8 Reasons Why You Should Get Pre-Approved for a Mortgage

8 Reasons Why You Should Get Pre-Approved for a Mortgage

Real estate information on advantages of obtaining Pre-Approval for a Mortgage provided by Brian Wiseman LL.B., CIPS of Keller Williams Energy Real Estate Brokerage

Searching websites for details and photos of homes for sale will provide you with some basic research about various areas, neighbourhoods and communities and you will be able to form some idea of what type of home is available for various price ranges.

However, when it is time to start searching seriously, the first step should be to obtain pre-approval of mortgage finance.

Why? Because, before you emotionally commit to a new home:

1.     You will know the maximum price you can afford to pay for your new home.

However, it should be noted that it is not always advisable to pay the maximum price you can afford according to the pre-approval.

2.  You will save time.

Once you have pre-approval, you will eliminate homes, or communities, that are above your price range.

You may even find that you can even increase the home price range you were initially considering.

You will, now, be able to focus your time in searching and viewing homes that meet your criteria, including price range.

This will save you significant time doing research.

3.     You will know how much down-payment you will need and the maximum monthly mortgage payments you may have to budget for.

4.     When you find the home you would like to buy, your agent will be in a great position to help you to negotiate the best possible price because sellers prefer to work with buyers who already have pre-approved finance.

This is particularly important if there are other buyers making offers.

You will have a head-start on other potential buyers who have not, yet, obtained pre-approval.

5.     Some lenders, when providing pre-approval, will lock in interest rate and other terms for a specific period – in some cases up to 120 days.

This gives you adequate time to find what you are looking for.

6.     In carrying out the pre-approval process, the proposed lender will check your credit score and verify your income, assets, liabilities, financial commitments and appropriate documentation to approve up to a specific loan amount.

This means that, in most cases, those qualifications do not have to be met again when final approval is sought.

Once you are granted pre-approval, you will still need a “subject to finance” clause in any offer you make because your Lender will still insist on having the home appraised for value as the terms of the pre-approval will be subject to the loan being no higher than a specific percentage of the appraised value (Loan to Value Ratio, or LVR).

However, because all of the other requirements of the Lender will have been provided, and approved, this final step will be quickly completed.

7.     In most cases, there is no cost involved in you obtaining pre-approval and you are not obligated to proceed with a pre-approved loan, so there is no risk involved.

8.     Buying a home inevitably involves some stress but, for the above reasons, you will reduce the stress considerably.

Some words of warning:

It is very important to note that, once you have lodged your application for pre-approval, and even after pre-approval has been granted, you should not create any new financial obligations without first discussing your intentions with the lender.

For instance, you should not:

ý lease or purchase a new car

ý obtain an additional credit card or other loans

ý change jobs

before your purchase has closed and you have taken possession of your home.

There are many variables in the types of mortgage financing available and it absolutely essential that you choose a mortgage specialist or mortgage broker who is committed to providing mortgage advice and not just finding a lender who will give a pre-approval based on interest rate.

The pre-approval must be for the type, and term, of mortgage that is suitable for your particular circumstances.

It is a mistake to make a decision on the lender you will use based only on the interest rate offered.

Find Homes for Sale in South Durham Region, Ontario

(Pickering, Ajax, Whitby, Oshawa & Clarington)

YOU ARE INVITED to visit my website, at any time and as often as you like, to find information & pictures of homes for sale.

You can also arrange to be notified when homes, that meet your criteria, come onto the market.

These services are available to you without obligation.

If you are thinking of selling your home, you can also search on my website for homes, similar to yours, that would be competition for your home.

Obtain an indication of the market value of your home by contacting me.

 For answers to your questions, email me.