The Rental Application Process: What to Expect

 

Like applying for a job, you’ll also need to apply as a tenant when you want to move into a new apartment. Therefore, understanding the entire rental application process is essential if you want to be approved for the unit of your choice. Here’s what it entails:

What Is a Rental Application Form?

In the U.S. and Canada, potential tenants are often required to submit a rental application form to the landlord or property management company when they wish to rent a unit. The form basically provides the owner with all the information they need to determine whether a candidate can reliably pay the rent.

As well as being able to fulfill financial obligations, the application process is also used to filter out candidates that don’t match other criteria. This can include pet owners in a pet-free apartment or smokers in a non-smoking home, for example.

When and Where Do You Fill It Out?

Nowadays, many landlords and property management companies allow you to fill out your application form online. This is a fantastic time-saver and is often used by leasing firms that offer online tours. The option to apply will be readily available once the tour has been completed.

Other companies will require you to fill out the form in person, often at the leasing office. This usually follows a tour, viewing or open house. If you’re prepared in advance, it shouldn’t take too long to complete the application form. This leads us to the next point…

What Paperwork and Information Do You Need to Provide?

The most important information a landlord is looking for is your credit score and proof of income. This enables them to figure out whether you will have any problems paying the rent each month or not while seeing if you have any outstanding debts that could cause problems. The following documents are typically accepted as proof of income:

  • Recent pay stubs (previous three months)
  • Bank statements
  • Tax returns
  • W-2s / T4 slips
  • Employment history and resume

You must give consent and provide all the necessary information for the landlord to run a credit check on you. You’ll generally need to supply the following:

  • Full legal name
  • Addresses for at least the past two years
  • Social security number / Social insurance number
  • Date of birth
  • Current employer
  • Current landlord

In addition to this, you’ll also need to prove your identity and supply contact details such as phone number and email. A copy of your driver’s license or passport is ideal for proof of ID. Character references from employers, colleagues, previous landlords, and even professors or your doctor are also a good idea.

Is There an Application Fee?

This depends on where you’re applying. In the U.S., application fees are applied to fund processing costs such as running credit checks. In some U.S. states, this fee is regulated not to exceed the actual charges the landlord pays to carry out these checks. In others, there are no limits. Generally speaking, you can expect to pay between $25 and $100 when applying for a rental in the U.S.

In Canada, application fees are prohibited by law in some provinces, such as Ontario and British Columbia. However, some landlords may still ask for a fee though this must be refunded either by the end of your lease if your application is successful or straight away if not. Such fees can cost around $150.

How Long Does It Take and What Happens Next?

Your application will typically be processed within one to three business days. In the best-case scenario, you can view and apply for an apartment and sign the lease agreement on the same day. Other times, it can take up to a week to verify certain information.

If you’re not accepted, the landlord is under no obligation to let you know. But if you are approved, you’ll be contacted and asked to sign the lease agreement. But, of course, you’re not obliged to sign just because you were approved, so you can still say no if you’ve changed your mind.

However, if you’re happy with the rental, you can sign the lease agreement. Just bear in mind that it’s a legally binding contract.

How Can I Improve the Chances of My Application Being Accepted?

There are three major things you can do to improve your chances of being approved:

  1. Improve your credit score: Most landlords are looking for a score of at least 600. Also, be sure to pay off any outstanding bills and debts.
  2. Check you’re earning enough: Your gross income should be at least three times more than the monthly rent for most landlords to consider your application.
  3. Be honest: Background checks will be made, so be upfront about anything that might cause you issues. A cover letter is a great idea.

This tax season, take advantage of Canada’s home office rebate

 

Mature woman talking on the phone in her office office

The percentage of Canada’s labour force that works mostly from home has increased nearly eightfold since the spring of 2020.1 If you belong to this group of people, you’ve likely noticed that while you are spending far less money on transportation costs, your monthly bills have increased. Spending an additional eight to 12 hours per day at home – with the lights on, heat up, computer plugged in and increased internet usage – has increased your monthly utility bill.

