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Home Buyers Checklist for mortgage approval

Pre-approval versus Pre-qualification.

 

It is important that you understand the difference between a pre-approved mortgage and a pre-qualification.

When speaking with the bank, trust company, mortgage broker or credit union what you will want to impress upon them is that you require a PRE-APPROVED MORTGAGE.

 

The Difference:

Pre-Approved mortgage is a confirmation by the lender of your ability to be APPROVED for a mortgage. This is obtained by supplying them with actual documentation of information as outlined below.

Pre-qualified mortgage simply put, is an approximation of a mortgage with no confirmation by the lender until the documentation as outlined below is confirmed by them.

 

Should you encounter a lender that is not willing to Pre-Approve you until you supply him/her with an accepted offer please give me a call and I can assist you in obtaining one. When you speak or meet with the lender, please be ready to supply them with the following documentation:

  • The social insurance numbers of each buyer.
  • Each buyer’s most recent and as well, the previous 2 years Income Tax Notice Of Assessment.
  • Each buyer’s most recent bank statement. If you are using RRSP's, GIC's and/or Term Deposits, a copy of all recent investment statements.
  • You will also be required to contact your employer’s Personnel Manager to obtain a letter confirming your employment so it is a good idea to make content now, before being asked to as this letter can take some time to be issued to you which can result in an unnecessary delay.

 

Your Privacy:

Your Privacy is assured. None of your personal financial information will be disclosed to me, unless for whatever reason, you wish to do so yourself. It is not necessary for me to have this information in most instances, however if you are self employed or feel that you may have some negative credit issues, it is suggested that you let me know of this prior to you contacting any lender so I can assist you in obtaining the appropriate lender for your Pre-Approved Mortgage. There are many different lenders available and each one has their own guidelines for approval, however if you are placing less than a 20% downpayment, all lenders require some standard information under the CMHC/ GENWORTH FINANCIAL policies.

 

Rate Shopping:

You may consider shopping around for the BEST rate. This is a normal instinct but one that can actually damage your ability to be Pre-Approved for your mortgage or get the lowest rate you are able. You see, when you apply for the Pre-Approved Mortgage, a check on your credit bureau reports will be done in the normal course of the approval process. Each time an inquiry is made on you, a record ("flag") is recorded on your bureau reports indicating that an inquiry was made and by which lender(s). The more lenders you go to, the more "flags" on your record. This can negatively affect your credit score. The next lender will see any previous inquiries and in turn suspect perhaps but not limited to one of two circumstances; 1. You are not committed to them as a lender and you in the end may go elsewhere for a mortgage once they reveal the interest rate, and/or 2. Perhaps there is something to "hide" and you are shopping around because of problems with the previous lender(s).

 

If you wish to shop rates, it is better to use the services of a Mortgage Broker. A Mortgage Broker deals with as many as 40 to 60 or more different lenders, takes ONE credit application and does ONE inquiry at the credit bureaus and then sends it off to many lenders and does the shopping for you. All this is done at No Cost to you except in very, very rare circumstances, generally if say... you have some negative credit history or bankruptcy on your credit record. You will be notified of this BEFORE hand for your approval, so you have nothing to worry about. You are in control!

 

I hope that this information assists you in obtaining your Pre-Approved Mortgage. Please feel to call me if you encounter any problems along the way.

 

Courtesy of Jeff Stern, RE/MAX performance realty (204) 946-5333 email: jeff@jeffstern.com

 

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