A pre-approval is an important step in the mortgage application process where a lender evaluates your financial situation to determine how much they are willing to lend you for a home purchase. Here’s what it typically involves:
1. Financial Review: The lender examines your financial information, including your credit score, income, employment history, assets, and debts. This helps them assess your ability to repay a mortgage.
2. Pre-Approval Letter: After reviewing your financial details, the lender issues a pre-approval letter. This document states the loan amount you’re approved for, subject to final underwriting and property appraisal. It shows sellers and real estate agents that you are a serious and capable buyer.
3. Valid for a Specific Time: Pre-approvals are usually valid for a set period, such as 60 to 90 days. If you don’t find a home within that time frame, you may need to update your pre-approval to ensure the new qualifying rate is satisfactory to you.
4. Difference from Pre-Qualification: Unlike pre-qualification, which is an informal assessment based on self-reported financial information, pre-approval involves a more thorough review and is a stronger indicator of your borrowing power.
In summary, pre-approval helps you understand your borrowing capacity, strengthens your position as a buyer, and streamlines the home-buying process. Sellers are more likely to take your offer seriously if you are pre-approved, as it demonstrates that you are financially capable and ready to proceed. This can give you an edge in competitive markets.
It is important to note that a pre-approval is not a 100% guarantee that your mortgage will be approved once you have an accepted offer on a home. The mortgage lender and insurer need to review the property to ensure it meets their guidelines and also to confirm the value of the property once you have chosen your new home.
Looking to get started with a pre-approval? Here is a list of experienced mortgage professionals that I recommend.
Barb Eglauer, TMG (The Mortgage Group)
780-720-5185
barb.eglauer@mortgagegroup.com
www.uandimortgage.com
Dennis Ward, Legacy Mortgage Group
780-991-1600
dennis@legacymortgagegroup.ca
www.advantagemortgage.ca
Indra Ramayan, Dominion Lending Centres Maximal Mortgages
780-242-4576
indra@indiemortgage.ca
www.indiemortgage.ca
Veronica Berry, BMO Mortgage Specialist
780-708-0140
Veronica.Berry@bmo.com