Getting pre-approved for a mortgage is one of the most important steps in the home buying process. Pre-approval gives you an idea of how much money you can borrow and what your monthly mortgage payments will be. It also shows sellers that you are a serious buyer and that you have the financial resources to purchase the home.
To get pre-approved for a mortgage, you will need to:
Gather your financial information. This includes your income, assets, debts, and credit score. You can get copies of your most recent pay stubs, bank statements, and tax returns. You can also check your credit score for free on Equifax or TransUnion.
Shop around for mortgage lenders. Compare interest rates and terms from different lenders to find the best deal. You can get pre-approved from multiple lenders, but keep in mind that each credit check can lower your credit score slightly.
Complete a mortgage application. The mortgage application will ask for your financial information, as well as some personal information, such as your employment history and contact information.
Meet with a mortgage lender. The mortgage lender will review your application and credit report. They will also ask you some questions about your financial situation and your goals for the home purchase.
Get pre-approved. Once the mortgage lender has reviewed your application and credit report, they will give you a pre-approval letter. The pre-approval letter will state how much money you are pre-approved for and the interest rate and terms of the mortgage.
Here are some tips for getting pre-approved for a mortgage:
- Have a good credit score. A good credit score will help you qualify for a lower interest rate.
- Make a down payment. A down payment of at least 20% of the purchase price will help you avoid paying mortgage default insurance (CMHC insurance).
- Have a stable income. Your mortgage lender will want to see that you have a stable income and that you can afford to make your monthly mortgage payments.
- Be prepared to provide documentation. Your mortgage lender will ask for documentation to support your financial information. This may include pay stubs, bank statements, and tax returns.
Getting pre-approved for a mortgage is an important step in the home buying process. By following these tips, you can increase your chances of getting pre-approved and finding the best mortgage for your needs.
This article is for general informational purposes only and is not legal advice. Contact us today to discuss your specific situation.