I have had a number of questions lately regarding a home loan pre approval, or in other words a mortgage pre approval. If you have any questions that I haven’t answered, please visit our contact us form. I will reply to your question and post it here for everyone to see.
How long is a home loan pre approval good for?
With most lenders, the pre approval is good for up to 90 days. Most lenders will also guarantee the interest rate over this period of time for you as well. If you are coming close to the 90 day limit when you find a home and are ready to set up the mortgage, some lenders will ask for some updated documentation. Most of the time, they want to ensure that you are still working at the same place and that you haven’t gone out and borrowed a bunch of money.
How much does it cost to get a home loan pre approval?
There should be no cost. As a mortgage broker, I get paid by the lender when your mortgage is set up and funded. If the lender doesn’t pay me directly, then I would charge a professional fee. We rarely charge professional fees because most of the lenders we deal with pay us a fee directly.
If you are dealing with someone who wants to charge you a fee in exchange for a home loan pre approval, then don’t accept it.
Should I obtain a home loan pre approval from a couple of different banks (lenders)?
You can do this if you wish, however there are a couple of disadvantages:
- Each bank you deal with will check your credit and this could affect your ability to qualify for a mortgage in the future.
- You have to take extra time to book appointments and meet with representatives from each bank
If you work with a mortgage broker, we only have to check your credit once. We will use this one credit check to provide your details to each bank you are interested in dealing with. You only have to meet with us once.
Do I have to have all my credit cards and loans paid off before I apply for a home loan pre approval?
No, when we calculate your ability to qualify for a mortgage there is room in the calculations for you to continue to hold credit card balances and loans. In fact, it is rare that someone applies for a home loan pre approval who has absolutely no outstanding debt.
As a First Time Home Buyer, do I have to qualify differently for a home loan pre approval?
Whether you are a first time home buyer or if this is your subsequent home (second, third, fourth, etc.) the qualification process is the same.
The advantage you have as a first time home buyer is that you can withdraw up to $25,000 from your RRSP without incurring any income tax. There are some rules that you must follow for this First Time Home Buyer Withdrawal:
- You must have the funds in your RRSP for at least 90 days
- You can withdraw multiple times within 1 calendar year under the First Time Home Buyer Plan
- You can withdraw no more than 30 days after you take possession of your first home
- You must pay the money you withdraw back over the next 15 years
Why should I bother getting a home loan pre approval? I have good credit and a good job.
A home loan pre approval certainly isn’t necessary to go shopping for a home but it certainly is recommended. Even if you have good credit and a good job, sometimes lenders look at income a little different than we do. A lender may not consider all the income that you earn when calculating how much you qualify for.
There may also be an issue with your credit that you don’t know about. It’s better to find out about that sooner and save the potential embarassment later…
Do you want to purchase a home? Have you received a home loan pre approval (mortgage pre approval)? Start the process today.