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Mortgage Pre-approval


So you have decided to buy a home. The first thing that many people do is rush to realtor.ca to see the hot new listings that are on the market. Then, maybe on the weekend check out a few open houses. Then, they put in an offer on that house they think is just perfect, and exactly what they are looking for. Seems like a lot of work, and possibly a lot of wasted time when you find out that home you had fallen in love with you cannot get a mortgage for!

Mortgage Pre-approval: This topic is the very first step that should be taken in the home buying process. I have heard many clients in the past say “I make $xxx dollars, I can afford this house.” Whether a first time home buyer or purchasing your tenth home, your search needs to start in a mortgage professional’s office, not an open house!

  1. Proof of Income
    Statements from your two or three most recent years of tax returns, recent pay stubs that show income, and also year-to-date income. Any other source of income such as bonuses, or alimony may be used also.
  2. Proof of Assets
    You will need to present bank statements and investment account statements to prove that you have funds for the down payment and closing costs. Home loans require 10% to 25% down payment, depending on the loan type. If you receive money from someone to help with the down payment, you will need a gift letter.
  3. Good Credit
    Your credit rating has a lot to do with your mortgage rate. Most lenders today give the good low interest rates to customers with great credit. Depending on your credit score, you may be required to make a larger down payment, or take a higher interest rate on your mortgage.
  4. Employment Verification
    Your lender will ask you to see pay stubs, and to call your employer (or previous ones if you have not worked at your current job for very long) to make sure that you are in a stable job with a stable income. Self-employed borrowers will need to provide significant additional paperwork concerning their business and income.
  5. Documentation
    Your Driver’s license, Social Security number, and your signature will be needed to allow the lender to pull a credit report on you.

This may seem like a lot of data collecting and paperwork to come up with a number, but when you are purchasing the largest asset of your life it is important to know that you will be able to pay for it! These tips will make getting a mortgage pre-approval faster and easier so you can get started on finding a home today.