It's that exciting time in your life: The seller has accepted your offer to purchase the house! Now what? What happens to ensure that your offer turns into keys in your hand? (Prepare yourself, this blog post is a little longer than usual - there's just so much great info to share!)...
The first thing that happens is done well before you have an accepted offer. We gather as many documents as possible in advance that will be needed, which will save us time later. This includes items such as your pay stub, bank statements, photo ID, etc.
Once your realtor sends me the offer package (Purchaes & Sale Agreement, counters, addendums, Property Condition Disclosure Statement, MLS Cutsheet and property taxes), I can get started - but not before I touch base with you. We'll ensure we're on track for the same plan and then I'll submit the application to the lender.
The lender will receive the application, process it and (hopefully!) approve it. If applicable, the default loan insurer will do the same. Once I have the mortgage commitment back from the lender, I'll prepare your documents for signing. We will review the conditions of your mortgage approval, which could include confirmation of income and down payment, paid out debt if applicable, an appraisal on the property, etc. If an appraisal is required - which all depends on the property and situation - we'll get that scheduled.
After I submit your signed and supporting documents for the conditions of your mortgage, the lender will review and satisfy those conditions. Or if additional information is required (perhaps something is not clear), we may need to collect more documents from you. Once all important conditions are satisfied, I can release the financing clause on your purchase agreement!
This is the day for the Happy Dance!
However...I always caution - we don't want to release the financing condition before the lender has received and approved your documents. If we do and there's an issue, you're responsible. So, it's important to allow the process to take it's course. There are many professionals involved behind the scenes to make your mortgage come together. Depending on how quickly I receive documents from you, your realtor, and what the current lender and insurer volume is like, not to mention individual work flow of lenders (some are faster than others!), could mean the difference for how quickly we can receive confirmation.
While you're doing that Happy Dance, I'll be writing an approval letter for you and your realtor. It will say;
"Congratulations! We are pleased to advise you that mortgage financing has been approved by your lender. This approval does not limit the financial instituion's right to rescind the approval if, before closing, we become aware of circumstances, which, in the financial institutions opinion, may adversely affect the financial condition of the client(s)."
What this means is to ensure you've presented everything accurately in your application and don't change anything about your financial picture between mortgage approval and closing.
Financing condition dates typically range between 5 to 10 business days from the time you have an accepted offer to when the transaction is supposed to be "firm". All of the above tasks and activities happen within that time frame. It can be fast paced! Keep in mind, lenders don't work evenings or weekends, so for a smooth process, follow these tips:
Tips for a Smooth Approval:
Provide accurate and truthful application information
Have your documents in order and ready
Minimize transfers between bank accounts, large deposits/transfers need to be tracked and unneccesary transfers means more bank statements for you to collect
Ensure your employer will be available to take a phone call from the lender to verbally verify the letter of employment (sometimes the employer is busy or on vacation and can create a delay in verifying the authenticity of the letter of employment)
Be sure your realtor provides the offer package as soon as all parties have signed
Keep your finances the same or better
Keep your job, don't change jobs during this time
Keep your hours the same or better, don't decrease your hours
Don't increase your bills
Pay all of your bills on time and at least the minimum payment, don't miss any payments
No large purchases on credit (applicances, furniture, vehicle)
Be available, don't go on vacation just yet
Any questions at all, I always love to hear from you! Happy House Hunting!
Sarah Nixon-Miller
Mortgage Broker
Toll-free Across Canada 1-844-315-6609
sarahnm@mortgagegroup.com