Purchasing A Home
The first step any new home buyer should take before they start shopping is to determine how much of a mortgage loan they qualify for. It can be very disappointing if after you find your dream home, you discover that you don’t qualify for the mortgage.
Benefits of a Pre-Approval:
- Knowing exactly how much you qualify for.
- Save time and dissapointment by shopping for a home in your price range.
- Find out where your credit score is at.
- Secure a guaranteed rate hold – if the rates go up, your safe, if the rates go down, you get the lower rate!
- Knowing ahead of time what documentation the lender will need from you.
- Knowing what you need to do, should you not qualify at this time, so that you can in the near future.
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The second step after you’ve received your pre-approval is to work with a good Real Estate Agent to help you find the home of your dreams. Working with a Realtor that you feel comfortable with is very important. Buying a home is the single largest purchase you may every make, you want to ensure your working with professionals that are sincerely looking out for your needs and interests.
The third step after you found the home of your dreams is to make a “conditional” offer to purchase. A conditional offer means you will buy the property if those certain conditions are met. At the very least your offer should include a condition on finance, or COF (even if you did the smart thing and got a pre-approval first) especially for high-ratio insured mortgages (meaning you have less than 20% as a down payment). The COF should be for at least 3 to 5 business days, so that you and your mortgage broker have enough time to get your live approval.
The fourth step would be to waive the COF by obtaining a “live” or “real” approval from the lender.
The following is a list of documents and information that you will need to provide in order to obtain your approval from the lender (note depending on the lender and situation, documents may vary)
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- Copy of the accepted Purchase and Sale agreement
- Copy of the MLS listing (if listed on MLS service)
- Completed and signed application (unless you were pre-approved with our office already)
- Confirmation of your down payment: it may be from your savings, RRSP, equity from the sale of another home (copy of sales agreement would be required if property sold less than 3 months), or a gift letter for any money that has been gifted
- If you are a salaried employee, a letter of employment outlining your name, base salary, hours worked per week and length of service along with a recent pay stub and possibly your last years T4 may be required
- If you receive the majority of your income from commission sales, three years of personal taxes (T1 Generals) as well as three years of notice of assessment will be required to calculate an average…A two year average may be used if the down payment is greater than 20%.
- If you are considered self-employed, 2 years of personal taxes (T1 Generals) as well as 2 years of notice of assessment will be required to calculate an average…A two year average may be used if the down payment is greater than 20%.
- If you are self-employed and you have incorporated your company, some lenders will also ask for three years business financials and three years business tax returns along with the three years T1 Generals and three years of Notice of Assessments
Talk to one of our Mortgage Professionals today: 416-466-5858