The Basics of the Pre-Approval Process

Everyone is looking for that edge when they search for a new home loan, and at Altius Mortgage, we’ll help you get it. One of the processes we encourage our clients to investigate thoroughly: Pre-approval.

Pre-approval is a process where you and a potential lender lay out many financial details, and the lender determines whether they’re confident in your ability to meet the requirements of a given loan and given mortgage rates. Let’s look at the financial elements under consideration during pre-approval, plus how it can benefit you in the long run.

Items Considered

When you meet with a lender, they’ll thoroughly investigate all your finances. This will include a credit check, plus an in-depth look at your base income compared with your monthly expenses.

One cautionary note: Don’t confuse the pre-approval process with the pre-qualification process. The latter is a much less formal procedure, and is really just a basic meet-and-greet with a lender – the latter is a real financial proceeding, and very few people who come through pre-approval unscathed will end up being rejected for a loan.

Pre-Approval Preparation

Before a pre-approval meeting, you need to make sure your finances are fully organized. This starts with credit score, for which there are easy tools online to monitor your current standing without raising the score itself. You also want a firm understanding of your income and expenses – any surprises during the actual pre-approval process could cost you.

Documents to Bring

There are a few specific documents to make sure you have when you meet a lender for pre-approval:

  • Personal information: Things like Social Security information and a form of ID will be required for lenders to run credit and other appropriate financial checks.
  • Income information: You’ll need two years’ worth of tax returns, pay stubs and W-2 forms. If you have any outside sources of income not reflected in these, you’ll need evidence of those as well.
  • Asset information: This includes any assets not listed as income, such as savings, investments or monetary gifts and loans.

There’s much more to learn about the mortgage process, and we’re here to teach you at Altius mortgage. Speak to one of our brokers today.