Mortgage Approval Tips for 2021 - Properly

Mortgage Approval Tips for 2021

Properly is a different kind of real estate brokerage. It's the stress-free, full-service, modern way to move.
Learn more

By Lucas Samuels

You've been looking at homes for months and finally found “the one.” But before you can make an offer, you need to get a mortgage approval. There are tons of competing lenders and confusing information floating around online, which can make the mortgage approval process feel a lot more complicated than it truly is. Instead of sifting through all of that, help yourself get the best deal on a mortgage by following our tried-and-tested tips below:

Tip #1: Check your credit report

Make sure you don’t have any open, unpaid accounts that can impact your score negatively. If there are any concerning things on your report, you can work to have them removed or paid off before applying for a mortgage. Your credit history is one of the biggest factors in whether or not you qualify for a mortgage, so even if it isn't usually top-of-mind, having a clear credit report is essential. You can check and track your credit for free with companies such as Borrowell.

Tip #2: Find out what you can afford

Before you even start looking for a mortgage, know the size of monthly payment you can manage and how it will fit into your budget. You should also account for property taxes, insurance, homeowner's association fees (if applicable), utilities, maintenance costs, and other related home costs.

Tip #3: Calculate moving costs

After calculating how big of a mortgage you can afford, make a budget so you know exactly what all the other expenses associated with purchasing a home (such as moving costs) add up to. Don't forget that you'll want some savings for potential maintenance costs as well. 

Pay attention to the monthly mortgage payments you can afford and factor in your utility bills, taxes, insurance, home repairs, and other expenditures.

Tip #4: Decide on non-negotiables 

You’ll want to create a list of criteria for your dream home so it’s easier to identify “the one.” Consider any major repairs that need to be made, the commute to work, the condition of the neighborhood. Another thing to think about is whether or not you want to purchase a house that requires renovations or would prefer a recently updated or new place.

Tip #5: Have your down payment ready

Don't bother with the mortgage process unless you have a down payment saved up. You should also know what you can qualify for upfront. This will help you narrow down your search and keep you from wasting valuable time looking at homes that are out of your price range. Carefully consider all of the additional closing costs associated with purchasing a home, and then determine what you can afford.

Tip #6: Get pre-approved

You can find pre-approval from your bank or credit union before looking at homes in person. Doing this will help you focus your search on houses that you know for sure are within your price range. 

Tip #7: Consult your agent

If you’re working with a real estate agent, use them as a valuable resource for providing insight into the market.

Mortgage Approval FAQ

What is a mortgage pre-approval?

When buying a home, securing a mortgage is critical. A bad credit rating can make it hard to get a loan, but getting pre-approved can help. 

Pre-approval is essentially a fast-tracked mortgage processing system that allows you to search for lenders and get approved for a loan before you start searching for a home. These days, you can use a mortgage calculator and enter your basic information — including your income and debt ratios — to find out the most likely mortgage you qualify for. Pre-approval can also be obtained from all major mortgage lenders and can be a helpful way to make sure that you have enough money to make your payments.

What to provide to your lender or mortgage broker?

If you're planning on getting a mortgage loan and are thinking about pre-approval, there's a small checklist of documents that you’ll likely need to get through an underwriter before finalizing the loan. The lender will ask you questions about your credit history, income, and more. It's a good idea to contact your lender ahead of time and ask what information they need, so you can make sure you're prepared to answer their questions. 

What to do if a lender refuses your mortgage application?

Unfortunately, there’s no easy way to guarantee that your mortgage application is accepted by a lender. Lenders might expect a bigger down payment than you have, sometimes even refusing a mortgage if the applicant has less than 20% of the purchase price. The only way to know for sure if you will get approved for a mortgage is to apply, which is why we suggest you start the process as soon as possible.

Questions to ask your lender or broker when getting pre-approved

In addition to asking your lender for clarification on anything you need clarified, you should also ask these questions during the pre-approval process:

  • How long is the pre-approved rate guaranteed?
  • If interest rates decrease while I’m getting pre-approved, does the lower interest rate automatically apply?
  • Can the pre-approval be extended?

More Questions?

If you want to buy a home, you can go online to find a mortgage expert who can answer all your questions about mortgages and financing, or you can rely on a trusted mortgage broker who can help you find a lender that will approve your loan quickly. You can also find a lender that specializes in your neighbourhood.

Properly is a Canadian tech-enabled real estate brokerage transforming the home buying and selling experience as the only service in Canada that helps homeowners to buy before they sell.