Don't fall in love with your dream home until you have a pre-approved mortgage and know exactly how much you can afford. That way you won't be disappointed.
The best and easiest way to have an accurate pre-approval done is to visit a licensed mortgage broker (not a bank). The mortgage broker will review your documentation and do a credit check. You will also need to provide a job letter that confirms your position, start date at the company, guaranteed hours and your hourly rate, or your salary; a current pay stub; T4s and how much you earned in a tax year and how much tax was deducted for the past 2 years. You will also need to provide your driver's licence.
Your mortgage broker will also require a 90-day history of where your down payment is coming from - a bank statement. If a parent is helping with the down payment, then you would need to provide a gift letter, and proof of the gifted money being deposited into your account. It may also be necessary to have your parents' credit rating reviewed.
A perfect credit score, somewhere in the 900s is not essential. A credit rating of 680 and above will qualify you for a 'best rate' approval.
If your credit score is lower, you might have to jump through a few more hoops and provide more insight to the lender.
Once your mortgage broker has all the information, they will calculate your net worth and what mortgage payments you can afford. All that information is then sent to the lender, who typically gives a pre-approval within 24-48 hours.
Once your pre-approval has been granted, it's important not to do anything that changes the basis of the pre-approval. This includes such actions as incurring extra debt or quitting your job. The lender will be reviewing the file again before final approval is granted and if there are substantial changes then you will likely need to repeat the pre-approval process.
Even though you are pre-approved, when writing an offer to purchase a home, in addition to any other subjects, you should make the offer subject to financing and appraisal.
Please contact me for more information or for a mortgage broker referral.
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