MORTGAGE PREAPPROVAL
A mortgage pre-approval gives you an estimate of the maximum amount you can borrow, as well as an idea of the interest rates you may qualify for. While it is not a loan guarantee, a pre-approval shows sellers that you are serious and financially prepared to purchase a home.
Benefits of a mortgage preapproval:
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Know your budget: It helps you better target your property searches within a realistic price range.
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Better positioning in negotiations: Sellers can take a purchase offer from a pre-approved buyer more seriously.
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Rate Fluctuation Protection: The interest rate offered can be locked in for a specified period of time (usually 60 to 120 days).
Documents needed for mortgage preapproval:
1. Income statements:
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Your pay slips.
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A letter from your employer confirming your position, salary and length of employment.
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If you are self-employed, you will need to provide tax returns for the last two or three years.
2. Proof of assets and liabilities:
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Documents showing your savings, investments or other financial assets.
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Statements of your current debts (student loans, car loans, credit cards, etc.).
3. Proof of down payment (personal contribution):
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Proof of savings or investments that will serve as a contribution (savings books, securities accounts, etc.).
4. Credit History:
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Checking your credit score is essential to assessing your financial reliability.
These factors help a lender assess your ability to repay a mortgage and determine how much they can lend you.