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Step 2: Take stock of your financial situation by going through the full underwriting process of a


Pre-qualification or Pre-Approval?

There is confusion between the terms “pre-qualification” and “pre-approval” even amongst financial institutions. The one you want is the most rigorous, involving a credit check, verification of income, calculation of your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios, etc.

Until you've gone through the full process, the amount of mortgage you qualify for is an unknown.

The 4 Numbers You Need to Know

At the end of the underwriting process, you should be clear on 4 numbers:

  1. the highest purchase price you qualify for,  

  2. the purchase price that accommodates the monthly budget you are most comfortable with,

  3. how much cash on hand you will need for the down payment, and

  4. the amount of cash on hand you will need for closing costs.

4 Reasons you should consult a mortgage broker even if you've already been given the green light from the bank.

1. Your bank or credit union typically has only one mortgage product to offer you with one set of rules that apply to everyone - a mortgage broker has up to 25 to choose from. This will matter more to you if you are self-employed, have a complicated credit history or would benefit from having your family allowance counted as qualifying income.

2. A mortgage broker's allegiance is to you, not to their one mortgage product.

3. Mortgages obtained through mortgage brokers are every bit as safe and legitimate as mortgages obtained through a bank or credit union.

4. Mortgage Brokers are required to be more highly educated on mortgages than bank employees. Their service is free and places you under no obligation. It is smart to shop around!

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