A thorough understanding of the mortgage approval process and application can assist you in moving forward and making confident decisions. The process of obtaining mortgage financing can be broken down into seven steps, each of which is divided into three stages. The first step is to meet with a trusted mortgage broker for an initial assessment to "diagnose" your situation and determine the best course of action. The second stage is pre-approval, which involves submitting and reviewing a formal application with supporting documents. Finally, funding is formally requested during the approval stage, and the mortgage contract's details are finalized !
Step 1) Discovery Call (15-minute conversation)
This is a free 10- to 15-minute phone conversation during which we'll talk about your loan and property goals, borrowing capacity, and the best next steps for your situation. This is the proper first step if you want to gain confidence. The goal is to quickly determine whether you meet the criteria for mortgage approval, how much money you can borrow, and whether you're ready to submit a formal application. We can even share our screen to run some scenarios and what-if calculations with you. Following the call, we'll send you an email summarizing our conversation and recommendations for the next steps !
We review your application, supporting documents, and credit reports at this stage to ensure that they will support a mortgage approval. We'll also find the best lenders for your situation !
Step 2) Request Application (1-2 Days)
If you think you might be eligible for a mortgage and want to move forward with an application, we'll send you a Mortgage Application Document, Privacy Consent Form, and a personalized Support Document Checklist as part of our Let's Get Started package, which will walk you through the process. The support document checklist's required documents are critical to the application's success, so take your time and make sure you provide all of the documents requested. It will take some time for you to locate, compile, and electronically submit the documents to us, but you will be done with the heavy lifting once you have done so !
Step 3) Pre-Approval (1 day or more, depends on you)
We open a file to store and organize the documents you're about to send once we receive your completed application and privacy consent. Your application data is entered into Filogix ExpressTM, an electronic loan processing system used by more than 50 Canadian mortgage lenders. We supplement your data by obtaining a copy of your credit bureau report and verifying your debt profile.
We'll keep the file open until you provide the mortgage support documents that were requested in the initial checklist !
As your file documentation comes together, we'll start looking over your application to see which lenders are the best fit for your situation in terms of rate, contract terms, and customer service. Our lenders keep in touch with our office on a regular basis, offering the most up-to-date mortgage products, rates, terms, and special offers. We also try to figure out the lender's approval timeline, as backlogs do happen !
We work with the lender of your choice to process and finalize your mortgage approval and transfer funds. Underwriting by the lender (takes lender 1 - 7 days from our formal submission)
We update your electronic application with the property details and financing deadline once you have a property, and we are ready to "go live," and we review the file with preferred lenders once more !
The best rate and terms for your situation are identified as a targeted lender. We then use Filogix ExpressTM to send your loan application and property information to that lender, which goes into their electronic queue. Underwriting typically takes 24-48 hours to complete. There may be a long wait in the queue (48-72 hours or more) before an underwriter reviews your application, slowing the approval process. A short lender queue is significant when deciding whom to submit to, but sometimes the available rates and terms are worth waiting. The busiest lenders are usually the best lenders !
Step 5) Conditional Commitment Processing (takes 2 - 4 days from lender approval)
We will receive an electronic "commitment" indicating that your application has been approved subject to a list of conditions if it meets the lender's underwriting guidelines. The terms will specify which documents are needed to prove income, assets, employment, property information, and value (an acceptable appraisal). We'll give you a call to go over the terms of their offer. You accept their offer (sign the commitment) if acceptable to you, and we proceed to meet the applicable conditions !
In most cases, documents that we already have on file will suffice to meet the loan conditions. Because the lender usually has a document review queue, the faster we can get the commitment and all of the required support documents to the lender, the quicker we can get to "file complete," which means all of your financing conditions have been met and accepted by the lender !
The lender then sends "mortgage instructions" to the lawyer you've chosen. We will inform you, your Realtor (if applicable), and your lawyer that funding has been "approved" in writing at this point. If an Offer to Purchase contains a financing condition, your Realtor can now remove it !
Step 6) Pre-Closing (takes 7 - 10 days from 'file complete')
At this point, your lawyer will collaborate with the lender to prepare and register the mortgage with the Land Titles Office and transfer the title of the property to you in the case of a purchase. If applicable, you or your Realtor will need to provide a fully executed Offer to Purchase to your lawyer !
To sign papers, provide your down payment and closing costs, confirm adequate home fire insurance, and satisfy any remaining "solicitor conditions," make an appointment with your lawyer (for example, to prove you paid off a debt that you said you would pay off). Nothing must change in your employment, financial, or credit situation during this time, as the lender may still pull out !
Step 7) Finalization (usually by noon on the funding/possession date)
The lender transfers the funds to the lawyer's trust account on the funding date, and the lawyer then distributes the funds to those who are supposed to receive them. The Realtor will hand you the keys and the lawyer will register your name on the title in the event of a purchase. The loan has now been fully repaid !
Summary of the 7-Step Mortgage Approval Process:
Submit an application;
Lender Underwriting; and
Prior to Closing
The Last Statement
The bottom line
Obtaining mortgage approval entails putting your financial affairs in order. Whether you're applying for a mortgage or not, maintaining a high credit score, paying down debt, and saving money are all worthwhile goals contact Guglu Homes. We're never more than a phone call away if you have any questions or concerns. Or even if you don't plan to buy a home right now, taking care of your finances now will put you in a better financial position tomorrow, whatever you decide to do !
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