Mortgage Pre Approval Explained

The mortgage pre-approval is the very first step in the home buying process. It may sound like a less-than-thrilling first step but it’s an essential one. If you do not get a mortgage pre-approval, you could miss out on getting the house of your dreams.

A mortgage pre-approval is when a mortgage broker asks you a series of questions in order to assess your financial situation. Based on that information, your mortgage broker will pre-approve you for a set purchase amount and mortgage rate that lenders will be willing to offer you for your first term.

As soon as you have been pre-approved, your mortgage broker will then guarantee that the mortgage rate will not fluctuate for a specific period of time, usually 90 to 120 days. You are then “locked-in” to this interest rate. If interest rates go up, you will still benefit from this low mortgage rate. If interest rates go down, then it will be time for your mortgage broker to negotiate with the lender to secure you a new, lower rate.

First Steps

Mortgage pre-approval is the first step in the home buying process – even before finding a real estate agent. This means that as soon as you think you are in a position to buy a home, you should get a pre-approval. 

Being pre-approved before you choose a real estate agent, means that if you happen to find the house of your dreams, you will be prepared to make an offer. Mortgage pre-approval typically takes a few days, which could be the difference between getting that house of your dreams and missing out. 

How To Get Pre-Approved

Contact a mortgage broker at Dominion Lending Centres NasaKasa to apply for a pre-approval. The mortgage broker will ask a number of different questions about your employment, liabilities and current assets. Then the mortgage broker will pull your credit score. Based on your credit score, you will be pre-approved for a specific amount.

Pros and Cons

How much your lender is prepared to lend to you, is your maximum affordability. Your mortgage broker will calculate your maximum affordability based on the information you provide during the pre-approval process. Factors include:

  • Down Payment Amount 
  • Credit score
  • Income
  • Debts

Once you know how much you can borrow, your real estate agent can focus your home search on neighbourhoods within your price range.

On a side note, just because your lender pre-approves you for a specific home price, does not mean that you need to buy at the top of that price range.  Do the math and choose what price range makes sense for your finances.

If you do find the home of your dreams and you make an offer to purchase, your pre-approval will help with the deal, as the seller will know you’re a serious buyer.

However there is one major con to being pre-approved – your financing is not guaranteed. 


When it comes to securing financing for your mortgage, while pre-approval is a good first step, it does not guarantee that your lender will give you money. Here are some reasons why you could be denied a mortgage after being pre-approved: 

  • A change to your financial circumstances, such as a job loss
  • Flaws in the home itself, for example, old electrical wiring that’s not up to code
  • The home’s appraised value is well below the purchase price

Due to this, make sure that your offer to purchase is always conditional on financing. One major pro about receiving a mortgage pre-approval is that it’s free and you are under no obligation to purchase a home.

Dominion Lending Centres NasaKasa 

Mortgage pre-approval is a powerful tool in the homebuyer’s toolbox and it should not be overlooked. Contact one of our mortgage brokers at 905.997.7001 or mtg@nasakasa.com for pre-approval before beginning your home buying journey.

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