Mortgage Pre-Approval
Your first move must be to look into your mortgage options! You can acquire a much lower interest rate if you consider refinancing your mortgage. Keep in mind that it is also very risky as it may incur a huge prepayment penalty, so make sure you do some research beforehand.
What is a Mortgage Pre-approval and Why It Matters?
This will keep you focused on shopping for homes within your price range. If you qualify for a pre-approved mortgage, you’ll be certain of the size of the mortgage for which you qualify and guaranteed a rate for a specific period of time. If you don’t qualify for a pre-approved mortgage, we will be able to help you estimate a mortgage-qualifying amount.
Going to open houses, scouring through the neighborhood, and looking into buying your dream house or residence in Canada may be exciting and enjoyable. Still, there is a possibility that you might have some difficulty getting a mortgage to help you purchase your new home.
Most home sellers expect purchasers to have a pre-approval letter at hand that shows proof or documentation of their assets and income, good credit, employment verification, and more. Most likely, sellers will be more willing to negotiate with those who prove that they can secure funding or financing.
As you look for a house, getting pre-approved for a mortgage can be a crucial action to take. Consulting with a lender and getting a pre-approval letter equips you with the chance to talk about loan options and financial budgeting with the lender; this step can clarify your total home-seeking budget and the monthly mortgage installment you can afford.
Also, seeking pre-approval before a deliberate house search places you in a more concrete position to improve your overall credit profile. You’ll also have more time to save money for any costs in purchasing a home.
Why Get Pre-approved?
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You will save time searching for homes because you already have a budget set once you are pre-approved. In this way, you save time by seeing only homes you can afford.
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You will have a better grasp of the idea of the recurrent payment amounts you will have monthly. And, of course, how much your down payment will be made for your home purchase?
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Real estate agents may help and assist you better because they perceive you’re a serious buyer and ready to make a solid purchase.
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Home sellers may be more inclined to consider your offer seriously because you have substantial financial support.
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Your pre-approved status may provide you more negotiating control with a house seller.
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Some mortgage lenders may proffer you a rate lock, so you don’t have to agonize about increasing interest rates while you look for a new house.
What is a Pre-Approval Letter?
If you are granted a mortgage pre-approval, your lender will present you with a pre-approval letter. Most of the time, this document should be with letterhead to consider it official. This official document means to sellers that you are a serious buyer and proves that you have the financial means to successfully make a home purchase.
Mortgage pre-approval letters usually include the acquisition price, loan application program, interest rate, loan amount, down payment cost, expiration date, and the home address. The pre-approval letter is submitted with your offer, and some home sellers might also demand to examine your bank and asset statements.
Getting a mortgage pre-approval doesn’t require you to borrow from mortgage lenders. When you’re set to make an offer, you can choose the lender that offers you the best rate in terms of your personal needs and preferences. Also, acquiring a mortgage pre-approval doesn’t guarantee that a lender will approve you for a mortgage loan, especially if your financial status changes between the pre-approval phase and underwriting.
How Long Does a Pre-approval Letter Last?
The time frame differs by mortgage lenders, but a mortgage pre-approval is usually valid for ninety (90) days. If you’re still house-hunting around Canada after the expiration point, you can request the mortgage lender to renew the pre-approval. You may need to present updated data and information, and the lender may review your financial status again.
