documents required for pre-approval

Steps and Documents Required for Pre-Approval

When looking into getting a mortgage, you may also wonder, what are the most important pieces to getting pre-approved? Before getting pre-approved, you’ll have to, know the maximum amount of the mortgage you can qualify for, estimate your mortgage payments, and lock in an interest rate for up to 60-120 days.

Steps to a Mortgage Pre-Approval

The mortgage pre-approval process is divided into various steps. First, you’ll want to begin the process by completing a mortgage application. This will give the lender an idea of what they can offer you given all the information you will have provided them. Below are 6 steps for the mortgage pre-approval:

  • Step 1: Determine Your Mortgage Payment Comfort Zone
    • It’s important to know ahead of time what monthly mortgage payment you’ll be able to comfortably pay after you’ve settled with a mortgage.
  • Step 2: Understand Your Credit
    • You’ll always want to get your credit pulled. This will help ensure which mortgage type is best fit for you on how your credit score looks.
      • Score of 700+: Lowest rates apply
      • Score of 650-700: Can also be approved for some of the best rates
      • Score below 650: Still have a good opportunity for mortgage approval, but the lender will need to rely on other application strengths, such as a bigger down payment or a stable employment record
    • Step 3: Get Proof of Income
      • You’ll need to provide the lender with a pay stub and an employment letter, which will state the exact start date, position, and salary
    • Step 4: Consider Down Payment
      • Lender will ask for proof of down payment, which can come from savings, gift from family, or existing home equity
    • Step 5: Talk to Your Mortgage Broker
      • Schedule a time to discuss what can be done with your mortgage application to get a better understanding of what you can do for a mortgage pre-approval. It’s NEVER too early
    • Step 6: Understand Rate Options
      • It’s recommended to never settle for the first rate that’s offered to you by your bank. Rates will depend on your credit score and down payment amount. It’s important to shop around with a mortgage broker for these rates before settling on one right away

What Documents Are Needed?

It’s come to the time of application, where your lender will begin to look at your assets, your income, and your level of debt. The lender may ask you to provide recent financial statements from bank accounts or investments. Such as, credit card balances, child support, car loans, line of credit, student loans, and any other debts.

You’ll also need to provide the following personal documents during time of application and submission:

  • Photo Identification
  • Proof of Employment
  • Proof you can pay for the down payment and closing costs
  • Information about your other assets (car, cottage, boat etc.)
  • Information about your debts or other financial obligations

You will be asked for proof of employment, and will need to provide the following information/documents:

  • Proof of your current salary or hourly pay rate (showing a recent pay stub)
  • Your position and length of time you’ve been with employer (job letter)
  • Two most current years T4 slips
  • If you’re self-employed
    • Notice of Assessment from the CRA (Canada Revenue Agency) for the last 2 years
      • Statement of Balance Owing confirming zero taxes owing to CRA
    • T SLIPS for the last two years
    • Two most current years T1 GENERALS
    • Certificate of Incorporate (if your incorporated)
    • Two most current years financials (if your incorporated)

It is VERY important to have a clear understanding of the implications when it comes to getting a pre-approval and what documents are required for the process. It makes all the difference in future planning and can impact you in very significant ways.

At GLM Mortgage Group, we know what questions to ask. We have relationships with the lenders that you know about and the lenders you don’t. We would be pleased to educate you on the financial options available to you. We want you to make the best decision possible on the mortgage that you are committing to. Call us anytime for a FREE consultation on the mortgage products available to you.