Whether you’re a seasoned homeowner or a first-time home buyer, navigating the mortgage process can be downright daunting if you don’t know what to expect ahead of time. Don’t worry, we’re here to help!
Here is the start-to-finish mortgage process, summed up in five simple steps.
1. Ready Your Down Payment
To purchase a home in Edmonton (or anywhere else in Canada), you’ll need to come up with the mandatory 5% down payment. While we understand it can be tempting to move ahead as soon as you’ve scraped together the minimum (after all, it can take months or years), keep in mind, the larger your down payment, the more affordable your mortgage will be in the long run.
Mortgage lenders also tend to look more favourably on larger down payments. As a result, you may enjoy an easier mortgage approval process as well as lower interest rates (here again, saving you a ton of money over the lifetime of your loan).
Are you a first-time buyer struggling to save your down payment? See our previous post: Helpful Programs for First-Time Buyers
2. Find Out How Much You Can Afford
Once you’ve set aside your down payment, it's time to take a look at how much home you can really afford. Using a mortgage affordability calculator, evaluate your household income, your monthly expenses and your current debt load to get an idea of how much mortgage you may reasonably qualify for.
Speaking of “qualify,” we recommend taking this process a step further by seeking a mortgage pre-qualification. Quick, easy and free, a pre-qualification will give you an initial idea as to how much mortgage you may be approved for through the eyes of a lender. This is a great way to determine whether you need to improve your financial situation before moving ahead.
3. Get Pre-Approved
The next step is to seek a mortgage pre-approval from a bank or lender. Similar to the mortgage pre-qualification process we mentioned above, the bank or lender will look at your finances to determine how much home you can afford. However, at this stage, the lender will take a closer look at your income, debt, assets, down payment, and credit history to see if you meet the minimum requirements needed for a mortgage loan.
Once conditions are met, your lender will issue a 60-120-day approval letter for a particular mortgage amount at a locked-in rate.
4. Be Prepared to Make an Offer
Now comes the exciting part – hitting the Edmonton market. If you haven’t already, now is the time to choose a REALTOR® with whom you feel comfortable and trust. Keep in mind, an expert Edmonton REALTOR® won’t just take the time to understand your unique wants and needs, but they’ll work hard to find you the perfect home within your budget (amounting to some considerable savings in both time, stress and money).
Note, having a pre-approval beforehand will allow you to be taken more seriously by home sellers and give you (and your REALTOR®) greater negotiation power when it comes to making an offer on a home.
5. Close the Deal
Once the home seller has accepted your offer, you’ll need to seek final approval from the lender. At this time, your mortgage provider will do a last review of your finances (for this reason, you want to be very careful not to make any financial changes such, as new debts), as well as your final application and your ability to cover closing costs. Your lender also (likely) want an appraisal of the property you plan to purchase and proof of home insurance before moving ahead.
Once all conditions are met, your lender will sign off on your mortgage loan (paying the seller), and the loan will then be closed. Your name be registered on the title, your REALTOR® will hand you your keys, and you’re free to move into your brand-new home! Congratulations!
For more helpful home buying information, check out our tried and tested home buying tips and/or our previous posts, including:
Photo credits: freepik.com
Posted by Kevin Klein on
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