Pre-approvals are often the first step you take when you are seriously looking to buy a home.
Pre-approval: a lender has committed to loan you money, subject to conditions, such as a property valuation.
This should not be mistaken with a rate-hold, whereby a lender is simply holding a rate and has not reviewed your documents.
Even though your mortgage broker has done your credit checks and reviewed your income—this is only a review of your application, NOT the property.
Therefore, when making an offer, you should still include a “subject to financing” clause in your offer, because the broker/lender does not know anything about the property, and issues may arise that can preclude you from buying that particular property. With a subject to financing, the buyer can walk away from the accepted offer if they cannot get satisfactory financing.
If you have to offer without a subject, talk to your mortgage broker and closely review the situation to ensure you understand the risks of that situation. Having been pre-approved does not mean that you can/should offer subject-free.
Why Get Pre-Approved?
- You will know exactly what you can afford, narrowing down your search and saving you time and effort.
- You will have a better idea of what your monthly payments would be, allowing you to budget accordingly.
- Real estate agents and sellers will know you are a serious buyer, ensuring you will be given the serious consideration you deserve.
- A mortgage broker can get you a pre-approval at no cost to you, and you will be under no obligation to accept the mortgage!
With a mortgage broker, the pre-approval process is straightforward. You will be asked to fill out one application, which the mortgage broker can use when approaching different lenders. A mortgage broker will discuss your financing strategy, needs, mortgage amount, down payment, deposit requirements, etc.
Your mortgage broker will also discuss the various mortgage options available to you, such as rate types, payment options, etc., and discuss which options best suit your needs. At this time, it would also be good to review your strategy when it comes to subjects.
A mortgage broker will also be able, with your consent, to do one credit check for your application.
When you use a mortgage broker to obtain your pre-approval, you are not only ensuring you find the best mortgage for your circumstances, you are saving yourself time, effort, and uncertainty. You will only need to fill out one application and have one credit check done, unlike if you approached different lenders on your own.
Best of all, using a mortgage broker to get you your pre-approval will not cost you anything, nor will you be under any obligation to take the mortgage.
When your offer has been accepted, your mortgage broker may advise you that it’s better to go with a different lender than your pre-approval. This could be because of the rate, timing, etc. Also, further documentation may be required once the lender receives the accepted offer.
Call me today to discuss how I can get you the pre-approval that best suits your situation and bring you closer to achieving your dream of home ownership!