Kevin: Today, I want to go back to the basics and talk about pre-approvals. And to help me do that, we brought in Eric and Marc from Ottawa Mortgage Shop. So I guess we'll start off with the basics. What is a pre-approval?

Marc: Well, a pre-approval is basic, but it's super important. And in my opinion, everybody should be out there equipped with one while they go shopping. So the pre-approval is you talk to your mortgage person, and you try and figure out what type of payments or housing price you can afford. One is so that you don't go out there looking at houses that you can’t afford, unfortunately, get your hopes up, and then have a hard time finding something maybe that's more in your price range. So what we do is basically we collect documents upfront, we take an application that should say, and then from there from the application, we'll collect a few basic documents regarding income and downpayment. And we'll work with the client to let them know what they're comfortable with in paying, and what they can qualify for. So that's essentially a pre-approval, it also guarantees your rate for 120 days, once it's sent to the bank. So if you're scared of rates going up, and those types of things, you know, pre-approval is good. So you can go in, especially in this type of market right now, where Kevin, you would know, a lot of, you know, there's a lot of purchases that are being made, where, you know, there's no financing condition involved. So it's an absolute must, that you have the pre-approval, so you know, what you're getting yourself into, and you can shop with confidence. So that's kind of the basics of a pre-approval.

Kevin: Yeah, for sure. And, and I know, like you kind of answered it, but we'll get more into it is what is the real importance of pre-approval. I know a lot of my buyers review this.

Eric: Yeah, so I'll touch a little bit more on what he touched for. But you know, a raid hold, especially in this market of uncertainty is one of the big ones. So we can actually hold the rate for 120 days. So if you're looking to purchase in the new year, I mean, if you start now you can have the rate hold until 120 days. So that gives you a little bit more flexibility and a little bit more peace of mind of shopping, knowing that if there is a rate increase that you're locked into to the proper rate, the other one is qualifying, so we want to make sure that the prices that you have, or the purchase price that you have is looked at and the documents looked at to make sure that there are no hiccups when it comes down to making an offer on a house with this market, and you know, it moves fast. So once you see a house, you fall in love with the house, you want to put an offer in so having all your ducks in a row prior to that, just simplifies the process, making you the, fast runner in putting in an offer on a house, giving you more chances of actually getting that house, I mean, the emotional rollercoaster of finding a house, falling in love with the house, and not being able to get the house and trying to get your financials in order. It's kind of frustrating. So we want to make sure that everything is in line, that we look at the proper documents, so there are no hiccups at the end. So you're going in with the offer with great certainty of, “I can purchase this house.”

Kevin: Yeah, for sure. And so, say I want to get into the market. And I call you guys up and I want to get approval today. What do I need?

Eric: So the first thing first is a quick little conversation to see where your head's at, where you're looking at what your morals are, yeah, little discovery of what your goals are and what you're looking to do. And then we fill out an application and in the application, we're going to look at three things. One, we're going to look at your credit, obviously, we have to look at your credit to see you know, your credit score, see if you have any debts, car, car payments, credit cards, and what have you. And then we're going to look at what we call the debt ratio. Okay, the debt ratio is really, you know, without boring you with the numbers, it's really what's going to give us our number. So ideally, what it does, it's going to take the mortgage, that you're trying to get the property taxes of that mortgage in the heat, all your existing debt, and we're going to divide it by your salary, and it's going to give us a percentage. And you know, by law, we can't go above 44%. So that's sort of the calculations that we're going to do. The other main thing that we look at is the downpayment. Since the new rules came out for anti-money laundering, there's no joking around with the down payment, the lenders are very specific as to what they're looking for. If there's a large deposit on the account, they want to know where that large deposit is coming from. So we have to make sure that everything is in order on the down payment.

Marc: We're looking for essentially what the lender is looking for is a roadmap. So if you had money here, there, there and there. You know, we need 90 Day history of everything so that it makes sense, if there are large deposits coming in from overseas or, you know, cash that you might have had under your pillow type of thing, you know, we need to figure it out. Because that's that's often a sticking point. So it's important to do that in the pre-approval process and not towards the end when you know, mayhem can happen, and we desperately avoid that.

Eric: So the biggest point I think, is having your downpayment and being able to explain what is out there will help us a lot to get the approval done quite quickly. Right now, our turnaround time and pre-approvals to be honest with is are less than 24 hours. So we're able to do it quite quickly. It's not something that's a lengthy process. And we can get it done fast so you can get out there and shop around.

Kevin: I was glad that you guys mentioned that because that's why I love working with you guys so much. A lot of times people want to get out there, they're looking at homes right away. So you will get a pre-approval that fast. That's amazing.

Marc: Yeah, no, it is. It's just like it basically it's like, let's not put the cart in front of the horse, right. So there is a process to it. And you know, and it's good for you guys, because you guys aren't, you know, showing houses unfortunately to people who might not be ready for that type of house yet. So now we appreciate you in that for you and all your clients. It's awesome.