Did you know all Canadians who worked more than 50% of the time from home for a period of at least four consecutive weeks in 2021 due to the COVID-19 pandemic can claim $2 for each day, up to a maximum of $500? If your home doubled as your office last year, be sure to take advantage of the Canada Revenue Agency’s deduction opportunity this tax season.

Who is eligible for a tax rebate? Anyone who spent at least 50 per cent of their full- or part-time hours working from home for at least four consecutive weeks last year qualifies.

How does it work? There are two options for employees: The temporary flat rate method and the detailed method. 

The temporary flat rate method allows anyone who meets the eligibility criteria to easily apply for a $500 maximum rebate, provided they are not claiming any other work-related expenses on their tax return (i.e. motor vehicle expenses), and have not already been reimbursed by their employer. This method is only valid for 2020 (max. $400), 2021 and 2022. There is a simple form you can fill out to make the claim, and your employer will not have to sign off on anything.

The detailed method is more complex in that you will have to calculate the square footage of your home office and submit receipts to support your claim, including for heating, water, electricity, internet, phone, etc. Your employer will also have to complete as part of this method. However, you may be eligible for a tax return greater than $500. If you are claiming other work-related expenses, this may be the right option for you.

Consult this page of the CRA’s website to help you determine which method is best for you.

Yardi Introduces Canada National Multifamily Report

 

Report analyzes key industry metrics at national, provincial & Census Metropolitan Area levels

Last month, Yardi launched the Canada Multifamily National Report, a quarterly series of reports analyzing portfolio performance, property management optimization and investment opportunities for multifamily professionals. The inaugural Canada National Multifamily Report covers vacancy rates, rent growth, and key fundamentals at the national, provincial and Census Metropolitan Area (CMA) levels. Key findings highlight last year’s strong demand and rent performance — indicating a promising 2022 for the Canadian apartment industry.
 

Smaller Markets Saw Strongest Rent & Lease Growth In 2021

As of December 2021, the national in-place rent averaged $1,326 — 2.2% higher than December 2020. Unsurprisingly, the highest average in-place rents were registered in the major metros of Vancouver and Toronto. Specifically, renting in Vancouver was $1,617, on average, while apartments in Toronto reached $1,520 a month. However, the highest increases in in-place rent happened in the smaller CMAs of London, ON (8.5%), and Halifax, NS (7.2%).

Notably, last year’s lease-over-lease rent growth was extremely strong, as were occupancy rates following 2020 vacancies. Nationally, new lease growth reached 6.2% year-over-year — the strongest in years. Meanwhile, the highest increases were in smaller markets like Hamilton, ON (11.8%), and London, ON (11.1%) — once again reflecting “the strength of smaller metros as a result of the out-migration from dense cities during COVID-19,” according to the report.

2022 to Be Strong Year for Canada’s Multifamily Market

Apartment demand remains high in the backdrop of increased immigration, rising single family housing prices, and gross national product and employment levels, which are surpassing pre-pandemic levels. In particular, the report highlights graduates and young people looking to form independent households among the driving forces behind apartment demand in the country.

Plus, the population also experienced a 1% boost in 2021 due to immigration, many of whom came through the Express Entry program, which focuses on welcoming highly skilled immigrants into the country. The demand from households coming from other countries should continue in 2022 as Canada aims to bring in almost half a million skilled permanent residents this year.

Likewise, more than 900,000 jobs were added in 2021, thereby reducing the unemployment rate to 5.9%. In fact, the Organization for Economic Co-Operation and Development (OECD) reported a 4.8% GDP increase last year and forecasts growth of 2.9% in 2022. But, even with a low unemployment level, homeownership is still unattainable for many and housing prices have become out of reach — leading to solid apartment demand and low vacancy rates.

For more data on the state of the Canadian multifamily market, get the full Canada National Multifamily Report here.

Essential home features for Canadians planning to age in place

High cost of living in senior care facilities a driving factor for those who want to remain in their homes longer

 

Elderly couple laughing and smiling in their kitchen while preparing a meal

The home that Canadians expect to spend their golden years in is often purchased well before retirement. But, with those days so far in the future, it can be difficult to imagine which features would be essential at that time. 

