How to Get Pre-Approved for a Mortgage
Receiving pre-approval for a mortgage involves discussing your finances with a broker or lender before you actually take out a mortgage. It’s helpful because you’ll find out the maximum you qualify for — and you can use this information to improve the chances that a seller accepts your offer. You can also use pre-approval to find out how much your mortgage payments are likely to be. Here’s everything you need to know about getting pre-approved.
Pre-Approval with a Mortgage Broker
The best way to gain pre-approval is through a mortgage broker. Every broker works with a number of lenders, meaning they can find you the best mortgage terms for your situation. Most even work with some lenders who don’t offer mortgages directly to borrowers.
You won’t pay anything extra if you use a broker instead of contacting lenders directly: the service is free because brokers receive a commission from lenders. However, you will save time and money, as there’s no need to contact multiple lenders yourself. Plus, you’ll feel more confident that you’re choosing the best mortgage option.
What Documentation You’ll Need
For the pre-approval process, you’ll need to provide your broker with information about your income, assets, and debt. This means providing evidence of employment, property ownership, and any financial obligations, such as loans, credit card balances, child support, and lines of credit. You may also need proof that you have enough funds to make the down payment and pay the closing costs. Finally, your mortgage broker may ask to see bank account and investment statements.
Staying Within Your Budget
Bear in mind that the pre-approval amount is the highest you could receive for a mortgage. It’s worth searching for properties within a lower range for a couple reasons. For one thing, it’s not always a given that you’ll be able to receive the full pre-approval amount when you do apply for the mortgage. In addition, it’s a good idea to avoid using your entire budget to ensure you have enough to pay for moving costs, maintenance and repairs, and any unexpected expenses. Ensure your monthly payment fits in with your other ongoing expenses, too.
What to Ask Your Broker
It’s important to make sure the terms of your pre-approval are what you expect. Ask your broker if the pre-approval rate is guaranteed and for how long.
The next step is to choose the right mortgage broker. Edmonton homebuyers have Flare Mortgage Group — complete the entire process online and receive pre-approval within one business day.