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If you’ve managed to find a property you love, congratulations! You’re halfway through your homeownership journey. Once you’ve put in that purchase offer and got your down payment out of the way, you have one more thing to check off your list- financing. Ideally, the seller will give you an estimated 45 days to close on the property; this period is critical for buyers looking to take out a mortgage. While the circumstances are wanting, no doubt, getting a mortgage approval within the stated window is quite doable. Yes, you read that right- you can apply for a mortgage and get approved before the stipulated deadline lapses; all you have to do is get your application right.
Prepping for your mortgage loan application
Before you let those nerves kick in, you should know; that mortgage applications are not rocket science. Admittedly, the prep work leading to the application is what’ll enhance your probability of approval. So what exactly goes into applying for a mortgage loan? Well, we’re breaking it down for you in four simple steps.
Check credit score
Ahead of visiting your lender, ensure you’ve checked your credit score reports to gauge your approval prospects. Ordinarily, most financiers use credit score ratings to determine their client’s creditworthiness- a poor credit score report poses you as a liability to the lender.
Do your research
Carrying out research in the early stages of a mortgage application is essential. Start by finding out the available types of mortgages and your eligibility for them. Then take the time to explore various local lenders and their terms- do they align with your needs? Mortgage rates are another important factor to look into. All these and more are factors to consider during your research process.
Put together your documents.
Gather your mortgage application documents in preparation for the process, including any and everything from your government-issued identification, to bank statements and proof of employment. Some lenders would also require you to provide debt information and asset documentation. Be sure to inquire with your financier about the necessary documents beforehand to save time.
Send a test application for your mortgage to your bank; in response, they’ll send you a pre-approval. The point is to give you an idea of how much you qualify for and the kind of mortgage you’ll have. This step will also prove to private lenders that your bank is backing you up.
Six critical steps to a successful mortgage application
According to data, 40% of the Canadian population has a mortgage. Statistics also show that at least 88% of Canadians will hold a mortgage at one point in their lives; this is more than half of the population. Saying that mortgages are the cornerstone of home ownership would therefore be understating. While it’s clear that mortgages are highly sought after for property acquisition, few know how to apply for them properly. Many buyers prefer to hire professionals to do it for them. Still, this is not to say you can’t learn to do it yourself; take a look at these six easy steps for insight into the process.
Present your offer
Mortgage applications always start with a proposal. After you’ve found that dream house, you’ll want to proceed with a downpayment to the seller worth at least 20% of the property’s purchase price. This move is what’ll essentially get the ball rolling and secure you the property for the next 45 days.
Choose a lender
The next step is finding financing. Banks and private lenders often finance mortgage loans; that said, you’ll want to go ahead and research your local financiers. From that pool, whittle your way down to an appropriate few with great interest rates and policies. Ideally, that limited selection of lenders where you’ll reach out for mortgage quotes.
Pro tip: Keep your lender list as short as three or four for effortless appraisal.
Review mortgage offer
It’s never advisable to walk into a mortgage deal blindly, so naturally, the following item is an assessment. Critically analyze the quotes presented to you by the prospective lenders; this includes interest rates, fees, costs, and loan periods. Do they match your needs? Once you’ve found a lender with loan estimates that align with your mortgage demands, it’s time to put a cap on the search and proceed to process.
Processing and clearance
With your quote reviewed, it’s time to get to the paperwork. Work with your lender to address and resolve any imminent concerns, questions, or requests either of you may have. It is during these negotiations that you’ll present the required documentation that you had gathered earlier on. Ideally, this step’s success will speed up your mortgage loan approval, so it’s best to be as cooperative as possible.
Close on it
Once the lender has cleared your application for approval, it’s time to close on your property. Set aside some funds for the closing process; this covers the legal fees for your closing statement review, drafting, and agreement signing. And now you’re all set; the application process is done and dusted.
Buying a home is a huge milestone; for most people, this makes their most significant investment. However worthwhile, the process leading up to homeownership can be intimidating and equally exhausting, especially when you have no clue how to go about it. Similarly, winging your home purchase can be costly. Ultimately, the trick is to arm yourself with mastery of the process, starting with mortgage applications. Not only will these efforts help you get the most out of your investment, but they’ll also save you a great deal of time and stress, and this piece is the perfect start for that.