What does the banker want?
In every real estate transaction, the Lender, when analyzing a demand, will consider the risk that YOU, THE PROSPECTIVE BORROWER OR MORTGAGOR will create for the Lender.
After careful analysis of the GDS/TDS ratios and related documents the Banker will pre-approve you for a mortgage up to a certain amount. You can then start your search…BUT…you have only one part of the equation.
The other is THE HOUSE YOU CHOOSE TO PURCHASE. Even though the Lender has PRE-APPROVED A MORTGAGE FOR YOU, they still have to look at the property to reassure themselves that it is a good risk and that if ever something goes wrong and you default on your mortgage payments, then the house has a resale value that will allow them to recuperate their loss.
The process for the Lender to assess the value of a house is called an APPRAISAL. The cost of having a PROFESSIONAL APPRAISER will be part of the purchase expenses and might vary depending on the type of financing you will arrange.
TO COMPLETE A PRE-APPROVAL, your Banker needs information. The rating of that information will determine his/her level of risk and determine the interest rate he/she will charge and the privileges to allow. Generally you can expect the request for the following information:
Getting pre-approved – GET IT IN WRITING!
- Two years or more of employment history for each borrower.
- Social Insurance number of each borrower.
- Chequing and savings account number and approximate balances.
- Credit card company(ies), with account number(s), monthly payments and approximate balances owing.
- Details on any mortgage(s) on your existing home (if any) and debts..
- Details on current assets like bonds, stock, R.R.S.P., savings, T.S.F.A , etc.
- If you are self-employed, you might be requested to provide additional information.
- Appraisal administration fees and credit report fees may be collected upon application.
A GOOD PRE-APPROVAL IS IN WRITING AND SHOULD ONLY BE SUBJECT TO SATISFACTORY APPRAISAL BY YOUR BANK OR CMHC/GE CAPITAL. IT SHOWS THE AMOUNT, RATE, TERM, AMORTIZATION YOU ARE APPROVED FOR AND THE TIME FOR WHICH YOUR RATE IS GUARANTEED FOR.
Later on, once you have selected a house, bring a copy of the following information:
- Copy of the Agreement of Purchase and Sale of the house you are buying or selling.
- Copy of the feature sheet (descriptive brochure of the house you are buying) with colour picture.
- Survey copy or documentation.
- Well/septic information (if applicable)
There are many other tips and considerations when shopping for a mortgage. Please feel free to contact us when you are ready to proceed and we can suggest bankers who have special offers at the current time.
