Mortgage Pre-Approval

With the volatility of the Real Estate Market and ongoing Mortgage/Government Rule Changes. 

It is extremely important that everyone who is serious about purchasing a home, takes the first step at getting a pre-approval done before they even start searching.  The purpose of getting a pre-approval, is so you understand the following things:


  1. What is the maximum mortgage you qualify for?
  2. What is the maximum purchase price you qualify for?
  3. What will be your interest rate?
  4. What are your monthly payments be?
  5. Do you qualify for a mortgage, and if not, why?


And mostly is there anything that you need to know about your Mortgage Application in advance?  Mortgage loans are approved based on the criteria of 5 things:  


  1. Capacity
    • Can the borrower afford the mortgage payments along with all their other credit expenses and living expenses?
  2. Character 
    • The best predictor of future behaviour is past behavior.  Lenders will look at your credit payment responsibilities, how long you’ve been employed, and how long you’ve lived at your current address.  Or is this an individual who has missed a lot of credit card bills, or changed jobs every year, or changed address each year?
  3. Collateral
    • Is the property the borrower is purchasing a good piece of property?  The property must be in a marketable area, and the property in which the mortgage loan will be secured against, must be in good condition.
  4. Credit
    • The lender will review your credit report and the will screen for credit scores.  And whether you have made your bill payments on time.  How long you’ve had credit, and if your credit balances are over extended?  All of these factors will determine if you will pay your mortgage payments as agreed.
  5. Capital
    • The lender will be reviewing your net worth.  Your net worth is all your assets minus your liabilities.  And what is left is your net worth.  Have you done a good job saving money into various different investments and savings?  Has the borrower saved up for their own downpayment? Or is all the downpayment coming from gifted funds?   They will also be checking for a positive or negative net worth and if you acquired a lot of debt or savings over the years?


When most people get a pre-approval, they tend to look for only what is the best rate?  But there is much more to a mortgage other than rate.  It is very important that you find out if you qualify for a mortgage and for how much?  And simply giving some details about yourself and estimated income, is not a proper pre-approval.  It is important that you speak to a Professional about qualifying for a Mortgage and they properly assess your situation. A proper pre-approval done by a Mortgage Professional with careful review of documentation, proof of income, credit check etc…will only help you successfully close your purchase and mortgage transaction without any problems. 

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