If you're an aspiring first time home buyer, you may have many questions about the buying process. From getting a pre-approval to understanding your mortgage terms to closing your purchase transaction with your lawyer - it can feel like too much information to absorb!
In this article, I will explain the mortgage process involved in buying your first home, including Pre-Approvals, Mortgage Approvals and Lawyer and Closing.
Once you have decided that it's time to purchase your first home, you'll need to figure out your budget. This means you have to determine how much you can afford and how much mortgage you can qualify for. A pre-approval is very different from a pre-qualification that most people conduct online. A pre-qualification is based on an embedded online calculator that uses your current income and your available down payment against basic mortgage qualifying guidelines. It doesn't take into account different lending products that may be available like the ones that accept the child tax credit or can gross up self-employment income, for example. Therefore, the results of a "pre-qualification" are very generic and will not provide you with precisely what you are looking for in terms of concrete approval figures. When you are about to spend your precious time shopping for a home, you must know the facts about what you can purchase instead of relying on generalities or gross assumptions. The better prepared you are, the easier the process will be!
A certified pre-approval, on the other hand, involves an authentic and detailed mortgage process that verifies every aspect of your application to ensure you qualify for a mortgage. It also provides you with extremely accurate numbers, which significantly improve your chances of purchasing your dream home. If you had to compete with a purchaser, it helps to have the capacity to be able to make a strong offer. Additionally, you can focus on price points you know you can afford, which saves time and energy. A pre-approval can also hold an interest rate for you for up to 120 days, which protects you with a low-interest rate for an extended period.
Getting a pre-approval is a straightforward process. During a consultation, you will be asked for your employment documentation, down payment verification and your personal information such as social insurance number, date of birth, current address, and so on. For a list of the type of documentation you will need to verify your employment, please click HERE. If you'd like to make an appointment to discuss obtaining a pre-approval, please call 647-773-4849.
A pre-approval consultation provides you with an opportunity to discuss different mortgage products and whether to take a shorter or longer-term or choose a fixed or variable rate product.
2. Mortgage Approval
Once your offer has been accepted, your real estate agent should send the Agreement of Purchase and Sale together with the MLS Listing to your mortgage professional. Since the pre-approval was already conducted, and you already provided the relevant documentation upfront, the process of mortgage approval should be relatively straightforward from this point onward.
Your mortgage agent or mortgage advisor will submit your official mortgage application to the lender of choice and forward you the approval documents to sign electronically (since most lenders accept electronic signature) or in person, once approved.
At this point, you can confirm your mortgage payments, interest rate, mortgage terms like pre-payment privileges and double up options and also ask any additional questions you may have about the financing and closing process.
3. Lawyer and Closing
Once you have accepted your new mortgage terms and signed all the necessary documentation, your mortgage lender will instruct your real estate lawyer. Mortgage instructions are a set of documents directed to your lawyer indicating how the bank would like him or her to register your mortgage on title to your new property. You will often find that, in addition to legal and title documents you will be asked to sign, you will also be required to sign the original mortgage documents again. This activity provides you with a second opportunity to go over the original mortgage commitment to ensure you understand all of the terms.
Once everything is signed, and your closing date approaches, your mortgage lender will wire transfer or direct deposit the mortgage funds into your lawyer's trust account. With the mortgage proceeds and your remaining downpayment (less your deposit with your offer), your lawyer will provide the seller's lawyer with the funds required to close. Once all is received, he or she will register your names on the deed along with your new mortgage. You will then receive the keys to your new home!
I have worked in the legal field for over a decade before I branched over to mortgage origination. I love helping first time home buyers with the process of buying their first home! If you have any questions, please do not hesitate to call or write.
Sarah A. Colucci
Mortgage Agent Lic. M14000929
Mortgage Edge, Broker 10680
Direct: (647) 773-4849
By: Sarah Colucci
411 Queen St.
15 Wertheim Court, Suite 210
Richmond Hill, Ontario
Sarah A. Colucci, Mortgage Agent Lic. M14000929
Mortgage Edge, FSCO Lic. 10680