At this brokerage we find that there is a plenty of confusion by our home selling clients and our buyers as to how they secure financing and make sure that this piece is handled properly during both the negotiation phase and the due diligence phase of buying (or selling) a new home.
There are essentially 2 steps.
Step 1 – Initial Approval
Must be completed BEFORE you start looking at homes. Most good quality Realtors® will not spend much time showing you homes until this part of the process is complete.
As a buyer, you need to find out how much a lender will actually advance you and you need to be comfortable with the payments.
To get this information, your mortgage broker will need to determine if you can borrow money and this decision will be a function of:
- Your credit score,
- Your quality and tenure of employment, and
- Your income and your down payment.
It’s important to remember that if you do get approved it will be ‘in principle’.
There may be little to no verification of the information you provide and if you exaggerate your earnings, or attempt to conceal debt, during the second step of securing approval this information will come out and could jeopardize your entire home purchase.
Step 2 – Final Approval
You will complete this phase ONLY when you and your Realtor® have negotiated a deal on your new home.
At this stage BOTH you and the purchase transaction have to be approved.
First, all of the information you gave to your mortgage broker will need to be verified. You must be able to back up any claim that you made during the initial approval process.
Second, the actual transaction will need to be approved by your lender. The lender will wish to make sure that you have not paid too much money for the home and that based on the size of the loan, your down payment and the probable disposal value of the home that they are making a prudent decision to lend you money.
Stage 1 can be completed within a matter of a few hours.
Stage 2 however can take up to 2 weeks, especially if the lender insists on getting your new home professionally appraised.
Can we help you? We can assist you in purchasing ANY home or condo in the metro Edmonton market. And we will give you cash when you move in. For more information contact our broker owner Stuart Neal. He can be reached at 780-760-2014 or visit www.CashBacktoBuyers.com
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