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Guest post by Tammie Redelback, Mortgage Advisor, MortgageLine Powered by Dominion Lending Centres

 

Thinking of buying a property, but don’t know where to start? One of the inital steps is to speak to your lender about your mortgage pre-approval.

 

The steps:
1. Get your pre-approval in place.
2. Look at property in your price point.
3. Sign an offer to purchase with a financing condition.
4. Complete your financing for a formal approval. (Usually within a few days.)
5. Complete your purchase.

 

A pre-approval is the best way to get started, but you should understand what a pre-approval is and what it isn’t.

 

What is a pre-approval?

 
- a formalized review of your financial status to give you information regarding mortgage options, mortgage rates offered to you and your mortgage maximums.
- allow you to understand all the documents you have to gather to formalize your mortgage approval. If you are self employed, new to Canada or requesting maximum amounts this paperwork can take some time.
- provide an understanding of your monthly costs so you can budget accordingly
- prove you peace of mind that you are searching for homes in the correct price bracket
- allows you to manage any issues before your dream home is on the line.

 

What is a pre-approval not?

 
-A pre-approval is not binding to you. A pre-approval is not the same as a final approval to purchase a specific property. It is not a guarantee of financing. There are a number of factors that come into play after the pre-approval is in place that can send your dreams of homeownership sideways. A couple of examples are:


• An approval requires a property to be scrutinized. Since a pre-approval cannot review the property (as you haven’t found it yet), it can’t be guaranteed the lender or insurer will approve the property.
• A secondary credit report can be pulled by the lender or insurer after the pre-approval is in place, if there are discrepancies, or your credit history changes they could decide not to proceed with financing.
• Mortgage rules can change and sometimes come into effect with no grandfathering.


If you make a large puchase, finance a car, change jobs, add significant funds to your credit card or fail to make regular payments on your accounts between pre-approval and purchase, you may be jeopardizing your formal approval for your home purchase.

 

So if things change why get a pre-approval?


A pre-approval is simply a formalized gathering of your information, and reviewing it. It won’t guarantee you will get the mortgage, but it will certainly uncover any major obstacles that might be in your way. Consider a pre-approval a pre-screening, where we take a look at your employment, credit history, your down payment, and figure out the maximum mortgage amount you can qualify for. Mortgage professionals that do a more thorough pre-approval verification are able to determine where you might get flagged by lenders and how and what to submit in order to satisfy lender mortgage requirements.

 

A pre-approval usually comes with a rate-hold, which is a good thing. Rates fluctuate and go up and down from time to time. Lenders will typically offer a rate hold for 90 days on a specific mortgage term. This means that if you find a property to buy in the allotted time, even if rates have gone up, you will get the rate that was guaranteed. If rates go down, you get the lower rate. It’s a win win.

 

The Process:

 

Buying a home is a process, a process that has a lot of steps that come into play. A pre-approval is one of the first steps you take. A pre-approval allows you to collect all your documentation ahead of time, handle any obstacles that may come up, have a look at your mortgage options, secure a rate hold, and will give you peace of mind as to the next steps in the process. Regardless if this is your first time buying a place or your tenth, a pre-approval is the best place to start.

 

For more information regarding your next preapproval contact:
Tammie Redelback, Mortgage Advisor, MortgageLine Powered by Dominion Lending Centres
Phone: 403.816.0218
E-mail: tammie@mymortgageline.ca
Web: tammieredelback.ca; mymortgageline.ca

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