How a pre-approved mortgage can help you
Whether you’re planning the purchase of your first or fourteenth home, it pays to obtain a mortgage prequalification certificate (better known as a pre-approved mortgage). Not only does this step provide you with peace of mind, it also helps your offer stand out in a multiple-bid situation.
A reality check
Your bank or mortgage lender will examine your current financial situation to determine how much you can afford to borrow, and give you a realistic idea of what your monthly payments would be.
Whether you decide to use a mortgage consultant, or your preferred bank, the process of getting pre-approved is fairly straightforward. You’ll be asked to provide your financial information, including all assets, liabilities and proof of income as well as the amount you have available for a down payment.
After reviewing your financial situation, the lender will determine the maximum mortgage amount you qualify for and lock in a mortgage interest rate. Prequalification certificates normally last for 90-120 days. If you don’t buy a home within this timeframe, you may renew your agreement at the going interest rate when your guaranteed rate expires.
With a pre-approved mortgage, you have an amount to have in mind while house hunting. Instead of scrambling to see every open house in the neighbourhood, you can focus your search to homes that fit into your predetermined price range. And by comparing similarly priced homes, you’ll be better able to gauge the value of each property and find the one that’s right for you.
A firm offer
Homebuyers with a pre-approved mortgage could have the upper hand when they put an offer on the table. Having pre-approval addresses your ability to finance the purchase, which leaves no question in a seller’s mind that yours is a firm offer.
After your offer is accepted, all that’s left for you to do is to send in the property and offer details, along with any other information requested, to your lender and your pre-approved mortgage will be converted into your actual mortgage in a matter of hours.
When it comes to buying a home, there’s no better way to approach a purchase than with the confidence and convenience a pre-approved mortgage provides.