Working with a mortgage broker is a different experience than working with a bank specialist. It’s also a different part of the home buying process compared to working with your Realtor. Some people may have never worked with a mortgage broker before and don’t know what to expect. Because of that, there are some questions…Read Article
Getting pre-approved for a mortgage before you head out and look for houses is something I highly recommend. It will enable you to know the price range you should be approved at when you make an offer on a property that you love.
Going into looking for a property blind, without knowing your approval rating, could set you up to be disappointed when you can’t qualify for a house your heart’s set on. Knowing the price range you qualify for will let you look at properties in your price range and get excited for only the ones that could be a possibility for you.
In this blog post, I will discuss the process of a mortgage pre-approval and the documents you’ll most likely need to prepare when planning to get a mortgage.
Getting pre-approved through a mortgage broker
There’s a regular process for getting pre-approved through a mortgage broker. This includes the following:
- An initial meeting to discover your situation, wants and other relevant information. Whether you’re qualifying alone or with your partner/spouse, your employment information, what you’re looking for, whether it’s a house/townhome/condo, etc.
- An application may be completed at the first meeting or after depending on your situation
- Confirmation of income and down payment funds. Note: this is done differently for employees vs self-employed individuals
- Go search for a home, make an offer, and once you do, let me know!
This can be a really simple process or a little more complicated, depending on your particular situation. If it’s a more complicated process, don’t worry! We will go through the process together and I will explain everything that I’m doing and everything I will need from you along the way.
Mortgage pre-approval example
I want to give you an example of a mortgage pre-approval for you to understand the process. So, for example:
- First time home buyer with 5% down payment
- Full-time employee that has been at the job for 2 years
- Great credit
It doesn’t get much better than that in terms of the ideal mortgage situation. So, you can be quite sure the amount you would be approved for based on your income and debt ratio. We’d be able to determine a solid number once you fill out an application for approval.
But, a situation that isn’t as ideal as the above, may look like this:
- Self-employed for 2 years
- Gross income of $100,000
- Net income of $20,000
- 10% down payment
- Good credit
This isn’t as solid of a scenario as the banks can be harder on self-employed individuals. Due to this person in the example writing off so much of their income, the bank will only consider the $20,000 as opposed to the $100,000.
There are ways to use more of the gross income and that is where using a broker experienced with self-employed clients can be a great tool, like myself. I have a lot of experience with self-employed clients looking to get a mortgage.
One last item to mention is that a pre-approval is not a guarantee that you will be approved for a mortgage. It is a professional’s opinion, based on their experience, of how much you should be approved for. The simpler the situation, the more solid the approval.
Items I will need from you
When going through a pre-approval, you will need to prepare some documents for me. Every situation is different and may require different documents. But to start, I will need:
- A recent pay stub
- A job letter on a company letterhead (if you’re an employee), stating your position, salary and hours you work
- Possibly T4’s from the last two years
If you’re self-employed, I will need:
- Two years of experience being self-employed (Depending on your situation, there may be wiggle room on this.)
- Two most recent tax returns and notice of assessments.
Get pre-approved today!
If you’re ready to get pre-approved, reach out to me today. We will discuss your situation, what you’re looking for and what I need from you. Then, I’ll begin the pre-approval process and let you know what you qualify for. Once you know, the fun begins, looking for your dream home! I can’t wait to talk to you and help you on your journey to homeownership.