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Pre Approvals are without a doubt the most misunderstood term in the mortgage industry. The borrowing public is certainly not at fault for that, the industry must take responsibility. In my many years as a mortgage broker I have lost track of how many times I had folks call and say "we were pre-approved, everything was great so we made an offer on a house and now we're declined"

​A pre-approval is a pre-qualification or a rate hold, at best. In some cases the lender doesn't even require a credit report. They calculate if you have an income of "X" and you have monthly pyments of "X" you would qualify for a mortgage of "X". Some pre-approvals are computer generated without anyone actually looking at the information. CMHC doesn't do pre approvals so even if the lender fully approves you it's impossible to have a secondary approval without a house under contract. 

​At Start Ventures I deal with pre-approvals a little differently. I run credit bureaus on all appplicants and review them carefully. Income is also carefully reviewed looking for anything that could trigger a problem when converting a pre-approval to a real deal. Applications are only sent to lenders that finance the type, value and location the borrower intends to buy.

​Every effort is made to reduce the chance of a disappointment at the formal approval stage. All borrowers receive full discloure as to the limitations of a pre-approval.