A simple, seven-step guide to the mortgage loan process.

Step 1= Save Your Down Payment

Your down payment plays a major role in determining how much home you can afford and what type of mortgage you’ll qualify for. For this reason, saving your down payment is the essential first step to securing a great mortgage loan. Keep in mind, Canada’s mortgage rules require a minimum of 5% down and anything under 20% will be subject to mortgage loan insurance. 

Step 2= Get Pre-Qualified

After saving your down payment, the next step is to seek a mortgage pre-qualification. During this process, a lender will take a high-level view of your current financial situation (including your income, debt(s) and down payment) and give you a ballpark number as to how much they might be willing to lend you. Keep in mind, a pre-qualification is not the same as a pre-approval, but it will help you figure out if you’re ready to take the next step, or if you need to work on your finances a little longer.

See our previous post: Mortgage Pre-Qualification vs. Pre-Approval: The Differences You Need to Know

Step 3 = Seek a Mortgage Pre-Approval

Unlike a pre-qualification (where the lender takes a preliminary look at your loan eligibility), a pre-approval delves deep into your finances. At this time, the lender will examine your employment situation, income and credit score, debts, assets, etc., to deliver a more specific answer as to how much they might loan you for a mortgage. Once approved, they will issue a pre-approval letter – a commitment to lend you a certain amount at a locked-in rate – typically good for 90 – 120 days.

Step 4 = Choose the Right Lender For Your Needs

As mortgage rates and conditions will vary according to the lender, we recommend shopping around before committing to a single provider. Be sure to ask about the following:

  • Interest rates (fixed vs. variable) and term
  • Amortization period
  • Payment and pre-payment options
  • Fees
  • Pre-payment penalties
  • Portability
  • How you can save on interest
  • Life, critical illness, disability, and employment mortgage insurance

You may also want to consider partnering with a mortgage broker to help you find the right lender for your needs.

Step 5 = Make An Offer

With pre-approval in hand, it’s time to partner with an expert Edmonton REALTOR®. You may look at several properties before finding “the one,” but once you do, your letter will ensure you’re in a position to make an offer quickly and confidently. Once the seller has accepted your offer, you will submit your final loan application to your lender for underwriting. At this time, your provider will once again assess your income, credit and down payment as it compares to the property you’d like to purchase. 

Note: Your loan lender will likely require an appraisal of the home in question, as well as a real property report (RPR), and proof of home insurance before officially signing off on your loan.

Step 6 = Pre-Close On Your Home

At this stage in the process, you will meet with your lawyer to sign pre-closing documents, deliver your down payment, closing costs and ensure any other conditions are met as required by your lender. Keep in mind, you’ll want to avoid making any income or credit-affecting changes (i.e. starting a new job or buying a new car) as this could cause your loan to fall through.

Step 7 = Close On Your Home   

Closing day (or possession day) marks the final step in the mortgage process. This is the day your lender officially transfers all funds to your lawyer, who, in turn, gives the money to the seller. From here, you will receive the keys to your new property, and your monthly mortgage payments will begin. Congratulations on your new home!

Home Buyers Guide CTA

Posted by Terry Paranych on


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