What is a Mortgage Pre-Approval?
A mortgage pre-approval is the most important step in the home buying process.
A pre-approval is the process of collecting and reviewing all necessary documentation and information that a mortgage lender will need in order to approve you for mortgage financing once you purchase a property. The pre-approval is completed in advance to ensure you can qualify for a mortgage and to determine exactly how much you qualify for.
A pre-approval is the process of collecting and reviewing all necessary documentation and information that a mortgage lender will need in order to approve you for mortgage financing once you purchase a property. The pre-approval is completed in advance to ensure you can qualify for a mortgage and to determine exactly how much you qualify for.
Mortgage Pre-Approval Process
The mortgage pre-approval process can essentially be broken down into 4 steps.
1. Credit Application
The first step includes completing a credit application with your mortgage specialist. The credit application will provide your mortgage specialist with some general information of the following areas:
Your mortgage specialist will use this information to gain a better understanding of your financial situation and it will assist them when they are exploring lending options.
2. Credit Check
Once your mortgage specialist has completed the credit application, they will then need to perform a credit check. The credit check will provide your mortgage specialist with your beacon score and a detailed breakdown of your credit history. This information is used in conjunction with the credit application to ensure that the information is as accurate as possible and to verify that your beacon score falls in line with the minimum lending requirements.
3. Document Collection
Now that your mortgage specialist has completed the application and performed the credit check, the next step in the process would be to collect documentation that supports both the credit application and the credit report. The type and amount of documentation that is required by the lender will not be the same for everyone. Your mortgage specialist will be able to determine exactly which documents are required in order to get your pre-approval in place.
4. Pre-Approval
Using all of the information listed above, your mortgage specialist will be able to calculate the exact amount you qualify for and then they will issue a pre-approval. Keep in mind, the pre-approval is based on your current financial situation at the time of applying, if your financial situation changes after you are pre-approved, it is important to inform your mortgage specialist of these changes as they may affect your pre-approval status.
1. Credit Application
The first step includes completing a credit application with your mortgage specialist. The credit application will provide your mortgage specialist with some general information of the following areas:
- Your credit strength and history
- Employment status and history
- Income type and amount
- Assets and liabilities
- Down payment source and amount
Your mortgage specialist will use this information to gain a better understanding of your financial situation and it will assist them when they are exploring lending options.
2. Credit Check
Once your mortgage specialist has completed the credit application, they will then need to perform a credit check. The credit check will provide your mortgage specialist with your beacon score and a detailed breakdown of your credit history. This information is used in conjunction with the credit application to ensure that the information is as accurate as possible and to verify that your beacon score falls in line with the minimum lending requirements.
3. Document Collection
Now that your mortgage specialist has completed the application and performed the credit check, the next step in the process would be to collect documentation that supports both the credit application and the credit report. The type and amount of documentation that is required by the lender will not be the same for everyone. Your mortgage specialist will be able to determine exactly which documents are required in order to get your pre-approval in place.
4. Pre-Approval
Using all of the information listed above, your mortgage specialist will be able to calculate the exact amount you qualify for and then they will issue a pre-approval. Keep in mind, the pre-approval is based on your current financial situation at the time of applying, if your financial situation changes after you are pre-approved, it is important to inform your mortgage specialist of these changes as they may affect your pre-approval status.
Mortgage Pre-Approval Vs. Mortgage Pre-Qualification
A pre-qualification and a pre-approval are commonly mistaken for one another but they are actually very different. A pre-qualification is essentially a stripped down version of a pre-approval. It provides an estimated mortgage qualification amount based solely on the information you provide, without collecting or reviewing any documentation.
This short-cut is used by some of the banks and credit unions in place of a true pre-approval to save them time and money. The problem with this process is that the amount you qualify for using a pre-qualification may not be the same amount you qualify for when it comes time to arrange mortgage financing.
When applying for a mortgage, all of the information you provide to the lender needs to be supported by documents. Without the collection of documents it is nearly impossible to calculate the exact loan amount a mortgage applicant may qualify for.
Instead of wasting your time getting pre-qualified, give me a call or fill out the form below and let's get a true pre-approval in place.
This short-cut is used by some of the banks and credit unions in place of a true pre-approval to save them time and money. The problem with this process is that the amount you qualify for using a pre-qualification may not be the same amount you qualify for when it comes time to arrange mortgage financing.
When applying for a mortgage, all of the information you provide to the lender needs to be supported by documents. Without the collection of documents it is nearly impossible to calculate the exact loan amount a mortgage applicant may qualify for.
Instead of wasting your time getting pre-qualified, give me a call or fill out the form below and let's get a true pre-approval in place.
Click the button above to contact me today.
Castle Mortgage Group
100-1345 Waverley Street
Winnipeg, MB, Canada
R3T 5Y7
100-1345 Waverley Street
Winnipeg, MB, Canada
R3T 5Y7