Royal LePage recently surveyed its network of senior housing experts and found that while not all Canadian seniors are looking for the same features in a property they can stay in long term, most remain eager to stay in their own homes as they get older.

“More and more, Canadians are choosing to right-size rather than down-size as they age,” said Caroline Baile, real estate broker, Royal LePage Sussex, and certified ASA™ (Accredited Seniors Agent). “Some mature buyers are looking for a turn-key condominium, so they can spend less time on maintenance and more time traveling after retirement. Others may choose to move from a two-storey home to a bungalow to avoid stairs as they age, or into a multi-generational property that offers the option to live with family. Others will opt to renovate their existing properties to accommodate their changing needs.”

Survey highlights:

  • 43% of survey respondents say a fully-equipped main-floor living space is essential for seniors planning to age in place.
  • 42% of respondents say a front and rear entrance with no steps and a walk-in tub are essential.
  • Almost all Royal LePage experts surveyed (94%) say purchasing a home close to family is top of mind for this buyer demographic.
  • 74% of respondents say older Canadians are increasingly interested in aging in place due to concerns over the high financial cost of living in senior care facilities.

What Does a Home Warranty Cover?

 

A home warranty is a type of contractual agreement that covers the cost of repairing or replacing home systems and appliances. It is optional home coverage, yet it can spare you a lot of headaches, especially if you have older appliances and home systems that would cost a lot to fix.

In this guide, we’ll look at what is typically included in a home warranty and explain how it differs from a manufacturer’s warranty and homeowners insurance.

What is covered by a home warranty?

Let’s start by listing what is typically included in a home warranty coverage:

Home systems:

  • Internal plumbing
  • Internal electrical systems
  • Heating and cooling systems (including ductwork)
  • Smoke detectors and fire or burglar alarms
  • Central vacuum cleaners
  • Ceiling and attic fans

Appliances:

  • Refrigerators and ice makers
  • Built-in ovens and microwave ovens, ranges, cooktops
  • Clothes washers and dryers
  • Dishwashers
  • Exhaust fans and hoods (including kitchen fans and attic fans)
  • Garbage disposals

Apart from appliances and major home systems, home warranty companies also provide a list of add-ons, which can extend your coverage to include items and amenities such as:

  • Electronics (laptop, TV, computer, etc.)
  • External plumbing (including septic systems, sump pumps, well pumps and sewer lines)
  • Spas and pools
  • Rentals and guesthouses located on the property premise

The home warranty coverage is usually capped at a certain amount per appliance or system. If the cost of repairing it exceeds that amount, you can choose between having it replaced or paying the difference needed to fix it.

What Isn’t Covered by a Home Warranty?

Here are the main items left out of the home warranty coverage:

  • Any issues previously discovered by a home inspector
  • Problems that result from neglect or poor maintenance
  • Systems and appliances damaged as a result of incorrect use, incorrect installation or manufacturing flaws
  • Damage caused by pests such as termites and rats, or mold
  • Identifying and removing hazardous substances such as lead and asbestos
  • Solar panels
  • Fireplaces
  • Commercial appliances
  • Cosmetic damage

It’s worth pointing out that just because something seems like it would be covered by the home warranty doesn’t mean it will. For example, some providers may offer coverage for refrigerators but not for free-standing freezers. Or they may provide coverage for doorbells, but not if they’re part of an intercom system. So always read the small print carefully to ensure that the coverage fits your needs.

Despite the name, a home warranty will not include the structure of your dwelling. This means it will also exclude coverage for structural problems, windows, foundations, flooring, walls and roof. There is, however, an exception to this rule:

Home Warranties for New Constructions

In both the U.S. and Canada, builders can provide a home warranty covering new constructions for up to 10 years. The coverage is typically included in the home price, guarantees the quality of labor and materials used in the new building, and will cover potential problems with the roof, exterior walls, foundation and frames.

Depending on the company, a home warranty for new buildings can also include coverage for appliances and home systems such as plumbing, electrical and heating.

Home Warranty vs. Manufacturer’s Warranty

Both home appliances and systems come with a standard manufacturer’s warranty by default. Yet this type of coverage is drastically different from the one provided by a home warranty.

