(April 11, 2024)
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Mortgage pre-approvals have become a hot topic of late, particularly the accuracy and validity of them. With so much at stake in Canada’s cut-throat real estate market, prospective buyers have misleadingly been sent to the market believing that their mortgage pre-approvals are intact and verified. But the fact of the matter remains – many mortgage preApprovals (as we know them today) are essentially unverified and highly unreliable.
Whether you’re dealing with your banker or a mortgage broker, set the bar high and make sure the following points are accounted for within your mortgage preApproval, otherwise you might be in for an 11th-hour shock.
Request a verified mortgage pre-approval from your mortgage broker
A verified mortgage pre-approval means that the application has been underwritten. Many mortgage pre-approvals are unverified and underwritten only when a live offer is presented – this defeats the sole purpose of a mortgage “pre-approval”. Underwriting for mortgage qualification involves meticulously scrutinizing applicant documentation while adhering to stringent lending criteria to assess whether the candidate aligns with an acceptable risk profile for the lender. It’s a complex process, and is often unintentionally misleading as many applicants perceive mortgage qualification as a one size fits all type of outcome. What you may deem as obvious and safe, a lender may view as risky and unacceptable. A verified mortgage pre-approval offers a precise conclusion about your borrowing capacity and essentially eliminates all the uncertainties of mortgage qualification.
Multiple qualification scenarios should be included in your pre-approval
For example, let’s say you have an unspecified amount of debt. There should be a qualification scenario with the debt factored in, and another scenario without the debt. Or perhaps you would like to see an additional scenario that displays how much more you would qualify for with a co-signer. Regardless of how many scenarios you are curious about, don’t hold back in requesting them! If your mortgage broker is annoyed with your requests, then find another.
Interest rates
Both fixed and variable interest rates should be included in a mortgage pre-approval. And equally important, the maximum qualification amount should be displayed for each. In todays interest rate environment, variable rate mortgages yield lower qualification amounts than fixed rates.
Terms and Conditions
This is an absolute must. Whether you agree or disagree with them, the conditions need to be displayed openly in the pre-approval document. Acknowledging your restrictions and limitations ensures that you are swift and efficient throughout your shopping and negotiating phase.
Request touch-ups to your pre-approval
Don’t be shy to inform your mortgage broker if things have changed throughout your property search. For example, if you’ve been pre-approved based on $2,500 annual property tax estimates but are finding that the range is actually $1,800, inform your mortgage broker and have them adjust the qualification accordingly. This difference will result in a higher qualification amount.
Substance
Your pre-approval should contain at least 500 words and various mathematically derived tables and scenarios. The document should be dense and loaded with information.
Availability
Lastly, your mortgage broker should be available outside standard banking hours. Purchasing a property is a dynamic experience, and the pursuit of it is often in the evenings and weekends. Your mortgage broker should be available (within reason) to service general inquiries and emergencies regardless of the time and day.
Do you have a verified mortgage pre-approval? Call or text Marko Gelo right now at 604-800-9593, or Click Here to schedule a free, no-obligation phone call with Marko. You can also call Marko on WhatsApp.
Download my amazing Mortgage App…it’s loaded with calculators and tonnes of useful information!
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Contact Marko, he’s a Mortgage Broker!
604-800-9593 cell/text | Vancouver (Click Here to schedule a call with Marko!)
403-606-3751 cell only | Calgary (Click Here to schedule a call with Marko!)
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Email: gelo.m@mortgagecentre.com
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