WHAT IS A PRE-APPROVAL
A mortgage pre-approval is when a lender has reviewed your basic financial information (income, credit score, current debts, etc.) and has determined the maximum amount of money they will lend to you.
In order to get pre-approved for a mortgage you just need to complete an online application which only takes a few minutes. Lenders have different qualifying criteria and by completing an online application I can properly determine your options. I will then meet with you to go over the options and the approval process in detail and answer any questions at the same time. I will explain to you the benefits of shorter or longer mortgage terms, the latest programs available, which mortgage products will most likely meet your needs the best, plus review all of the other costs associated with purchasing a home.
Pre approval is a strategic step in the home buying process because:
If the rate drops I will request the lower rate. Also, if another lender comes out with a better rate, we can opt to take your application to that bank too, but for now we are finding you the best rate which is held the longest – for up to 120 days. This means that you will want your COMPLETION date on the purchase contract to be within these 120 days.
You can always check back with us when you a find a home you like, before you write up the offer to see when the rate expires.
If you should find a home that is less than your maximum pre-approval amount, then we can crunch numbers again to determine which amortization period will work best within your budget.
Pre-approval process consists of three quick and easy steps:
GDS/TDS
To determine how much you qualify for banks use a set of ratios that determine how much of your income will be used to pay down your current debt. The two ratios used are Gross Debt Servicing (GDS) and Total Debt Servicing (TDS).
GDS is the percentage of your gross income that is required to cover housing costs.
These costs include the following items:
TDS is the percentage of your gross income that is required to cover housing costs plus any debt you have.
These costs include the following items:
It’s a really simple process for me to do a free confidential mortgage analysis.
A mortgage pre-approval is when a lender has reviewed your basic financial information (income, credit score, current debts, etc.) and has determined the maximum amount of money they will lend to you.
- Although you have been pre-approved it is highly recommended that when you enter into an offer to purchase you make your offer "subject to financing" to protect yourself from risk as a pre-approval is conditional and should not be regarded as a guarantee to provide financing.
- Final approval and funding is still subject to all standard underwriting guidelines being met and all supporting documentation (including income and down payment) being acceptable to the lender. The property itself is part of the financing so the lender has to be satisfied with the value and overall condition of the property.
In order to get pre-approved for a mortgage you just need to complete an online application which only takes a few minutes. Lenders have different qualifying criteria and by completing an online application I can properly determine your options. I will then meet with you to go over the options and the approval process in detail and answer any questions at the same time. I will explain to you the benefits of shorter or longer mortgage terms, the latest programs available, which mortgage products will most likely meet your needs the best, plus review all of the other costs associated with purchasing a home.
Pre approval is a strategic step in the home buying process because:
- You know how much you can borrow, so you don't waste time looking at properties you can't afford.
- You have an edge when you make an offer, because the seller knows you're more likely to get a loan and that you are a serious buyer.
- Real estate agents may encourage you to get a pre-approval before they begin working with you.
- Protects you from rising interest rates and guarantees you a rate 60-120 days depending on which lender.
If the rate drops I will request the lower rate. Also, if another lender comes out with a better rate, we can opt to take your application to that bank too, but for now we are finding you the best rate which is held the longest – for up to 120 days. This means that you will want your COMPLETION date on the purchase contract to be within these 120 days.
You can always check back with us when you a find a home you like, before you write up the offer to see when the rate expires.
If you should find a home that is less than your maximum pre-approval amount, then we can crunch numbers again to determine which amortization period will work best within your budget.
Pre-approval process consists of three quick and easy steps:
- Complete a mortgage application.
- I will process the application
- I will submit the mortgage application electronically for a pre-approval to the lender that offers the best rate and product to suit your needs.
GDS/TDS
To determine how much you qualify for banks use a set of ratios that determine how much of your income will be used to pay down your current debt. The two ratios used are Gross Debt Servicing (GDS) and Total Debt Servicing (TDS).
GDS is the percentage of your gross income that is required to cover housing costs.
These costs include the following items:
- Mortgage payment
- Property tax payment
- Heating expenses
- Strata fees (if applicable)
TDS is the percentage of your gross income that is required to cover housing costs plus any debt you have.
These costs include the following items:
- Mortgage payment
- Property tax payment
- Heating expenses
- Strata fees (if applicable)
- All debt
It’s a really simple process for me to do a free confidential mortgage analysis.