At American’s Moneyline we cannot stress enough the importance of having a strong pre-approval letter. With the current competitive market you need to be one step ahead of your competition. A pre-approval letter is often misunderstood as to what it fully entails. Below we have put together a complete outline of what you need to know about a pre-approval letter.
1. What is a Pre-Approval?
Hands down, a pre-approval letter is an imperative part of the home buying process. One thing that must be clear is that a pre-approval letter is not a broker’s promise to loan you funds, rather it is the opportunity to distinguish how much money you can potentially borrow. Our loan officers will review your income, credit, assets, liabilities, and will determine your maximum pre-approved mortgage amount.
2. Why is a pre-approval necessary?
Not only is a pre-approval a vital component in your home purchasing process but it will help outline the max purchase price you should consider in a home. The letter will give you confidence knowing what you have available to purchase within your means. At America’s Moneyline we find that buyers will focus directly on the pre-approved amount when your attention should be directed to how much your monthly expense will become. Our loan officers will work with you to make sure you purchase comfortably.
3. Requirements of a pre-approval
Your pre-approval letter will be generated from a complete analysis of your financial situation. Your loan officer will be pulling your credit score and checking your credit situation in addition to reviewing all financial documentation. The documents you will be asked to provide are:
- Letter of employment.
- Your most recent pay records
- Your last two years of T4’s or notice of assessments
If you are self employed, you will additionally need to provide:
-3 years of fully accountant prepared T1 Generals
-2 years notice of assessments
4. How long is a Pre-Approval Valid for?
Your pre-approval will be valid for 90-120 days. If you find yourself still searching for a home beyond that time frame you will have to provide all new documentation when the original letter expires.
5. When should you obtain your pre-approval?
You should obtain your pre-approval letter BEFORE you start your home search. By having your pre-approval ahead of your home searching you will be able to know exactly where you financially stand. At America’s Moneyline we work with our clients to make sure they understand and design a preferred monthly budget.
You can count on our loan officers to present expert market knowledge that helps you secure competitive rates and terms that benefit you and your homeownership goals. Our number one goal is for you to feel confident when you make your mortgage decision.