The main difference is that a manufacturer’s warranty will cover the cost of parts and labor needed to repair an appliance, but only as long as the damage is caused by a manufacturing fault. On the other hand, a home warranty will cover the cost of repairing damage that results from regular wear and tear.

Also, a manufacturer’s warranty is limited to new systems and appliances. Meanwhile, a home warranty will provide coverage for older items as well, even if they are outside the manufacturer’s warranty by several years.

Home Warranty vs. Homeowners Insurance

As a homeowner, you’re most likely wondering which is worth buying: a home warranty or home insurance? To better understand which one you’ll need, keep in mind that a home warranty protects your home systems and appliances and covers the cost of repairing or replacing them.

Homeowners insurance is more comprehensive in terms of coverage and will include not just your dwelling but also personal belongings such as furniture, living expenses in case the damage to your home makes it temporarily unlivable, and even liability protection.

Of course, nothing prevents you from getting both a home warranty and homeowners insurance. But if you’re still wavering between the two, it’s best to discuss this with a professional and find out which policy suits you best.

 
 

Renting with Pets: Dos and Don’ts

 

Pet ownership has increased drastically in the last couple of years, with more of us than ever before sharing our homes with various furry companions. However, when it comes to renting with pets, there are some definite dos and don’ts to be aware of. So let’s take a look.

DO Know Your Rights

Legislation on renting with pets varies across states and provinces, so this is the best place to start documenting yourself. For example, the Ontario Residential Tenancies Act prevents landlords from including a no-pets provision in the lease agreement. Landlords can, however, refuse tenants who have pets. In other Canadian provinces, as well as in the U.S., such decisions are left to the landlord’s discretion. The only exceptions are service dogs and emotional support animals, which can bypass no-pets rules given the fact that they are not actual pets.

In addition to no-pets clauses, you should also know your rights regarding pet rent and deposits. For example, pet rent is prohibited in Canada, but other pet fees are allowed. In the U.S., pet rent, deposits and fees are regulated by local laws, so make sure to check those in advance. Also, keep in mind that a landlord can never charge you any pet rent or deposit if you have a service animal or emotional support animal.

DON’T Hide Your Pet From Your Landlord

As tempting as it is, sneaking pets into a rental is never a good idea. If your lease has a strict no-pets clause, even something as seemingly inoffensive as a hamster can be considered a breach of contract. A good relationship with your landlord goes a long way, so it’s essential to start off on the right foot. And, who knows, if you need to relocate, they may even agree to write a letter of recommendation for your pet.

DO Prepare Your Pet’s Documents

Even if your landlord doesn’t ask for it, it’s a good idea to have your pet’s paperwork ready before signing the lease. Most states and provinces will require a pet license, which allows shelters and animal control officers to identify the pet if it gets lost or stolen. A pet license will also prove that your cat or dog is up to date with its rabies and distemper vaccinations, whether it’s been spayed or neutered, and whether the pet has a microchip. In some cases, you will also need to provide a certificate of veterinary inspection, an official document attesting that your pet has been inspected for diseases and is in good health.

DO Mind Your Neighbors

This applies to both neighbors as well as potential roommates. Nobody likes a dog that barks at odd hours night and day, and if you’ve only just moved in, this could cause problems later on. If neighbors complain about noise or other pet-related disturbances or damage, your landlord may present you with an eviction notice. To avoid that, try to talk to your neighbors and address any concerns as soon as they arise.

DON’T Leave Your Pet Alone for Long Periods

Unless you’re working from home, there’s a good chance your pet will spend many hours each day alone. And sadly, a lonely pet is a stressed pet and is more likely to cause damage to the property as a result.

Ideally, once you move into a new rental, try to spend a few days with your pet until it becomes familiar with their new home. Also, try to establish a daily routine, so your pet knows that it’s normal for you to be gone for a few hours. Go for long walks, spend as much time as you can playing with your pet, and make sure that it has plenty of food and water while you’re away.

