Congratulations!  You are in the process of one of the largest sales you will make in your life.  You can do it!  My job is to make certain you are ready for and able to take the next step when your home receives an offer and the sale is in process.

Are you going to be purchasing a new place to live?  Let's make sure you know what you can qualify for - both now and when your house sells.

A Snapshot

Taking stock of your current financial situation and abilities is key.  It's important to note that where you are now and where you will be when you are actively looking for your next home need to remain the same.  A preapproval for your next move is based on your financial picture as of that day, and cannot be expected to remain the same if factors change.  A few things to keep the same from the time you put your home on the market until you are safely in your next one:

1. Your employment.  The longer tenure you have with the same employer, the better.  Career changes, no matter how positive, should be planned once you are in your new home.  It is hard for a lender to determine your prospects with a new employer with no history to base it on, and probationary periods with employer are just that.

2. Financial Obligations.  Eyeing up that new truck?  It's a beauty, but it would be best to wait.  A change in a monthly payment obligation (ie your vehicle payment changing from the $350 it once was to $600) changes the amount of mortgage payment you can qualify for.  The same applies to balances owed on credit cards and other facilities - try to keep them close to what they were at preapproval time or less.

3. Be available.  Besides the obvious showings of your home, mortgage approvals require paperwork in certain timeframes from you.  Make sure your schedule allows the time to gather these things, and allows for signing time with your broker, your insurance agency, and your solicitor. 

Paperwork is everyone's favorite thing to do, right?  Didn't think so!  Getting preapproval in place to solidify your next step sure lends peace of mind.  Make it easier on yourself and be prepared for what lenders look to see.  A quick checklist for preapproval:

GENERAL:

_____   2 most recent paystubs

_____   Notice of Assessment (personal tax return summary) for 2007, 2008

_____   Down payment source (is your down payment coming from your sale proceeds?)

_____   Closing costs verification (same as above)

_____   Offer to purchase existing residence with conditions removed (if accepted offer in place)

_____   Recent mortgage statement for this existing property (if still for sale)

_____   Lawyer you will use (name, firm, address, phone number)

FOR SELF EMPLOYED INDIVIDUALS:

_____   T-1 Generals (full tax returns, ALL PAGES)

_____   Proof of business (articles of incorporation, business license, GST remittance form)

Down payment - Where From and How Much?

As a seller, you will most likely be obtaining your down payment on your next home purchase from the sale proceeds on your current home.  Have you calculated what you stand to have in-pocket after the sale is complete?  There are a few things to take into consideration when calculating how much money will actually be available to use for down payment:

1.      Mortgage payout.  Do you have a mortgage to payout out associated with your property?  Call your lender to find out the approximate amount owing.

2.      Mortgage penalty.  Are you opting out of your mortgage term early (ie selling 3 years into a 5 year mortgage term)?  Call your lender to find out the approximate penalty for today's date.

3.      Property taxes.  Do you owe property taxes?  Leave room for this adjustment at the lawyers when you close your sale.

4.      Lawyer costs.  To transfer title from your name to new owner, legal fees apply.  Call your lawyer to get a quote.

5.      Credit payment.  Are you planning to use some of your sale proceeds to pay down credit facilities?  Account for what the balance on each of these will be.

6.      Furniture, home improvements, appliances.  I have never met a home I didn't want to improve in one form or another - have you?  Allow for funds to buy appliances if necessary, additional furniture, and improvements like landscaping, fence, paint, etc.

All things considered, your final sale price minus these amounts will give a clear picture on the amount of funds you have available for down payment or other endeavors.

Feel free to contact me anytime for your preapproval, or any financing questions you may have.  I look forward to working with you (or your potential buyer) soon!