Getting Pre-Approved for a Mortgage



Mortgage pre-approval is a critical step before the house hunting process begins. Getting pre-approved for a mortgage not only confirms how much you can spend on your new home but also locks in your rate of interest for a set period of time (usually 30-120 days). Once you have been pre-approved you can start the house hunting process with confidence and focus on properties within your price range. Then, when you find that perfect dream home, you can proceed with an Offer to Purchase knowing that you have already met the financing conditions to purchase the home at a pre-determined rate of interest.

Applying for a Mortgage

To apply for a mortgage you will need to meet with a mortgage professional and fill out an application. Completing an application will help the mortgage professional determine the mortgage amount you will qualify for from the lender and will help determine what is affordable for you.

To complete this application, you will need to provide the following information:
· Employment history. 
· Your Gross Income, including overtime, commissions, bonuses etc.  
· Debts, including your proposed house payment, loans, credit cards, car loans, alimony and child support payments etc.   
· Amount and Source of your Down Payment
· Closing Costs
· Current Monthly Household Expenditures, including rent
· Bank Account Information
· Bankruptcy History (if applicable)
· Citizenship Status
· Alimony or Child Support Payments• 
· Value of all Investments
· Value of Whole Life Insurance Policies
· Value of Owned Automobile
· Value of Any Other Major Assets 

Qualifying for a Mortgage

To qualify you for a mortgage application, lenders look at five factors:
· Income
· Debts
· Employment History
· Credit History
· The Value of the Property

Mortgage Approval

To be approved for a mortgage your application must have the following features:
· Housing expense ratio no greater than 39% 
· A secure, steady income with no employment gaps for two years or longer.
· Debt-to-income ratio no greater than 44% 
· A good credit rating 
· The price you are paying for your house reflects its value in the current market.

Remember, If It Isn’t Written Down… It Doesn’t Exist

You should receive a letter that outlines the amount that you can afford, what your downpayment amount should be and what your interest rate will be on the mortgage. This letter has an expiry date so find out how long this agreement will be valid for.  

NOTE:  A key component to consider is whether your loan would require the assistance of mortgage insurance. The Bank of Canada states that any downpayment with less than 20% of the purchase price must be accompanied by mortgage insurance, generally from
CMHC [http://www.cmhc-schl.gc.ca/en/co/moloin/index.cfm] or
Jenworth Financial [http://www.genworth.ca/content/genworth/ca/en/home.html].)

The information contained herein is accurate at time of printing and is copyright Bruce Witchel 2015.
For further information on real estate matters, please contact Bruce at 416-WITCHEL 416-948-2435 or by email at Bruce @ BruceWitchel.com.

 
Bruce Witchel, Real Estate Agent
Mississauga, ON,
(416) 948-2435