First Time Homebuyers
What To Expect When You’re Expecting Your First Home
The purpose of this pamphlet is to provide you hopefully with useful information, and add some insight to the expectations of owning your FIRST home!
Who are we?
Expect Stress? Not me…
Mortgage associates, like ourselves, should be your very first step in the process, and can also be the very best source of relieving some of your stresses. Our role is to not only provide you with the best interest rates, but we are also in place to assist and explain every step in the process so that we can progress onto the next part of the transaction with as little stress as possible. Let’s face it, the more you know about what’s involved for YOU – the better prepared you’ll be! The whole process is divided into “steps of progression” until you physically pick up and move into your newly owned home.
I’m a good listener…
*The stage will be set for you to ask questions along the way!!*
I’m done listening, what can you do for me???
The five “C’s” of Credit - Character, Capacity, Capital, Credit, and Collateral.
YOUR CREDIT - Credit is one aspect in life that makes the world go around. Without it, your purchasing power is weakened. Your credit bureau tells a story. It tells a story of how you manage your credit; your past, right up until the present. Your bureau has a long memory and will tell all to everyone you give permission to look at it. It states your name, birthdate, address, employers, and it will give a history of who has pulled your credit. It will also tell what your balances are on the credit trade lines that you possess, as well as your limits. But rest assured, it will tell if you’ve been late on a payment! It will tell if you’ve been discharged from bankruptcy, have collections, or have judgments against you. The credit bureau is an integral piece of information to a lender because it will determine if you have the character, capacity, capital, conditions, and collateral within to obtain financing for a home.
YOUR EMPLOYMENT – Yet another constant in the mortgage loan; you must have an income! Whether you’re a salaried employee, contracted, hourly, seasonal, commissioned, or Business for self – there are lenders out there that will tailor there mortgage guidelines around your situation.
YOUR DOWNPAYMENT – Sometimes your down payment is important to what type of mortgage that you’re eligible for. We’ll take a quick look at the different types of lenders that we have access to next!
Over 30 lenders to choose from – where to start?!
Yes, we have a plethora of lenders to choose from, but it really is something quite different than throwing your mortgage application out to as many lenders as possible to see which one “sticks”. For example, there are a handful of lenders that won’t look at applicants with a previous bankruptcy in their histories. Alternatively, there are lenders that will specialize in those kinds of applicants. There is somewhat of a science in determining just WHERE to send your mortgage application to. It is also true that we deal with most major financial institutions that you are aware of; TD, Bank of Montreal, Alberta Treasury Branch, Scotia, etc. But what about all the other lenders – who are they? The other lenders are comprised of different Credit Unions and Trust Companies that are backed by major investors, and they usually have a “niche” in the mortgage market that allows them to target certain mortgage applicants. Some dedicate their mortgages to people with good income but bruised credit, some to good credit but hard to prove income, and some are for hard to prove income with very bruised credit!
It is only when we have a full application filled out, and a credit bureau in our hands that we can determine what your best mortgage “fit” will be.
I’m going shopping…
Not until you’re comfortable with the pre-approval and the conditions set out within the document, should you set a date with a realtor to shopping for your home. If your realtor has questions – by all means, get them to call us to discuss any questions that they have as well.
…NOW I’M SHOPPING!
It was time to go shopping, and you found it! It’s in your price range, and you’ve fallen in love with it. If you’ve reached this point, the realtor will advise you to submit your offer on the property. This is where you will be exposed to the contract called the “offer to purchase”. It may take a short while for the realtor to negotiate the price you want and the items within the property (if there is any; such as the dishwasher, microwave, stove, etc.). Once the price and terms are agreed upon between you and the seller of the property, you will submit your offer with a CONDITION TO FINANCE. This is a very important condition to recognize within the purchase agreement. Let me explain…
So far, the bank has decided to offer you a mortgage based only on the information they have received about you. At this point, they haven’t verified any of the information like: your employment (by way of letter of employment from your employer, a paystub, and a verbal verification via phone call to your employer), your down payment (if any), and they haven’t verified the property you’re purchasing until they get the purchase agreement. The condition of finance date is set within the purchase contract, and it protects you against losing your down payment on the house until the bank has verified everything we’ve told them thus far! It usually takes about 5 – 7 days to have the bank verify all documents, but again, it depends on how fast they receive everything. So, it’s always a good idea to get as much documentation together at the PRE-APPROVAL stage. You will be required to supply an appraisal to the lender ONLY if you are coming in with 20% down or more for MOST lenders. If this is the case, we’ll need to make the provisions for enough time to get an appraiser in and out of the property – and enough time for the appraiser to provide the appraisal report to the lender. This usually only requires a few days. Once the lender has verified that all documentation is acceptable to them, they will relay a message to us, the mortgage associate - where in turn we will advise you that you are clear to waive your conditions to financing, and a huge “congratulations” goes out to you! NOW it’s time to get excited…but you’re not done QUITE yet…
Now I have to move, right?
Hopefully you’ve found some useful information within these words, but I’m sure there will be more information, questions, and concerns that surface throughout the process.
Perhaps I’ve spawned some questions that you didn’t expect to have BEFORE you started reading this! Don’t worry…that’s part of the “stress” we talked about.
But hopefully this gives you synapses of what to expect when you’re expecting your first home!
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