Find out how much you can afford before you go house hunting!
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, a mortgage broker will be able to help you estimate a mortgage-qualifying amount.
48 HOURS FUNDING IS JUST A CLICK AWAY.
WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF MORTGAGE PRE-APPROVAL?
If you’re looking for a mortgage for your home, you may have run across “mortgage pre-approval” or “pre-approval”. How do they work, and what are the benefits and disadvantages of using doing this? These are some of the questions you might be asking. Here is an answer to all of those questions.
First, what exactly is a mortgage pre-approval? A pre-approval is a soft approval where a lender allows a potential homeowner to qualify for a particular loan amount based on the financial information provided in the application. The lender will usually require that the potential buyer provide documentation to support their financial information.
The reason that a pre-approval mortgage can be so helpful is that it gives you assurance on your affordability. Most buyers who apply for a mortgage will usually have many options on the table from hundreds of houses to buy. This means that as a buyer you can eliminate some of those houses based on your pre-approval affordability.
With a pre-approval mortgage, however, you’re dealing with one lender who is telling you what they believe you can afford. This will probably be the lender that you’ve had your best experience with in the past, but the fact is that you don’t know have to rely on just one pre-approval from one lender when you work with a mortgage broker. You don’t have to take their pre-approval as final, you can work with a mortgage broker to find ways that can get you a bigger more loan amount if you wish.
What are the advantages? One advantage is that you are buying houses in the dark. You have a measure on how much you can afford, instead of hoping that things will work out after your Agreement of Purchase and Sale (APS) is accepted by the Seller.
The biggest disadvantage of mortgage pre-approval is that it’s not a one-size-fits-all. While you may feel like you made the right choice, you can choose to be happy with that pre-approval amount. Otherwise, you can work with a mortgage broker to find a better mortgage pre-approval from different lenders. However, most people who use mortgage pre-approval services will end up choosing the second opinion that is more competitive. This makes sense to do when you are trying to get the best mortgage for you and your family.
HOW TO GET MORTGAGE PRE-APPROVAL
The first place that you should start your search for how to get pre-approved for a mortgage is with your current lender. In most cases, you will have some flexibility with where your house is located. The reason for this is because your current lender may be able to give you a good mortgage rate even if you are having a hard time qualifying. If you do not have any luck qualifying for a mortgage from your current lender, then this is one of the best places to start your search for how to get pre-approved for a mortgage.
Another thing that you can do is to request a free consultation from various mortgage lenders. When you request these quotes you will be able to see a variety of interest rates and terms they offer. There are many online sites that will allow you to request free quotes from a variety of mortgage lenders. Some of these mortgage sites also allow you to fill out and submit certain information online which allows the lenders to get your information much faster than if you were to call or visit their offices. Here is a tip that you should know if you are in the market to purchase a home with a mortgage: the interest rate is not the end-all-be-all.
By competing for the lowest rate possible is a good idea because you are missing the other important aspects of the mortgage such as prepayment privilege amount, any prepayment penalty amount, and the ability to adjust from variable to fixed-rate term without penalties, amount other things. Use all the information that you have and compare the information with what you plan to achieve in the short, medium, and long term. If you feel that there is any inaccurate or unverified information in the quote that you are given, contact the lender immediately to get the information corrected. It is important that you double-check the figures because if there is an error, the lender will need to know about it.
If you find that there are many companies offering mortgage pre-approval, then you will need to determine what the criteria are for being accepted. If you meet all the qualifications, then you may proceed to the next level of processing. At this stage, the lender will send you paperwork to sign and submit. Once you fill out the application completely and submit it along with all the required documents, you will get the pre-approval notice. At this point, it is important that you compare the mortgage offer from each company carefully to make sure that you are getting the best deal possible.
Jermaine Hinds, Mortgage Broker
Jermaine Hinds is a licensed mortgage broker for mortgages across Canada.
Your mortgage options are powered by Matrix Mortgage Global (Brokerage Lic. #11108). This means you gain access to more than 100 different lending partners who are ready to offer you various mortgage solutions, including mortgage renewals, refinancing, second mortgages, home equity loans, bridge loans, and other specialized mortgage products.
Read the previous Press Release here.
