The Mortgage Process

"PURCHASING"

First time home buyers.

The Process

• Determine the amount a person can qualify for.  A pre-approval is not the same as an approval. (Generally, it's a good idea to get pre-approved before buying).
• Allow a review of credit to assess the chances of getting a mortgage.
• Identify strengths (length of employment, good credit) or weaknesses (opposite) which allows us to present all available options.
• Allow us a chance to explain the requirements of getting a mortgage.

The Purchase

• Receipt and submission of application, credit bureau, agreement of purchase and sale, and MLS (if through real estate.)
• Receipt of approval or decline
• Approval - requires documents to be reviewed and signed.  Contains conditions:
  • Employment letter, most recent pay stub (sometimes T4s or Notice of Assessment)
  • Proof of down payment, ie. 3 months bank history or statement of RRSP's (only deposit in excess of $1000 must be verified, usually a gift)
  • Void cheque - from account the mortgage will come out of
  • Name of lawyer (solicitor)
• Incidental Documents:
  • Bankruptcy papers
  • Credit cards/loans paid off recently
  • Mortgage statements for a rental owned by client

 Broker Complete

• Once documents are submitted and file becomes complete, the lender sends instructions to the lawyer.
• Once all legal documents are complete, the client is called by the lawyer's office, and schedule a time to meet to complete process.

 "REFINANCE"

A refinance is when a person or persons already have a mortgage and wish to use the equity built up in their house, to consolidate or pay off debts. 

The Process

• Establishing through an appraisal or other electronic valuation process, the value of a property (land & building).
• Lenders will grant up to 85% of the value provided the debt to income ratios work.
• The submitted application automatically seeks out the existence of a 1st and/or 2nd mortgage on a house.  This must be paid off.  This also allows debts to be designated for action, like being paid off.
• Receipt of an approval sets out conditions and documents required.
• If you are getting out of a mortgage before the end of your term, there will be a penalty - this can be 3 months interest or interest rate differential.
• Key documents can include: Proof of income, appraisal, name of lawyer, void cheque.

"RENEWAL"

A mortgage coming to an end at the end of a term.

The Process

• Determine if you wish to remain with your current lender or switch to a new lender.
• You do not need to see a lawyer or incur legal or appraisal costs as long as the amount stays the same.  To alter by more than $1000-$2000 is considered a refinance and subject to a legal process.
• If changing lenders, you may be required to provide documents, including:
  • Income letter & pay stub
  • Change/mortgage of land
  • Property taxes
  • Void cheque
  • Insurance policy
• If rates are expected to increase, this is a good time to get approved 120 days in advance to protect your rate from increasing.