Now that you have compared and found the best mortgage rate, you’re next step in the mortgage process is securing a mortgage approval from a lender. How do you do that and how long does it take? Here to help answer those questions and more, we sat down with Jake Abramowicz, a Toronto mortgage broker with the Mortgage Edge. You can read his blog MortgageJake.com and follow him on twitter!
Q: Will a mortgage pre-approval improve your chances of getting a mortgage approval?
Yes and no. Yes, because it’ll give the lender a chance to either review [the mortgage pre-approval] or have the system review it. Yes, because it’ll give us a chance to see how the deal looks before clients go house shopping, and it gives clients a direction to head with respect to payments, prices, and what to expect to put as a down payment. BUT a big NO because a pre-approval is “worth only the paper it’s written on.” Usually pre-approvals are done by systems and not by people and hence anything can happen between pre- and real approval time. It’s definitely a great start but not the same as a true commitment.
Q: What is the typical turn-around time after you submit a mortgage application? Are some lenders faster at approving mortgages than others?
It can be as little as 4 hours. Typically though, “in by 9am out by 5pm” is a good rule to have. Usually if I send a deal in the evening after work hours, I expect an underwriter response by the next morning at the very least, and then an approval by the afternoon. If I feel that there are items on the mortgage application that could cause a delay, the best practice would be to detail them in the application notes and follow up with an email (plus any documentation you have). But on a straight-forward application, one without complications, 4 – 8 hours is the typical turn-around time.
Also, as brokers, reviewing service levels with mortgage applicants is important to give them an idea of turn-around times.
Q: Will a good relationship with a lender influence the speed of the approval?
Absolutely. The approval process is all about relationships. A good agent will have strong relationships with multiple lenders. Not only is a good relationship important with the approval process but very important in the closing process. It’s important to get it approved in time, BUT it’s equally important to have conditions waived and reviewed well before closing so that if something comes up, it is easier to overcome.
Q: What documents do consumers need to provide?
It depends, just as long as they get their numbers straight such as T4 info, hourly wage, salary, etc. Clients need to sign an approval before checking credit but that’s all we need. The more prepared the client is for closing – the better. In most cases, we need an MLS and Offer of Purchase and Sale to get started, so the lender has plenty of information about the property.
Q: Does a consumer’s credit rating influence their approval time?
To some extent, yes. Nowadays I find minimum beacons are around a score of 650 [for good turn-around time]. The truth is that a good score would help if it’s a tough deal where the approval is taking longer than normal, and I can say to the lender, “look, the client has 810 credit, let’s get this done.” But realistically your income, down payment and property are more important to your approval time.
Q: What can a mortgage consumer do to help speed up a mortgage approval?
Being organized and on top of your financial picture is hugely important; supplying lots of information to the lender is always a good idea. Where’s your down payment? Are you on probation? Are you a first-time home buyer? The ability to answer these types of questions will help immensely.
You should also understand that when the deal is [in the hands of a mortgage broker]; we are doing everything we physically can and are using our relationships and experience to get that approval placed. Sometimes delays are to be expected, sometimes questions arise, but clients must know that mortgage brokers will find a way to work it out.