I feel like the catchphrase of a first-time home-buyer is “I had no idea that was A Thing,” so I’ve teamed up with BMO to break down some of the key things you need to know going into the whole buying-a-house process over the next few weeks.
Up first is one of my personal favourite parts of the process: Getting pre-approved for a mortgage.
See, I loved the process, because it involved talking about budgets, printouts of my financial details, and at the end of it, my mortgage specialist commended me on how well-prepared I was.
Getting gold stars is my jam.
So to make sure the process is much more gold-star than “I had no idea that was A Thing” for you guys, I talked to Jared Ksenica, Regional Vice President of Specialized Sales for the Greater Toronto Division at BMO.
He was kind enough to answer the questions I feel like we all kind of have in the back of our minds going into a mortgage meeting (including me, I just had to Google mine instead of talking directly to a mortgage expert).
And stay tuned, cause we’ve got a handy downloadable checklist for ya, too.
Q: Can I call you Jared?
It just seems so much less formal, and we’re already talking about mortgages, A Very Serious Topic.
I asked this via email, but he agreed.
Q: How do I get a pre-approval meeting?
It seems silly, but that is a very real question I had, because I’m not a big in-person-services person. When I knew I had to book a pre-approval, I basically just flailed, procrastinated, and then asked The Boyfriend to do it for me (true personal finance confession). Luckily, Jared’s got my back on this one.
“A pre-approval meeting can be conveniently arranged by contacting a Mortgage Specialist on the BMO website via the locator,” he says, winning him some heart-eye emojis for the fact that it can be done online. “The Locator feature allows a customer to select a Mortgage Specialist based on a series of defaults, including city or town and language preference.”
He also notes that your realtor might have specialist recommendations for you, which requires you be more organized than I was and actually have a realtor before you go get pre-approved… but I digress.
And how long should you expect to be there? “Typically an hour, based on the knowledge and familiarity with the pre-approval process.”
So basically, if you’re on your fiftieth mortgage and know the process well, it might be shorter – but us first-timers should probably bank on an hour.
Q: What do I need to do before coming into the pre-approval?
I know I’m nowhere near average when it comes to how much I love to prepare for financial meetings, so I made a point to ask how much information someone would actually need before going in for a pre-approval.
“It would be helpful for the customer to have a sense of what type of property they are looking for (single family, town home or condominium),” Jared advises, which seems like a totally do-able amount of information, especially if you’ve been creeping realtor.ca as hard as I know you have been.
“Also if a customer is looking to buy a new construction property from a builder, we can discuss the appropriate steps to complete the purchase which differs from a standard pre-approval.”
Q: What do I need to bring with me to the pre-approval?
This was the Big Kahuna for me, and I suspect it’s what’s most on your mind too. If you’re going to an in-person meeting and you want to make the most out of the hour, what should you bring with you?
“Ideally, confirmation of where the customer works – pay stub or employment letter and confirmation of any funds available to assist with the down payment,” says Jared. I was thrilled when I only had to bring in a pay stub, not an official signed letter from HR. Nothing against HR either, it was just soooo much easier.
“Some customers like to bring their budgets to the initial meeting, which is helpful to assess the level of comfort for the customer.” (You guys know I did this too, and highly recommend it.)
So basically, print out your financial life as it relates to the home-buying process, and bring it with you. Luckily, BMO and I have got your back: We put together this checklist of every document you might want to bring with you, including a section for a co-buyer as well.
Nothing keeps someone organized like a checklist, guys.
Q: So to clarify, do I have to know my budget before coming in?
I’m a keener, but Jared’s got a more practical take on things.
“It is entirely based on customer preference,” he says in reply to my question about budgets. “Some customers like to access online tools available, and others feel daunted by the process until they meet with a Mortgage Specialist. We’re happy to accommodate based on the customer’s preference.”
But there is one number Jared and I both think you need to have locked down before diving in.
“One of the most important factors to consider is the amount available for the down payment.”
Mortgage Specialists are great at what they do, you guys, but please don’t make them explain to you why you can’t buy a $500,000 house with a $5,000 down payment.
Q: Will getting pre-approved impact my credit score?
My credit score never really mattered to me until I showed up at a bank asking them to lend me hundreds of thousands of dollars. So since your credit is probably top of mind when buying a house too, here’s what Jared had to say when I asked about my precious score.
“When we provide a pre-approval to a customer, we’re providing this approval for a dollar amount so that they can feel confident to begin the process of looking for a home. This does include a credit check and we would assess the income and down payment the customer has available to them to be comfortable when looking for a home.”
Ok, so yes: Getting pre-approved for a mortgage includes a credit check, which won’t sink an excellent credit score, but it is a small ding against you. Luckily, they’ve thought of that – and if you’re really worried, you might be able to work around it.
“If a customer is concerned about a credit check being conducted, they should inquire with their Mortgage Specialist who will be able to guide them appropriately, without providing a firm pre-approval,” Jared tells me.
Q: Can you tell me how much I’m approved for right away?
You’ve done all the prep work, you’re at the meeting, and you’re ready for the Big Reveal – how much do you get?
Sadly, that’s not really how it works.
“Since we’re assessing the documentation being provided and assessing the credit report to ensure that we are best able to properly guide our customers, approval typically follows in 24-48 hours.”
So Jared, what you’re saying is don’t leave the meeting and immediately go buy a house based on the casual conversations we had? Cool, good note. Wait for the actual pre-approval.
So what’s next?
It turns out, getting pre-approved for a mortgage isn’t actually as complicated as it seemed before I did it, and I probably didn’t need to outsource all the set-up to The Boyfriend, in retrospect.
To get pre-approved for a mortgage, you need to…
- Book a meeting
- Know what kind of property you want beforehand
- Bring in the right documents
- Know how much you have for a down payment
- Don’t go buy a house immediately following the meeting
To make sure you remember those documents, and bring in the right ones, make sure to grab the Pre-Approval Document Checklist now – and happy mortgages, friends!