DO Consider Pet-proofing

Pet proofing is the easiest way to reduce pet-related damage and ensure you’ll get your deposit back. Limiting your pet’s access to some rooms can help reduce damage to floors, walls and furniture. Removing carpets can help you stay on top of cleaning up pet hair. You can also put delicate items and appliances in closed cabinets, where pets can’t accidentally break them. Similarly, toys are a great way of distracting pets from chewing or scratching the furniture in your rental.

DON’T Ignore Cleanliness

Not all pet-related damage is the result of chewing or scratching. Sometimes, it can result from falling behind on tidying up after your pet. For example, urine stains or smells can be difficult to remove if they are unattended for too long. Also, pet hair can become an absolute nightmare once it starts building up on carpets and upholstery. But if you stay on top of regularly cleaning up after your pet, you will drastically reduce the risk of potential pet damage.

 

Frozen Pipes? Here’s How to Thaw Them

During wintertime, the risk of frozen pipes increases considerably. The good news is that in many cases, you can thaw them out yourself fairly easily. In this guide, we’ll take a look at how to tell your pipes are frozen and what to do if they are.
 

How To Tell if a Pipe Is Frozen

Let’s start by looking at the clues that will tell you if your pipes are frozen. Here are the six main signs:

  • Little or no water coming out of the taps
  • Gurgling sounds when you open the taps or flush the toilet
  • Unpleasant smells coming from the drains
  • Low water pressure
  • Pipes feel cold to the touch or are covered in ice
  • Bulging pipes
 

Thawing a Frozen Pipe

Now that you’ve determined that your pipes are indeed frozen, let’s see how you can fix the problem.

Turn off Water at the Mains

Before you start thawing your frozen pipes, always shut off the water supply. This way, if the pipe has burst or cracked somewhere along the line, you will minimize the risk of more pressure building up, as well as potential flooding.

Keep Taps Open

This will allow the water to pour out of the pipe as the ice begins to melt and also releases the pressure inside the pipes.

Thawing Exposed Pipes

If the frozen pipe is easily accessible, for example, in the kitchen or bathroom, there are several simple ways to thaw it. The easiest method is using a hairdryer. Start by thawing the pipe from the section closest to the faucet, then gradually work your way along the length of the pipe until it’s completely thawed. If the pipe is made out of PVC, avoid applying direct heat for too long, as this can damage the pipe.

As an alternative to the hairdryer, you can also use electrical heat tape wrapped in a spiral around the pipe. For metal pipes, you can also use a handheld heat gun. Applying hot towels to the frozen pipes also works and can also be used on bulkier items, such as toilet bowls or toilet tanks in which water has frozen.

Avoid using a blowtorch, propane heater or any open flame for thawing. The risk of damaging the pipe or even starting a fire is not worth it.

Thawing Pipes Inside Walls

If you’ve thawed out exposed pipes but you’re still not getting any running water, it’s likely that the pipes are frozen inside the wall. In this case, start by increasing the temperature in your home for a few hours until the blockage is melted. To facilitate warm airflow to the walls, leave any cabinet and wardrobe doors open. You can also use an infrared lamp or a fan heater pointed at the wall to help speed things up.

Work Slowly

When thawing pipes, it’s always best to work slowly and gradually. Sudden temperature changes can result in pressure building up in the pipe as the ice melts, which increases the risk of bursting.

Know When to Call a Plumber

Thawing a frozen pipe is a fairly simple DIY job. But if you suspect that the pipe has been frozen for a long time, say over a week, it might be worth contacting a local plumber. This is because the longer a pipe stays frozen, the more pressure builds up until the pipe will burst. Also, if you notice any leakages after thawing the pipes, there’s a chance they have already burst. If that happens, keep the water turned off the mains, and contact a plumber as soon as possible.

You should also consider calling a plumber if the frozen pipes are difficult to access. To some extent, you can try to thaw enclosed pipes on your own. But if it looks like you’ll have to cut out a section of the wall to get to them, hiring a professional is the best way to go.

Do Pipes Always Burst if They Freeze?

Just because a pipe has frozen doesn’t necessarily mean it will burst. It’s worth keeping in mind that it’s not the ice itself that makes the pipes burst but the pressure building up inside them. Also, not all pipes have the same risk of bursting if they do freeze, with PVC and copper pipes being more susceptible to bursting than PEX piping, for example.

