If you have been considering a second mortgage for your home for any reason, whether you want money to consolidate other debts, or you are just interested in reducing your monthly payments, you may think the process is long, drawn-out, and complicated. In fact, you can get a second mortgage in just five simple steps.
Step 1 – Getting Preapproved
Preapproval is the first stage in the process of getting a second mortgage and it all comes down to meeting with a loan officer. You will need to provide certain bits of information in order to find out whether you qualify for a second mortgage, and this includes anything from your credit report to bank statements and income verification. Your chosen bank or financier can provide you with specifics regarding what you will need.
Step 2 – The “Full” Application
The preapproval process simply gets the mortgage into underwriting for the first time, which is a thorough review of any information you provide. Once this is complete, the loan becomes “official” and you will need to update any documentation you submitted. What’s more, this is the point when you will need to address any credit issues, document deposit sources, and complete a full application packet.
Step 3 – The Processing
Processing an application for a second mortgage takes time, and there are several unique steps within this one, too. For instance, the person processing the mortgage must order an appraisal on the home itself in order to determine whether there is enough equity to grant the requested loan amount. What’s more, there is still legal work and documentation to complete during this time.
Step 4 – Underwriting
Once the mortgage application processes, it re-enters the underwriting phase. This time around, the underwriters check the borrower’s criminal history and background, as well as the reputation of others involved in the contract, including lawyers, appraisers, and real estate professionals just to prevent fraud. The underwriters draw out the contract in full, including all of the legal bits, and they may request additional information at any time.
Step 5 – Closing
“Closing” occurs when the borrower actually receives the loan amount and the contract takes legal effect. Prior to closing, the underwriters may require updated versions of documents that are more than 90 days old, and they may recheck the borrower’s credit history once again. If anything in the credit report or employment status changes, it may delay the closing of the loan. As such, as a borrower, you should strive to ensure that you keep everything as-is during the underwriting process. This makes closing come much faster, and puts the money in your hands sooner.
There are many places in Canada where you can take out a second mortgage for just about any reasons. Banks and independent financiers such as Canada Wide Financial all do their best to handle these requests promptly. All in all, from pre-approval to closing, most Canadians get their second mortgages in 30 to 45 days.