Thursday 3 July 2014

Guest blog: Getting a Mortgage Pre-Approval

If you are looking for a new home, be sure you are pre-approved. With a mortgage pre-approval, a licensed mortgage professional can do a more complete verification prior to sending you shopping for a home, and with that done, the dollar figure you are going shopping with is actually what you can spend.

The mortgage professional that you work with to get pre-approved will let you know what you can afford based on lender and insurer criteria, and what your payments on a specific mortgage will be.

Licensed mortgage professionals can lock-in an interest rate for you for anywhere from 60 – 120 days while you shop for your perfect home. By locking in an interest rate, you are guaranteed to get a mortgage for at least that rate or better. If interest rates drop, your locked-in rate will drop as well. However, if the interest rates go up, your locked-in interest rate will not, ensuring you get the best rate throughout the mortgage pre-approval process.

In order to get pre-approved for a mortgage, a mortgage professional requires a short list of information that will allow them to determine your buying power. A mortgage professional will explain to you the benefits of shorter or longer mortgage terms, the latest programs available, which mortgage products they believe will most likely meet your needs the best, plus they will review all of the other costs involved with purchasing a home.

Getting pre-approved for a mortgage is something every potential home buyer should do before going shopping for a new home. A pre-approval will give you the confidence of knowing that financing is available, and it can put you in a very positive negotiation position against other home buyers who aren’t pre-approved.
Some pre-approvals from banks are not as valuable as those from a professional mortgage agent.  The bank may not even ask for income verification whereas I request this upfront so I feel confident with your pre-approval.  A lot of lenders only do “auto-approve” pre-approvals which means it is all computer approved based on numbers and no person actually underwrites the deal and therefore, the pre-approval really means nothing.  I will only send a pre-approval to lenders who will actually underwrite the entire deal to ensure your pre-approval is just that, pre-approved.

All offers that you make on a home after a pre-approval should be “conditional upon financing” (unless instructed otherwise by your mortgage agent) as you may be pre-approved but the lender will also need to approve the property as it might not meet their criteria.  Also, there may be condition on the formal approval that you may not meet and therefore this “conditional upon financing” protects you from any liability.

Important - Be sure to not make significant changes after getting the pre-approval i.e. changing jobs, adding debt or missing payments, co-signing another loan, or using your down payment money. 

Marianne Hobson
Mortgage Agent Lic#M08004925
Dominion Lending Centres Homestead Financial FSCO# 11711
Cell: 905-973-9266

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