Credit / Documents / Lenders / Market Updates / Pre-Approvals / Purchase / Qualifying / Rates & Terms

Pre-Approval Do’s & Don’ts

mortgage pre-approval

For any homebuyer, a pre-approval is a good idea. It not only holds an interest rate for up to 120 days which is a good thing right now given rates are increasing, it also confirms you CAN qualify for a mortgage and determines what amount you qualify for. It is important to know that a pre-approval alone is not an absolute guarantee of mortgage financing. The property you select as well as the supporting documents confirming your finances as stated on your credit application must also be reviewed and accepted by the mortgage lender.

A pre-approval is based on your financial profile at the time the application is made and if there are any changes to your finances up to the time you purchase and move into your new property, you may be putting your financing at risk. It’s important to speak with the mortgage lender who pre-approved you if you are considering a change in your debt load or employment prior to your closing date.

The Do’s

DO-pay down credit balances

Reducing your debt level is never a bad idea. If you’re trying to qualify for a higher mortgage amount, lowering your debt level gets you further than increasing your downpayment amount.

DO-use an experienced realtor; or lawyer in the event of a private sale

You consult a doctor about your health, you consult a mechanic about your car, you should consult a real estate professional about any home purchase. Using a professional, even in the event of a private sale, allows you to benefit from their experience as you navigate through the process of buying a home.

DO-put a financing condition on the Offer to Purchase

A pre-approval is an approval based on you the borrower and your current financial profile. The property you are buying now requires an approval, specifically the value versus the purchase price and the overall condition and location of the home. A financing condition allows you time to get the property approved and supporting financial documents accepted by the lender. If for some reason the financing is not proceeding, your initial deposit will be returned to you. Alternatively, if financing is approved, your initial deposit is credited towards the down payment you wish to make.

DO-start saving up your closing costs

In addition to having a down payment, the lender will want to confirm you have additional access to funds to cover the closing costs. This would include legal fees,  property tax adjustments, title insurance and any other miscellaneous moving expenses.

DO-know your payout penalties

Ensure you are aware of the costs involved if you break your mortgage term early for any reason. Given the number of special low rate discount mortgages being offered these days, make sure to read and understand the fine print before you sign. These details should be disclosed to you initially and if they aren’t, ask the right questions.

DO- start getting your supporting documents together

This will make the process go faster when you find a property. Your favourite mortgage professional should be able to provide you with a list of required documentation at the time of the pre-approval.

The Don’ts

DON’T-switch employers or positions without first speaking with the lender

Again, your pre-approval is based on your current employment details and if you make a change, your pre-approval status may be affected.

DON’T-incur more debt

Your pre-approval is based on balances owing at the time of application and if the amount owing increases, your maximum purchase price could be reduced. This includes “don’t pay for a year” scenarios.

DON’T-forgo a property inspection to save money

It may cost you more in the end. Your real estate professional should be able to provide a referral for you if required.

DON’T-overlook a property because it needs a little TLC

Most lenders offer a “purchase plus improvement” mortgage. This allows you to include the cost of the improvements in your total mortgage amount such as new paint or new flooring. There are some special conditions surrounding this type of product.


If you can’t get a pre-approval for any reason at this time, your mortgage professional should be able to provide you with a plan of action for future financing approval.

If you’re looking for an experience Mortgage Broker, contact the Mortgagegirl at 780.433.8412 or email Stay in the loop by following on Twitter @Mortgagegirlca.


6 thoughts on “Pre-Approval Do’s & Don’ts

  1. Part-time earnings may not count when seeking a mortgage. The two-year rule for counting part-time income has been an industry standard for years and was recently incorporated into regulations adopted by the Consumer Financial Protection Bureau

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