It’s always a good idea to get pre-approved for a mortgage before you start shopping. A lender will look at your finances and figure out the amount of mortgage you can afford. Then the lender will give you a written confirmation for a fixed interest rate which is good for a specific period of time. A pre-approved mortgage is not a guarantee of being approved for the mortgage loan.
Even if you haven’t found the home you want to buy, having a pre-approved mortgage amount will help keep a good price range in mind. It also gives you an advantage in negotiating with the seller over someone who is estimating his or her “borrowing” profile.
The first time you meet with a lender he or she will want some information from you:
- Your personal information, including identification such as your driver’s licence.
- Confirmation of your employment and salary.
- Other sources of income.
- Information and details on all bank accounts, loans and other debts.
- Proof of financial assets.
- Source and amount of down payment and deposit.
Proof of source of funds to cover the closing costs (these are usually between 1.5% and 4% of the purchase price)