Pre-Approval: the most important step in house hunting.
Imagine…you find the home of your dreams in the absolute perfect location, this is the ONE!
You think this home is in your budget and you let your real estate agent know your price and to draw up the offer. You’re golden, right? Well, no…. Without getting your loan pre-approved you risk being denied by the lender and having to start the process all over.
If you are preparing to buy a home, whether for the first time or your tenth time, it’s important to get pre-approved by a Mortgage Advisor before you call your real estate agent and begin looking at homes. There are several reasons why this is a critical step in having a successful home purchase.
But first, let’s discuss what exactly a pre-approval is.
A pre-approval is a quick and painless process in which a lender checks your credit and evaluates your income, expense and debt numbers. At this point in the process you will provide much of this information verbally, but may have to submit a few documents to support your income. The lender will also pull your credit to get an accurate look at what your debt profile is. After asking you a series of financial questions and reviewing the paperwork the lender will calculate your loan eligibility, you will then be provided with a pre-approval.
It’s called a ‘pre’ approval because the lender has not seen all the documentation from you at this point. When going through the official loan approval process you will need to submit specific documentation, which then gets sent on to underwriting for a full evaluation.
Once you are pre-approved, you will receive a letter that you can then share with your real estate agent as well sellers and their agents.
If you want to ensure a smoother, easier, more streamlined home purchase – and who doesn’t! – it is highly recommended that you get pre-approved for your mortgage, and here’s why:
You’ll know exactly what you can afford
Lots of time can be wasted on looking at homes you may not be able to afford. Online calculators are nifty to get a range of what you can afford, but until a lender has a look at your personal finances, your objectives and your credit file they don’t really know the right plan for your situation.
Ability to address any credit or financial issues on the front end
When evaluating your credit file and financial picture, often issues arise that need to be addressed before a lender can get a full approval from the underwriters. The more time allowed to address concerns the better, ensuring a successful and smooth home purchase process.
Shows sellers that you are serious
Taking the time to get pre-approved will definitely work in your favor in the negotiation and contract signing of your home. This is especially important in multiple offer situations. If you have a pre-approval and your competition does not, you are more likely to be chosen to go under contract with the sellers because your financing is more of a sure thing and there’s less risk of the deal falling through.
Getting pre-approved is a simple and painless process that has many benefits. It’s a no brainer! So, reach out today and we’d love to discuss your particular situation and get you pre-approved, before you start house hunting.