What is a pre-approved mortgage certificate?

This is a certificate that secures a mortgage amount at a guaranteed rate (for fixed-rate mortgages) for a specific length of time. Consider for example the one you can obtain from your mortgage representative: if interest rates increase, your rate will not. And, if interest rates fall, you get the lower rate. You’re under no obligation to purchase a home within the time period. If your Pre-Approved Mortgage Certificate expires before you’ve found a home, you can apply for a new one by calling your mortgage representative.

Why is it important in buying a home?

A pre-approved mortgage certificate allows you to shop confidently and provides you with the security of negotiating a house price that falls comfortably within your budget. Many real estate agents will encourage you to get a pre-approved mortgage certificate before they begin working with you. The fact that you already have your mortgage financing arrangements in place indicates to prospective vendors that you are a serious buyer. The certificate outlines the maximum amount that can be borrowed, the interest rate to be charged, and the monthly payments. Of course, the confirmation is subject to a few conditions such as an appraisal of the property being mortgaged and satisfactory credit review.

What do I need to get one?

Here are some things you’ll need to have ready to obtain a pre-approved mortgage certificate:

• Personal information, including identification such as your driver’s license
• Details of your job, including confirmation of salary in the form of a letter from your employer
• Sources of income
• Information and details on all bank accounts, loans and other debts
• Proof of financial assets
• Source and amount of down payment and deposit
• Proof of source of funds for the closing costs (these are usually 1.5% of the purchase price)

It’s not easy losing out on the home you set your heart on. So before you fall in love and start bargaining, make sure you have a Pre-Approved Mortgage Certificate. With most banks or mortgage brokers, it’s absolutely free, with no cost and no obligation. Knowing what you can afford makes buying a home less stressful.