TL;DR: this is where it all comes together; ride or die! All the moving parts are looked at and a lending decision is made.
2 minute read
The process is similar to getting pre-approved, but it begins after you have made an offer to purchase and the offer has been accepted by the seller. Your offer depends on you securing financing to come up with the entire purchase price you have offered. This means you need to get your mortgage secured before you can close on the house.
Immediately after your offer is accepted is when full details about your finances and the home you want to buy are reviewed. When the mortgage is approved, a list of documents that are required to proceed will be sent to you. Most (or ideally, all) of these documents we will have requested and received from you well before you write your offer. Here's a reminder of what is reviewed:
Employment and income details
Usually all we need are paystubs and employment letters. If you are self employed, divorced or retired, other documents are needed and we will almost definitely have already got these from you.
How you are paying for the down payment will have to be verified (thanks, Federal anti-money-laundering law!) A full 3 months of PDF bank statements for the account(s) with your down payment money in it/them is required.
This includes the deposit you paid with the offer to purchase, inventory of your assets and liabilities and a void cheque to arrange mortgage payment withdrawals. Again here, most of this we will/should already have.
Specific details on the home you want to purchase will be looked at very carefully, as the property is the ultimate security/collateral.
Once your application is sent to an underwriter, all of this information will be analysed to see if you can afford the purchase. Once a lender is confident that you can make the payments and the home fits their guidelines, you will be given approval for the mortgage. This usually takes 4-8 hours but can take up to two business days.
Approval is conditional
When the application is approved, it will be conditional on final approval of all supporting documentation.
What happens next?
Have a look at this article to see what happens next after the approval is confirmed.