Mortgage Application Process
If you can't get a mortgage you can't buy your home... unless you have enough cash. So, let's take a look at the steps you will likely go through to apply for a mortgage.
Initially you will meet with a Mortgage Consultant who will have you complete a RESIDENTIAL MORTGAGE APPLICATION and will provide you with an estimate of the closing costs you may incur in the transaction.
The Mortgage Consultant will then request a series of documents to support your income, your savings and your expenses. These could include details on your job, including confirmation of salary in the form of a letter from your employer, your sources of income, proof of financial assets, source and amount of down payment and deposit, and proof of source of funds from the closing costs (these are usually between 1.5% and 4% of the purchase price).
The Mortgage Consultant will begin processing your application. At this time the Lender (Bank, Credit Union, or Trust Company) will order an appraisal of the home, a copy of your current credit report, and will make written requests to verify your employment information and details on all bank accounts, loans and other debts.
Once the Lender receives your credit report, appraisal and all the written verification requests, your loan package will then be forwarded to their underwriting department. They will evaluate your loan package and will either approve or deny your loan according to their OWN policies and guidelines.
You are probably saying "This is a lot of work! And there is still a chance I may be denied?" Yes!! Then you would have to begin the whole process over again with other Lenders until you find one that has appropriate policies.
TO AVOID THESE HASSLES, AND AVOID LOSING YOUR DREAM HOME, YOU NEED TO BE PRE-APPROVED FOR A MORTGAGE!
Yes, you can get approved for a home mortgage even before you make an offer to buy!
This report will show you exactly how to get a pre-approval in writing. This pre-approval guarantees you qualify for a specific mortgage amount - even before you begin shopping for a home.
Now you can lay to rest the concern you have about qualifying for a home mortgage, so you can shop for your dream home in total confidence.
1. It gives you a WRITTEN approval from a lender for a SPECIFIC LOAN AMOUNT so you know exactly what homes to look for and in what price range you can purchase.
2. It gives you the peace of mind of knowing that your being approved will not be an obstacle in buying you home.
3. It gives your offer MAXIMUM CREDIBILITY and shows the seller that you are serious about buying because you've taken the time to get pre-approved. If the sellers received multiple offers on the home, which one do you think they would pay more attention to?
4. It gives you a guaranteed interest rate (usually a 90 day minimum).
5. It puts your Realtor at ease because you qualify to buy and it confirms to him that you are not just another "look-y-loo".
This saves you the following steps:
Just a simple meeting and within a matter of days you have a written approval!!!
WHY STEVE RECOMMENDS TO GET PRE-APPROVED:
DOCUMENT CHECKLIST FOR MORTGAGE APPLICATION
PURCHASE OF PROPERTY:
The following is the basic information needed to complete a mortgage approval. The information required may vary depending on the Lender of choice. The person responsible to provide the information to the Lender is listed in brackets.
CLOSING COST ANALYSIS
CLOSING OR SETTLEMENT COSTS
Mortgage Insurance Fee $__________________
Legal Fees $__________________
Property Appraisal $__________________
GST (New Homes) $__________________
Property Transfer Tax $__________________
Home Structural Inspection $__________________
Total Closing Costs: $___________________
ADJUSTMENTS, PRE-PAIDS, AND OTHER DEPOSITS
Fire or Home-Owners Insurance Premium $__________________
Property Tax Adjustment $__________________
Estimated Interest Adjustment $__________________
Utility Deposits $__________________
TV Cable $__________________
Total of Above: $_________________
ESTIMATED BREAKDOWN OF MONTHLY PAYMENT
Based on a loan in the amount of $___________________ for _________ years at ____________%
Principal & Interest $__________________
Monthly Taxes $__________________
Monthly Fire Insurance $__________________
Monthly Home Insurance $__________________
Monthly Mortgage Insurance $__________________
Total Estimated Payment: $__________________
DETAILED EXPLANATION OF CLOSING COSTS
You will need to plan ahead to cover the many up-front costs of buying a home. Timing is important to help make sure things go smoothly.
Appraisal Fee. Your Lender may require that the property be appraised at your expense. An appraisal is an estimate of the value of the home. The cost is usually between $250.00 and $350.00 and must be paid when you contract for those services.
Deposit. This is part of your down payment and must be paid when you make an Offer to Purchase. The cost varies depending on the area, but it may be up to 5% of the purchase price. If you wish to make a down payment of 5% and you give a deposit of 5%, then your down payment is considered to be made.
Down Payment. At least 5% of the purchase price is usually required for a high ratio mortgage and at least 20% of the purchase price is usually required for a convential mortgage.
Home Inspection Fee. Remember that this may be a condition of your Offer to Purchase. A home inspection is a report on the condition of the home and may cost over $400.00, depending on the complexities of the inspection. For example, it may be more costly to inspect a home that has large square footage or one that is expensive.
Land Registration Fees. (sometimes called a Land Transfer Tax, or Property Transfer Tax). 1% on the fist $200,000 = $2,000 plus 2% on the balance of the purchase price. Please confirm this with your lawyer or notary.
Legal Fees and Disbursements. Must be paid upon closing and cost a minimum of $500.00 (plus GST). Your lawyer/notary will also bill you direct costs to check on the legal status of your property.
Mortgage Loan Insurance Premium. If yours is a high ratio mortgage (less than 20% down payment), you may need mortgage loan insurance. To get this insurance, you will be asked to pay the required insurance premium. Your Lender may add the mortgage insurance premium to your mortgage or ask you to pay it in full upon closing.
Prepaid Property Taxes and/or Utility Bills. To reimburse the Seller for pre-paid costs such as property taxes, etc.
Property Insurance. The mortgage Lender requires this because the home is security for the mortgage. This insurance covers the cost of replacing the structure of your home and its contents. Property insurance must be in place on closing day.
Water Quality Inspection. If the home has a well, you will want to have the quality of the water tested to ensure that the water supply is adequate and the water if potable.