must-Know Mortgage Preparation Steps
Step One: Evaluate and Clear Up Existing Debt
It is important 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 that 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 Two: 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 numerous 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 has
the ability to 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. And what’s more, this service doesn’t
cost you a penny.
Step Three: Get Pre-Approved
Getting a pre-approved mortgage shows that 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 than 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 without any 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
(or call 780.271.5544) and I will connect you with a trusted
professional that will find you the best deal.
Step Four: 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 Five: From Offer to Closing
Once you’ve found a home that interests you, you must 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 Six: When Your Offer is Accepted
Congratulations! You will soon be the owner of a 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 Seven: 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 Eight: 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 (or call 780.271.5544) 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.
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