The process of obtaining a home mortgage can be confusing; especially for the first time home buyer and with all the recent changes that have taken place in mortgage lending. Lending experience may vary from lender to lender, but the basic steps are the same.
The first step in this process is to fill out a loan application. This can be done either over the phone, online or face to face with your mortgage advisor. If you don’t have a lender, your broker usually has one to do business with and will refer you to them. The application asks for detailed personal information about you regarding your current and previous residency history, employment, income, assets and monthly debts.
Many people wait until they find a home to begin this process, but pre-approval can help you avoid falling in love with a home you don’t qualify for. Once you complete the loan application, the lender accesses your loan file. After carefully reviewing all of the information provided, a quick debt to income analysis can be performed to determine which price range to look at.
Your mortgage advisor can also help you identify potential stumbling blocks and tell you the best way to avoid them. You must provide documentation supporting the wealth and income information you provided on your loan application. You will receive an oral or written list of the required documents. These items typically consist of bank statements, payment subscriptions, and W-2s. Tax returns may be required for self-employed or agent borrowers or those with rental properties. Divorce decrees and bankruptcy papers may also be required.
Shortly after submitting your loan application, the mortgage advisor can give you the green light to start looking for an apartment. This can happen while awaiting formal pre-approval from an insurer. If the mortgage advisor is not happy with your loan, they may advise you to wait until an insurer has reviewed the file and formal approval has been obtained.
You must be willing to provide a large amount of documentation and be patient as the process can take a while, but the rewards are worth it!