Pros and Cons of Mortgage Pre-approvals

Mortgage can bring a hurricane of questions and troubles for home buyers. The Globe and Mail recently put up the question of “Should you get pre-approved for a mortgage?” Let’s break everything down and take a look.

Getting a pre-approval indeed has many benefits, for example:

You’ll get an idea about the price range you should aim for during your househunting.

By knowing how much a lender can lend out, you can manage your money better. We all loved getting surprises when we were kids, but not all surprises are created equal. Avoid any surprise expenses by knowing your monthly payment amounts and how much down payment is needed. This will help you be in control of your money.

Real estate agents can better attend to your needs if they know what you can afford, making everything run smoother.

Letting the seller know you are serious by have a solid financial backing is also a plus. When it is time to make an offer, sellers are more willing to consider it.

Also by having a pre-approved status, you may be able to negotiate more with a seller.

At Accessible Mortgages, your mortgage rate will be locked in for 120 days against any increases. But if you select a fixed rate mortgage term, you can also benefit because it can go lower if rates decrease.

It is free and you are not obligated to accept the mortgage.

All the benefits are great, but what are some essential facts you should know about pre-approvals? And what are some things that you should be careful of?

Difference between PreQualified and PreApproved

Pre-approvals vs Pre-qualifies. Don’t confuse pre-qualifies with pre-approvals. This small word change makes a world of difference. Read all the need-to-know about how pre-qualifies vs pre-approvals.

Appraisals are necessary but be careful. A home appraisal will determine the actual value of the property. This means if you haven’t found a house yet, you can’t get an appraisal on it. Appraisals aren’t done at the pre-approval stage and this brings in possible troubles. If the appraisal reveals that you’ve overpaid, or the property has defects, it can render your pre-approval worthless. I will help you avoid such mess by letting you know when it is the best time to get an appraisal and more.

Timing is key. If you’re very well qualified, I can time the submission of your pre-approval to get you better rates.

Resetting your pre-approval. If you are need more time home hunting and rates have stayed low, I can help you reset your pre-approval. This extends your rate hold, protecting you if rates jump before you close.

Getting a second pre-approval. But if time have passed, rates have jumped, and you need more time to find a home, I can help you consider getting a second pre-approval elsewhere.

Contact Irina Marshall today if you want to discuss more or have further questions.