The Importance of Being Pre-Approved for your Mortgage
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For most of us, buying a home will be the largest purchase we will make in our lifetime. The process can be stressful, but don’t worry – there are steps you can take to make it easier. It is important to be organized, informed and prepared before you start looking.
The more thorough the pre-approval process, the more beneficial it will be to you once you are ready to make a purchase. To be pre-approved, you will need to provide your lender:
Looking at your dream home may be an exciting place to start, but the process of buying a home is best started by getting pre-approved for a mortgage from your lender. Pre-approval for a mortgage is an evaluation that determines if you qualify for a loan and the maximum amount you are eligible to borrow.
The more thorough the pre-approval process, the more beneficial it will be to you once you are ready to make a purchase. To be pre-approved, you will need to provide your lender:
- Confirmation of income: Your lender will need official proof of your annual income. This will allow your lender to calculate a realistic borrowing amount. Applicable documents may include pay stubs, tax returns and statements of assets.
- Credit report: Your lender will need authorization to conduct a credit check to obtain your credit score and history. Your credit history affects your ability to qualify to borrow and the interest rate that you can be approved for. Your lender will also be able to give you advice to improve your credit score.
- Assets: Your lender will require you to provide bank statements, investment statements and other proof of assets. This information is needed to ensure that you are able to afford the closing costs, as well as the down payment. The down payment is required by the Canadian Mortgage and Housing Corporation and will be a minimum of 5% of the cost of the home. Saving 5% can be overwhelming, which is why CUA offers a no down payment mortgage option – Learn more »
Being pre-approved is an important first step, as it allows both you and your lender to know what to expect. This includes setting a realistic purchasing price based on payments you will be able to afford. Receiving a clear and reasonable evaluation before you start looking for a home will relieve a lot of stress and uncertainty moving forward.
If you are interested in purchasing a home and want to start the pre-approval process, visit one of our branch locations or call the CUA Contact Centre at 902.492.6500.
Revised Jul. 4, 2021
Revised Jul. 4, 2021
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