Everything, And Anything You Need To Know About Mortgage Pre-Approvals!

One of the topics I get asked the most about, is Mortgage Pre-Approvals! And although it is a common topic in the financing world, it is often misunderstood so below I have shared some insight on everything and anything you need to know about Mortgage Pre-Approvals!

1. What is a Pre-Approval

Although a pre-approval is an imperative part of the home buying process, it is often very misunderstood. A pre-approval is not the lender's promise to loan you the funds, rather the opportunity to establish how much money you could borrow based on standard guidelines. Your Mortgage Broker will review your income, credit, assets, liabilities, and determine your maximum pre-approved amount. 

2. Why is a pre-approval necessary? 

Not only will a pre-approval assist you in establishing your max purchase price, but it will also give you the confidence to purchase within your means. Oftentimes buyers focus on the pre-approved amount when the actual focus should be on your monthly expense. Your Mortgage Broker will work with you to fine-tune your monthly budget to ensure you are purchasing well within your means and comfortability. 

3. Requirements of a pre-approval

When facilitating your pre-approval, your Mortgage Broker will do a complete analysis of your total financial situation. This will include checking your credit and reviewing all documentation. Some of the documentation to expect to provide is as follows: 

• Letter of Employment confirming your position, start date, hourly/salaried income, signed and dated by your employer (if you are an employee and not self-employed)

• Most recent paystub

• Last two years T4’s or Notice of Assessments

• 90-day bank statements confirming fund available for your down payment

For Self-Employed we may also require: 

• 3 years fully accountant prepared T1 Generals

• 2 years Notice of Assessments

4. How long is a Pre-Approval Valid for?

A pre-approval can be valid anywhere from 90-120 days. If the time lapses and you have not yet purchased, all new documentation will be required. 

5. When should you obtain your pre-approval? 

The sooner the better! Although pre-approvals are only valid for 120 days at most, completing your pre-approval with telling you exactly where you stand. Your Mortgage Broker will assist you.

Reach out to me anytime to discuss your pre-approval!