Get your mortgage pre-approval

A mortgage Pre-approval can be important for many reasons especially when it comes down to determining your budget.  Keep in mind a mortgage pre-approval is generally a rate hold for a certain period of time, usually 120 days and generally to give you an idea maximum you can qualify based on the information provided.
‍

Do I need a mortgage pre-approval?



Though it’s possible to purchase a home without a pre-approval, Canada’s competitive real estate market means that most sellers will be looking for buyers who have their financing secured. Because there’s so much competition, buyers who submit an offer with a condition - like securing financing - are more of a risk compared to buyers who don’t have conditions. This means that buyers who submit an offer without conditions are preferred by sellers. Being prequalified will save you time and could potentially mean the difference between a winning offer and going back to search mode.

‍

Things to consider: A pre-approval also helps you proceed with the knowledge of exactly how much you can offer and afford. In bidding war situations, this is a helpful piece of information to carry with you so you don’t overextend yourself.
‍

When should I get a mortgage pre-approval?



Most pre-approvals are held for 90 to 120 days, after which you can reapply again. Pre-approvals also help you secure a rate, an advantage in understanding your financing.

Core steps



Before giving you a pre-approval, Pine will need to take a look at a couple things:
‍

• You and your co-applicant(s) income,
• Your and your co-applicant(s) current debts (car leases, credit cards, other loans, etc.)
• Any other properties that you own

Once your pre-approval is accepted, and you find the home that you want, Pine will ask for other documentation to verify your income and other key details to turn your pre-approval into a full approval.

Prequalification vs. Preapproval



In the initial stages of your home buying journey, you're likely to come across two terms - prequalification and preapproval. Though they might seem synonymous, they hold different meanings and implications in the mortgage process.



‍

Prequalification is essentially a rough estimate or an initial evaluation of how much you might be able to borrow from a lender. This assessment is based on the financial information you provide - which typically includes your income, assets, and debts.
‍

The prequalification process is quick, straightforward, and often can be done online or over the phone. However, it's important to note that prequalification is an informal process, and it doesn't involve any credit check or in-depth financial analysis. As a result, a prequalification should be seen as a general guideline rather than a guarantee of the mortgage amount you'll receive.

‍

Preapproval, on the other hand, is a more formal, in-depth process. Here, a lender will thoroughly check your financial background, including your credit score, employment history, and income. The preapproval process results in a written commitment from the lender stating the specific mortgage amount for which you are approved, the interest rate, and the term.
‍

A preapproval can provide you with a realistic idea of your budget and show sellers that you're a serious, qualified buyer. It also gives you a head start in the home-buying process, allowing you to act quickly when you find a home you want to purchase.
‍

The distinction between prequalification and preapproval is crucial to understand as you start your journey towards homeownership. While prequalification can give you a ballpark figure of your potential mortgage, a preapproval provides more certainty and credibility.

Anything else?

At the end of the day there are many things to consider during the pre-approval process. While this helps you understand the maximum you may get for your prospective mortgage, it doesn’t guarantee it. The approved mortgage rate will depend on the amount of your down payment paired with the value of the property. So though there's possibilities of getting a higher mortgage, you have to also account for additional fees that come up when purchasing. Additional fees to plan for are:

‍

• Closing costs (e.g. land transfer tax),
• The costs to move (e.g. renting a truck, hiring movers, boxes),
• Home insurance
• Ongoing maintenance costs (e.g. utilities) as you prepare the home for your arrival.
  

Welcome to the adventure of buying your forever home! Talk to our advisors if you have questions about how pre-approvals work or to start the process.