Finalizing Your Mortgage
You have done a lot of work in assessing your mortgage eligibility and finding out the right lender. Also you have fixed the cost of the property and the finalized the deal on it. Now the next step is to finalize the mortgage and get your property deal closed at the earliest.
The procedure for finalizing the mortgage involves a thorough analysis and verification of your documents by your mortgage lender. This process may take a few days as the process is done under close scrutiny. The following documents may be required in order to corroborate your financial status as well as the eligibility for the mortgage.
A letter of employment along with the salary statement to show your employment status and income. In case you are new to the present company, the lender may ask you to produce the details of your previous employment.
If you are self-employed, you will have to produce the latest financial statements and the last three years’ the income tax returns.
Proof of any additional income, if you have.
A copy of the pre-approval of the mortgage, if you have procured it.
A detailed financial report stating your assets and liabilities. In general, a bank statement or passbook will show the details of your assets and liabilities. You may have to produce other documents such as the GIC, RSP statements, credit card details, etc., as applicable, to show the complete summary of your finance.
Confirmation of the down payment. This again is done through the bank statements. The mortgage lender will require your bank details such as the account number, transit number for transactions, and branch details in order to verify it. If you are going to make the down payment through a gifted finance source, you may produce the necessary documents including the gift letter from the concerned person stating that the amount is not repayable.
The property documents- a copy of sales and purchase agreement mentioning the exact cost of the property and the conditions applicable during the sales process.
A copy of the MLS listing.
Complete address of the new property.
Property tax estimate.
Condominium fees estimate, if you are going to purchase a condominium.
Estimates for the other costs such as the heating cost or cost for septic maintenance, etc., as applicable.
The details such as the name, address and contact details of your solicitor.
Once all the required documents are submitted, the mortgage analyzer will verify your documents. The prime job of your mortgage lender is to get the credit rating done. Most of the agencies do this by a process of tri-merge credit report. Once your credit report has been found satisfactory, they will evaluate your property in order to assess its market value. The mortgage will be sanctioned on the basis of the market value, not on the value fixed by your seller. Once the property value is fixed, the mortgage company will work out other plans such as arranging insurance for your mortgage and sanctioning the mortgage.
The next step is preparing the necessary documents. Your attorney will help you preparing the necessary documents for transferring the mortgage in your name. And once the documents are ready, you will get the mortgage registered in your name.
The most important factor, the costs involved in the process, should not be forgotten. There is quite a long list of expenses that are incurred during the entire process. This includes mortgage underwriting insurance, property transfer tax, legal charges, inspection charges, taxes, utility bills, etc. The property transfer tax is paid on the fair market value of the property. If the fair market value is less than or equal to $200,000, the tax is 1% of the property value, and if the market value is higher than $200,000, the tax is 1% of $200,000 plus 2% of the remaining value. If the seller has already paid the tax for the current year, you have to reimburse it. Similarly you need to pay the GST if it is not included in the cost of your property. Make sure that you read the sales agreement properly to verify these details.
Don’t be panic seeing the long list of formalities. Be in a composed state of mind while dealing with the agents and mortgage lenders. Avoid getting misled by the market rumors. Try to get a professional guidance always.