The Mortgage Process

mortgage

Whether you are a seasoned homeowner, or looking to buy your first home, we think you will find this mortgage information helpful. A huge shout out and Thank You to Katharine Keyes at “Invis – Canada’s Mortgage Experts” for providing it to us.


Step 1: Mortgage Pre-Approval


– Protects your negotiated rate up to 120 days
– Determines the price range of your new home
– Makes the purchase process smoother


There are certain requirements that you must meet in order to qualify for a mortgage, including:
– Having a minimum of 5% of the purchase price for a down payment (a limited number of programs still offer 100% financing)
– Mortgage payment + taxes + heating costs must be less than 32% of your gross monthly income
– Monthly debt (including mortgage payment) must be less than 42% of your gross monthly income
– You must be able to pay closing costs of at least 1.5% of the purchase price
– Credit history (lenders will obtain a credit report)


Step 2: Shopping for your Home


– It is always recommended to use a realtor when shopping for a new home, as they can assist you with inspections, property information, and making a competitive offer
– When preparing an offer on a home, you will need to provide some basic details:
– Your legal name
– Name of vendor
– Legal and civic address of the property
– Purchase price
– Conditions, if any


Step 3: Mortgage Application


– Your mortgage broker can assist you in understanding your mortgage options and identifying which documents you will need for a speedy application process
– There are several different mortgage options available, including:


Open Mortgage
– Repay the loan without penalty
– Interest rates may be higher
– Good choice if you are planning to sell your home in the near future
– Conversion to a closed mortgage is normally allowed at any time


Closed Mortgage
– Offers terms from 1-10 years fixed rates
– Often penalties or restrictions for prepayments or additional lump sum payments
– May not be the best option if you plan on moving before the end of the term


Variable Rate Mortgage
– Variable interest rate tied to prime
– Generally convertible to a fixed rate mortgage (penalty may be charged)
– Term is usually for 3 or 5 years


Term and Payment Options
– 6 months to 18 years with amortizations up to 30 years
– Flexible payment options of weekly, bi-weekly or monthly


Associated Costs with Home Purchase
– Appraisal fee
– Survey/title insurance
– Legal fees
– Home inspection
– Property taxes
– Fire insurance (we can help you with this one!)


What a Lender Wants:
– Personal information such as age, marital status, birthday and dependents
– Details of employment, including proof of income (ie T4’s, Notice of Assessment, and Letter of Employment)
– Other sources of income, including pensions, rental income and investment income
– Current banking information, including name of institution and average cash balance
– Verification of down payment (3 months of bank statements showing account holder name and number)
– Consent to complete credit investigation
– Information on assets (including property, vehicles, RRSP’s, and other investments)
– Information on liabilities (including credit card balances, personal loans and vehicle loans)
– Details on the property to be purchased, including:
– A copy of the listing
– A copy of the Agreement to Purchase
– Appraisal
– Plans and cost estimates on new home
– Condo financial statements, if applicable
– A certificate for well and septic, if applicable


Step 4: Subject Removal


– Once all conditional have been met and the subjects removed, the lender will forward all documents to the lawyer


Step 5: Legal Process


– The lawyer will sit with you to sign the mortgage and transfer of title


For more information on the Mortgage Process, or if you are interested in obtaining a mortgage for a new property, we recommend contacting Katharine Keyes at Invis for more information:


Katharine Keyes
Phone: 587-989-3848
Email: katharinekeyes@invis.ca


Thank you,


The Costen & Associates Team