There is a lot to know about purchasing a home before going through the process. The goal of Cascade Mortgage Capital is to help educate you about the process, what to expect and how to navigate it all to ensure a smooth transaction. Below we’ll walk through the different things to take into consideration when buying a home and securing a mortgage.
What can I afford?
The first step in this process is sometimes overlooked by homebuyers as they don’t think they’ll have any issue getting approved. Whether you have a perfect credit score and the savings to match or not, a mortgage pre-approval gives you a realistic look at what lenders are willing to give you. Before you go online or to any open houses, the first thing you should do is get pre-approved. Not only does this make you a stronger contender when making an offer on a home, it expresses a conditional mortgage commitment from the lender and will help you understand exactly how much you can afford to spend on this purchase.
Home Inspections
In today’s ultra competitive housing market some buyers will present offers that have no conditions. While this is definitely an aggressive approach to get you to the front of the line, it also poses a risk for you as a buyer, especially if you forgo a home inspection. This is likely the largest financial decision of your life, peace of mind goes a long way in the process. A lot of homeowners are encouraged to stage their house prior to placing it on the resale market, in order to make it look cosmetically appealing for the buyer. To an untrained person, staging can cover up deficiencies and visible issues that may cause potential costly issues after the buyer takes possession. The home inspection allows you to scratch beneath the surface and see what kind of deficiencies or issues exist with the home. This inspection should include a thorough assessment from a professional that examines the structure, foundation, electrical, plumbing, windows and roofing. An experienced inspector is worth every penny as they will highlight areas of concern based on how old the house is, specific issues, previous renovations and issues that must be addressed immediately or that can be planned for in the future.
Deposit
A deposit is a key component of demonstrating your commitment to following through with the purchase of the property. This is typically 5% of the purchase price, although it is determined by the seller, there are no hard and fast rules on the amount of deposit required but it must be at least $1, this is known as consideration, to make the purchase contract binding. The funds are typically provided to the listing agent or the seller’s lawyer ‘in trust’, meaning the funds will be kept in the respective trust account until the closing date. Upon closing, you can have the deposit funds applied to closing costs and the down payment.
What’s involved: The mortgage approval process
There should be a level of constant communication between you and your mortgage broker in order to facilitate the transfer of documentation leading up to the mortgage approval and continuing to the closing day. You will need to provide your mortgage broker documents supporting your employment verification, down payment details, a breakdown of investments, debts, finances and the details of the property you are looking to purchase. The supporting documentation along with other factors will provide your lender with an understanding as to how well you have managed your finances, how you will be able to service the new mortgage and ultimately help them determine the amount of money they are willing to lend you. Mortgage pre-approvals significantly improve the likelihood of receiving a final approval and the fulfillment of the loan from your lender. If you were not able to obtain a mortgage pre-approval in advance, and had issues getting approved, it is important that you understand the reason the lenders declined your application. This will give you the opportunity to look at repairing the issues that arose, if possible, look into alternative lenders and get back on track as soon as possible. This is best left to enlisting the services of qualified mortgage brokers at Cascade Mortgage Capital.
Bank vs Broker?
Banks are practically an automatic thought for home buyers as a resource, it makes sense to buyers to put their mortgage with their other financial services and keep things simple, but this may not be the best resource for you. Banks are motivated to convince you that they have everything a mortgage broker can offer, however that is simply impossible. A bank or their mobile specialists can only offer you their limited range of products and services. A mortgage broker is the ultimate resource for a buyer to see what mortgage products are available in the marketplace and to be able to quickly and effectively compare products, mortgage rates and services across a variety of lenders simultaneously. Qualified mortgage brokers are not limited to offering lenders outside of the big 5 banks, in fact they can also have big banks and other lenders compete against each other for your business. Not only is there an abundance of choice with mortgage brokers, they are able to help you understand which of those mortgage products is best suited to you and which to avoid based upon your unique circumstances
