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May 23

Documents – what you need and why during the mortgage approval process

  • Buying your first home

You made an offer on a home – the important next steps

The time is here! You have worked with your realtor or a home builder and now have an accepted offer on a home! First of all, congratulations. We are so excited for you and always here to help. At any point if you feel overwhelmed or any worry please just reach out. We are experts and have years of experience in the mortgage industry and we have a quick phone call, zoom, or email than have you feel concerned.

So what are the documents required for the mortgage approval process?

Well here goes – documents relating to home are important, an accepted offer to purchase and a current MLS listing are required. In some cases, we handle private sales, this simply means that the property is not MLS listed and you are working directly with the home owner. If you are working with a realtor, they can forward on the offer to purchase (signed by all parties), the MLS listing (provides all the details including square footage and lot size), and if the home is a condo or townhouse then condo documents may be required. This depends on the lender. In cases where the lender does not obtain the condo documents it still important to obtain a condo document review with by a condo doc reviewer or a real estate lawyer. Your realtor will walk you through this process.

Income Documents – what is needed and why

All lenders need to verify the income we detail in a mortgage application with documents.

If you are hourly or salary, a letter of employment from your HR department, on company letterhead, that states – the position start date, the role, the salary annually or the hourly amount, how many hours per week are guaranteed, and if you are new to the position – the time remaining in the probation. A recent pay stubs is also needed. Pay stubs detail the income earned, the income tax deductions, the name of the company, your name and address.

If you annual income fluctuates – bonuses, overtime, or commission income is earned on top of the salary or hourly income – then lenders may also require for the most recent two years of T4s from the company. T4s verify the two year history of total income and in some cases the two year average of the income. In industries like oil and gas, trades, or nursing – overtime, commission or bonus income is important and very helpful to a mortgage application.

If you self-employed, all lenders will require the most recent two years of T1 Generals (the document your accountant submits to the Canada Revenue Agency) and the Notice of Assessments (the document CRA sends you to verify your total annual income and any income taxes owing or being refunded to you). Accountants keep record of T1 Generals and can provide copies directly to us if you prefer. If you aren’t able to find your Notice of Assessment we are able to obtain this documents with one form signed by you! Let us know. We are here to help.

For self-employed applicant’s lender do need to know if you are a sole proprietor or are incorporated and the history of either. We can also obtain your original incorporation details through an online system. So if you need assistance with this just let us know!

Down payment

Lenders verify the source of all down payment funds. This is a federal government rule and it’s very important. Let’s say you are purchasing a $400,000 home and the down payment amount is $20,000. We must provide the lender with details and written verification of the $20,000 and the source of funds. This may involve bank statements, RRSP or investment statements, or TFSA statements. Lender collect a 90 day or three month history of the funds. Each account statement must have your full name, the date, and the three month history of the account transactions.

Often, family members gift down payment funds. In this case the family member gifting the funds signs a one page form called a gift letter. This letter details the amount being gifted, the address of the new home, the giftor and the gifted (that’s you). We will provide the gift letter form – each lender has a slightly different version.

Sale of a property or a vehicle – in this case we must obtain the sale contract for the sale of home or a bill of sale for a vehicle or motorcycle. Lenders simply want to verify that you in fact owned the home or vehicle and it is sold and the funds are in your account.

Offer to purchase and MLS listing

As we move through the mortgage process, if there are changes to the original offer to purchase such as the closing date, change in purchase price, or amendments please let us know!

We provide an explanation of all of these documents at the time of pre-approval. And again once there is an offer to purchase you can expect an updated list and our support in understanding what is required and why. Throughout the mortgage application process we will provide updates and will touch base for any outstanding items.

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      Hi! 👋🏻 Happy Thursday… it’s been a minut Hi! 👋🏻 Happy Thursday… it’s been a minute since we said hello and since had a little break! Grateful for the support and we feel so lucky to live an integrated life - work, family, fun, travel can all fit in every week. 🙌🏻 

Calling a snow day tomorrow! Friday fun ❄️☃️🧣🧦 Settled in @mountengadine. So far, this year was a whirlwind of activity in the housing and mortgage market. Thanks to our incredible referral partners and clients we provided a LOT of mortgage pre-approvals! 👩🏼‍💻👨🏻‍💻💵 🙌🏻 Some of our clients are finding the right home, some continue the search. Rates are stable. Lots of out of province interest in our housing market. Yes, Alberta is as pretty, fun and full of adventure as our photos! 🏔️🏔️🏔️ 

