Step by step, here’s what you need to know about the mortgage process and how to secure a great mortgage loan.
1. Save Your Down Payment
To purchase a home in Canada, you must put down a mandatory 5% (minimum). You’ll also need to provide proof of down payment when applying for a mortgage, so be sure to secure these funds ahead of time.
2. Get Pre-Qualified
In short, a mortgage pre-qualification is when a lender takes a high-level view of your finances and how much home you can afford. A sort of financial “check-in”, this process will give you an idea as to whether or not you could qualify for a loan based on your current situation. From here, you can proceed with the mortgage process or continue to make improvements until you’re in a better position to apply.
3. Work With a Broker
Once you’re ready to begin your home buying journey, it’s time to speak with a qualified mortgage broker. As expert “bargain hunters,” your broker will scout out the best lenders and mortgage terms to compliment your unique needs. Best of all, a broker will save you time, money and their services won’t cost you a thing!
See our previous post: Buying a Home? 6 Great Reasons to Use Mortgage Broker
4. Get Pre-Approved
Your broker will work with you to zero-in on the right lender. You can now begin the pre-approval process before heading out in search of your new home. The lender will once again take a look at your finances; only this time, they will delve a little deeper (i.e. examine your credit score, payment history, etc.). Once approved, the lender will issue a pre-approval letter: a commitment to lend you a certain amount, at a locked-in rate, for a 30-120 day period.
5. Find Your Dream Home
With pre-approval in hand, you’re now ready to find your dream home. We recommend partnering with an expert REALTOR®, who will help ensure your home buying process runs as smoothly as possible. Here too, you can ask your broker for a few REALTOR® recommendations.
6. Application and Processing
Congratulations on finding your new home! At this time, you will begin the formal mortgage approval process. Along with your application, your lender will require information regarding your employment, down payment, finances, details about the home you’re purchasing, etc. Taking all this into account, they will ensure you meet qualifying guidelines and, in turn, approve you for a mortgage.
7. Close On Your New Home
On closing day, you and the seller will review and sign off on all documents relevant to the mortgage loan and home sale. Once the paperwork is complete, funds are transferred to the seller, closing costs are paid (although separately from the mortgage), and the property is turned over to you, the proud new homeowner.
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