Many Canadians dream to own a home. However, because of the high housing price, it is difficult to own one unless they can pay in full. So, most of them resort to getting a mortgage loan. If you’re one of those who want to secure a home loan, then you need to comply with all the requirements including the Mortgage Pre-Approval.
Pre-approval is a preliminary assessment of the lender to prospective borrowers to determine if they can be granted with a pre-qualification offer. For a mortgage pre-approval, the lender will pull up your credit report and review the documents to check your income, assets, and debts. Getting pre-approved has various benefits such as knowing how much the lender can give you money as well as figuring out the needed down payment. But during the pre-approval process, there are some Dos and Don’t s you need to take note of:
Dos of Mortgage Pre-Approval
Apply for a Pre-Approval
The first thing that you must do is to apply for a mortgage pre-approval instead of contacting a realtor. Once you’re pre-approved, you’ll get a good estimate on the amount you can afford for a home. Also, it could make the mortgage process faster as extra steps are removed.
Shop Around for a Great Pre-Approval Rate
Looking around for the best mortgage rates is a good move. Do not only go to your local banks where you may expect to get a big deal. Instead, do your research and compare different rates of mortgage. Better yet, find a mortgage broker who will negotiate on your behalf.
Prepare Your Documents
Preparing in advance your documents required for a mortgage pre-approval reduces the time looking for them. You may ask your broker what documents are needed to finalize your mortgage and start gathering it all in one place.
To help you identify the types of documents you must prepare, take note of some of these things:
- Identification – to prove who you are
- Bank account and investment statements – to verify that you can pay your monthly payments.
- Proof of assets – such as a car, cottage or boat.
- Proof of income
- Information about your debt
Stay in Touch with Your Broker
In case your mortgage broker has some questions for you, you must stay reachable. This means you must available anytime. Once you’re not available, there might be assumptions about your intent that may lead to rejection of your mortgage pre-approval. So, always stay reachable and not miss any calls from your broker.
Read the Fine Print
A pre-approval document will be sent to you by a loan officer. Under this document, there are conditions outlining interest rates, loan terms, and the mortgage amount. Therefore, it would be best to reach each statement carefully.
Don’ts of Mortgage Pre-Approval
Don’t Get Pre-Approved Over Your Budget
Getting Pre-Approved over your budget is highly discouraged. Don’t make your mortgage pre-approval your maximum purchase price. Instead, figure out the amount you can afford monthly by doing your calculation. Include other costs to be incurred for home ownership, and not only for the mortgage.
Don’t Make Major Purchases
To prevent yourself from getting rejected, don’t make major purchases that may affect your debt service ratios. Once you’ve sent your documents to your loan officer, your financial condition must not be changed from pre-approval to completion of the loan. Changes to your financial condition could eventually lead to a denial of the loan, even though you were originally pre-approved.
Don’t Apply for New Credit
Applying for new credit will adversely impact your credit which you want to prevent during the process. Bear in mind that both your debt level and the credit available are factors in the approval of mortgages, so avoid doing things that can threaten your pre-approval.
Don’t Quit or Change Jobs
Having a steady income is critical to most mortgage applications. Once you quit or change your job, it may throw a wrench into the mortgage approval process. Instead, hold off changing a company until you get the home you want. If the worst happens, and you’re fired, it’s probably a smart idea to postpone purchasing a house until you get financial stability.
Where to seek the best broker for mortgage pre-approval?
If you are looking for the best broker for your mortgage pre-approval, then you’ve come in the right place. Private Mortgage Canada has a team of professional mortgage brokers that are experts in the field of private mortgage finance. We can help you with your financial concerns and give you the greatest assistance you need.
Just set an appointment with us so we can start immediately. We have the best Private Mortgage Broker Toronto to assist you. You may email us through [email protected] or contact us through our contact number +1 416-825-0142.