Get Pre-Approved

Get pre-approved

approved deniedYou have to know how much money you are comfortable spending each month on your new home. When you add up the mortgage payment, the property taxes, utilities, condo fees and home maintenance at what point do you scream “that’s enough!”

Mortgage lenders will assess affordability for you  too – they follow precise measuring guidelines to determine how much of a mortgage you are qualified to carry. Their method is pure arithmetic – they remove the emotion from the calculation. They calculate two very important ratios.

  1. Your GDSR (Gross Debt Service Ratio) This is the  the sum of your mortgage, taxes. heating bill and half of your condo fees, if applicable, as a percentage of your gross income.
  2. Your TDSR (Total Debt Service Ratio) Then they also factor in all your other monthly debt obligations (credit cards, student loans, car payments etc.) and figure out the grand total as a percentage of your gross income.

Pre-approved means you’re conditionally approved for a mortgage – up to a certain limit – in advance of actually buying a house. As part of the pre-approval process, lenders will want an official copy of your credit report – first you must give your written consent.

If you don’t actually want a formal pre approval certificate, an experienced mortgage broker can review your own personal copy of your credit report, (you can buy it from Equifax’s website) together with all the documents a lender is going to ask for, and will be able to offer a very strong opinion on what you will qualify for. This might save some valuable credit score points for later.

A formal pre-approval certificate will never have the lowest interest rates – don’t worry about that. You are not committing yourself to anything. In fact, most lenders say they only fund one out of every five pre-approvals they do.

Related Article: Please do not make big changes in your life after you are pre-approved

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