Everything You Need to Know About Getting Pre-Approved for a Mortgage

Posted by Kent Braaten on Tuesday, March 31st, 2020 at 12:00pm.

 

For many first time home buyers, the natural assumption that the first step in buying a home is choosing the right neighbourhood, searching for homes online, and going for showings with their REALTOR®. But what they may not know is that before they even begin their search, the best first step in their journey to homeownership is getting pre-approved for a mortgage!  

What is a Mortgage Pre-Approval?

A mortgage pre-approval is the first step to buying a home, taken before you even start your search. It is when a potential buyer meets with a mortgage broker or lender and starts the mortgage application process before buying a home to get a clear idea of what kind of home loan they qualify for. This gives them the clarity in what they can afford, so they can set realistic expectations and confidently shop for homes  in their price range.  

Pre-Approval vs. Pre-Qualification: What’s the Difference?

While you may hear the terms “mortgage pre-qualification” and “mortgage pre-approval” used interchangeably, the two are actually quite different!

A mortgage pre-qualification is usually done online or over the phone and is a quick and easy preliminary assessment of your income-to-debt ratio to give you an approximation of what the bank may be willing to lend you. It’s usually as simple as providing general income details, as well as general estimations of current debts and assets, and getting an instant response of what you can expect. It doesn’t affect your credit score and most importantly: it is not guaranteed

A mortgage pre-approval, however, is much more in-depth than a pre-qualification. This is when a lender will actually verify your financials and complete a credit report to verify your scores. They will also provide a time-constrained commitment to honour the stated lending amount, so long as your current situation doesn’t change before purchase.

 

How to Get Pre-Approved for a Mortgage

To get pre-approved for a mortgage, you’ll want to begin by finding a mortgage specialist that you feel comfortable working with. And if you’re unsure of where to start, never hesitate to consult with your REALTOR®. We work with dozens of lenders throughout the Saskatoon area and will be able to better guide you toward preferred partners that we trust to work with our clients. 

Once you find your mortgage professional, you’ll then want to set up a meeting to discuss your financial situation currently and learn what lending options are available. Then, you will fill out a pre-approval application. For this, you’ll want to have your income, proof of employment, a list of any assets, proof of a down payment, as well as a record of any other debts you are currently carrying. 

With your permission, your lender will then perform a credit bureau report to pull your current credit score and review your application to assess what mortgage amount they will lend you. They will discuss this amount with you and then provide you the details of the approval in writing, complete with any conditions that may apply.

Other Mortgage Pre-Approval Questions You May Have

Do You Need a Mortgage Pre-Approval?

While a mortgage pre-approval isn’t required, it is certainly encouraged whenever possible for any buyer! Not only does it give you a better idea of what you can afford, but it also shows sellers that you are a qualified buyer, which does give you some pull when it comes to offers and negotiations.

How Long is a Pre-Approval Good For?

How long a pre-approval is valid for depends on the lender. It can range anywhere from 60 to 120 days. Always clarify this information with your lender.

How Long Does it Take to Get a Mortgage Pre-Approval?

Again, this depends on the lender. Some mortgage pre-approvals can take as little as a day, while others can take multiple. You can always ask your mortgage lender how long you can expect to be waiting when beginning the process.

 

If buying a home is next on your list and you want to be confident in your finances before getting started, the best place to begin is with a mortgage pre-approval. With that in hand, you can start your home search realistically and without stress! 

Ready to get started? Fill out my First Step to Mortgage Pre-Approval Form today and one of our trusted mortgage professionals will review your application and get back to you as soon as possible!

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