Getting A Full Pre-Approval For Mortgage Financing Is Crucial

I’m frustrated by mortgage brokers (and buyer agents) not doing a full mortgage pre-approval on behalf of their buyer client before putting in an offer.

Last week I had an offer on one of my condo listings downtown. The seller and the buyer agreed to price and terms and the buyer made their offer conditional upon arranging financing which is very common and acceptable to most sellers.

The problem arose when the buyer went to finalize their financing. It turned out that the lender wanted a whole series of documents that the buyer found difficult to find or provide. The mortgage broker either didn’t understand what paperwork would be required for a self-employed buyer OR he didn’t ask for the papers upfront.

To complicate things, both the buyer agent and the mortgage broker were friends of the buyer and did him a big disservice. They probably did not go into enough depth with the buyer to ascertain what his real financial situation was like (maybe they were afraid to ask him personal questions).

Either case, the mortgage broker put the buyer, the buyer’s agent and the seller through a futile exercise.

What a diligent mortgage broker or bank mortgage rep should do is ask the buyer to provide, up front when pre-approving a client, the following documents…

• Proof of income – A current employment letter, the last tax year’s Notice Of Assessment from Revenue Canada (2-3 years if self-employed), a current pay stub and a copy of the T-4 from the employer
• Proof of down payment – Copy of any GICs, copy of RRSP statements, copy of a bank statement or a gift letter from a family member if they’re contributing to the purchase
• Credit Bureau – Although this only takes about 2-3 minutes to process, brokers often miss this simple but crucial step

By doing this work up front, collecting all this paperwork, the mortgage broker will have removed all the guesswork from the process. A good broker will be able to analyze the documents provided and give accurate guidance to the buyer as to how much mortgage they can realistically qualify for.

To make a guess on the qualification amount without seeing the proof is totally irresponsible and just wastes everyone’s time !!!

If you come across a mortgage broker who says this is not necessary, or says “Wait till you get an offer accepted”, go and find another lender.

Frankly, they’re just being lazy and not taking your request for financing approval seriously.

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