Important Facts About Mortgage Pre-Approvals

There are a lot of steps involved when you are buying a home, but the first step that you should take is to get pre-approved for a mortgage.

What is mortgage pre-approval?

how much you can afford when you are buying a house. You provide the lender with certain financial information, they perform a credit check, and then come back with an offer. That offer will include the maximum loan that they will give you and the interest rate that they will charge.

Mortgage pre-approval differs from mortgage pre-qualification in which the lender doesn’t take any financial information from you but rather just gives their best guess as to what they might be willing to approve you for.

Why is mortgage pre-approval important?

Before you begin seriously searching for a new home, it is highly recommended that you get pre-approved for a mortgage. There are a number of reasons why this is important including:

It lets you know what you can afford. Having a mortgage pre-approval will help you to avoid wasting time looking at homes that are out of your price range. Since you know what the lender is willing to offer, you can focus your house hunting efforts on homes within your price range.
It lets the realtor know that you’re serious. Many realtors will not take you on as a client to purchase a home until you have been pre-approved for a mortgage. Remember, the realtor doesn’t get paid until they make a sale, so they don’t want to waste their time showing you homes that you won’t be able to afford.
It lets the seller know that you’re serious. If you don’t have financing when you put in an offer on a new home, you will have to make the offer conditional upon receiving financing. In the meantime however, the seller is likely getting several other offers from buyers who already have their financing in place. Not getting pre-approved for a mortgage will put you at a disadvantage when you are ready to put in an offer on a house.

What should I avoid after getting a mortgage pre-approval?

Just because you have been pre-approved for a certain amount does not mean that you are guaranteed to get the final approval from the lender. If you credit or financial circumstances change significantly before you close on your new home, the lender could withdraw their offer.

Therefore, once you have a mortgage pre-approval, you should avoid major financial changes. This include changing jobs or doing anything that could significantly affect your credit such as getting another large loan.

What is the best way to get a mortgage pre-approval?

The best way to get a mortgage pre-approval is to work with a licensed mortgage broker. Your broker can compare the rates and terms of different lenders to help you get the mortgage that makes the most sense for you. If you are ready to get a mortgage pre-approval, contact Akal Mortgages today to speak to one of our brokers.