Five Tips When Applying For A Mortgage Pre-approval
To become a homeowner is a life-long dream for many Canadians. However, with the instability of the housing market and new experiences due to these unprecedented times, you may be surrounded by doubts and a lot of questions about mortgages. So, if it’s your first time or tenth time buying a home, keeping yourself updated with the mortgage processes is crucial, and you will need to begin with by being mortgage approved. To help you have an informative and positive experience when applying for a mortgage, Audra Kish - Mortgage Broker, has listed five tips for a mortgage pre-approval. Keep reading to know what they are.
Tip #1: Get a mortgage pre-approved before house shopping
Most homebuyers think that the first step in the home-buying process is to contact a realtor and start looking at properties. Regrettably, it’s not, the first thing you should do to save yourself any future headaches is to apply for a mortgage pre-approval. After all, if you find a home you love, you’ll want to know right away whether or not you’re able to afford it. A pre-approval will help you to understand your budget and where you stand with your financials. Online mortgage calculators can help you to with the estimate, but only a pre-approval can tell you confidently how much a lender will allow you to borrow.
Tip #2: Only shop for a suitable mortgage product
Just as you see several homes before you find ‘the one’, you need to also shop around for the best mortgage terms and rates. Although you should keep in mind that the lowest rate isn’t necessarily the best mortgage for you. There are many no-frills and low feature mortgages that can have fine print to haunt you later. Decide what is important to you, and what your future homeownership goals are. Will you be moving again in the next few years? Then you may want to choose a term less than five years. Do you want to pay the mortgage down faster? You may want to select a mortgage that will allow you to make extra payments directly to the loan principal without penalty. Do your research to compare mortgage products or rates. Most importantly, you need to talk with your mortgage broker about your plans and learn more about your options. Your broker will explain different mortgage features, terms, and rates so that you can make an informed choice that works best for you.
What happens after your mortgage pre-approval?
You’ll generally have a 90 to a 120-day period where your rate will be held for you. This is the perfect time to start house hunting!
Tip #3: Gather up your documentation
Collecting necessary documents needed for mortgage approval can take some time, so it’s best to get started early. Your broker will inform you what documents would be required to finalize your mortgage. So here’s a sample list of what you might need to get started,
a. Identification
To prove that you are who you claim to be.
b. Bank account and investment statements
Ninety-day transaction history will likely be required for the account(s) that your downpayment will be coming from. If your downpayment is coming from another source, be sure to talk about it to your broker.
c. Proof of income
Pay stubs or a letter from your employer will do. If you receive a bonus, overtime, or commissions income, you’ll also need to provide T4 slips. Self-employed? Not a problem! Your broker will guide you through what would be necessary to verify your income.
Tip #4: Monitor your credit
Once you’ve been pre-approved, you’ll want to keep your credit in good shape while looking for a home. A credit score helps lenders to determine how reliable you will be at making mortgage payments, so be sure to continue paying all bills on time each month. You will also want to keep all balances on credit lines or credit cards as far below their credit limits as possible. Now will not be the time to apply for new loans, buy vehicles, etc. Your pre-approval will have taken your current debts into account, and if they increase or you miss payments while you shop, it could negatively impact your pre-approval.
You can monitor your score for free with sites like Credit Karma or Borrowell. Many mobile banking apps can also help you with monitoring credit. There’s no harm done to your credit if you monitor yourself.
Tip #5: Stay in touch with your broker
Stay reachable in case we have any questions about your documentation. This means avoiding vacations or business trips where you won’t have access to email or phone. If you absolutely must leave town, make sure to inform your mortgage broker in advance.
If anything changes in your financial situation like a job change, a new car, etc., be sure to let your mortgage broker know ASAP to ensure that it won’t affect your pre-approval.
For more tips when applying for mortgage approval, reach out to Audra Kish - Mortgage Broker. I am a passionate and dedicated mortgage associate with many years of experience helping clients finance their dream home. I provide unbiased advice and ensure you find the perfect mortgage solution for their unique financial needs. You can avail of my mortgage services, including a mortgage refinance, mortgage renewal, credit improvement, and assistance in buying a home across Saskatoon, North Battleford, Prince Albert, Warman, Martensville, Dundurn, Delisle, Humboldt, Rosthern, Rosetown & Outlook, SK.
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