A Step-By-Step Walkthrough

1 Loan Application and Pre-Approval – Lenders are encouraging buyers to get pre-qualified for a mortgage even before they begin looking for a house. This way, buyers know ahead of time how much house they can afford.

2 Loan Search – Although buyers often use a lender recommended by their Real Estate agent, some prefer to do their own comparisons. Borrowers may choose to contact a mortgage broker who has access to a wide variety of loans.

3 The House Hunt – At this point, the buyer begins shopping for a house. When the right one is found, the terms of the sale are negotiated, including the sale price and often the type and conditions of the loan being sought. 

4 Documentation – It is crucial to supply the lender with copy of Promise to Purchase, Annexes, Counter Offers and all other paperwork supporting the application.

5 Loan Review – The loan package with all pertinent information is to be sent to the lending underwriter, including any explanations that may be needed, such as reasons for derogatory credit.

6 Appraisal – Lenders may require an appraisal on home sales not insured by CMHC. This step could jeopardize a deal if a big discrepancy were to exist between the home’s sale price and appraised value.

7 Underwriter’s Review – Based on the information put together by both the loan advisor and the processor, the underwriter makes the final decision on whether a loan is approved.

8 Mortgage Insurance - Lenders require mortgage insurance with CMHC or Genworth or AIG when borrowers put down less than 20 percent on a loan. Even if a loan meets the standards of a lender, a mortgage insurance company could choose to deny coverage. This law does not apply to subprime lending.

9 Title Search – This is the time when any liens against the property are discovered. A lien may have been placed on a property to ensure payment of outstanding debts by the owner. All liens must be cleared before a transaction can be completed.

10 Insurance – Lenders require fire and hazard insurance on the replacement value of the structure.

11 Signing – Final loan and documents are signed at the notary office.

12 Funding – The lender sends a wire or check for the amount of the loan to notary.

13 The Buyer Begins Making Mortgage Payments.

Written by Danuta Levitzki. Conseillère en Financement Hypothécaire | Mortgage Loan Specialist
For current interest rates or to get more information on mortgage financing feel free to visit her website or call direct at 1-800-605-6154.