However, the risk is there regardless of the piping material used, which is why it’s always best to prevent getting to this scenario. Home and pipe insulation, keeping a constant indoor temperature, and closing the water supply when you’re away for extended periods are just some of the things you can do to protect your pipes in winter.

 
 

13 Pet-Friendly House Plants

 

House plants are a fantastic way to liven up your home decor by adding a natural touch and a splash of color to any room. However, if you’re a pet owner, you’re probably aware that some plants are toxic to your furry friends. The good news is that there are plenty of safe options that look stunning. So, check out our top picks for pet-friendly house plants.

Calathea

All Calathea or prayer plant varieties are safe for cats and dogs. With their stunning range of leaf colors, sizes and patterns, we’re sure you’ll find one that suits your home decor. They grow best in medium light, high humidity and need filtered or distilled water to keep the leaves glossy and healthy.

African Violets

These flowering houseplants are an excellent choice for a pet-friendly home. To keep them happy, place them in bright indirect light and water them when the top inch of the soil feels dry to the touch. Then, throughout spring and summer, give them a bit of fertilizer twice a month to encourage abundant flowering.

Palms

Indoor palms can add a veritable touch of luxurious, tropical vibes to your home, and most of them are pet-friendly. Here are a few species that will get along with your pets: Parlour Palm, Areca Palm, Miniature Date Palm and the Ponytail Palm. Steer clear of the Sago Palm, though, as it is toxic to both cats and dogs.

Ferns

Like indoor palms, the vast majority of indoor ferns are safe for pets. Our top picks include Boston Fern, Maidenhair Fern and the Staghorn Fern. These plants thrive in indirect sun and high humidity and make an excellent addition to a bathroom with a window.

Moth Orchids

This may come as a bit of a surprise, but all varieties of Moth or Phalaenopsis Orchids are non-toxic to cats and dogs. The trick to keeping these plants happy is using the right potting soil. A mix of two-parts fir bark, one part perlite and one part sphagnum peat would be perfect for them.

Polka Dot Plant

If you’re looking for a plant that’s small, colorful, beginner-friendly and also non-toxic to pets, the Polka Dot Plant is the answer to your prayers. Keep it in a room with bright indirect light, water it regularly, and you’re all set. Bonus tip: cut the ends of the stems once a month to keep your Polka Dot Plant looking bushy.

Fittonia

Another houseplant that’s both low-maintenance and pet-friendly, Fittonia or the Nerve Plant, stands out due to its compact size and stunning range of leaf colors. This plant loves high humidity and bright indirect light and needs a good soak when the top inch of the soil feels dry to the touch.

Banana

When it comes to pet-friendly plants that also work as a dramatic centerpiece in your home, the Banana Plant has almost no competition. This exotic giant can easily grow to a height of 7 feet and will need plenty of sunlight, humidity and well-draining soil to reach its full potential.

Spider Plant

An oldie but a goldie, the Spider Plant ticks the boxes for being both pet-friendly and beginner-friendly. Easy to grow indoors, it’s also a great plant to have around due to its air-purifying abilities. As far as we’re concerned, this one is an all-around winner and must-have plant for any home.

Air Plants

Not only are Air Plants non-toxic to cats and dogs, but they also spare you the headache of having to clean up if your pets knock the pots over. That’s right: Air Plants, or Tillandsia, don’t need any soil to grow. Instead, you can either mount them on a wooden display or keep them in an open glass container. To water them, simply dunk them in water once a week, for about 30 minutes. Plant care doesn’t get easier than this!

Peperomia

Peperomia or Rubber Plants are another fantastic choice for a pet-friendly home. The secret to keeping them healthy is bright but indirect sunlight and only watering them when the top two inches of the soil feel dry to the touch.

Hoya

Also known as Wax Plants or Porcelain Flowers, these slow-growing, trailing succulents are safe to grow in a home with cats or dogs. They also produce clusters of small, colorful flowers with delicate chocolate, vanilla, or cinnamon scent. Plant them in a mix of two-parts orchid bark, one part perlite and one part peat, keep them in bright indirect light and water them moderately.

