When you decide to purchase a property, getting approval for a property mortgage happens to be the most crucial step. Unless you are well-versed with the process, you may face hurdles and unpleasant surprises on your journey.
In this article, you will get to know about a typical process of a mortgage application. Remember, the offer to purchase that you can make depends on the financing you receive. Therefore, it’s crucial to secure the mortgage approval at the outset. Next, you can proceed to purchase the property.
The process of mortgage approval is similar to the pre-approval process. The property owner needs to furnish specific details to the lender or mortgage broker about the property you are about to purchase. Along with this, you need to provide relevant details regarding your down payment and income.
The experts at Mortgage Maestro have put forward the different stages that would help you apply for the mortgage.
What Information Does Your Lender Or Mortgage Broker Need?
When you reach out to a potential lender, they will calculate your debt-servicing ratio. Accordingly, they would authenticate your credit score and determine whether you are eligible for a pre-approval. The accuracy of your inputs often determines the pre-approval, and they may not ask for supporting documents. The reason is, the pre-approval process is optional.
You need to be honest with your information during this process. When the mortgage representative inquires about something specific, try to be as accurate as possible. This would save time and energy for you as well as the lender.
The lender will issue a certificate for pre-approval once you qualify based on these inputs. This certificate would be valid for up to 120 days approximately. Within this term, you need to get the mortgage rate fixed. One of the benefits of getting your mortgage pre-approved is that you would have to pay the previous rate if it rises during the subsequent processes. When the interest rate is likely to rise, it pays to get your mortgage pre-approved. However, you can enjoy a lower rate if it drops during this time.
The Pre-Approval Process
During the meeting for pre-approval with your lender, you would have to provide accurate information regarding your liabilities, assets, and income. In the process, the lender will calculate an approximate amount that you would be able to afford while you repay your mortgage. Of course, they would ensure that the amount remains within your budget.
However, you should know that a budget amount and an approved amount are not the same. The approved amount can be much higher, but it might not be suitable for your budget. This explains why certain property owners have their budgets at the back of their minds. In this process, they ensure that the obligation for repayment doesn’t cross their monthly payment limits.
Experts recommend property buyers to calculate their financial strength and state their repayment capacity per month at the outset. This ensures that you would have the expenses within your limit.
Making Your Offer
Now that you know the amount of mortgage you would be eligible for, you can put forward your offer to a potential seller. This is the time to negotiate the price and bring it down if possible. In case the seller is comfortable with the price you offer, it would get accepted. Next, you will get a period known as ‘condition of finance,’ by which you need to finalize the deal.
Getting The Actual Mortgage Approved
Depending on the seller, you would get around ten business days to obtain the mortgage or financing approved. It is recommended to have your mortgage pre-approved so that you can bargain the price accordingly.
After finalizing the deal with your seller, you need to approach the lender and obtain the actual mortgage approval. If you already have a pre-approval, the actual approval process should not take more than 48 hours.
Next, you can carry out the inspection process, the paperwork, consult your lawyers, and then move into the new home. The overall process of applying for a home mortgage is simple. With professional guidance, you can carry it out seamlessly.
How Long Does It Take To Get The Mortgage Approved?
In case you have a pre-approved home mortgage loan, it won’t take long to obtain the actual mortgage. After you finalize the agreement with the seller, you need to carry out certain formalities. This involves some paperwork and submission of your documents. Once the lender evaluates your file, they would process the mortgage within a couple of days.
However, under certain circumstances, you might face delays in getting the loan processed. In case technical issues delay your loan processing, your lender would inform the same.
What Are The Basic Requirements To Get Your Mortgage Approved?
Here are certain factors that determine whether or not your mortgage would be approved. Apart from this, the lenders will also check out your collateral and character before processing the loan.
This is the ability of the borrower to repay the loan. You would have to undergo a stress test, which would determine your financial strength and repayment capacity. This involves the evaluation of your current and future finances.
Banks and mortgage brokers expect property buyers to have a healthy credit score. In case you have suitable finance handling habits, your credit score would be higher than 600, which is the basic requirement in Canada.
The lenders would check your financial health, including your savings, present loans, and liabilities. Accordingly, they would determine whether you can shell out the down payment without compromising your lifestyle.
It makes sense to shop around and compare the best rates for property mortgages. Consulting a reputed mortgage broker would be a logical decision in this regard. The professionals would guide you seamlessly throughout the process. Reach out to one of the established specialists around. This would streamline your property buying process significantly.