Tomorrow - a snow shoe, hiking Mount Rummel, cozy fires, delicious food and drink @mountengadine and cross country skiing at Mount Shark Saturday! 🤩

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      The Prime rate has risen by another .50%. For the The Prime rate has risen by another .50%. For the first time in 15 years, fixed rates are now lower than variable rates across the board. The borrowing costs for variable rate mortgage and lines of credit will rise. Not the news any of us wanted, but the new reality is that inflation is severely impacting the Prime lending rate and is not slowing quickly enough. 

Thoughts on the news from Sherry Cooper, DLC Chief Economist - "The Bank of Canada hikes the Prime rate by 50 bps.... The Governing Council of the Bank of Canada raised its target for the overnight policy rate by 50 basis points today to 4.25% and signalled that the Council would "consider whether the policy interest rate needs to rise further to bring supply and demand back into balance and return inflation to target.

This is more dovish language than in earlier actions where they asserted that rates would need to rise further. Some have interpreted this new press release to imply that the Bank of Canada will now pause or pivot. Expect there will be additional rate hikes next year, but they will be more measured and not on every decision date. The BoC may refrain from dropping Prime until 2024. 

Three-month rates of change in core inflation have come down, an early indicator that price pressures may be losing momentum. However, inflation is still too high, and short-term inflation expectations remain elevated."

Bottom line: This will likely be the last oversized rate hike this cycle. The Governing Council next meets on January 25. Whether they raise rates will be data-dependent. If they do, it will likely be by 25 bps. Even if they pause at that meeting, it does not rule out additional moves later in the year if excess demand persists. I expect further monetary tightening, the continued bear market in equities, and a further correction in house prices. 

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      The end of each year is a great time to start to p The end of each year is a great time to start to plan for next year’s budget. ✨🎄💸

That may be buying your first home, your dream home or cottage or figuring out how to manage debts and pay down your mortgage faster. There are many ways to tackle your mortgage or reduce consumer debt with a mortgage refinance. 🏦 

Our advice begins with a thorough mortgage pre-approval. Did you know that we provide pre-approvals for first time home buyers but also for home buyers selling a home and buying, downsizing, or planning for a rental property or cottage? We also talk to many clients about buying a home for family - a child going off to university or aging parents. 📚 Budgets are great tool for all ages and all financial decisions. 🤓

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      Thinking about buying your first home? Start by ge Thinking about buying your first home? Start by getting pre-approved! 

By a human, not an online app. Mortgage pre-approvals should take up to one hour (60 minutes, not 60 seconds). We will collect details on employment, savings, debts, down payment, your credit score, and the range of homes you are interested in. 😊

A pre-approval tells you your mortgage maximum (the highest approvable mortgage amount), provides example payments, and explains interest rates, fine print, and all the options that a great mortgage should have (things like pre-payments to principle). Now is the time, plan ahead and let’s build your homeownership budget together. 🏡

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When you are buying a new home really, really consider that during the three weeks before the possession date it’s best to be at home, not travelling OR planning ahead to sign with your lawyer in advance of any travel plans. Remember that signing in advance requires every stage - the financing condition period, providing your income, downpayment and property documents and signing forms to be completed in advance. 🤷🏼‍♀️

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Our clients were all approved at the federal government qualifying interest rate - at least 2% higher than the actual rate they received. 👍🏻 Rising rates were factored into their mortgage approvals. 

For variable rate mortgage holders - don’t lock into a fixed rate without a robust conversation around the reasons and possible outcome. Five years is a very long time. Variable rates are like waves. 🌊 They are peaking, will flatten and in the future (predicting when isn’t easy 🔮) will decline. It’s not a always going up or always going down situation. 📉📈

We are volitile times - serious inflation, supply chain challenges, war, global oil and gas shortages and rising costs energy costs are all playing a roll in the Bank of Canada’s rate decisions. 🤔

All interest rates are in essence “variable” as most Canadians have five year terms. Every five years the rate will change. To lock into a fixed rate at what may be the peak time of variable rates may not be wise. 🤓 These decisions are highly dependent on your personal situation, employment, budget, cash flow and future plans for the property. 🏠

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