Any good mortgage professional will tell you that your house hunt should include a call to a mortgage professional as well as a call to your realtor. A mortgage professionals work with you to obtain a mortgage pre-approval. Then, you can shop for a property knowing how much money you have to spend or, more importantly, how much a lender will loan you for your mortgage?
And that’s what a mortgage pre-approval is: the process of determining whether a borrower meets a particular lender’s guidelines for a home loan. It shouldn’t be confused with a mortgage pre-qualification, which is a much more cursory look at your financial picture. A mortgage pre-approval gives you some confidence that you are a qualified borrower in the eyes of a lender. This is beneficial because the last thing you want when going through the home buying process is to have done your own calculations and have figured out what you think you can afford using a mortgage calculator and the available interest rates, then apply for a mortgage with a lender and receive an entirely different interest rate based on your overall strength as a borrower. To avoid any nasty surprises, it’s best to get pre-approved before doing anything else. (Apart from saving money, of course!) The pre-approval process The pre-approval process can start anywhere up to 120 days before you want to buy a home, depending on how long the lender’s pre-approval is guaranteed. It’s the first step to getting a mortgage, and although it typically doesn't take that long to complete, another benefit to doing it early in the process is that you're not simultaneously dealing with offer negotiations, when every moment can be crucial. For a mortgage pre-approval, you have to provide supplemental documentations proving your income, the source of your down payment, and your assets and liabilities. The lender will also look at your credit report to determine your credit-worthiness. According to BMO, you (and other applicants, if more than one person is applying) will need to provide the following information: