Getting a loan to purchase a home can be a tricky business, and there are terms one might find hard to understand. Here are some information from the Financial Consumer Agency of Canada on getting preapproved for a mortgage:
WHAT IS A MORTGAGE PRE-APPROVAL
When you’re shopping for a mortgage, you can compare options offered by different lenders.Mortgage lenders have a process which may allow you to: -know the maximum amount of a mortgage you could qualify -estimate your mortgage payment -lock in an interest rate for 60 to 130 days, depending on the lender The mortgage preapproval process may be divided in various steps. It may also be called mortgage prequalification or mortgage preauthorization. Different lenders have different definitions and criteria for each step they offer. During this process, the lender looks at your finances to find out the maximum amount they may lend you and at what interest rate. They ask for your personal information, various documents and they likely run a credit check.
This process does not guarantee your approval for a mortgage.
WHAT TO CONSIDER DURING PRE-APPROVAL PROCESS The preapproval amount is the maximum you may get for a mortgage. It doesn’t guarantee that you’ll get a mortgage for that amount. The approved mortgage amount will depend on the value of the property and the amount of your down payment. You can also look at properties in a lower price range so that you don’t stretch
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