~ It should be a really exciting time!
The number one worry is finding problems after moving in. The next worry is that prices will drop and the house won’t be worth the original purchase price. You can reduce some of that stress and worry by putting together a team of experts who will guide you through the entire process. It starts with having a mortgage professional who will take a look at your finances, including your credit score, to qualify you for a mortgage. A lot of information about you and your credit management abilities come up during this process. For example, derogatory items may be on your report, but that doesn’t necessarily deny your ability to qualify for a mortgage. Everyone’s situation is different and a mortgage broker is familiar with most situations, and I can discuss those options with you.
Stage 1 – The Application
It is essential to collect personal information from you to determine what you qualify for and the best mortgage strategy/product you should adopt for a successful mortgage plan. This includes:
• General information such as contact info, birth date as well as assets and loans, and alimony and support payments.
• Employment info such as employer, title, salary and other income (self-employment information that includes historical taxable income, historical gross business income(s)
Stage 2 – Qualifying
At this stage, we will package up your information and send it to a lender for a rate hold, pre-approval or approval. Your information will be packaged in the best possible way to present your credit worthiness to the lender. We send our information electronically and directly to the lender and can usually get a response within 24-72 hours. Stage 3 – Verification
Your approval will be subject to verification of the information you provided to us. Verification will be done on items such as your income, with a job letter and recent pay slip, and showing a bank statement to prove you have enough savings for your down payment. Some lenders require your tax returns and NOAs. We will list out all the information needed and lead you through a straightforward verification process that will satisfy all the conditions of your approval.
Funds for closing costs. The lender requires you to have enough money to cover the down payment, and in some cases prove that you can also cover the closing costs – calculated at approximately 1.5% of the price of the home.
Stage 4 – Property
Once you have found your dream home, your Realtor will draw up a Purchase and Sale Agreement, which he or she will also send to us on your behalf. When writing your offer, we strongly recommend writing “subject to financing” to ensure you get approved before the deadline, so you don’t lose your deposit. During this stage, the lender may request an independent appraisal to determine the real worth or value of the property.
Stage 5 – Approval
During this stage, the lender will verify everything including income, any documents and the property appraisal to ensure that all of the conditions are satisfied. At this stage, you can still change the rate, term, payment amount or frequency, amortization, and more. Once you agree to the conditions, we will review the commitment letter in detail with you before you sign.
Stage 6 – Funding
The only thing left to do is to register the transaction legally. This will require a lawyer or notary. The bank will then forward all the documentation directly to your lawyer, and the lawyer will contact you to arrange a meeting. During this meeting, your lawyer will confirm the details of your transaction and will request a bank draft or certified cheque to cover the amounts outstanding before the closing date, which includes the down payment, the lawyers fee, property transfer tax and any other disbursements not yet paid for, less any deposits already paid. The lawyer then receives the funds from your lender, disburses them and registers the title of the property in your name and you get the keys to your home.
Here are additional steps to make sure you get on the right track and into your new home:
Determine the location and the type of home to suit your needs. Most people will have an idea of where they want to purchase their new home based largely on familiarity and convenience. For example, living close to work or schools might be a priority, or selecting a certain area of town with parks and amenities, and/or walkability scores. This is also a good time to think about how much you want to spend and what you can afford.
Getting your finances in order. During the pre-approval process is a good time to make sure you have the finances to cover your down payment and disbursements on your anticipated purchase.
Starting your home search. How you find the perfect property is entirely up to you. Many home buyers enlist the services of a Realtor. It’s important to only look at homes within your budget.
Hire professional services. You will need a lawyer to complete a real estate transaction. A real estate lawyer ensures your paperwork is correct and that the transaction is complete. They will review the contract and mortgage documents, conduct a title search, purchase title insurance on your behalf, register the property in your name, get signatures, prepare a Statement of Adjustments that shows the amount you will pay in closing costs, and collect and disburse fees.
Hire a home inspector. Home inspections have become part of the home-buying process for both new home purchases or resales. It might seem like a waste of money to pay for a home inspection for a newly-constructed home, but you might consider getting an inspection a few months before the expiration of the New Home Warranty. Better to be safe.
Insurance agent. Lenders will require you to have fire insurance. An insurance agent can help you find the best coverage and the best price.
Make an offer. This is done by presenting the seller with an Offer to Purchase. Sellers have the right to accept, reject or counter offer. Remember to include all necessary details in your purchase offer. The deposit will be paid, in trust, to the Realtor.
Did you know: On average, home buyers spend approximately five months house-hunting and visit 10 locations before deciding to buy. It’s certainly a good idea to take your time to make sure to get the house that’s right for you.
Interestingly, a 2013 BMO Psychology of House Hunting report found that 33% of home buyers felt rushed into making a purchase – that increased to 39% for first timers. Sixty-eight per cent were prepared to settle for a home that was less than perfect. Four-fifths of prospective buyers said they know a home is right for them as soon as they step inside.
When you're ready and planning on purchasing a first home or a new home, let's connect!
Glen Estabrooks
902.489.4898
E: glenestabrooks@mortgagegroup.com 30 Years Experience * Trusted Personalized Service
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