What Happens After the Mortgage Valuation?

The Steps After a Home Valuation

You found the perfect home. Your offer was accepted. Now, your lender has ordered a property valuation. This is an important step in home-buying. Many buyers feel a mix of excitement and anxiety during this waiting period. The outcome of the valuation directly impacts your mortgage approval. Understanding what happens after the mortgage valuation prepares you for the next stages of your purchase. This knowledge helps you manage expectations and move forward with confidence. The process involves several key players and milestones, from the lender’s final review to the legal work required to close the deal. Let’s explore the path from the appraiser’s report to getting the keys to your new home.

The valuation confirms the property’s market value for the lender. It protects their investment by ensuring the loan amount is appropriate for the asset. Once the appraiser submits their report, a series of events begins. Your mortgage application moves from a preliminary stage to final underwriting. You will work closely with your mortgage broker, lawyer, and real estate agent to complete the remaining tasks. Each step is designed to ensure a smooth and secure transfer of ownership. This period is less about searching and more about securing, finalizing, and preparing for your move.

Your Property’s Assessed Value

The first event after the appraiser’s visit is the creation of the valuation report. The appraiser combines their on-site inspection notes with market data to determine the property’s value. This report includes details about the home’s condition, square footage, number of rooms, and any notable features or required repairs. It also lists recent sales of comparable properties in the neighbourhood, known as “comps.” These comps are a primary factor in justifying the final valuation figure. The appraiser sends this comprehensive document directly to the lender who ordered it, as they are the client.

You, the buyer, may or may not receive a copy of this report. Some lenders provide it upon request, while others keep it for internal use only. Your mortgage broker can usually get the key information for you, specifically the final assessed value. This number is the most important piece of information. It tells the lender how much the property is worth as collateral for the loan. The entire mortgage file waits for this figure before it can proceed. Your focus should be on this final value, as it dictates the immediate next steps in your home purchase and financing journey.

Check out this page to learn more about your Orangeville home’s value
Related Article: What if Valuation Is Higher Than Purchase Price?
Related Article: Which Valuation Approach Is Best For Valuing a Residential Property?

Your Options When the Valuation is Low

Receiving a low valuation can be stressful, but it does not automatically end your home purchase. You have several options to consider. The best choice depends on your financial situation and the seller’s flexibility. Your financing condition in the purchase agreement is very important here. It gives you the time to explore these options without risking your deposit. Acting quickly and communicating clearly with your agent and the seller is key to finding a solution.

• Renegotiate the Purchase Price

  Your first step is often to go back to the seller. With a professional valuation report in hand, you have strong evidence that the agreed-upon price is too high. Your real estate agent can present this information to the seller’s agent and attempt to renegotiate the price down to the appraised value. Many sellers are motivated to close the deal and may agree to a price reduction to save the sale.

• Cover the Shortfall Yourself

  If you have additional savings, you can choose to cover the difference yourself. This means increasing your down payment to bridge the gap between the purchase price and the new, lower loan amount the bank will offer. While this requires more upfront cash, it allows you to proceed with buying the home at the original price if the seller is unwilling to negotiate.

• Challenge the Valuation

  Challenging an appraisal is an option, but it is often difficult. You must provide compelling evidence that the appraiser made a mistake or missed crucial information. This could include more recent or more relevant comparable property sales. You submit this information through your mortgage broker to the lender, who will then decide if a review or a new appraisal is warranted. Success is not guaranteed.

• Walk Away from the Deal

  If you cannot cover the shortfall and the seller will not lower the price, your financing condition allows you to walk away. This clause protects your deposit if you are unable to secure the necessary mortgage financing. While disappointing, this option prevents you from overpaying for a property or putting yourself in a difficult financial position.

Securing Your Final Mortgage Commitment

Once the valuation is accepted and meets the lender’s requirements, your file moves to the final underwriting department. This is the last checkpoint before your mortgage is officially approved. An underwriter, who works for the lender, performs a thorough review of all your documents. They act as the final decision-maker. Their job is to minimize risk for the lender by ensuring every detail of your application is accurate and meets the bank’s lending guidelines. They verify your income with pay stubs and employment letters, re-check your credit score, and confirm the source of your down payment.

The underwriter also reviews the property details, including the valuation report and the purchase agreement. They ensure everything aligns. If all conditions are met and your financial situation has not changed, the underwriter issues the final approval. This official document is called a mortgage commitment letter. It outlines all the terms and conditions of your loan, including the interest rate, term length, and payment amount. Receiving this letter is a major milestone. It means the financing is secure, and you can waive your financing condition with confidence.

The Legal Steps Before Closing Day

With the mortgage commitment in hand, the transaction moves into the legal phase. Your lender sends a package of instructions to your real estate lawyer. This package contains all the necessary details about your mortgage loan. Your lawyer’s role now becomes central to the process. They are responsible for protecting your interests and ensuring a legal and valid transfer of property ownership. They manage the flow of funds and documents between you, the seller’s lawyer, and the lender. This part of the process requires careful attention to detail.

Your lawyer will perform several key tasks. They conduct a title search on the property to confirm that the seller is the legal owner and to check for any outstanding claims or liens. They prepare all the legal paperwork for you to sign, including the mortgage documents and the land transfer documents. You will typically meet with your lawyer about a week before the closing date to review and sign everything. The lawyer also calculates the final closing costs, including land transfer tax and legal fees. They facilitate the transfer of your down payment and the mortgage funds to the seller on closing day to complete the purchase.

Your Checklist for a Smooth Closing

The home stretch has arrived. Your financing is firm, and the lawyers are handling the paperwork. Now, you can focus on the final preparations for your move. This period involves coordinating several services and completing a few last tasks to ensure everything is ready for closing day. Staying organized will make the transition into your new home much smoother. Your real estate agent can provide a helpful checklist to keep you on track. These final steps are just as important as the initial offer.

First, you must arrange for home insurance. Your lender requires proof of an active insurance policy before they will release the mortgage funds. You should shop around for quotes and have your policy ready to start on your closing date. Next, contact utility companies to set up accounts for hydro, water, and gas in your name. You want the services transferred seamlessly on the day you take possession. You also need to book movers or arrange for a rental truck. Finally, you will conduct a final walkthrough of the property, usually 24 hours before closing. This is your chance to ensure the home is in the same condition you agreed to buy it in.

From Valuation to Homeownership

The period after the mortgage valuation is a structured sequence of crucial steps. It transforms your accepted offer into a completed purchase. A successful valuation that meets or exceeds your offer price smooths the path to a final mortgage commitment from your lender. This approval then allows your lawyer to begin the important legal work of searching the title and preparing the closing documents. While a low valuation can present a challenge, you have clear options to address it, from renegotiating with the seller to using your financing condition to walk away if needed. Each step is a checkpoint on the road to owning your new home.

This final phase is about verification, legal preparation, and practical planning. By securing final loan approval, engaging your lawyer, and arranging practicalities like insurance and utilities, you ensure a coordinated and successful closing. Remember that the valuation is just one piece of the puzzle, though a very important one. It is a major milestone that unlocks the final stages of the transaction. Working with a dedicated team of a real estate agent, mortgage broker, and lawyer provides the guidance you need to manage these final steps effectively and turn the key in your new front door.