The Pre-Approval Process
Wondering what the process is when applying for a mortgage pre-approval?
I'll take you through the steps!
When someone reaches out to me, the first thing I do is send out my online application so I can gather their basic information and then schedule a “discovery call” to get to know them a bit better and ask a few questions such as:
What are their goals?
What is their timeline?
Do they have a property in mind already?
How do they receive income?
What are their monthly expenses?
How do they feel about their credit?
Do they have a down payment saved?
At the end of the discovery call we will know whether there are things that need to be worked on before moving forward and I will help put a plan in place to get them where they need to be, or if it sounds like we are ready to continue with the process I will send a request for documents to confirm income and down payment.
I also send out my client engagement letter at this point, which outlines our relationship as client and broker and gives me authorization to pull their credit report.
This step is very important as it confirms the liabilities, which are monthly expenses like credit card payments, car loans, lines of credit, student loans, etc… which I need to be precise with in order to keep within debt servicing ratios which are set by the default insurers (CMHC, Sagen & Canada Guaranty).
This is your income compared to your expenses.
At this point I am able to confidently give you a budget based on a fully unwritten file. It is very important not to change anything about the snapshot in time in which I did this in order for your pre-approval to be valid. This means, not changing jobs or becoming self employed or adding any new debts and expenses.
Of course, the final decision for approval ultimately comes from the lender we submit the application to and although it's possible to get pre-approved by a lender, this is usually just a rate hold and the underwriters do not actually look at the documents until the file is live.