7 Steps to a WINNING Pre-Approval
It’s a very good idea to get a pre-approved mortgage from your Broker BEFORE you start shopping. Your Realtor will ask if you’ve been approved. A Broker will look at your finances and figure the amount of mortgage you can afford. Then your broker will give you a confirmation, for a fixed interest rate. This confirmation will be good for a specific period of time (usually 120 days). A pre-approved mortgage is not a guarantee of being approved for the mortgage loan. (source CMHC)
Even If you haven’t found the home you want to buy, having a pre-approved mortgage amount will help you keep a good price range in mind and make shopping with your Realtor easy.
Bring the following information with you the first time you meet with your Broker:
- Your personal information, including photo identification such as your drivers license
- Details on your job, including confirmation of salary in the form of a letter and 2 paystubs from your employer
- All of your sources of income
- Information and details on all bank accounts, loans and other debts
- Proof of financial assets (statements of accounts must have your name on them)
- Source and amount of down payment and deposit
- Proof of source of funds to cover the closing costs (these are usually 1.5% of the purchase price)
Types of mortgages
Fixed Rate Mortgage: Interest rate is fixed for the entire period of the loan.
Variable Rate Mortgage: Interest rates fluctuate during the mortgage term as the rate is based on the Prime Lending rate (monthly payments stay the same and the amount of principal applied towards the mortgage fluctuates).
Blended Rate Mortgage: Interest rate is a combination of the old mortgage and additional mortgage borrower requires.
Convertible Mortgage: Mortgage can be prepaid or changed at any time throughout the loan term.