How Important is Mortgage Pre-Approval for Homebuyers?

Is Mortgage Pre-Approval Important? Why Should You Get Pre-Approved? Are you looking to buy a home sometime soon? If so, you’ll want to get pre-approved for a mortgage and determine just what price range you can afford! Whether you’ve bought and sold many homes or are looking to make your very first purchase, pre-approval should be one of the first steps you take.

You want to be able to move quickly and make an offer on a home, especially if you feel like you’ve found “the one.” This is even more important in a seller’s market, where a listing may have multiple offers at once and buyers have to make decisions quickly.

Why shouldn’t you begin searching for a home without a mortgage pre-approval?

#1 – Misunderstanding your financial limit: You don’t know for sure if you can afford the home you want. Mortgage pre-approval indicates what your maximum allowable price is for a home that is affordable given your finances.

#2 – Unable to make a timely offer: You will have to get pre-approved before making an offer on a property. Another buyer could purchase that home in the meantime as you go through the process of mortgage pre-approval to allow yourself to comfortably make an offer within your limit.

#3 – Stronger position for negotiations: When a potential buyer has mortgage pre-approval, the seller may be more incentivized to negotiate a deal since the sale is less likely to fall through.

#4 – Reduce your stress: You may feel stressed out due to time constraints if a home comes onto the market that you love and you're not already pre-approved. Pre-approval makes searching for that perfect property the way it should be – enjoyable and exciting!

#5 – Avoid disappointment: Browsing for a home without knowing your price is setting yourself up for disappointment. Take the stress of wondering if you can afford a property out of the equation.

No one wants to let their dream home slip through their fingers, so don’t let it happen to you… and get pre-approved for a mortgage!

Also, the importance of mortgage pre-approval applies to both the seller and your Realtor®. It shows your hired agent that you’re serious about buying!

Browse for the Best Rates

Chances are you wouldn’t purchase the first show home you view, so why would you do the same when it comes to a mortgage pre-approval?

Your home will likely be one of the largest purchases you’ll ever make. So, do yourself a favour and shop around for the best mortgage rate. That means thorough research into multiple lenders including the big banks – TD, RBC, CIBC, Scotiabank, Bank of Montreal – as well as mortgage brokerages for the best interest rates, loan terms and qualifications.

Many home buyers opt to use a mortgage broker as they negotiate for the best interest rate on your behalf. Many Realtors® highly recommend using a broker because getting a better rate, even by half a per cent, could mean tens of thousands of dollars in savings over the long term.

Keep in mind that a mortgage broker or lender won’t be able to give you definitive loans until you’ve found a property to buy. Once the mortgage and down payment amounts are specified, they will then provide terms and interest rates.

Collect Your Documents

Your lender will let you know what documents they need to make an appropriate evaluation for your pre-approval. Those include, but are not limited to:

  • Identification
  • Social Insurance Number
  • Bank and investment account statements
  • Proof of assets
  • Proof/letter of employment
  • Current debt, if any
  • Tax income statements
  • CRA statement of accounts

Collecting the documents necessary for mortgage pre-approval can take some time. Give yourself at least a week to get these together for submission to lenders.

Make Yourself Available

Once you’ve submitted all the necessary documentation, make sure you’re available to answer any questions your mortgage broker or bank may have.

Yes, that means trying your best to not go on vacation to a remote island in Southeast Asia where cell phone towers and data services are sparse.

If you’re mortgage broker cannot reach you, they may start to make assumptions; it’s all they can do when you’re unavailable. Not making yourself available during the evaluation process could mean getting denied for pre-approval, and you’ll have to start all over again.

If you absolutely must be unavailable because of a work trip, for example, make sure to let your broker know about it and be clear with expectations on the timeline of your future home purchase.

Do your due diligence. Make yourself available as much as possible when your broker is reviewing your case. It’s simply in your best interest to do so.

Evaluate Your Financescalculating

Just because you’ve been pre-approved for a $600,000 property doesn’t necessarily mean you’ll want to buy a home that costs that much.

Take a step back and evaluate the “other” costs associated with buying a home, such as:

  • Down payment
  • Moving costs
  • Move in/out cleaning
  • Utilities and transfers of service
  • Condo document review (if applicable)
  • Home inspection
  • Lawyer fees

You may find that buying a home on the lower end of the $400,000 to $500,000 range instead of the upper end approaching $600,000 will allow you to continue to save money while making the appropriate mortgage payments.

Read the Fine Print

Assuming you’re reaching the final stage of buying a home, you’ll now want to read all the fine print on all mortgage-related documents you receive. They will outline critically important details such as:

  • Mortgage amount (maximum)
  • Loan term
  • Interest rate
  • Conditions of approval

Sometimes such documents can be a mind-boggle. If you need help understanding them, ask someone you know, a family or friend to go over them with you carefully.

You can also ask your Realtor® if you have one and they should be happy to answer any questions you have.


Aren’t sure about which mortgage broker to use? Ask an experienced Realtor® to refer you to an experienced broker who will have your best interests at heart. Any highly experienced Realtor® should have the industry connections to make your next real estate transaction convenient and enjoyable.

Questions about Mortgage Pre-Approval?

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