The Greenhouse
by Pine

What is a mortgage pre-approval and why is it helpful?

At the end of the day there are many things to consider during the pre-approval process.

Shop around for the mortgage that works best for you.

When you’re shopping for a mortgage you’ll receive offers from a variety of lenders. Each mortgage lender has a process that allows them to determine the following; know the amount of a mortgage you’ll qualify for, estimate your mortgage payment, and lock in an interest rate for a period of time. 

Pre-approval of a mortgage can be important for many reasons especially when it comes down to determining your budget. The specific details of your mortgage pre-approval process will depend on where you receive your loan, but typically have the same core steps. 

Keep in mind pre-approval is generally a rate hold for a certain period of time, usually 120 days and generally to give you an idea maximum you can qualify based on the information provided.

Core steps to getting an approval

The most important step in getting your mortgage approved is shopping around for the plan that works best for your needs. It’s easy to compare rates with any number of leading mortgage lenders. 

Next comes the estimation on your future mortgage payments, understand the maximum amount of a mortgage you’ll be approved for, and lock in an interest rate for a period of time depending on your lender. During this process, the lender looks at your credit, as well as some crucial documentation to determine the maximum they’ll allow you to have, as well as your interest rate.

The documentation you'll need

Before giving you a pre-approval, your mortgage advisor will need to take a look at a couple things: 

  • Your assets, 
  • Your income
  • Your current debt standings

Later on, your lender will have you provide recent financial statements from bank accounts and investments in order to determine the legitimacy of your goals of paying for your mortgage. 

Additionally, they will be looking for a certain level of documentation from you. These documents will include but not be limited to:

  • Your identification (e.g. passport, driver’s license), 
  • Proof of employment (e.g. a letter of employment from HR), 
  • Proof of savings (e.g. monthly bank statements), 
  • Information about your other assets, 
  • Information about your debts (credit bureau), 
  • Information about your current financial obligations. (e.g. credit card balances, child or spousal support, student loans, lines of credit, car loans, or any owed debts)

Anything else? 

At the end of the day there are many things to consider during the pre-approval process. While this helps you understand the maximum you may get for your prospective mortgage, it doesn’t guarantee it. The approved mortgage rate will depend on the amount of your down payment paired with the value of the property. So though there's possibilities of getting a higher mortgage, you have to also account for additional fees that come up when purchasing. Additional fees to plan for are: 

  • Closing costs (e.g. land transfer tax), 
  • The costs to move (e.g. renting a truck, hiring movers, boxes), 
  • Home insurance
  • Ongoing maintenance costs (e.g. utilities) as you prepare the home for your arrival. 

Welcome to the adventure of buying your forever home!

Question? We've got answers.

What’s involved in getting a mortgage from Pine?

Does Pine charge any lender fees?

Can I take advantage of the Home Buyer’s Plan with Pine?

Will I have a point of contact at Pine?

Is my data secure with Pine?

How much of a down payment does Pine require?

Can Pine help me if I have poor credit?