A Pre-Approved Mortgage
So you've finally saved up a substantial down payment on your very first home and your eager to move out. But before you can move out on your own, you will need to be able to figure out how much you are able to afford. By getting pre-approved mortgage, you’ll have a better idea how much you can borrow, how much of a home you can afford and what your monthly mortgage payments will be, therefore helping narrow down your housing criteria. And the process to obtain one is relatively straightforward, easy and not time consuming, usually around 20 minutes if you have all the necessary information handy. For example, based on the information that you supply, the bank will give you a maximum amount they would be willing to lend you at a certain interest rate, for example $250,000 at 3.5%. If you had a down payment of $60,000, you could potentially buy a home up to a selling price of $310,000. The bank will secure the mortgage pre-approval amount and interest rate for a certain amount of time, usually up to 90 days, however it is not 100% guaranteed. The bank will perform further due diligence on your income qualification before formally giving you a firm mortgage loan. A mortgage pre-approval will help you:
- By getting mortgage pre-approval, you’ll have a better idea how much you can borrow, how much of a home you can afford and what your monthly mortgage payments will be
- If you choose a fixed interest rate mortgage, you are guaranteed that rate during the 90-day pre-approval period, so you are protected if interest rates should rise.
- When it comes time to make an offer, because you know you’ve been pre-approved for a mortgage, you’ll be able to act more quickly.
- Even if you haven’t found the home you want to buy, having a pre-approved mortgage amount will help keep a good price range in mind.
What information you'll need for a Pre-Approved Mortgage
Below is the typical type of information that you'll need to provide to your lender to obtain a pre-approved mortgage certificate:
- Your personal information, including identification such as your driver's license
- Details on your job, including confirmation of salary in the form of a letter from your employer
- All your sources of income
- Information and details on all bank accounts, loans and other debts
- Proof of financial assets
- Source and amount of down payment and deposit
- Proof of source of funds to cover the closing costs (these are usually between 1.5% and 4% of the purchase price)
Just like when you are buying a product, t’s a good idea to do your own research and shop around. There are many lenders that will give you competitive rates and favourable condition terms for a pre-approved mortgage. You can walk into any traditional brick and mortar bank like Scotiabank, Royal Bank or Bank of Montreal to sit down with a mortgage advisor and obtain a pre-approved mortgage. But also these banks and other non-traditional banks are able to provide pre-approved mortgages online, like ING Direct. The online process usually take about 20 minutes. So shop around and do your research before you obtain a pre-approved mortgage. Please contact Nicholas Chan for further information on the pre-approved mortgages, the mortgage or buying process or any other real estate services and needs. Whether you’re buying, selling, leasing or assigning your home or property, I would love to work for you and will dedicate myself to ensure that you receive professional service, expert advice and an enjoyable experience with your real estate transaction. Contact me at (416) 889-6906 or by email at Nicholas.Chan@century21.ca or by clicking here.