Undergoing a quick mortgage pre-approval process with an expert mortgage broker helps nail down a budget and how much extra debt you should plan to pay down before you start shopping for a home.
What does it mean to get mortgage pre-approval?
A mortgage pre-approval is when a lender reviews your credit score, your income, and your debts to determine how much you can be “approved” for to buy a home.
Consider the pre-approval amount your guideline for how much you can afford to spend on a home. It also gives you an edge as sellers and realtors will know you’re a serious buyer. Here are some key do’s and don’t you want to follow when you’re getting a mortgage pre-approval:
Do’s
Do get pre-approval before shopping around to show sellers you’re serious.
Make sure you have all the necessary documentation ready. We cover this in our Ultimate Homebuyer’s Checklist. Things like:
- Proof of income
- Credit score
- Proof of assets
- Bank account records
Read the fine print. In this case, the financial jargon is important and you want to be sure you understand what you’re signing. A good mortgage broker can help!
Don’ts
Don’t go over-budget with your pre-approval amount.
Don’t take on more credit or co-sign for someone as this can affect your pre-approval status. This goes for other big purchases too!
Don’t quit or change jobs within the mortgage pre-approval window. The predictable income you were pre-approved with is important to your loan applicaiton.
And bonus: pre-approvals lock in the rate you’re given for 90-120 days, protecting you from rate increases while you’re house hunting. This is especially valuable in a volatile interest market like we’ve seen in Canada the last few years.