What You Need to Know About Getting a Mortgage in the U.S.
Obtaining a mortgage loan in the United States is far more complex than in Canada. Due largely to regulatory and financial documentation requirements, the mortgage application and closing process is more time consuming and costly than you might expect based on your experience in Canada. At RBC Bank, we want to help you fully understand the differences in documentation, timing, and cost so you’re better prepared to create your comfortable home in the U.S.
Typically when you apply for a mortgage, you'll be asked to complete a Uniform Residential Loan Application. This standard residential mortgage loan application is a four-page document that asks in-depth questions about you, your income, your assets and liabilities, and your credit as well as a description of the property. Although it can vary slightly depending on the type of loan, lenders usually require the following information and documentation:
- Title Opinion & Insurance – Often required by lenders, including RBC Bank to verify clear title to the property considered for a mortgage
- Appraisal – An expert, yet independent opinion as to the fair market value of a property; the appraisal can affect the total allowable loan amount
- Survey or Plat Sketch – Documentation required by many lenders to provide written documentation to establish boundaries of real property
- Flood Certification Insurance – An insurance policy is required if the property you intend to purchase is located in a flood plain zone
While it only takes a few days to apply for and secure a mortgage in Canada, in certain cases, it can take up to a couple months to complete the same process in the U.S. The following provides a quick overview of standard timelines between mortgage application and closing:
- 30 days - MOST COMMON – Typical processing with standard documentation and no credit or income verification issues
- 60 days - EXTENDED – Longer processing times can be experienced during busy mortgage refinancing periods or if there are minor credit or income verification issues
In the U.S., there are many ancillary costs associated with securing a mortgage. While these expenses vary from state to state, they can total more than 2% of the amount financed and include some of the following:
- Commitment/Origination Fee – Charged by U.S. banks to help defray underwriting and certain loan processing costs
- Appraisal Fee – Charged by a certified professional for an expert opinion as to the market value of the property being financed
- Credit Report – Charged by the U.S. lender to research your credit history and worthiness
- Flood Certificate – Required by a lender to verify the flood zone status of a property in consideration for a mortgage
- Recording Fees – Fees charged by cities and/or counties to record the mortgage documents in government archives. In certain states, taxes or mortgage stamps may also apply
- Survey – An analysis to determine boundaries, easements, rights of way or potential easements on the property considered for financing. The fee is charged by the professional services firm engaged to conduct the survey
It’s important to note U.S. lenders are required to provide potential borrowers with a good faith estimate of all costs within three business days of receipt of the borrower's application.
Consult your financial, tax, legal and other professional advisors regarding your specific circumstances prior to entering into any transactions.