Deciphering the mystery of the Pre-approval

General Pam Pikkert 15 Nov


            There are a plethora of terms out there in regards to a mortgage pre-approval.  You are probably very well aware of the importance of getting a pre-approval before you go house hunting but do you know how to get yourself a genuine pre-approval.  One that is going to make the home buying process as easy as possible? Did you know there is a big difference between and pre-qualification and a pre-approval?  Now that I have you interested let’s dive right in.

Mortgage prequalification is the term often used when the information has been provided by a borrower but is not yet verified.  Your information is entered into the computer and based on that data, your mortgage professional will tell you how much of a home you can afford.  It’s possible that your credit has not even been pulled depending on who you meet with.  The problem here is that without a full suite of documents to examine and a close look at your credit bureau, your mortgage professional is not able to address any potential issues which may come up.  For example, in today’s busy market, you may end up in a bidding war with another buyer which could result in a shorter financing period.  You could lose the house of your dreams if an issue with your financing arises after a real application is taken.  That’s sucky so how can you avoid this?  Get a real mortgage pre-approval.  That’s how.

A mortgage pre-approval will involve paperwork and credit bureaus and questions oh my! 

  1. The application – You will be asked a series of questions.  This will include your social insurance number, your employment history, your address history, and a list of assets amongst other things of course.
  2. The credit bureau – Once you sign a consent form, your mortgage pro can pull your credit from Equifax.  They will take a very close look at your entire credit bureau and ask you questions if there are any concerns.  Why?  If we can see that in 2009 you had a history of late payments, I will guarantee that the lender can too and they will want to know exactly why.  If we know ahead of time we can address it right away which can expedite the whole process later
  3. The documentation – You are going to have to provide a whole pile of paperwork.   Getting all this in ahead of time allows us to address any potential problems
  • Letter of Employment
  • Pay stubs
  • 2 years Notice of assessments and T1 Generals
  • Proof of Down Payment
  • Divorce or Separation Agreement
  • Bankruptcy Documents
  • And whatever the heck else they ask for.
  1. The submission – Once this is all put together, your pre-approval can go in to the lender.  They will take a look and decision the file which will still be subject to them approving the home you choose and the mortgage insurer also coming on board.

The thing is that you are going to have to provide all of this paperwork at some point so you may as well do so ahead of time and rest easy in the knowledge that your financing is secure.

Keep in mind that even if you already own a home and are just looking to make a move, you should take the time to get yourself a pre-approval.  Just imagine selling your current home only to find out that you are no longer qualified to purchase the next. Yikes!!

And there you have it in a nutshell. How to successfully navigate the pre-approval process.

Taking Care of your Financial Business.

General Pam Pikkert 10 Nov

This time of year we start to think about getting the house ready for winter, the upcoming holiday season and maybe even a coveted spring vacation. But maybe we should add something to that list.  It is time to make sure your financial picture is as rosy as it can be.  This week we are going to look at a few things that should make the list for such an undertaking.

Set an Annual Date – We all know that we have the best of intentions when it comes to setting things up properly but life always seems to intrude and we never seem to quite get there.  Set aside an entire day each year.  Turn off you phone, shut down the social media, take the kids to daycare and focus!  It may seem extreme but the freedom that will you will enjoy the rest of the year without these matters weighing on your brain is well worth the day you dedicate.  We can try to make it sound fun and give it a catchy title like Financial Day.    

    The first time is going to be the most difficult.  If you are like most of us then your organizational skills may be lacking.  Purchase a filing cabinet and some folders to help yourself.  Experts say that we should be able to lay our hands on any important piece of documentation within 2 minutes.  If the year ahead involves a mortgage which will mean finding said documents then you will be very happy you did so.

What types of things should you do on Financial Day?

  1. Review Your Will – It goes without saying that you should have a legally prepared will.  If you don’t have one, get one.  Make sure you are still happy with the choices that were originally made.  If your marital status has changed then you certainly do not wish your ex to remain as your beneficiary.  What about the kids?  Is the choice of guardians from last year still acceptable? Taking the time to set your estate in order is a great gift to those you leave behind.

  2. Review your Life Insurance – Are you still sufficiently covered?  If you have purchased a home or had another child then you will certainly want to consider increasing your coverage.

Is it time to consider adding disability or critical illness?  Have you gotten a divorce? If your marital status has changed then it is certainly time to ensure the beneficiary is correct.  

  1. Review your other Insurance – Take a look at your home, automobile and health coverage.  Ensure that you have adequate coverage and take the time to call to ask any questions you have about your insurance.

  2. Pull your Credit – For $23.95 plus GST you can see your full credit report and your credit score.  This will give you the opportunity to take a close look. For example, perhaps you had a personal or vehicle loan which has been paid out but which is still showing a balance.  You can take a minute to call the lending institution and ask them to remedy this situation.  You can also set your mind to rest about the threat of identity theft.

  3. Investments and Bank Accounts – Take a close look.  Are your investments sufficient to meet your goals?  Do you need to increase your RRSP contribution?  Setting up a monthly contribution can feel less painful than trying to come up with a lump sum. A really important thing to do for all of your accounts is to make sure that your spouse or estate executor is able to access them in case of emergency.  Have the logins and passwords in an agreed upon spot.

  4. Mortgage – It is a great idea to review your mortgage statement.  Perhaps it’s finally time to set up a small monthly increase to your mortgage payment to help you pay it down quicker.  This also gives you the chance to make a mental note of when your renewal is.  You can save a significant amount of money by shopping for the best rate and allowing yourself sufficient time to do so can ease your stress levels at that time.

So there you have.  A step by step guide to a successful Financial Day.  There are professionals to help you with insurance, legal, mortgage and investments so use their expertise and just go do it!!