Mortgage Preparation: Documents Needed for Mortgage Pre Approval Canada
If you’re thinking of purchasing a new home, refinancing or transferring your mortgage on your existing home, finalizing the paperwork is one of the last steps you take toward completing your home financing. Arriving prepared with all the documentation you need will make the process quick and easy! Here is our home financing checklist to help you get started – whether you’re a new buyer or experienced buyer, this is everything you need to get the ball rolling.
If you’re purchasing a home….
Information on your current financial situation:
– Confirmation of Down Payment equal to the down payment amount from one or more of the following sources:
– Savings accounts and/or Deposits
– Liquid or other assets
– Gift letter
– Proceed from the sale of another property
*If salaried or hourly employment (full time or regular part time) – provide one of the following:
– A letter from your employer on Company Letterhead which includes your name, salary or hourly pay rate and name and title of person signing the letter
– Current pay stub
– Copy of a current Bank Account statement showing direct deposit of your income
*If self employed or on contract, and/or you wish to include bonuses, overtime, gratuities or profit sharing, provide your last two years Notice of Assessments (NOA) from the Canada Revenue Agency
*If your income source is something other than mentioned above please refer to your mortgage representative for more information on the type of income confirmation required
Upon coming to an agreement with the seller and receiving an accepted offer, you’ll need to provide your mortgage broker/bank the following about your future property:
– Purchase and Sale Agreements(S) include schedules and waiver
– MLS Listing with photo
– Name, address and telephone number of your Solicitor/notary
– How much are (or estimate) the annual property taxes and heating costs?
– If the property is a condominium, what fees are associated with the corporation?
– What is the total square footage of your home?
– What is the total square footage of the land if detached
– Depreciation Report, Form B and other strata documents if strata
*Pro tip*: A number of the above information, such as neighbourhood comparables and the MLS listing with photo, can be provided to your mortgage broker or bank by your realtor. It is important that your realtor and your mortgage representative work closely together to ensure that the transaction runs smoothly and all proper information is correctly provided. If you have a preferred mortgage representative that your realtor does not currently know, make sure to send their contact information to your realtor so that they can connect. This will benefit you greatly.
If you already own a home…
What information to bring about your current property:
– Recent mortgage statement
– Current homeowner insurance policy
– Most recent property tax bill/statement
– Legal description of property
– Property Value
– What current assets or savings do you have?
– What current liabilities do you have? (Please ensure that you know the amount outstanding and monthly payment)
– What specific Critical Illness/Life Insurance coverage do you presently have?
Why is Pre-Approval Important?
Knowing how much you can afford to spend on a home and finding the right way to finance it are two of the easiest ways to increase the comfort of home ownership. Before falling in love with a potential new home, you may want to obtain a pre-approval. This will help you stay within your price range and spend your time wisely looking at homes you can reasonably afford, after all closing costs. The pre-approval meeting is the time to find out about different mortgage products that are available to suit your particular needs. Once the mortgage is pre-approved, your lender can typically hold and commit to the interest rate at the time of approval for 120 days with no obligation.
Having the income confirmation documents ready will help to speed up the pre-approval process, allowing you to search for your home sooner, and with the confidence of knowing how much you can spend for the home of your choice.
Your Credit Score Will Be Reviewed in Order to Obtain Pre-Approval – Do You Know Your Credit Score?
The lender will have to check your credit score and review your existing debt. They will check your monthly car payments, credit card debt, lines of credit, etc. If you’re unsure of your credit score, you might want to try to pull your credit. You can go to www.Equifax.ca and pull your credit once a year without it deducting points or hurting your score. A “good” score is considered to be 680. Anything higher than that is good or great, and anything lower you may have some issues. There are ways for lenders to get around it, but if you are thinking about buying in the near future you can try to improve your credit score in the mean time.
Some ways to improve your credit score are paying your bills on time, keeping debt loads to a minimum/under control, paying your bills regularly, and making sure you aren’t consistently “maxing” out your credit card by having it more than 80% of your limit (they flag you at 80%). For more information on your credit, feel free to give us a call. If we don’t have all the answers, we can refer you to a mortgage broker that does.
Have any other questions about how to obtain a mortgage? Questions about the pre-approval process? Thinking about moving? Give us a call at 604-765-0376 and we can point you in the right direction. Prefer text? 604-319-0200 or email firstname.lastname@example.org to start a conversation.
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