The Mortgage Approval Process in Canada – What No One Ever Tells You!

Hey there Savvy Home Buyers and Sellers this is Jeff O’Leary – “The Village Guru” Mississauga Real Estate Broker and in today’s episode I’m going to go over the Mortgage Approval Process and the things that no one ever tells you. If you’re a homebuyer you’re definitely
going to want to watch this video and learn how to protect yourself in the
process and make sure you have a good experience. So without any further ado let’s get into it! So in today’s video I’m going to go through the Mortgage Approval Process in 4 Steps and it’ll give you the information you need to know as a home buyer to protect yourself and make
the best possible choices. So the first step is getting a Mortgage Pre-Approval. This is the most talked about aspect of the home buying process it simply means you’re going to submit paperwork get your credit run they’re going to look at where
you work, how much money you make and they’re going to come back to you with a number that you’re able to borrow with a down payment that you have to put down that’s pretty simple. Another important thing about the pre-approval process is that they’re going lock your rate in and guarantee it for the next little while say 90 to 100 days or something like that, every lender is different. So that’s really important you should always be pre-approved before you seriously start looking at homes. Now, the problem with the pre-approval process is a lot of buyers think that’s it and everything is good to go and I’m here to tell you that is just the beginning of the process the next steps are critical and this is
why we’re doing this video. Step #2 is to Put an Offer on a Home and get it accepted. Now as a home buyer, I always recommend you have a condition on financing in that offer and if you’re a first time home buyer in this market
you definitely need to have it this is what’s there to protect you and make sure that everything works out financing wise. Now the problem with the condition
on financing is usually it only lasts five banking days and if your mortgage person’s not on the ball and not quick at doing their job they may not get all the paperwork processed and do everything they have to do in that time frame which puts you into a pickle because you don’t want waive your condition but at the same time you may not want to lose that house. So this is why it’s important by understanding this you can have that conversation ahead of time and make sure they’re (mortgage broker) on the ball and doing their job. Which leads me into the 3rd part which is the Mortgage Commitment Letter and once you buy a home and you submit
the paperwork to your lender the bank is going to come back with a commitment letter now a lot of people think that’s it I’m “clear sailing” and not so fast… the commitment letter will have conditions in it where the bank says, “sure I’ll lend you the money” “you bought that house for seven hundred thousand, we’re good to go” “however we just need to confirm a couple of things” like employment status… income… and more importantly the appraised value of the home Yes, most homes are getting appraised nowadays and a lot of times that involves them
ordering a physical person to go in and appraise the home. Now where the issue comes up is a lot of times that appraiser may not agree with the price you paid and that’s just what’s happening in this market. Now… the good thing is you do have a condition and if you’re quick with your lender and tell them hey make sure if there’s any appraisal to be done it gets done within
the conditional time period… then you’re okay. If they come back and say hey you
overpaid for the house at least you’re not on the hook you can walk away from the deal because you can’t get financing and that’s good for you. However, a lot of people will go ahead and wave their condition without confirming this and then they get a call three weeks later from their person saying, “well
everything’s good but by the way” “we just need a property appraisal…” Don’t put yourself through that process make sure it’s done during the time and this is really the key to this video. Finally step #4 Once you’ve fulfilled all the conditions in the ‘commitment letter’ the bank will get back to your mortgage person with a ‘commitment on the loan’ which basically means “we’ve reviewed everything” “our underwriters gone through all of it and everything’s good to go” and it’s at that point that you’ll be instructed to waive your conditions and firm up the deal. Now, it’s important that this process happens during the five days and I can’t emphasize enough make sure they understand this because a lot of people out there not naming anybody in particular say “everything’s good it all looks good, you can go ahead and waive your condition” without this being done nothing is ever in the bag because
unfortunately the bank doesn’t care they’re there to make money and they’re
there to secure their loans and they want to make sure that everything is proper. Now in the off case that you’ve waived your condition and all of a sudden and appraisal is done on the property and it comes back lower then you can expect to make up the difference in terms of cash out of your pocket and
I know for first-time homebuyers that could be a real killer because you just
might not have that money. So in order to avoid the whole situation make sure this process is followed in these steps. Well there you have it I hope you enjoyed my video on mortgage commitments and approvals. If you like this video give it a thumbs up subscribe to my channel and share it with your friends. Thanks for watching and we’ll see you soon!

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