Succulents

Although most pet owners would be wary of having spiky succulents around their cats and dogs, there are many spike-free species you can bring into your home. Blue Echeveria, Buro’s Tail, Opuntia, Christmas Cactus and the Fishbone Cactus are just some of our pet-friendly picks. Or, if you don’t mind something a bit prickly, the Blue Haworthia is another excellent choice.

 

Getting Prequalified for a Mortgage: How Does It Work, and Is It Worth It?


 

If you’ve ever asked yourself how much mortgage you can afford, getting prequalified is one of the first ways to find out. The process is actually pretty quick and easy, and you don’t really have anything to lose. It is worth understanding exactly what a mortgage prequalification is, though, so with that in mind, let’s find out more.

What Is a Mortgage Prequalification?

A mortgage prequalification is a lender’s estimate that lets you know how much you can take out in a loan. It’s a very basic form of loan inquiry, and if you’re looking to buy a home, it’s one of the first items you should add to your to-do list. This will give you a better idea of the budget you’ll need for purchasing a house and also allow you to explore different mortgage options.

How It Works

Applying for a mortgage prequalification is surprisingly easy. To get started, you’ll need to first shop around for several lenders. Nowadays, many banks and creditors provide online forms that take a few minutes to fill in and submit. For a prequalification, the lender will only need basic information such as:

  • Your name and address
  • Contact details
  • A figure for your stable monthly income
  • Basic data on your bank accounts, savings and other assets
  • Your desired loan amount and, sometimes, how much you can put as downpayment
  • A credit check

Some lenders may not take a close look at your proof of income and assets, although they can do a background check on your credit report and history. It’s worth pointing out that applying for mortgage prequalification is considered a soft inquiry and will not impact your credit score. Once the lender has all this information, they will use it to assess your creditworthiness. The data will help them determine whether they can grant you the loan you’re looking for or whether granting you a loan is feasible, to begin with.

The process itself is quite speedy, and you can expect an answer from the lender within a day or so. If the response you receive is positive, you can either pursue things further with the lender and discuss a loan application or preapproval or just leave it as a loan inquiry.

Prequalification vs. Preapproval

Although mortgage prequalification and preapproval sound similar, the two processes have different requirements and implications.

To better understand the differences, think of a prequalification as just an inquiry that tells you how much you can borrow, with no strings attached. At this stage, lenders are also prospecting you as a potential client. However, mortgage prequalification is not a guarantee that your loan will be approved or that you will be approved for the amount discussed throughout the process.

On the other hand, mortgage preapproval involves a closer look at your creditworthiness. The paperwork requirements are different, and you will need to provide pay stubs, bank statements and tax records on top of meeting the lender’s credit score requirements. All information will be closely scrutinized, and the lender will provide an answer within up to 10 business days. If you are preapproved, the lender will send you an offer, usually valid for 90 days.

Last but not least, a traditional mortgage preapproval counts as a hard inquiry, lowering your credit score by a few points, whereas mortgage prequalification does not.

Is a Mortgage Prequalification Worth It?

Absolutely! For starters, mortgage prequalification is a quick and free process that will instantly let you know just how likely you are to buy your dream home. It will let you know whether you’re in a financial position to purchase real estate or whether you should postpone it for a few more years. Buying a home can be a stressful process, but if you can dedicate an afternoon to filling in a few forms, the peace of mind it provides is well worth the time invested.

Being prequalified will also give you more leverage when dealing with sellers. It lets them know that you are committed to purchasing their property and can also leave room for negotiation. What’s more, your offer can carry more weight when compared with offers from buyers that are not prequalified, let alone preapproved.

If you manage to obtain a mortgage prequalification from a lender, it’s also worth pursuing matters further and discussing a preapproval. Keep in mind that a prequalification is no guarantee for the loan. However, a preapproval letter brings you one step closer to securing a loan and can even lock interest rates in place for the next 90 days. In fact, being prequalified can also give you preferential access to loans and speed up the preapproval process.