Understand the Mortgage Approval Process

The mortgage approval process involves several steps from the initial application to the closing of the loan. Here is an outline of the typical mortgage approval process with a mortgage broker:

  1. Preparation:

a. Financial Assessment:

  1. Evaluate your financial situation, including income, expenses, assets, and debts.
  2. Check your credit score and credit history.

b. Budgeting:

  1. Determine how much you can afford to borrow and repay each month.

c. Research Lenders:

  1. Explore different lenders and loan products.
  2. Compare interest rates, fees, and terms.

d. Get Pre-Approved:

  1. Submit basic financial information to a lender for a pre-approval.
  2. Receive a pre-approval letter indicating the maximum loan amount.
  3. Property Selection:

a. Find a Property:

  1. Work with a real estate agent to find a suitable property.

b. Make an Offer:

  1. Negotiate the purchase price and terms with the seller.
  2. Sign a purchase agreement if the offer is accepted.
  3. Formal Application:

a. Submit Application:

  1. Provide detailed financial information along supporting documents to the lender.
  2. Credit check

b. Property Appraisal:

  1. The mortgage broker orders an appraisal to assess the property’s value.
  2. Loan Processing:

a. Verification of Information, Underwriting & Conditional Approval:

  1. The lender verifies your income, employment, assets, and other information.
  2. The underwriter reviews the loan file, ensuring it meets the lender’s guidelines.
  3. The lender issues a conditional approval with any outstanding conditions to be met.
  4. Conditional Approval Fulfillment:

a. Provide Additional Documentation:

  1. Submit any additional documents required by the lender.

b. Clear Conditions:

  1. Satisfy any outstanding conditions for full approval.
  2. Loan Approval:

a. Final Underwriting & Clear to Close:

  1. The lender performs a final underwriting review.
  2. The loan receives final approval, and a “clear to close” is issued.
  3. Closing:

a. Sign Documents:

  1. Attend the closing meeting to sign the loan documents with your lawyer. Several lawyers offer virtual signing meeting to facilitate their clients.

b. Funding:

  1. The lender funds the loan into your lawyer’s trust bank account, then the funds are disbursed to the seller lawyer’s trust bank account.

c. Transfer of Ownership:

  1. Ownership of the property is transferred by your lawyer, and keys are handed over.
  2. Post-Closing:

a. Loan Servicing:

  1. The loan is transferred to the loan servicer for ongoing management.

b. Move-In:

  1. Take possession of the property and move in.

This is a general outline, and the specific details and requirements can vary depending on the lender, loan type, and local regulations. It is crucial to communicate effectively with your mortgage broker and lawyer during the process to ensure a smooth transaction. It is safe to consider that the process will take approximately 10 business days, this could vary depending the time of the month and if there are several holidays.

Consulting with a mortgage professional can provide personalized advice based on your specific financial situation. At Easy House Loan (www.easyhouseloan.ca), we have the expertise to guide you through the process and make sure that you qualify for the best suitable mortgage.