Alex Melconian

Seems to be much confusion over the following financing terms...Essentially a Final Approval is the only term that is FIRM- Be extra careful when client requires high ratio financing which also requires CMHC or GENWORTH FINAL APPROVAL.

1) PRE- APPROVAL

2) CONDITIONAL APPROVAL

3) FINAL APPROVAL

Essentially a PRE APPROVAL or PRE QUALIFICATION is:

Dated/or good for 120days

Good for an interest rate hold

Is a snapshot of an individual at that point in time- This is NOT AN APPROVAL

Clients interested in buying a house can often approach a lender, who will check their credit and verify their income, and then can provide assurances they would be able to get a loan up to a certain amount. Buyers can then get a letter of pre approval from the lender, and when shopping for a home can have possibly an advantage over others because they can show the seller that they are more likely to be able to buy the house. Note that a pre-approval letter from a lender is not a guarantee from the lender that a loan will be provided.

CONDITIONAL APPROVAL:

Most mortgages are approved subject to certain conditions being satisfied before closing. This means that your loan is approved as long as you can satisfy the lender's requirements. If you can't, you won't get the loan.

The lender might need verification of some of your financial documentation, such as a copy of the gift letter from your parents, or Tax Assessment from Revenue Canada. The lender might want proof that you paid down a or closed a credit card, or proof you do not owe personal taxes to Revenue Canada.Buyers whose down payment is coming from the sale of another property will be required to provide the lender with a purchase and sale agreement with all waivers confirming sale of that property. Lenders need to verify the source of the buyers' down payment funds before they will grant a loan.

FINAL APPROVAL IS SUBJECT TO:

1) confirmation of credit application details (including income); per the lender income guidelines

2) confirmation of down payment from non-borrowed sources;

3) satisfactory credit investigation;

4) no change in, and the accuracy of, the information provided;

5) the property to be mortgaged meeting the lender normal lending requirements;

6) Canada Mortgage and Housing Corporation or GE Capital Mortgage Insurance Canada approval if required

Once the FINAL APPROVAL is granted I always suggest to provide your Realtor the following:

Give a Copy of the loan commitment and rates/fees if any so that we can review the conditions before you remove or sign the financing waiver.

Lately I have seen some approvals being PULLED last minute.

When in doubt always ask the lender if they should include a condition of financing clause in the offer prior to the offer presentation.

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