To Get Pre-Approved For a Mortgage Is A Relatively Easy Process
Don’t drive around neighborhoods you like. Don’t go and visit open houses in your neighborhood. Don’t browse online for homes in your price range. Get preapproved for a mortgage before doing anything! Why, because without a mortgage pre approval, how do you even know what your price range is?
To get preapproved for a mortgage is a relatively easy process. You complete a quick application, review your financial picture with a mortgage professional or mortgage advisor. This includes a review of your employment history for the last 3 years, your income, assets and liabilities. The mortgage advisor will also check your credit and ask for some documents to confirm your income.
Here are 4 Reasons To Get Preapproval for a Mortgage…
1. Get Pre Approved For A Mortgage & Know Your Budget
First and foremost, after you get mortgage preapproval, you will know how much you qualify for. This will help you determine a price range that a bank will finance for you. This will narrow down your home search.
You will also understand how much the payments are for your price range. Almost half the time, my client’s realize how much they qualify for and the number is higher than they thought. Their next question is, “if our payment is this much ($x,xxx/month), how much mortgage would that be?”
With a mortgage preapproval, you can set your budget and it doesn’t have to be the maximum!
2. Get Pre Approved For A Mortgage To Make A Stronger Offer
Let’s say you find a home you love. You make an offer and find out that there are competing offers. You can disclose to the vendor that you have been pre approved for a mortgage. If the competing offer is by someone who isn’t pre approved for a mortgage then you have a better chance of winning the bid!
3. Get Pre Approved for a Mortgage and Take Advantage of Time
The home buying process can be stressful. When you write an offer to purchase a home, the vendor isn’t going to give you 3 weeks to finalize everything. You are luck if you get 7 days. You will need to visit your mortgage advisor, collect a bunch of documents like employment letters, pay stubs, bank statements, investment statements, make RRSP withdrawls, arrange for appraisals, arrange for home inspections. etc., etc…
When you get pre approved for a mortgage, you aren’t under this time crunch. You will have time to organize the documents you need. You will have time to review some different options and choose a mortgage that might be best for you.
Many lenders will also offer a 30, 60 or 90 day rate hold. This means that your interest rate is guaranteed while you shop for your perfect home. This also means that if rates go up while you are shopping, you don’t have to worry. The rate you held when you were preapproved is guaranteed.
4. Get Pre Approved For a Mortgage and Have Peace of Mind
During the preapproval process your mortgage advisor will review your credit history. If he finds any errors, you have time to clear them up before you make an offer. I had a client who recently used a credit card that he rarely uses. In fact, when he moved he forgot to update his address with them. When I checked his credit, he was 1 month in arrears with this credit card.
He only used the card for a $65 purchase, but the credit bureau was reporting this late payment already. My client completely forgot that he used the card and had no idea the payment was late. This late payment affected his credit a little and he made the payment right away.
If we hadn’t noticed this, he could have gone 2 months, 3 months or more in arrears. If he hadn’t fixed this issue in time, he might not be a home owner today. Or, he may have paid a much higher interest rate to buy the same home!
What are you waiting for, get preapproved for a mortgage today!