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Let's talk about Mortgage Pre Approvals

What is a mortgage Pre Approval?

When you’re shopping for a mortgage, you can compare options offered by different lenders.

Mortgage lenders have a process which may allow you to:

  • Know the maximum amount of a mortgage you could qualify for

  • Estimate your mortgage payments

  • Lock in an interest rate for 60 to 130 days, depending on the lender

  • The mortgage Pre Approval process may be divided into various steps. It may also be called mortgage prequalification or mortgage preauthorization.

During this process, the lender looks at your finances to find out the maximum amount they may lend you and at what interest rate. They ask for your personal information, various documents and they likely run a credit check.

What to provide to your lender or mortgage broker

Before preapproving you, a lender or mortgage broker will look at:

  • Assets

  • Income

  • Debt

You’ll need to provide the following:

  • Identification

  • Proof of employment

  • Proof you can pay for the down payment and closing costs

  • Information about your other assets.

  • Information about your debts or financial obligations

For proof of employment, you may have to provide:

  • Proof of employment or other income

  • Information about your employer

  • notices of assessment from the Canada Revenue Agency for the past 2 years, if you’re self-employed

Your lender or mortgage broker may ask you to provide recent financial statements from bank accounts or investments. This will help them determine if you have the down payment.

Your debts or financial obligations may include your monthly payments for:

  • Credit card balances

  • Child or spousal support

  • Car loans

  • Lines of credit

  • Student loans

  • Any other debts

This process does not guarantee your approval for a mortgage.

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