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While shopping for a mortgage, lenders provide different options in order for you to get an understanding of how much you can afford.
Mortgage lenders have a process which may allow you to:
• know the maximum amount of a mortgage you could qualify for
• estimate your mortgage payments
• lock in an interest rate for 60 to 130 days, depending on the lender
The process is known as mortgage pre-approval and may be divided in various steps. Different lenders have different definitions and criteria for each step they offer. During this process, the lender will look at your finances to find out the maximum amount that may be lent and at what interest rate. They will ask for your personal information, income, debts, assets, various documents and they will likely run a credit check.
Once you have a pre-approval, you should avoid making big financial decisions, as the process does not guarantee you the approval if the financial conditions change. Therefore, avoid:
• Changing jobs
• applying for new credit
• making major purchases without checking with your broker first
