Obtaining a pre-approval mortgage will give you the confidence of knowing exactly what you can spend on a home before you start looking. You will also be protected against interest rate increases while you look for your new home.
Your Mortgage Specialist will answer your questions and help you determine which financing terms and options are right for you. Your Mortgage Specialist and Real Estate Professional work as a team to help you find the right home and select the best financing.
How much home can you afford?
- Pre-qualification will define the numbers.
- Pre-approval will “Show you the Money!”
Pre-Approval: Is a detailed approach that can give you a firm decision on a home loan. It makes you a “cash buyer” in the seller’s eyes.
Pre-Qualification: Establishes how much you can afford to borrow, based on how much you earn and owe. Pre-qualification is not an assurance of mortgage approval.
Pre Approval Advantage- Bargaining Power
Pre-approved buyers have increased bargaining power with the seller as they are perceived as serious buyers and bring to the table a certain level of credibility. Quick decisions can be made which is attractive to the seller especially in a multiple offer situation, potentially placing your offer to buy in a “first choice” position.Obtain A Mortgage Pre-Approval Through:
Mortgage Broker: Using a Mortgage Broker may be your best option. They can provide you with the most favourable Mortgage available in the market place today with terms, conditions and interest rates to best suit your needs. Mortgage Brokers are not limited to one Lender or Financial Institution, they have access to all of them.
Financial Institution: Your Lending Options are Limited with a Financial Institution. They can only offer you their product and interest rates based on their lending policies.
Before You Start House Hunting:
- Establish how much cash (or downpayment) is needed and how much you can afford to carry in monthly payments.
- Hidden Costs: Approximate costs are $3000.00, an amount over and above the above noted cash down payment. These costs could include items such as the Building Inspection, Other Inspections, Appraisal Fees, Mortgage Insurance, CMHC Fees, Legal Fees, Transfer Tax, Title Insurance, Taxes, etcetera.
- There is no use looking at homes that are out of your afforded price range. It will only frustrate you and waste your time. It also confuses your knowledge building process as it may interfere with you making that right decision. We need to compare Apples with Apples, not Apples with Oranges.
- Most Realtors will not show you homes unless you are pre-approved.
Documents Needed for Mortgage Approval:
- Notice of Assessment from previous taxation year
- Letter from Employer confirming annual income and length of employ
- T4 Slips and/or Income Tax Returns
- Verification of Down Payment- copy of bonds, investment certificates, bank books.
- A copy of the real estate listing of the property with exterior photo. If the home is still to be built, the mortgage lender will need to see the architect’s or builder’s plans and details on lot size and location.
- A copy of the accepted offer to purchase or the building contract, if this document has been prepared.
Types of Mortgages:
Conventional and High Ratio.
- Down Payment of 25% or more.
- No insurance premium.
- Down Payment between 5% and 25%.
- Must have CMHC insurance for the Lender.
- 0.5% to 3.75% of Mortgage amount (check for the most recent percentages with CMHC).
- $100,000 x 3.75% = $3,750.00
- Premium added to Mortgage.
- 8% Sales Tax on premium to be paid up front.