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Pre approvals / Approvals

Pre approvals / Approvals

What does the lender look for when they qualify you for a preapproval or an approval for a mortgage?

First thing they look at on deals over 80% Loan to value is your Beacon score. This shows up on your credit bureau. This score tells the underwriter first and foremost if the client meets CMHC/ Genworth / Canada Guarantee (which are the insurers that must insure the mortgage to be allowed to lend the money) minimum score standards.  Passing that they can move to step two.

Second they look at the Credit bureau to see how you are paying your revolving credit (lines of credit and credit cards) and then your loans.

The next thing if all that is good. They look at how much your monthly payments are. There are ratios that have to be kept and cannot be exceeded.

To know what the ratio is they now need to know how much you earn. Time at your job and if you are full time, part time or are paid hourly. Again even this plays a role in the Approval process.

Now if your income is good enough to make everything work the next step is the down payment.

They need to know where is the down payment  coming from and how much it is? This too has an effect on the ratios and sometimes make or break the deal.

Last but not least is the home and where it is. Yes even this plays a part. Some lenders restrict where they lend and what they will lend on so this two has to be looked at.

This is an over view of what goes into an approval and preapproval. It certainly is not everything, however I hope it gives you some answers to your questions.

There will be more information on this tomorrow.


Allan Burnett

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