Mortgage pre-approval tips

Is a mortgage pre-approval important? The short answer is ‘yes’! It is definitely important so you have the confidence to move forward with your house hunting. A pre-approval is for you and not the lender. We are going to review your income documents and confirm the source of your down payment funds. You will know if there are any areas of concern and we will discuss a plan to move forward.

The term ‘pre-approval’ is somewhat misleading, as we cannot guarantee that you are 100% approved for your financing. There are many variables that will factor into your final mortgage approval, including the lender reviewing the property you are purchasing.

A mortgage pre-approval can give you the confidence to know that you fit within the guidelines of a mortgage lender, and also a mortgage insurer if you require an insured mortgage for your purchase. It will also establish a realistic budget for your new purchase.

Here are the benefits of getting pre-approved:

You will know your price range before you start house hunting.

Your realtor will know exactly what type of property you should be looking at, so that can save you both time and also narrow down your home search.

Being pre-approved can give you an edge over other buyers as you may be able to close quicker and that might be important to the seller.

There aren’t going to be any surprises as you will already know how much you require for a down payment, closing costs and how much your monthly mortgage payments are going to be.

Since you are already pre-approved this may put you in a better position to negotiate with the seller.

A pre-approval also gives you the benefit of securing your interest rate for up to four months. This is a great benefit, especially if interest rates are predicted to increase.

Here’s another tip – you don’t have to wait for an appointment to obtain a mortgage preapproval. The first request I often receive is for a meeting, and I am always happy to accommodate my clients, but an in-person meeting is not required for a mortgage pre-approval. Most are happy to find out that we can complete the process via an online portal, telephone and email, including collecting the required documents. This is generally more convenient for my clients and a great time-saver, which can result in the pre-approval being completed in one day, most times. It’s a simpler process than most think. I can complete your pre-approval most likely before you even get to an appointment with your bank.

Once you have a pre-approval in hand you can then start your home hunting with confidence. 

The last round of new mortgage qualification rules are making it more difficult for ALL to obtain financing, so it’s better to go through the simple process of a mortgage preapproval before moving forward with placing an offer on a new home. It will save you time and stress.

Before you fall in love with a home you should know if it’s within the reach of your finances. The first person you should call before reaching out to your realtor is a professional mortgage broker.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.