Your First Mortgage, Steps to TakeFebruary 12, 2013
If you are looking to buy your first property, you might be feeling overwhelmed by all the things you need to know and the various options available. It should be an exciting time, not a whirlwind! The following are some basic steps to follow when entering this stage of your life.
Get pre-approved for a mortgage
Before you begin the search for your home, it is important to get pre-approved for a mortgage so you understand what price range you can afford and the Canadian mortgage rates available. This involves contacting a mortgage specialist through a financial institution or by using a Licensed Mortgage Broker. Obtaining this pre-approval involves submitting a mortgage application, where you will be asked to disclose details such as your income, assets, and liabilities. With a pre-approval in your hand, you will be better informed on what your purchase price range should be. In addition, sellers will also take your offers more seriously.
Find a Realtor
When finding a real estate agent, you want to be sure you choose someone who is the right fit for you and your needs. A good Realtor is someone who is eager to help you find the right home at the right price; someone who will take the time to do their research on properties of interest; someone who will listen to your comments and concerns; and someone who makes the process fun and is personable. You will know right away if you have chosen the right agent. They are there to work on your behalf to help you find the right home. Getting recommendations from friends, family and colleagues is a great way to find one.
Find a Property and Make an Offer
Once you have your pre-approval in your hand and have found an agent, you can start looking for properties. It is best to provide your agent with as much information as possible about what you want in your home. You do not want to lose time looking at properties that are not of interest. When you find your perfect home, an offer is made to the seller and negotiations will begin. Sometimes the seller will accept your offer or they may counter offer. This may go back and forth a few times until both of you are in a mutually beneficial place. Offers include details such as when you want to take possession of the property, items to be included in the home, home inspection clauses, etc. It is very important to include a condition with your offer that states ‘Subject to Financing’. This will protect you should any mortgage lenders not approve the property you have chosen.
Going from Pre-Approval to Live Deal
When an agreement is reached between yourself and the seller, you are to provide a copy of the Purchase Agreement and MLS listing (if applicable) to the financial institution that will be approving your mortgage. The lender will then adjudicate the property and ensure it meets their guidelines and requirements. Once they are satisfied, they will issue you a firm approval.
Meeting Lender Conditions
Now that you have a firm approval from your financial institution, you will be asked to fulfill conditions. Typically you will be asked to provide proof of income documents, source of funds for your downpayment, and other conditions if requested. It is very important for the lender to verify these documents, because if you can not satisfy these conditions, they have the right to refuse financing your home.
Closing your Mortgage
After your financial institution is satisfied that you have met all of their conditions, your file is then transferred to a solicitor who is in charge of the legal side of the mortgage and property. These dealings include title searches, registering the deed and mortgage, paying land transfer taxes, and any other legalities applicable to your file. When you visit your solicitor, you will sign all the pertaining documents, and provide a cheque for your downpayment, land transfer tax and legal fees. At the closing date, the keys are handed over to you, and you are officially a home owner.