Pfanntastic Home Buyers Handbook
Chapter 8 B. – Working On “The Subject To” Clauses; Financing.
In our journey towards buying your 1st home, so far we have covered.
- A broad overview in buying your 1st. Home
- Location, is Everything
- Selecting a Realtor
- Preparing to View Homes
- Watching the Market
- Financing Options
- Finding A Lender
- Getting (Pre) Approved for a Mortgage
- Making and Offer
- Making an Offer in Different Conditions
- From Contract to Closing the Deal
Please review the previous chapters for more details in our Pfanntastic Home Buyer Handbook Series, and or contact Peter of Linda Pfann.
Welcome back to our journey towards Home Ownership, let’s get back to work on our newly accepted contract, as time is of the essence between now and the “subject removal dates”.
Now that you have an accepted contract with a number of “Subject To” clauses, you will, together with Peter and Linda Pfann, (Your Realtors) need to make sure that everything will be proceeding as planned and in a timely fashion.
Before we review the various clauses, it is important to note that; most of the “subject to’s” we are reviewing are what we refer to as “sole benefit” clauses. That means that these conditions are there to protect one party (in this case you the buyer), so in the event that you, for example, are not able to obtain financing, you can cancel the contract, without the consent of the seller, and move on.
In no particular order let’s review each of the more typical Conditions in your contract and outline what all happens to make sure everything goes according to plan.
In most home buying situations, efforts to work on the various conditions will be proceeding all at the same time, in order to get everything completed within the time allotted for the required conditions to be removed, so let’s roll up our sleeves and get to work on the first “Subject To” clause:
Subject to Financing and Appraisal
In our earlier chapter about financing options we discussed the benefit of getting “pre-approved”, and if you did so, your lender or mortgage broker will be well on his/her way to get the ball rolling.
What your lender will need to proceed, is a set of copies of the contract, and any relevant documentation that is part of the contract, some additional paperwork about the property.
In most cases, the lender will then proceed and order an appraisal, submit you application, the contract and the various other documents for approval to the right people either at the lender, their approving office and if needed in the case of high ratio financing to one of the mortgage insurance providers.
There will be a few more papers to sign, and fees to pay, (appraisal, etc.) but in most cases once you have been pre-approved as buyers, this time it is mostly about the property and its value and security for your mortgage.
Typically the financing approval process will take between a week to 14 days dependent on who the lender is, where they are and if there is any additional details that are required.
Once the Lender has proposed a mortgage package to you, more paperwork is to be reviewed and signed, most commonly referred to as the “commitment letter” outlining all the essential terms of the mortgage, as well as any further details that the lender may need to actually advance the monies to you on the completion date of the contract.
In and around Victoria BC, many of the homes and properties are older, which in some cases will cause either the lender and or the property insurance companies to request a copy of the inspection reports to be provided to them as a condition of providing either the mortgage or insurance (or both).
To give you an example that happened to us when Linda and I bought our current property.
The condition of the house that we bought was so bad that the mortgage and insurance company required us to replace the roof, the heating system and a few other things within 6 month of ownership, or they would have the right to cancel the insurance and the mortgage. We bought the house, did the work and still love living here.
If your first home purchase involves a condominium, a townhouse, half duplex or any other form of “strata ownership” by which you buy into a community where part of the ownership involves a shared ownership component, many lenders will require you to provide a set of copies of a number of years’ worth of strata documentation.
In the rare event, your lender either does not approve the mortgage, and or offers terms or conditions that are not acceptable to you, we can then either decide to move on to a different lender and or continue our efforts to buy a Pfanntastic home, by moving on to a different property.
You will want to know the exact reasons for not being approved or having received a proposal not satisfactory to you, in order to make sure that your “next application” will get approved as intended.
Next up is the property inspection, and there are many different reasons why we would in most cases recommend having a proper property inspection completed for your home purchase, and we will cover that in our next sub chapter.
As always, if you have any questions, concerns or would like to explore your options, be sure to Talk To Peter or Linda Pfann, we will ensure that our 25+ years of client focused results will benefit you.
Visit our Website for additional resources www.pfanntastic.com