How Mortgage Financing Is Arranged, Step By Step
What the typical home buyer goes through to obtain a mortgage

1. Pre-approval – Potential home buyers, such as yourself, should contact a mortgage consultant, who can help you get a pre-approval for a mortgage, even before you begin looking for a house. Your mortgage consultant will gather information from you about your income and debts and find an appropriate lender who will make a preliminary financial determination about the maximum amount of money you can borrow for mortgage purposes.

Usually, a pre-approval letter is issued showing the amount for which the lender has pre-approved you. It's a good idea to know the price range of the home you can afford before you start shopping for one. Furthermore, if you can provide a pre-approval letter, real estate agents and sellers will know that you are an able buyer and may take your offer more seriously.

Finally, when you are pre-approved with a lender, you are automatically guaranteed a mortgage interest rate no greater than the rate you have been pre-approved at. If rates go down after the pre-approval, you are usually given the lower rate. You have nothing to lose and everything to gain by obtaining a pre-approval!

2. Home-buying preparation – After getting the pre-approval, you will know the price range you can afford. You should make a list of the most important factors to you when looking for a house.

3. The Hunt - At this point, you can start searching for a real estate agent. (Benefits of a real estate agent)… The real estate agent will discuss your needs, and help you find the home that you’re looking for. Home Inspection

4. Making an offer - If you have decided that this is the right home for you, decide how much you want to offer for the house and have your agent prepare the Offer (Agreement of Purchase And Sale). With your agent, list everything you want included (i.e., conditions on financing and inspection, survey clause, appliances, light fixtures, etc.). At this time, you may want your lawyer to review the offer. In any case, you should definitely get your lawyer to review the documents prior to waiving any conditions to make the offer firm.

A firm offer means that you will buy the property as outlined in the offer of purchase and that there are no conditions attached. Once the vendor accepts the offer, both parties are bound to the agreement.

A conditional offer means that you will buy the property if those certain conditions are met. We recommend that a condition on financing is included, especially for high-ratio insured mortgages. If you have a condition on financing clause, you should contact your mortgage consultant immediately.