Mortgage Pre-Approval

 

Are you thinking about buying a property?

Wondering where you should start?

A Mortgage Pre-Approval is a good place to start.

An analogy that I heard that I think does a good job putting it into perspective. Would you go to a restaurant without having enough money to buy your meal?

Likewise, before setting out to buy a property, you should know exactly how much you can afford, and have a good understanding of the process.

While a mortgage pre-approval is the best way to get started, one of the most important things to understand is that

A Mortgage Pre-Approval is not binding

A mortgage pre-approval is not an approval.

A mortgage pre-approval is not a guarantee of financing.

it is not magic,

it is not binding.

After your pre-approval is in place, there are still a number of factors that come into play that can put a stop to your dreams of home ownership.

• a mortgage approval requires a property to be scrutinized, a pre-approval doesn’t look at any property. There is a chance that the lender may have an issue with the property that you end up choosing.
• if your employment status changes after you have secured a pre-approval, this could impact you from getting an actual approval. We request all employment documents up front so that we can review and verify, in advance of the approval process.
• There is more than one credit reporting agency. And so, a secondary credit report can be pulled by the lender or insurer after the pre-approval is in place, and if there are discrepancies, they could decide not to proceed with financing
• mortgage rules can change and sometimes come into effect without warning and no grandfathering.

So, what is a mortgage pre-approval

The best way to describe a mortgage pre-approval is getting prepared.

Another analogy, is a mortgage pre-approval is a formalized gathering of your ducks, and putting them in a row.

A pre-approval will not guarantee you will get the mortgage, but it will certainly uncover any major obstacles that might be in your way.

A good way to look at it is as a pre-screening, where we take a look at your employment, credit history, and your downpayment, and figure out the maximum mortgage amount you can qualify for.

We will also have a look at all the mortgage options available to you on the market, so you are better prepared to decide what product meets your financing needs when the time comes to choose.

What types of Obstacles?

Did you know that roughly 10-20% of credit reports have some kind of reporting error on them.

By taking a look at your credit report as part of the mortgage pre-approval process, ahead of you finding a place and writing an offer, you have time to fix any errors before hand. This might not sound like that big of a deal, but it could be the difference between getting financing or not.

A mortgage pre-approval usually comes with a rate-hold, this is a good thing.

A good way to look at rates is that they are like gas prices. Rates fluctuate up and down. not as frequently as gas does, but they move several times a year.

As part of taking a preliminary look at your mortgage application, lenders will typically offer a rate hold for 90-120 days on a specific mortgage term. This means that if you find a property to buy in the allotted time, even if rates have gone up in the mean time, you will get the rate that was guaranteed. What happens if rates go down, well… you get the lower rate. It’s a win win.

Buying a home is a process

There are a lot of steps along the way.

A mortgage pre-approval is one of the first steps you take.

A mortgage pre-approval allows you to collect all your documentation ahead of time, handle any obstacles that may come up, have a look at your mortgage options, secure a rate hold, and will give you piece of mind as to the next steps in the process.

Regardless of whether this is your first time buying a place or if you are a savvy experienced buyer, a pre-approval is the best place to start. Even if it doesn’t guarantee you will get the mortgage in the end.