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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