Common Mistakes When Getting A Pre-Approval
You are looking to buy a home. Congratulations. It can be both exciting and scary at the same time. The best way to approach it is with a trusted team of professionals to guide you through the processes and ensure you are taken care of. The best place to start when building that team is with a trusted mortgage broker. They will get you started with a pre approval and can connect you with other professionals to help make the process as stress free as possible.
Your mortgage broker will get the process started with a thorough pre approval. Once you have been pre approved for a certain amount, your realtor will start to show you what's on the market in your price range and start shopping for the home that is right for you. Something to be aware of is not all pre approvals are equal and I want to go over the five biggest mistakes that a buyer can make when getting a pre approval.
1. Not going to a mortgage broker
Each lender has its own policies when it comes to approving a mortgage. By going to a mortgage broker, you are able to take advantage of all of these policies from one source. By having access to multiple lenders in one place, you will be able to maximize your pre approval and increase your chances of getting the home you desire. Some variables that are treated differently by each lender include rental income, length of time at a job, self-employment income, Canada Child Benefit and varying property types. A good mortgage broker will consider these factors and connect you with the best lender for your situation. They will also help you evaluate your closing costs, so you don't run into any hidden fees at closing.
2. Not having your documents reviewed
You should be providing T4’s, NOA’s, pay stubs, job letters, bank statements and having your credit checked in a pre-approval. Without a full document review, the pre-approval is just a wild guess. With a full review of credit, income documents and down payment, you can shop confidently. And, If you’re having trouble managing the documents for your mortgage application, you’re not alone! It can be challenging to keep track of document titles and where you can go to find each one, especially if you’re a first-time homebuyer. Get in touch with our experts to make the process easier.
3. Not providing all of your information
When you go for a mortgage, the lender will go through your finances to determine if you’re a good candidate for a loan. This process includes checking personal information, including your salary, assets, credit history, and employment. If you hide things during pre-approval, they may come back to haunt you. A debt that you omit, misrepresenting your income, or not divulging the source of the down payment is all a recipe for disaster. If you’re self-employed or run a business, there are different ways to prove this income. An honest conversation will be required to thoroughly explain your income and make sure you can provide the appropriate documents. Addressing challenges in the pre approval process is the best way to overcome them and ensures the right lender is approached.
4. Not communicating changes to your broker
The home buying process is about you. It’s about seeing or creating the right environment that you have fantasized about for your home. So be as clear, and upfront about your requirements and life changes with the broker. If you switch jobs, buy a vehicle or change the property you are looking for, these can affect your pre-approval. Communicate with your broker before making any significant decision, so they can inform you if there may be any adverse effects on your pre-approval. It is always better to know the consequences before you make a decision. Remember, ambiguity only wastes your valuable time and needlessly extends your search.
5. Focusing only on the rate
You may qualify for less, or there may be other restrictions on a mortgage to get that better rate that may cost you more in the long run. Discuss all your options, and know that your broker will get you the best rate for the product you want. An example is a 30-year amortization may come with a higher rate, but your monthly payment is less, reducing your monthly bills. It also allows you to qualify for more. It is best to know all your options. Unless you have a deep understanding of your financial positioning and how residential lending works under the hood, it’s wise to shop around until you find a dedicated mortgage broker who can help you compare your loan options.
To avoid facing these and other mistakes, reach out to Matt Dahlman at Monument Mortgages. With access to over 50 lenders, we can fulfill all your financing requirements. We have associated ourselves with Residential and commercial mortgages, financing purchases, refinances and construction from the best lenders available. By approaching the right lender to fit your situation, we can simplify the process and get you straight to approval without the pressure of shopping around while still getting you the lowest rates.
We serve clients across Vernon, Kelowna, Kamloops, Salmon Arm, and the surrounding areas. We can also help your friends and family all across the country in all provinces except Quebec. For a comprehensive list of services we provide, please click here. For any topics related to our mortgage offerings, please feel free to contact me by clicking here.